Obama Wants Congress to Delay DTV Transition

Between Obama’s election Nov. 4 and now, “we have discovered major difficulties in the preparation” for Feb. 17, “weaknesses” which “mean major problems for consumers,” John Podesta wrote legislators on behalf of the next president and Vice President-elect Joe Biden. Because Congress mandated the analog cutoff date, it must take “the first step toward addressing the problems awaiting Americans,” he added. A waiver of the Anti-Deficiency Act to allow coupons to continue to be mailed is needed, wrote Podesta. Congress is working on just such a fix, NTIA Acting Administrator Meredith Baker said in an interview Wednesday.

But the ADA waiver isn’t enough, Podesta wrote, because there’s not enough money set aside by Congress. There’s also insufficient support for consumers, especially the poor, elderly and rural residents, Podesta wrote, saying part of the Economic Recovery Package contains resources to tackle the issue. “The Feb. 17 cutoff date for analog signals should be reconsidered and extended,” he added. “I urge you to consider a change to the legislatively mandated analog cutoff date.” The letter went to Senate Commerce Committee Chairman Jay Rockefeller, D-W.Va., Ranking Member Kay Bailey Hutchison, and their counterparts in the House: Henry Waxman, D-Calif., and Joe Barton, R-Texas.

Barton called Obama’s letter “disappointing,” in a written statement. “We don’t need to bail out the DTV transition program because it isn’t failing, and reintroducing uncertainty to the switch will make things worse instead of better.” He’s working with Markey on accounting changes to let NTIA meet “last-minute demand,” Barton added. “Ditching the deadline and slathering on more millions of taxpayer dollars, however, is just panic.” House Commerce is working on a change to legislative language, a committee aide said. Rockefeller supports “delaying the current date of the DTV transition until we can do it right,” he said late Thursday.

Martin: FCC Can’t Act Alone

The FCC acting on its own can’t delay the analog-cutoff date, Chairman Kevin Martin said Thursday after a speech to the American Enterprise Institute. He also indicated he doesn’t consider a delay necessary. “You need to have an Act of Congress,” Martin said. “The legislation is clear that broadcasters are not allowed to continue broadcasting in analog after the transition day.”

Delaying the analog cutoff might increase confusion, Martin said. “The government has said for the last 18 months the transition is going to occur on February 17,” he said. “I think it would create consumer confusion if we come back and say it’s delayed.” But Martin said he hopes Congress will quickly provide additional money so viewers can keep getting coupons. He noted that the FCC has stressed the availability of the coupon program over the last year in its outreach to consumers.

Martin said he had no regrets about how the FCC had handled the transition. “We've continued to make it a top priority,” he said. “The commission, for several years, had asked Congress for resources to educate consumers about the DTV transition. … We didn’t receive any of those resources until this year.”

Outgoing House Telecom Subcommittee Chairman Edward Markey, D-Mass., said Congress should consider immediately Obama’s proposal, although “moving the transition date entails significant logistical challenges.” Hutchison believes it’s “too early to call for a delay,” her office said. The CTIA said it’s “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.”

Baker Sees Hill Fix Soon on DTV Coupons

The NTIA thinks Congress will see legislation within days that would allow the agency to resume mailing out DTV converter box coupons, Baker said. Lawmakers will focus on finding a “technicality” in, if not an outright exception to, the ADA, which prohibits the government from committing to spend more than a program’s budget, Baker said.

Right now, NTIA can’t send out coupons because it would be committing funds in excess of its budget, even though it expects to have the actual money remain in the Treasury in the long run from expired and unredeemed coupons (CED Jan 6 p1). ADA exemptions are not unusual. The universal service fund program, for example, gets one every year.

House Telecom Subcommittee Chairman Ed Markey, D- Mass., is expected to introduce the legislation by early next week, Baker said. Rep. Joe Barton, R-Texas, a senior Republican on the subcommittee and the main author of the DTV Transition Act that brought about the coupon program, already has signed off on the legislation, Baker told us. On the Senate side, she thinks it’s possible incoming Senate Commerce Committee Chairman Jay Rockefeller, D-W.Va., will hold a hearing on the issue next Thursday, she said.

Baker spoke as the waiting list for new coupons mushroomed to 948,000 orders as of Tuesday, according to the latest NTIA data available. That was only three days after the NTIA stopped sending out coupons after reaching the $1.34-billion fund commitment ceiling. Though the Bush administration opposes ADA exceptions as bad fiscal policy, the White House is not expected to block the legislation, Baker said.

Protecting the ADA against exceptions is “almost a religion” at the Office of Management and Budget, Baker said. But many previous administrations have opposed ADA exceptions on similar fiscal-responsibility grounds, Baker said. Still, NTIA regards an ADA exception as only a “Band-Aid solution” to get DTV coupon processing restarted, she said. It will be up to the Obama administration and the new Congress to decide whether to increase the $1.34 billion funding cap for coupons that would enable more than 33.5 million vouchers to be redeemed, Baker said.

Baker fears negative publicity about the coupon waiting list will give traction to arguments from Consumers Union that the DTV transition should be delayed, she said. Postponing the switch from Feb. 17 would confuse consumers and anger those who have paid money out of pocket to buy converter boxes to prepare for a transition that won’t happen when the government has spent months telling people it will, she said. It also would raise the risk that many retailers would abandon selling converter boxes without a date certain for the switchoff of analog TV, she said.

CU thinks 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,” Policy Analyst Joel Kelsey said Wednesday in letters to the House Commerce Committee leadership and to President Bush and President-elect Obama. “NTIA is now placing hundreds of thousands of consumers onto a waiting list each day, and telling consumers to either pay for converter boxes themselves, or subscribe to cable or satellite TV service,” Kelsey said. The federal government will receive over $19 billion in proceeds from the DTV spectrum auction, Kelsey said. Yet “millions of consumers could now be forced to spend their own money to navigate this federally mandated transition,” he said. “This economic climate is not the right time to ask consumers to dig deeper into their own pockets to pay for the miscalculation by the federal government. Consumers need assistance to navigate the transition at the lowest cost possible.”

Of the 948,000 coupon orders put on the waiting list through Tuesday, about 47 percent are from households that self-certified they get TV through an antenna alone, an NTIA spokesman said. “We are working with Congress and other stakeholders so coupons can be processed and mailed without delay,” Baker said in a statement issued late Wednesday. “We have been communicating with Congress throughout the program and advised as early as Nov. 6 that coupon demand may hit the $1.34 billion obligation limit by mid-January. Throughout the year, NTIA has been very transparent in communicating coupon demand, redemption rates, and to urge households to apply for coupons by Dec. 31, 2008, so they can be fully prepared by Feb. 17.”

NTIA told Congress in its “final phase plan” Nov. 6 that the program risked reaching its funding limit by mid-January. The plan assumed problems would ensue amid “immediate, extremely heavy and sustained increases in coupon requests, such that demand for coupons surpasses the program’s ability to distribute coupons in the first quarter of 2009.” It said it had based that scenario on patterns it observed in the Wilmington, N.C., test, where analog service went dark Sept. 8. Coupon orders in Wilmington rose by more than 300 percent after that market’s early transition to DTV was announced last May, the NTIA report said.

Still, the NTIA report discounted that scenario as “highly unlikely” to occur. Were trends similar to those observed in Wilmington to materialize nationally, average daily orders would suddenly need to spike to 214,000 and stay there, the report said. “Because the Wilmington transition occurred in a compressed period of time, NTIA will assume only a 100 percent increase over baseline demand in advance of a spike in February,” the report said.

The reality is that coupon orders since the Nov. 6 report have far exceeded the 214,000 a day that NTIA had called a critical benchmark. And for the week ended Tuesday, average daily orders had climbed to 360,800 from 248,000 per day the week earlier. On Tuesday alone, orders actually soared above 512,000 -- evidence, Baker told us, that coupon demand has grown even more in wake of the negative publicity about the waiting list.

Still, in the interview, Baker stood by the report’s conclusions, calling any prospect of higher, sustained coupon demand highly unlikely. Wilmington was “a truncated test,” its findings too inconclusive to predict what would happen nationally once intensive consumer education efforts kicked in, Baker said. In fact, NTIA officials have said consumer outreach programs like the agency’s “Apply, Buy and Try” campaign -- formed from the lessons learned in Wilmington -- helped spur coupon demand to unexpectedly high proportions.

Where Wilmington also lacked nationwide applicability was in the fact that the Sept. 8 test obviously didn’t take place over a holiday selling season, Baker told us. NTIA had assumed many Americans would shop for new DTV sets in Q4, reducing the need for converter boxes or coupons, she said. But those assumptions went out the window when the economy tanked, and obtaining a $40 government coupon, for many more than had been expected, became “an attractive proposition,” Baker said.

ABC Backs Move, CEA Opposes It

Obama’s letter makes it more likely that the analog cutoff will be delayed, said broadcast and communications lawyers. Many said that there are other ways to fix problems with the NTIA coupon program that don’t involve extending the deadline, such as the ADA fix discussed by Baker, or legislation to add more money to the NTIA coupon program. But Obama’s letter will carry much weight with legislators, said broadcast attorneys.

Congress should not move the date, the CEA said Thursday. “An eleventh-hour change to the DTV transition would create enormous uncertainty for consumers,” said CEA President Gary Shapiro. Congress should focus on helping NTIA distribute more coupons, he said. “Any delay to the transition would cause massive confusion among the more than 90 percent of Americans who have already taken the necessary steps to prepare” and set back consumer access to new wireless spectrum, he said.

The NAB believes Congress created “certainty” by mandating the Feb. 17 deadline, a spokesman said. Broadcasters are “committed to being ready by Feb. 17 and strongly support a solution that would enable the government to continue making converter box coupons available,” he said. But ABC thinks delay is a good idea, said Preston Padden, executive vice president for government relations.

CBS, Fox and NBC seemed open to Obama’s proposal. It’s “prudent and well-considered,” said NBC Universal. “CBS is open to the suggestion,” it said. News Corp. “supports any efforts to ensure that the transition to digital is a success,” said a spokeswoman. Officials at other broadcast networks didn’t reply to messages or said they couldn’t comment by our deadline. Cable companies “will continue to work as hard as they can to help Americans achieve a smooth DTV transition” should the transition be moved, said NCTA President Kyle McSlarrow in a written statement.

Full-power broadcasters in Hawaii will probably move ahead with their early switchover regardless of what happens in Washington, D.C., said Mike Rosenberg, president of KITV Honolulu. “That would be my vote. We've invested too much into this move [the date]. The people in Hawaii are expecting this.” Hawaii is making the switch Jan. 15 to accommodate the annual nesting of an endangered bird species. “If we don’t take our towers down right now, we have leave them up for another year,” Rosenberg told us. Broadcasters there have set up a call center, which is fielding 100-plus calls a day, he said: “Even before NTIA ran out of money, we were telling people it’s basically too late,” because of the early switch.