Obama: Delay Transition

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In a jolt few saw coming, President-elect Barack Obama wants to delay the Feb. 17 transition to digital broadcasting, dumping a plan put in place three years ago by Congress that was backed by a $1.2 billion industry-supported consumer education campaign.

The incoming president is concerned that poor, rural and elderly residents will be unprepared for the cutoff of analog TV signals just 28 days after he moves into the White House.

Obama’s call for delay, sharply criticized by a House Republican who helped design the analog cutoff plan, came in a letter last Thursday from the co-chairman of his transition team, John Podesta, to the bipartisan leadership of the Commerce Committees in the House and Senate.

With Democrats in control of the House and Senate, a determined Obama administration shouldn’t have troubling getting its way, especially in the honeymoon phase, when Congress tends to defer to a new president. Obama takes office on Jan. 20.

“It’s a done deal,” said a broadcast-industry lobbyist, concerned that a Feb. 17 cutoff would cost too many people access to free TV.

Another lobbyist for telecommunications firms doubted a Democratic-controlled Congress would vote to delay because doing so would prevent its leaders from blaming Republicans for any future snafus.

“If they delay it, they own it,” the lobbyist said.

It’s not clear what Obama wants to do besides delay. He has options. He could kick the whole thing to the Federal Communications Commission and have the agency craft a new plan, perhaps one that gradually transitions the country to digital on a market, state or regional basis.

The statewide approach will be tested Jan. 15, when all commercial-TV stations in Hawaii voluntarily turn off their analog signals. The Wilmington, N.C., market went all-digital on Sept. 8 in a carefully orchestrated trial by the FCC.

In the letter, Podesta didn’t say how long the delay should last and he wasn’t clear about how many vulnerable Americans were at risk. His letter came just one day after Consumers Union, publisher of Consumer Reports magazine, called for an analog cutoff delay, sharing many of Podesta’s concerns about going forward just a few weeks into Obama’s White House tenure.

Congress would have to pass a new law to move the Feb. 17 transition date, which President Bush signed into law in February 2006, FCC chairman Kevin Martin said last Thursday.

In his letter, Podesta argued that the $1.34 billion digital-to-analog converter box coupon program run by the U.S. Commerce Department can’t issue any new coupons. That, he said, has produced a waiting list for 1 million coupons.

The $40 coupons help defray the $40 to $80 retail cost of each converter box needed to keep an old analog TV set running after the switch.

About 47 million coupons have been requested, but about 18 million have actually been used. Another 10 million coupons remain active, but if redemption trends continue, about half of those won’t be used, as some consumers opt to buy pay-TV service or purchase a digital TV set in lieu of a converter box.

Podesta capped his letter by insisting programs designed to help rural, poor and elderly Americans prepare for digital-TV service were inadequately funded.

“All the above leads to the conclusion that the Feb. 17 cutoff of analog signals should be reconsidered and extended,” Podesta said. “With coupons unavailable, support and education insufficient, and the most vulnerable Americans exposed, I urge you to consider a change to the legislatively-mandated analog cutoff date.”

An Obama transition office spokeswoman said the President-elect supported Podesta’s letter.

Writing in last Friday’s The New York Times, former Federal Communications Commission chairmen William Kennard and Michael Powell said they supported a delay. They argued that going forward would produce a “train wreck” for consumers.

“There is no reason to rush toward a fiasco when we could just as well take the time to make sure the change happens smoothly,” they wrote.

In a statement last Thursday, Rep. Joe Barton (R-Texas) decried Obama’s suggestion, saying “ditching the deadline and slathering on more millions of taxpayer dollars … is just panic.”

Barton crafted the analog cutoff legislation in 2005 when he was chairman of the House Energy and Commerce Committee.

Sen. Kay Bailey Hutchison of Texas, the most senior Republican on Senate Commerce Committee, also questioned the wisdom of moving the transition date.

“We need to focus on a solution to the coupon shortage. Shifting the date this close to the transition, without a sound plan to share information about the new transition date, will likely result in significant confusion,” she said.

However, Senate Commerce Committee Chairman Jay Rockefeller (D-W.Va.), critical to any effort to enact a delay, strongly endorsed Podesta’s request.

“I look forward to reviewing the details of the Obama administration proposal with my colleagues, and will support delaying the current date of the DTV transition until we can do it right,” he said, claiming that the coupon program was “appallingly mismanaged.”

TV stations were told to turn off their analog signals because the switch to digital would free up valuable spectrum for wireless broadband providers and for advanced communications services needed to link police, fire and rescue squads around the country.

FCC Democrat Michael Copps, considered by many as Obama’s pick as interim FCC chairman in a few weeks, has been pessimistic about the DTV transition for more than a year.

“More time can only help put in place the kind of consumer-focused outreach and assistance that should have been up-and-running months ago,” Copps said.

The National Association of Broadcasters claims that TV stations spent the equivalent of $1 billion to educate the public about Feb. 17. National Cable & Telecommunications Association members chipped in at least another $250 million in DTV transition messaging, even though TVs hooked to cable won’t be impacted by the change in technology.

Neither NAB nor NCTA came out in opposition to a delay as both groups have to take into account the repercussions of challenging a new administration before it was even sworn in.

“If the transition date is moved, cable companies will continue to work as hard as they can to help Americans achieve a smooth DTV transition,” NCTA president Kyle McSlarrow said.

Not so for Gary Shapiro, president of the Consumer Electronics Association, who combatively challenged Kennard and Powell’s claim that converter box demand could outpace supply by 4 million to 31 million units.

“Converter boxes are in stock and available from retail outlets within reach of all Americans, and manufacturers and retailers will meet consumer demand,” Shapiro said. “The facts clearly support maintaining the hard date of Feb. 17.”

The House Communications, Technology and the Internet Subcommittee is expected to hold a hearing on the coupon program as soon as this week under the panel’s new chairman Rep. Rick Boucher (D-Va.), who is replacing Rep. Edward Markey (D-Mass.).

Markey, who is taking over as Energy Subcommittee chairman, held numerous hearings last year on the DTV transition while heading the telecommunication panel. In a statement, he didn’t specifically endorse scrapping Feb. 17.

“President-elect Obama’s call to move back the digital television transition date highlights the vulnerability of millions of Americans to the impending analog signal shutoff. It also underscores the need for prompt Congressional examination of his proposal,” Markey said.

Rupert Murdoch’s News Corporation, which owns Fox TV stations and the Fox Network, issued a statement that appeared to support a delay if that’s what needs to be done.

“News Corp. supports any efforts to ensure that the transition to digital television is a success. Our first concern is what’s best for our viewers, and we believe that the Obama-Biden Transition Team shares our concern,” the company said.

ABC Television, owned by The Walt Disney Co., is endorsing Obama’s delay, a company executive said Thursday.

“As many of our viewers would lose their ability to access broadcast information and entertainment, ABC supports the call to delay the DTV transition,” ABC said in a statement.

According to Nielsen Media Research, 7.8 million households, or 6.8% of total U.S. TV homes, are not prepared for the DTV transition. That means none of the TV sets in those homes can display a digital signal.

The coupon program, run by the Commerce Department’s National Telecommunications and Information Administration, hasn’t run out of money. It would exhaust its funding if all active coupons were redeemed.

But that’s an unlikely scenario because so far about half of all coupons have gone unused in the one-year lifespan of the program, which ends March 31. NTIA coupons expire after 90 days in the field.

However, a federal budget law, called the Antideficiency Act (ADA), bars NTIA from issuing new coupons until old coupons expire and replenish the program with new money. NTIA has spent about $720 million.

But since the remaining $620 million is backing coupons either en route to consumers or already in their hands, NTIA has to wait for coupons to expire before mailing out new ones. About 300,000 coupons expire each week.

Boucher and Markey are working on a bill that would waive the ADA’s restrictions and allow NTIA to send out 8 million coupons immediately. The bill would also require NTIA to use first class, not third class, mail to expedite delivery.

“The Congress should immediately pass legislation providing for an exemption to the Antideficiency Act,” Markey said.

The bill, however, wouldn’t change the Feb. 17 date, a House source said.

“That’s the right thing to do,” said Barton, who is the most senior Republican on the Energy and Commerce panel.

The Feb. 17 date was contained in a highly partisan budget law passed in December 2005. Not a single Democrat in the House or Senate voted for it.

Last year, the FCC raised about $19 billion from auctioning analog TV spectrum located in channels 52 to 59. Winners, who want to provide wireless broadband, were promised access to the spectrum on Feb. 18.

“We are concerned that a delay of the transition date could postpone investment in and deployment of broadband wireless services and decrease confidence in the auction model for spectrum allocation that has generated billions for the U.S. Treasury,” Wireless Association (CTIA) spokesman Joe Farren said. Podesta in his letter endorsed an ADA waiver, but he said it wouldn’t completely address the funding problem.

“Coupon demand appears headed to a level that will exceed that authorized by Congress,” Podesta said.

Funding to assist vulnerable Americans would be included in Obama’s economic stimulus plan, he added.

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