Consumers Union : Delay DTV Transition
Organization Says Sans Coupon Program Funding Millions Could Be Without Broadcast TV
By Ted Hearn -- Multichannel News, 1/8/2009 4:00:00 AM
Washington -- A leading consumer organization is calling on Congress to consider delaying the Feb. 17 digital TV transition, alleging that a key converter box coupon program subsidized by the federal government has run out of money and could leave millions of consumers without broadcast TV.
"We believe Congress should consider delaying the transition until a plan is in place to minimize the number of consumers who will lose TV signals, particularly by fixing the flaws in the federal coupon program created to offset the cost of this transition," officials from Consumers Union said in a letter Wednesday to the chairmen of the House and Senate Commerce Committees. The letter didn't recommend how long the transition should be postponed. "That is up to Congress and the new incoming [Obama] Administration," Consumers Union policy analyst Joel Kelsey said. "We are not saying it should be delayed indefinitely." Triggering the request for a delay by Consumers Union, publisher of Consumer Reports magazine, was Monday's announcement by the Commerce Department's National Telecommunications and Information Administration that federal accounting rules required it stop mailing out new $40 convert box coupons until previously mailed coupons had expired. NTIA, which has $1.34 billion for the program, has spent about $720 million. The remaining $620 million has been allocated to pay for coupons that have been mailed but have not been used or reached their 90-day expiration. Under a federal budget law, NTIA has to assume that all active coupons will be used, even though 40% to 50% of coupons have not been used by consumers during the life of the one-year-old program. Nevertheless, Consumers Union and many major media outlets have claimed that NTIA's creation of the waiting list meant the coupon program's funding and dried up. "On January 4, the NTIA announced that funding for the federal converter box coupon program had run out," Consumer Unions averred in its letter to Sen. Jay Rockefeller (D-W.Va.) and Rep. Henry Waxman (D-Calif.) Describing the NTIA program as being out of money was accurate, Kelsey claimed. "[NTIA] can't give coupons to people who have requested them because they have allocated all the money given them by Congress," he said. NTIA reiterated that the coupon program had not run of money. "We have hit our authorization limit. However, there is money from expired coupons remaining," NTIA spokesman Todd Sedmak said. "Currently, funds settled is approximately $720 million. The program is funded to redeem $1.34 billion worth of coupons." On Feb. 17, all full-power TV stations need to turn off their analog signals. Analog TV sets not connected to a digital-to-analog converter box -- which costs between $40 and $60 at retail -- or not connected to a pay-TV service like cable will go dark in an all-digital world.
NTIA notified Congress in November that a budget law called the Antideficiency Act would delay the release of coupons if coupon requests surged late in the program, which expires on March 31. Congress, as well as the National Cable & Telecommunications Association, pressured NTIA to allow pay-TV households to apply for coupons, even though households that rely exclusively on free, over-the-air-television were the only ones that absolutely needed to take action to watch digital TV signals on their old analog sets. As a result, 115 million
U.S.
households were entitled to request two $40 coupons each, though the program had funding for just 33.5 million coupons. Under pressure from Congress, NTIA also didn't stick to its original policy of allowing just broadcast-only homes to apply for the last $450 million in funding. The National Association of Broadcasters sent a letter Wednesday to Rockefeller and the Commerce Committee's top Republican, Kay Bailey Hutchison (
Texas
), proposing ways to unfreeze NTIA's program
The trade group, for instance, said Congress could increase funding for the coupon program by an unspecified sum, and it could permit NTIA to assume that less that 100% of active coupons will be redeemed.
"A modification of the projected redemption rate, e.g., an assumed 80 percent redemption rate, would free up more money for coupons to be delivered to consumers," NAB president David Rehr's letter said.
Rehr also said Congress could waive the Antideficiency Act with confidence in knowing that about half of all coupons issued won't be used.
"Lifting the Antideficiency Act requirements on the program would allow the NTIA to distribute more coupons without an additional appropriation," Rehr said.
