Feds unveil digital-TV subsidy details

As part of the lead-up to a scheduled February 2009 shutdown of over-the-air broadcasts in the United States, the National Telecommunications and Information Administration (NTIA) held a press conference here Monday to unveil its long-awaited final rules for a congressionally mandated subsidy program.

Under the rules, all U.S. households will be able to apply for up to two $40 coupons to defray the cost of a basic digital-to-analog converter box during the program's initial phase, in which up to 22.5 million coupons are expected to be available. Beginning January 1, 2008, households will be able to make such requests through a toll-free phone number, a Web site, fax or postal mail. March 31, 2009 is the last day to make the requests. Boxes are expected to cost between $50 and $70 apiece.

If that initial $890 million worth of coupons run out, NTIA has the power to ask Congress to hand over an additional $450 million, creating up to 11,250,000 more vouchers. Those coupons would be reserved, however, for households that self-certify that they rely solely on over-the-air broadcasts, as opposed to cable or satellite.

Opening the subsidy program to all consumers is a good start, but Congress should have delegated about twice as much funding if it hopes to cover all households with incompatible TV sets, said Jeannine Kenney, a senior policy analyst for the advocacy group Consumers Union.

"Instead, they put the burden of the transition on consumers--ironically, a burden that falls most heavily on those who have demonstrated the least interest in digital television," Kenney said in an e-mail interview. Because the switch is government-mandated, as opposed to market-driven, her group has taken the position that consumers should not be forced to bear the costs required to keep their TVs functioning.

The coupons have no income limit, meaning that millionaires would be as eligible for taxpayer-provided discounts as someone living below the poverty line. In addition, NTIA has acknowledged that there's nothing stopping someone from reselling the converter boxes they have purchased with the coupons on auction sites such as eBay at a profit, although officials said they didn't believe there would be a market for that practice. It's also unclear how NTIA will police the potential abuse of individuals ordering multiple coupons at multiple addresses.

NTIA Administrator John Kneuer emphasized that the voucher program is only one way for consumers to ensure a seamless shift when the nation shifts to all-digital broadcasts on February 19, 2009. For one thing, consumers who already subscribe to cable or satellite services are not expected to have any changes to make.

According to a recent National Association of Broadcasters survey, an estimated 19 million households do not subscribe to those services. That means they must either acquire a digital-to-analog converter box, a digital-ready television, or another device, such as a VCR or DVD player, that contains a digital tuner, or their analog televisions will effectively go dark.

In releasing its rules Monday, NTIA dictated that households may redeem the coupons only for boxes designed to do little more than convert digital signals to analog ones.

For example, consumers could not use the coupons toward devices that contain digital video-recording capabilities or DVD players. NTIA deemed a certain range of features acceptable, including an electronic program guide, equipment necessary for processing software upgrades, antenna inputs and video outputs.

Also as part of its rulemaking, NTIA dictated that the boxes must meet certain energy efficiency and interference standards and outlined procedures for retailers that wish to apply to accept the coupons.

Kneuer said the agency chose not to adopt specific consumer education requirements so that it can remain flexible. An alliance of consumer electronics, broadcast and cable industry and public interest groups has already announced plans for what they hope will be a high-profile awareness campaign.

NTIA plans to track how many coupons have been issued and redeemed through a real-time database that will be contracted to a private company within the next few months. The coupons will be gift card-like in nature, and retailers will be expected to modify their systems as necessary to accept them. The coupons will be set to expire within 90 days of when households receive them, freeing up money to release additional vouchers.

In response to questions from reporters, Kneuer said he expected the coupon distribution to begin on time and the transition to occur as planned. Some Democratic leaders in Congress had criticized NTIA in recent weeks for what they perceived as foot-dragging on putting out more details on the subsidy program.

Kneuer suggested the consequences of freeing up the analog TV spectrum are too important to delay the deadline again. Public safety responders are in need of the spectrum for their communications. A number of high-tech companies are clamoring to bid on the leftover spectrum, whose inherent scientific properties could make for easier, cheaper broadband deployment.

"This really has the opportunity to be an absolute game changer in the broadband marketplace," Kneuer said.