NTIA Creates DTV Coupon Waiting List
Despite 50 Percent Redemption Rate, New Applicants Will Have to Wait
By Ted Hearn -- Multichannel News, 1/5/2009 11:46:00 AM
Washington—Due to a federal accounting law they probably never heard about, consumers can't gain immediate access to $40 coupons created to help them buy converter boxes for the viewing of digital broadcast TV signals on old analog sets, the Bush administration announced Monday.
Congress set aside $1.34 billion to allow consumers to use 33.5 million coupons. About 18 million coupons have already been used and about 15 million more are still in the field and may or may not be used.
But a federal budget law, called the Antideficiency Act (ADA), requires the U.S. Commerce Department to assume that all 15 million active coupons will be used, even though the one-year program has had a 50% redemption rate, which has edged toward 60% only in recent weeks.
"For consumers, what this means is that anyone who is requesting coupons now will be placed on a wait list and will be mailed coupons on a first-come, first-served basis," Meredith Attwell Baker, head of the U.S. Commerce Department's coupon program, told reporters Monday on a conference call.
On Feb. 17, all full-power TV stations need to cease analog broadcasting and rely exclusively on digital signals, which in many cases have been up and running for almost a decade. According to the National Association of Broadcasters, 73 million analog TV sets were broadcast-only when Congress voted in December 2005 to end analog TV in a law President Bush didn't sign until February 2006.
To help consumers prepare for the switch, Congress approved $1.34 billion (plus $160 million in administrative funds) to subsidize the purchase of converter boxes at retail. The program was open to all households, not just to the estimated 12 million to 20 million households that rely exclusively on free, over-the-air broadcasting and are considered the most vulnerable to losing free TV service after the switch to digital.
The program reached its $1.34 billion commitment ceiling on Sunday. Those who applied before Sunday can expect to receive their coupons within four weeks, said Baker, who heads Commerce's National Telecommunications and Information Administration.
Those on the waiting list won't be mailed any coupons until previously mailed coupons have expired. Each household that received a maximum two coupons had 90 days to use them before they expired automatically.
Based on a 60% redemption rate, the Bush administration expects to mail out another 6 million coupons by March 31, when the program ends, Baker said.
The waiting list, at least initially, should clear quickly. Each week, about 350,000 coupons expire. "There are 103,000 on the [waiting] list right now," Baker said.
The Bush administration is not supporting an ADA waiver for the coupon program. But Baker said she is working with Congress and the incoming Obama administration on ways to unfreeze the coupon program.
"Certainly, if Congress chose to waive the ADA, we would comply with whatever Congress passed," Baker said.
The NAB and the Consumer Electronics Association (CEA) want to see the budget rules relaxed.
"NTIA should be permitted to mail out coupons immediately, and we urge Congress to work with NTIA to lift the red tape that is keeping available coupons out of consumers' mailboxes," CEA spokeswoman Megan Pollock said.
Comcast Corp., the largest U.S. cable company, noted in a statement that consumers frozen out of the NTIA coupon program could pay $10 a month for basic cable for one year or get basic service for free for one year by signing up for either digital phone or high-speed data service.
NTIA's program ran into accounting trouble when coupon requests spiked in December to 7.2 million, compared to a monthly average of 3.5 million from January to September. NTIA ramped up its coupon program promotion in the last quarter to maximize consumer receipt of coupons before the Feb.17 cutoff of analog TV signals.
"Our goal was really to make November and December out highest month," said Baker, who declared success.
In September, Baker told Congress that based on redemption rates so far, the coupon program would likely return $300 million to the U.S. Treasury. That prediction still might come true, depending on the ultimate level of consumer reliance on coupons.
A few weeks later, Federal Communications Commission chairman Kevin Martin sent then-House Energy and Commerce Committee chairman John Dingell (D-Mich.) a letter saying he was concerned that the coupon program might run out of money.
