Martin Fears Coupon Program Lacks Funds

By Ted Hearn -- Multichannel News, October 7, 2008

Washington -- Federal Communications Commission chairman Kevin Martin is concerned that a $1.5 billion digital TV converter box program run by the U.S. Commerce Department could exhaust its funding, leaving consumers in the lurch next February 17 when analog TV signals are shut off.

Martin expressed his concerns in undated letters to House Energy and Commerce Committee chairman John Dingell (D-Mich.) and Telecommunications and the Internet Subcommittee chairman Rep. Edward Markey (D-Mass.). An FCC spokeswoman said the letters were dated Oct. 6, calling the omission "a typo."

Both Democratic lawmakers have engaged in aggressive oversight of the converter box coupon program supervised by Commerce's National Telecommunications and Information Administration.

"While I do not have access to NTIA's projections and detailed analyses, I am concerned that the total funding required to satisfy demand may prove to be insufficient," Martin said in the letters, copies of which were obtained by Multichannel News Tuesday.

Congress just approved $20 million in case NTIA needs extra administrative funds to mail coupons near the end of the program next February. Each household is entitled to apply for two $40 coupons.

Martin's letter clashes with recent congressional testimony by Assisting Commerce Secretary and NTIA director Meredith Attwell Baker. The program, she testified, won't run out of money; in fact, she said it will likely return more than $300 million to the U.S. Treasury, based on coupon redemption rates.

In the letters, Martin offered various projections and scenarios showing that NTIA could lack sufficient funding. For example, he said NTIA estimated that in Wilmington, N.C., a test market that made the DTV transition on Sept. 8, the number of broadcast-only homes was 13,759. Martin said 19,187 broadcast-only homes applied for coupons, certifying they didn't have cable or satellite TV. Martin supplied other examples that he said could result in a funding shortfall.

"Given these factors, it is difficult to predict whether the converter box program is adequately funded. This difficulty is compounded by the fact that our Wilmington experience shows that the data on the number of [broadcast-only] households, and estimates of the number of coupons of these households may request, is imperfect," Martin said. "Accordingly, I am becoming increasing concerned about the funding of this program."

Martin, a Republican Bush appointee, resisted conducting the Wilmington trial. He eventually agreed to it after public prodding from FCC Democrat Michael Copps.

In February, the Bush administration tried to replace Baker with Neil Patel, an aide to Vice President Richard Cheney. But the Senate Commerce Committee never gave Patel a confirmation hearing. Baker agreed to stay on the job, winning high praise from some segments of the broadcast industry.