[House Hearing, 110 Congress]
[From the U.S. Government Publishing Office]




          THE STATUS OF THE DIGITAL TELEVISION TRANSITION

=======================================================================

                                HEARINGS

                               BEFORE THE

          SUBCOMMITTEE ON TELECOMMUNICATIONS AND THE INTERNET

                                 OF THE

                    COMMITTEE ON ENERGY AND COMMERCE
                        HOUSE OF REPRESENTATIVES

                       ONE HUNDRED TENTH CONGRESS

                             FIRST SESSION

                               ----------                              

                     MARCH 28, OCTOBER 17, 31, 2007

                               ----------                              

                           Serial No. 110-27


      Printed for the use of the Committee on Energy and Commerce
                        energycommerce.house.gov













            THE STATUS OF THE DIGITAL TELEVISION TRANSITION

=======================================================================

                                HEARINGS

                               BEFORE THE

          SUBCOMMITTEE ON TELECOMMUNICATIONS AND THE INTERNET

                                 OF THE

                    COMMITTEE ON ENERGY AND COMMERCE
                        HOUSE OF REPRESENTATIVES

                       ONE HUNDRED TENTH CONGRESS

                             FIRST SESSION

                               __________

                     MARCH 28, OCTOBER 17, 31, 2007

                               __________

                           Serial No. 110-27


      Printed for the use of the Committee on Energy and Commerce
                        energycommerce.house.gov

                                 ------



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             THE STATUS OF THE DIGITAL TELEVISION TRANSITION


                    COMMITTEE ON ENERGY AND COMMERCE

                   JOHN D. DINGELL, Michigan, Chairman
HENRY A. WAXMAN, California            JOE BARTON, Texas
EDWARD J. MARKEY, Massachusetts           Ranking Member
RICK BOUCHER, Virginia                 RALPH M. HALL, Texas
EDOLPHUS TOWNS, New York               J. DENNIS HASTERT, Illinois
FRANK PALLONE, Jr., New Jersey         FRED UPTON, Michigan
BART GORDON, Tennessee                 CLIFF STEARNS, Florida
BOBBY L. RUSH, Illinois                NATHAN DEAL, Georgia
ANNA G. ESHOO, California              ED WHITFIELD, Kentucky
BART STUPAK, Michigan                  BARBARA CUBIN, Wyoming
ELIOT L. ENGEL, New York               JOHN SHIMKUS, Illinois
ALBERT R. WYNN, Maryland               HEATHER WILSON, New Mexico
GENE GREEN, Texas                      JOHN B. SHADEGG, Arizona
DIANA DeGETTE, Colorado                CHARLES W. ``CHIP'' PICKERING, 
    Vice Chairman                          Mississippi
LOIS CAPPS, California                 VITO FOSSELLA, New York
MIKE DOYLE, Pennsylvania               STEVE BUYER, Indiana
JANE HARMAN, California                GEORGE RADANOVICH, California
TOM ALLEN, Maine                       JOSEPH R. PITTS, Pennsylvania
JAN SCHAKOWSKY, Illinois               MARY BONO, California
HILDA L. SOLIS, California             GREG WALDEN, Oregon
CHARLES A. GONZALEZ, Texas             LEE TERRY, Nebraska
JAY INSLEE, Washington                 MIKE FERGUSON, New Jersey
TAMMY BALDWIN, Wisconsin               MIKE ROGERS, Michigan
MIKE ROSS, Arkansas                    SUE WILKINS MYRICK, North Carolina
DARLENE HOOLEY, Oregon                 JOHN SULLIVAN, Oklahoma
ANTHONY D. WEINER, New York            TIM MURPHY, Pennsylvania
JIM MATHESON, Utah                     MICHAEL C. BURGESS, Texas
G.K. BUTTERFIELD, North Carolina       MARSHA BLACKBURN, Tennessee
CHARLIE MELANCON, Louisiana               
JOHN BARROW, Georgia                      
BARON P. HILL, Indiana                    

                                 ------

                           Professional Staff

                  Dennis B. Fitzgibbons, Chief of Staff
                    Gregg A. Rothschild, Chief Counsel
                      Sharon E. Davis, Chief Clerk
                 David Cavicke, Minority Staff Director

                                  (ii)

  
          Subcommittee on Telecommunications and the Internet

               EDWARD J. MARKEY, Massachusetts, Chairman
MIKE DOYLE, Pennsylvania             FRED UPTON, Michigan
    Vice Chairman                        Ranking Member
JANE HARMAN, California              J. DENNIS HASTERT, Illinois
CHARLES A. GONZALEZ, Texas           CLIFF STEARNS, Florida
JAY INSLEE, Washington               NATHAN DEAL, Georgia
BARON P. HILL, Indiana               BARBARA CUBIN, Wyoming
RICK BOUCHER, Virginia               JOHN SHIMKUS, Illinois
EDOLPHUS TOWNS, New York             HEATHER WILSON, New Mexico
FRANK PALLONE, Jr, New Jersey        CHARLES W. ``CHIP'' PICKERING, 
BART GORDON, Tennessee                   Mississippi
BOBBY L. RUSH, Illinois              VITO FOSSELLA, New York
ANNA G. ESHOO, California            GEORGE RADANOVICH, California
BART STUPAK, Michigan                MARY BONO, California
ELIOT L. ENGEL, New York             GREG WALDEN, Oregon
GENE GREEN, Texas                    LEE TERRY, Nebraska
LOIS CAPPS, California               MIKE FERGUSON, New Jersey
HILDA L. SOLIS, California           JOE BARTON (ex officio)
JOHN D. DINGELL, Michigan (ex officio)















                             C O N T E N T S

                              ----------                              

                             MARCH 28, 2007

                                                                   Page
Barton, Hon. Joe, a Representative in Congress from the State of 
  Texas, opening statement.......................................    10
Blackburn, Hon. Marsha, a Representative in Congress from the 
  State of Tennessee, opening statement..........................    15
Dingell, Hon. John D., a Representative in Congress from the 
  State of Michigan, opening statement...........................     4
Doyle, Hon. Mike, a Representative in Congress from the 
  Commonwealth of Pennsylvania, opening statement................    13
Green, Hon. Gene, a Representative in Congress from the State of 
  Texas, opening statement.......................................    13
Harman, Hon. Jane, a Representative in Congress from the State of 
  California, opening statement..................................     9
Markey, Hon. Edward J., a Representative in Congress from the 
  Commonwealth of Massachusetts, opening statement...............     1
Pallone, Hon. Frank, Jr., a Representative in Congress from the 
  State of New Jersey, opening statement.........................     9
Shimkus, Hon. John, a Representative in Congress from the State 
  of Illinois, opening statement.................................     6
Solis, Hon. Hilda L., a Representative in Congress from the State 
  of California, opening statement...............................    12
Stupak, Hon. Bart, a Representative in Congress from the State of 
  Michigan, opening statement....................................     7
Terry, Hon. Lee, a Representative in Congress from the State of 
  Nebraska, opening statement....................................    14
Towns, Hon. Edolphus, a Representative in Congress from the State 
  of New York, opening statement.................................    15
Upton, Hon. Fred, a Representative in Congress from the State of 
  Michigan, opening statement....................................     2
Walden, Hon. Greg, a Representative in Congress from the State of 
  Oregon, opening statement......................................     8

                               Witnesses

Britt, Glenn A., president and chief executive officer, Time 
  Warner Cable...................................................    47
    Prepared statement...........................................    49
Fetchet, Mary, founding director, Voices of September 11th.......    56
    Prepared statement...........................................    59
Nogales, Alex, president and chief executive officer, National 
  Hispanic Media Coalition.......................................    43
    Prepared statement...........................................    45
Taylor, John I., senior vice president, LG Electronics, USA, 
  Incorporated...................................................    16
    Prepared statement...........................................    18
Vitelli, Michael, senior vice president, consumer electronics and 
  product Management, Best Buy, Inc..............................    65
    Prepared statement...........................................    68
Yager, K. James, chief executive officer, Barrington Broadcasting 
  Company, LLC...................................................    21
    Prepared statement...........................................    23

                           Submitted Material

``What You Need to Know About the February 17, 2009 `DTV 
  Transition''' Consumer Electronics Retailers Coalition.........   104
``Digital Television Transition Campaign Plan'' prepared by 
  Jonathan Collegio, National Association of Broadcasters........   108
Comments of the Association for Maximum Service Television, et 
  al., letter of September 25, 2006 to NTIA......................   130
RCA press release of March 12, 2007..............................   163
David H. Arland, vice president, marketing,Thomson, letter of 
  March 27, 2007 to Messrs. Markey and Upton.....................   165

                            OCTOBER 17, 2007

Barton, Hon. Joe, a Representative in Congress from the State of 
  Texas, opening statement.......................................   176
Capps, Hon. Lois, a Representative in Congress from the State of 
  California, prepared statement.................................   185
Deal, Hon. Michael F., a Representative in Congress from the 
  Commonwealth of Pennsylvania, opening statement................   172
Dingell, Hon. John D., a Representative in Congress from the 
  State of Michigan, opening statement...........................   171
Doyle, Hon. Mike, a Representative in Congress from the 
  Commonwealth of Pennsylvania, opening statement................   173
Eshoo, Hon. Anna G., a Representative in Congress from the State 
  of California, opening statement...............................   175
Ferguson, Hon. Mike, a Representative in Congress from the State 
  of New Jersey, opening statement...............................   179
Green, Hon. Gene, a Representative in Congress from the State of 
  Texas, opening statement.......................................   180
Inslee, Hon. Jay, a Representative in Congress from the State of 
  Washington, opening statement..................................   182
Markey, Hon. Edward J., a Representative in Congress from the 
  Commonwealth of Massachusetts, opening statement...............   167
Solis, Hon. Hilda L., a Representative in Congress from the State 
  of California, opening statement...............................   178
Stearns, Hon. Cliff, a Representative in Congress from the State 
  of Florida, opening statement..................................   182
Stupak, Hon. Bart, a Representative in Congress from the State of 
  Michigan, opening statement....................................   184
Terry, Hon. Lee, a Representative in Congress from the State of 
  Nebraska, opening statement....................................   181
Towns, Hon. Edolphus, a Representative in Congress from the State 
  of New York, prepared statement................................   185
Upton, Hon. Fred, a Representative in Congress from the State of 
  Michigan, opening statement....................................   169
Walden, Hon. Greg, a Representative in Congress from the State of 
  Oregon, opening statement......................................   174

                               Witnesses

Benjamin, Michael, executive director, Family, Career, and 
  Community Leaders of America...................................   308
    Prepared statement...........................................   310
    Answers to submitted questions...............................   355
Fazlullah, Amina, staff attorney, media and telecommunications, 
  U.S. Public Interest Research Group............................   299
    Prepared statement...........................................   302
    Answers to submitted questions...............................   360
Goldstein, Mark L., Director, Physical Infrastructure Issues, 
  U.S. Government Accountability Office..........................   229
    Prepared statement...........................................   231
    Answers to submitted questions...............................   363
Kneuer, John M.R., Assistant Secretary, Communications and 
  Information, National Telecommunications and Information 
  Administration, U.S. Department of Commerce....................   186
    Prepared statement...........................................   189
    Answers to submitted questions...............................   369
Martin, Kevin J., Chairman, Federal Communications Commission....   207
    Prepared statement...........................................   211
    Answers to submitted questions...............................   401
Romeo, Tom, director, Federal services, Global Business Service, 
  IBM Corporation................................................   326
    Prepared statement...........................................   328
Stout, Claude, executive director, Telecommunications for the 
  Deaf and Hard of Hearing, Inc., on behalf of the Coalition of 
  Organizations for Accessible Technology........................   283
    Prepared statement...........................................   286
    Answers to submitted questions...............................   421
Zirkin, Nancy M., vice president/director of public policy, 
  Leadership Conference on Civil Rights..........................   315
    Prepared statement...........................................   317
    Answers to submitted questions...............................   426

                           Submitted Material

``Broadcasters Announce Comprehensive $697 million Campaign to 
  Educate Consumers about the February 17, 2009 Transition to 
  Digital Television (DTV),'' DTVAnswers .com, October 15, 2007..   431
Kyle McSlarrow, president and chief executive officer, National 
  Cable and Telecommunications Association, letter of September 
  6, 2007 to Messrs. Dingell, Barton, Markey and Upton...........   438
``Univision Communications Inc. Launches Industry's First Digital 
  Television Conversion Education Campaign,'' Univision press 
  release, October 1, 2007.......................................   442
Hon. Fred Upton, ``Auction the Spectrum's `White Spaces,''' op-
  ed, The Hill, October 16, 2007.................................   444

                            OCTOBER 31, 2007

Capps, Hon. Lois, a Representative in Congress from the State of 
  California, opening statement..................................   452
Eshoo, Hon. Anna G., a Representative in Congress from the State 
  of California, opening statement...............................   449
Green, Hon. Gene, a Representative in Congress from the State of 
  Texas, opening statement.......................................   450
Harman, Hon. Jane, a Representative in Congress from the State of 
  California, opening statement..................................   449
Markey, Hon. Edward J., a Representative in Congress from the 
  Commonwealth of Massachusetts, opening statement...............   447
Radanovich, Hon. George, a Representative in Congress from the 
  State of California, opening statement.........................   451
Solis, Hon. Hilda L., a Representative in Congress from the State 
  of California, opening statement...............................   451
Stearns, Hon. Cliff, a Representative in Congress from the State 
  of Florida, opening statement..................................   451
Upton, Hon. Fred, a Representative in Congress from the State of 
  Michigan, opening statement....................................   448

                               Witnesses

Abbott, Jonathan, president and chief executive officer, WGBH, 
  Boston, MA.....................................................   583
    Prepared statement...........................................   585
    Answers to submitted questions...............................   644
Barrett, David J., president and chief executive officer, Hearst-
  Argyle Television, Incorporated, New York, NY..................   467
    Prepared statement...........................................   469
Bruno, Ron, president, Community Broadcasters Association, 
  president, Bruno-Goodworth Network, Inc., Pittsburgh, PA.......   453
    Prepared statement...........................................   456
Knorr, Patrick, president, and general manager, Sunflower 
  Broadband, Lawrence, KS........................................   458
    Prepared statement...........................................   460
Swanson, Dennis, president, station operations, Fox Televsion 
  Stations, Incorportated, New York, NY..........................   556
    Prepared statement...........................................   558
Taylor, John, vice president, government relations and 
  communications, LG Electronics, Lincolnshire, IL...............   599
    Prepared statement...........................................   601
Uva, Joe, chief executive officer, Univision Communications, 
  Inc., New York, NY.............................................   550
    Prepared statement...........................................   552
Vitelli, Michael, senior vice president and general manager, Home 
  Solutions Operating Group, Best Buy, Incorporated, Richfield, 
  MN.............................................................   566
    Prepared statement...........................................   568
    Answers to submitted questions...............................   648
Willner, Michael S., vice president and chief executive officer, 
  Insight Communications, New York, NY...........................   540
    Prepared statement...........................................   542

 
            THE STATUS OF THE DIGITAL TELEVISION TRANSITION

                              ----------                              


                       WEDNESDAY, MARCH 28, 2007

              House of Representatives,    
         Subcommittee on Telecommunications
                                  and the Internet,
                          Committee on Energy and Commerce,
                                                    Washington, DC.
    The subcommittee met, pursuant to call, at 10:00 a.m., in 
room 2123 of the Rayburn House Office Building, Hon. Edward J. 
Markey (chairman of the subcommittee) presiding.
    Members present: Representatives Doyle, Harman, Inslee, 
Boucher, Towns, Pallone, Stupak, Green, Solis, Dingell, Upton, 
Hastert, Deal, Shimkus, Wilson, Walden, Terry, Blackburn, and 
Barton.
    Staff present: Johanna Shelton, Colin Crowell, Maureen 
Flood, Mark Seifert, Tim Powderly, David Vogel, Kyle Chapman, 
Neil Fried, and Courtney Reinhard.

OPENING STATEMENT OF HON. EDWARD J. MARKEY, A REPRESENTATIVE IN 
        CONGRESS FROM THE COMMONWEALTH OF MASSACHUSETTS

    Mr. Markey. Good morning, ladies and gentlemen and whoever 
is watching this on C-SPAN. Twenty-five million people. That is 
bigger than ``Dancing with the Stars.'' If they see this on 
delay, it is March 28, 2007. But it has been 80 degrees here in 
Washington, and all of these various blossoms are completely 
confused, and this is the debate over whether or not global 
warming is affecting our country and causing this personality 
disorder in plant life. I am saying that I have had such a 
pollen attack that it is going to affect how people hear me 
today, but I am going to be kind of in a Luca Brasi sound alike 
contest today, and I don't have a cold, but----
    Mr. Upton. You are sounding a little bit like Charlie 
Rangel.
    Mr. Markey. Charlie Rangel, Luca Brasi, I am not going 
there, OK, but there is a, I think, a real problem for many 
people here today in Washington. The purpose of today's hearing 
is to provide this subcommittee with a clearer picture of how 
Government, industry and community groups will work together to 
ensure that millions of Americans do not lose free, over-the-
air television after the transition from analog to digital 
broadcasting on February 17, 2009.
    Recent oversight hearings with the Federal Communications 
Commission and the NTIA have left this subcommittee with a DTV 
transition picture that is fuzzy, at best. If we are going to 
make sure that all Americans don't see their analog televisions 
go dark on February 17, 2009, we need to start getting better 
reception from the parties who are responsible for making sure 
this digital transformation is a success.
    I truly hope today's panelists can provide high-definition 
clarity to the DTV transition so that we can assure the public 
it will be a success for everyone. Let me start by reaffirming 
my support for the DTV transition. I held the first HDTV 
hearing as chairman of this subcommittee in this room 20 years 
ago, 1987. We have long known the benefits of transitioning to 
digital TV and it is time to get the job done and done 
correctly.
    If implemented successfully, transitioning broadcast 
television to digital service will free up valuable spectrum to 
enhance public safety communications, may bring consumers an 
array of new digital broadcast video and other services and 
will provide spectrum that, if also implemented properly, will 
enhance wireless competition and spur a new wireless broadband 
deployment and innovation.
    Mr. Dingell and I and other Democratic colleagues urged the 
administration and our Republican colleagues in the last 
Congress to ensure sufficient funding for this program so that 
all of the almost 70 million analog television sets would be 
covered. The CBO estimated that this would cost roughly $3.6 
billion, or more than twice the amount in the final law. With 
the relinquished spectrum estimated to garner upwards of $10 
billion at auction, there is sufficient money to do this right.
    In the last Congress, the Democratic side offered a plan 
which allocated enough money to cover every possible applicant 
for a converter box and we proposed that the remainder of the 
$10 billion in auction revenue should be used to fund public 
safety interoperability and network upgrades. Instead, our 
colleagues proposed less than half that amount for converter 
boxes and only $1 billion for first responders. In addition, 
there is only $5 million for consumer education at NTIA and 
$1.5 million at the FCC in order to deal with this issue.
    We have to get this job done. That is what this hearing is 
all about. We are going to make sure that all of the parties 
from the Government and the private sector play their role in 
protecting the American right to their television set, turning 
on when they have spent their good hard earned money to 
purchase that set.
    And the time of the Chair has expired. I turn and recognize 
the gentleman from Michigan, Mr. Upton.

   OPENING STATEMENT OF HON. FRED UPTON, A REPRESENTATIVE IN 
              CONGRESS FROM THE STATE OF MICHIGAN

    Mr. Upton. Well, thank you, Mr. Chairman, and I would like 
to thank the witnesses for testifying today on this very 
important issue. I commend you for holding this extremely 
important hearing. The DTV transition is an issue that 
continues to generate an outstanding amount of attention and it 
is certainly imperative that the attention on the issue focuses 
on the heart and soul of the matter, and that is giving our 
first responders, many whom I have met with this morning in my 
office, from my district, the resources that we need to keep 
America safe.
    The catalyst for the DTV transition is the post-9/11 
realization that we have to get the 24 MHz of spectrum into the 
hands of public safety officials for interoperability once and 
for all. In fact, clearing the 24 MHz was precisely the task 
which the bipartisan 9/11 Commission, in its recommendations to 
Congress, also recognized as a mission very critical to 
homeland security. And despite the moral imperative, much of 
the debate is focused on the NTIA program to provide consumers 
with coupons for subsidized converter boxes. And I am confident 
that the NTIA coupon program is more than adequate to provide 
subsidized converter boxes.
    According to the National Association of Broadcasters' 
testimony there are a total of 69 million TVs not connected to 
cable or satellite, including those in homes that subscribe to 
cable and satellite. They estimate that after a broadcaster 
sponsored consumer education campaign, consumers will want 
subsidized converter boxes for about a third of those TVs. That 
makes 23 million subsidized converter boxes well below, well 
below the 33\1/2\ million subsidized converter boxes that the 
$1.5 billion coupon program is intended to cover.
    In fact, I think the initial $990 million will be more than 
enough to cover the demand for the subsidized converter boxes 
based on the estimates using data from the FCC or the consumer 
electronics industry. And according to the CEA, the 
manufacturers building the boxes, only 25 million sets will 
need a converter box by the transition date and only a third of 
those will feel that they need the subsidy, and that is a 
little more than 8 million boxes which easily can be covered by 
funds for the program.
    The fact remains that it is in the financial interest of 
the broadcasters, the satellite and cable folks to make sure 
that each TV-viewing household knows about the DTV transition. 
The last thing the industry wants to do is lose viewers. The 
broadcasters should be commended for the work that they are 
going to do to ensure consumers to be aware of that transition 
and I am confident that they will continue to do more than 
their share to ensure that the transition is successful.
    It should be noted that the transition has been difficult 
for our local broadcasters. Individually, each broadcaster has 
had to invest significant sums, often more than a million 
bucks, to make this Government imposed transition; not to 
mention the energy and the insurance costs for operating both 
analog and digital facilities at the same time. Our local 
broadcasters are to be commended for doing their part. Had it 
not been for their hard work and sacrifice, the transition 
would not have been possible.
    However, if any of my colleagues on either side of the 
aisle have doubts or concerns about the industry's resolve to 
educate consumers, I would urge them to cosponsor and pass H.R. 
608, the Digital TV Consumer Education Act. Make no mistake, if 
we alter any of the fundamental pillars of the DTV Act plan, 
like changing the auction date or the spectrum allocations, we 
jeopardize, jeopardize the 24 MHz of public safety spectrum and 
the billion dollar public safety grant that was included in the 
legislation. The stakes are too high to gamble and we have come 
so far. We should try to risk avoid strain from that well-
plotted course.
    As I conclude my opening statement, I would just like to 
highlight a few of the relevant numbers again. Fifteen million 
exclusively over-the-air homes; 94 million cable and satellite 
homes. Projected demand for the subsidized converter box is 
21.8 million. Thirty-three and a half million converter boxes 
are available through the Federal coupon program, which is, 
should be, more than enough to cover the 21.8 million. But the 
numbers that matter the most are the 24 MHz of spectrum and the 
billion dollars for public safety.
    I look forward to hearing from the panel today. The 9/11 
Commission understood the importance of ensuring that our first 
responders have the equipment and the spectrum necessary to 
communicate in times of emergency. I am proud that we were 
successful in not only passing the DTV transition last 
Congress, but we are also providing a helping hand to enable 
our first responders to better protect all of America.
    Mr. Markey. The gentleman's time----
    Mr. Upton. Oh, wait. If I could just submit a unanimous 
consent to put in a letter from Thomson indicating that they 
will have the converter sets available by January 1, 2008.
    Mr. Markey. Without objection it will be included.
    Mr. Upton. And also to allow Congresswoman Blackburn, to 
sit in and participate in the normal process, as she is not a 
member of this subcommittee?
    Mr. Markey. Without objection Mrs. Blackburn will be 
allowed to participate in the hearing and she will be 
recognized after all of the members of the subcommittee have 
been recognized, but we welcome you. Thank you. The Chair 
recognizes the gentleman from Michigan, the chairman of the 
committee, Mr. Dingell.

OPENING STATEMENT OF HON. JOHN D. DINGELL, A REPRESENTATIVE IN 
              CONGRESS FROM THE STATE OF MICHIGAN

    Mr. Dingell. Mr. Chairman, I thank you and I commend you 
for holding this hearing. This is the first oversight hearing 
on the digital television transition since the law that set a 
hard date to turn off analog television was enacted more than a 
year ago. I think that careful oversight is going to be very 
much needed because I have great apprehensions that a fine mess 
lies before us.
    Mr. Chairman, consumers deserve a clear picture of the 
digital television DTV transition. This committee will work 
hard in the coming months to see to it that the public and 
private stakeholders are doing all that they should to prepare 
consumers. Much will be gained for our country if the 
transition is done properly and is successful. The timely 
return of the spectrum will produce significant public 
benefits, particularly for the first responders and wireless 
innovators.
    Indeed, led by my good friend Mr. Stupak of Michigan, many 
of us voted to use the bulk of the spectrum auction proceeds, 
$5.8 billion, for first responder interoperability. 
Unfortunately, that law was enacted in the previous Congress 
and set aside far less funding for first responders. Decisions 
being made now by this administration and others will lay the 
foundation for success of the transition; good decisions that 
put the consumer first will go far towards ensuring a timely 
return of the analog broadcast spectrum.
    Consumer adoption is the lynchpin of a successful DTV 
transition. I suspect few consumers know that they will need to 
purchase new equipment to keep their analog television sets 
working. We must reach all Americans with accurate information 
about the transition date and about the coupon program. The law 
established a first-come, first-served converter box coupon 
program. That imposes significant perils on portions of our 
society that may or may not be aware of that feature of the 
law.
    When that money runs out many households, including those 
dependent on free, over-the-air television, for every day for 
their local news, weather and emergency alerts may be left with 
a blank screen. Retailers must provide consumers with simple 
and useful information. When consumers walk into a store, the 
necessary equipment, including eligible low-cost converter 
boxes, must be in stock and visible on the shelves.
    Consumers should see effective informational displays and 
be able to pick up coupon applications right at the store where 
the boxes are sold. Sales associates should accurately answer 
questions and assist coupon holders in obtaining eligible low-
cost boxes. Consumer electronics manufacturers must also make 
certain that affordable converter boxes are produced in 
sufficient numbers and available to retailers in the proper 
timeframe.
    Given that coupon distribution will begin in January 2008, 
I am curious whether orders have been placed to produce low-
cost boxes and in what quantities. How will manufacturers 
market, promote and test the boxes? Will there be installation 
or antennae assistance? Will product labeling easily identify 
coupon eligible boxes? The most crucial part of any consumer 
education campaign is the efforts of the broadcast industry, 
itself. Broadcast television is a powerful media to reach 
consumers.
    Local broadcasters must begin a thorough public education 
program as the coupons become available next January. 
Broadcasters should also partner with local retailers and 
community organizations to promote outreach to hard-to-reach 
populations. Cable operators must also do their part. They must 
provide accurate and appropriate information to guide their 
subscribers through this transition. It must be noted that 
retailers and wholesalers and others involved in the sales of 
television equipment must also do their share and must not sell 
equipment which will not best suit the needs and the concerns 
of the consuming public.
    Importantly, Government agencies such as the Federal 
Communications Commission and the National Telecommunications 
and Information Administration must step up their efforts. 
There has been too little appreciation for the task of properly 
informing and equipping American households. It is the 
responsibility of the FCC to inform all Americans about the 
transition and coordinate the technical steps required to usher 
in full digital broadcasting. NTIA has serious responsibilities 
here and they must conduct vigorous consumer outreach regarding 
the coupon program and they must keep Congress adequately 
informed on the progress of their efforts.
    As we prepare for February 2009 we should not forget that 
we are asking ordinary people to pay for a Government decision 
that essentially makes their television sets obsolete. For that 
reason we should ensure that this transition is as painless as 
possible for American consumers and that they have all of the 
information needed to protect themselves in what could be a 
dangerous undertaking for their viewing interests. Thank you, 
Mr. Chairman.
    Mr. Markey. The Chair recognizes the gentleman from 
Illinois, Mr. Shimkus.

  OPENING STATEMENT OF HON. JOHN SHIMKUS, A REPRESENTATIVE IN 
              CONGRESS FROM THE STATE OF ILLINOIS

    Mr. Shimkus. Thank you, Mr. Chairman. Remember what we did 
in the Deficit Reduction Act of 2005? The primary 
responsibility was to get 24 MHz up to the first line 
responders and a billion dollars to help in that transition, 
but I want to highlight something that I covered in a hearing 
of last week; it is up on the screen, it is up on this placard 
and it is really the best way to get a hold of some numbers to 
understand whether we have enough money or whether we don't 
have enough money.
    At last week's DTV hearing I walked through the converter 
box numbers with NTIA, demonstrating that the initial $990 
million allocated to the program would cover demand. Some said 
I did it too quickly, so I thought I would do it again, this 
time with some help. According to the FCC's most recent 
estimate, there are 15.36 million exclusively over-the-air 
homes. NAB's February 2007 survey projects that 25 percent of 
the over-the-air homes may want a subsidized converter box; 
that comes to 3.84 million homes. Over-the-air homes tend to 
have two televisions for a total of 7.68 million subsidized 
converter boxes.
    According to the same FCC estimates, there are 94.23 
million cable and satellite homes. According to NAB, 15 percent 
of cable and satellite homes may want a subsidized converter 
box. That comes out to 14.13 million homes. Those homes are 
likely to have only one television not connected to their cable 
or satellite service, so that is a total of 14.13 million 
subsidized converter boxes. If you add those numbers together 
you get 21.81 million subsidized converter boxes. That is less 
than the 22.25 million subsidized converter boxes that the 
initial $900 million less the administration costs can fund.
    And I would like to point out the consumer electronics 
industry, the ones who actually are making and selling the 
converter boxes, thinks the numbers needed will be even 
smaller. I realize that many of these numbers are estimates, 
however. If they are accurate, then we are headed in a great 
direction. When we passed the Deficit Reduction Act of 2005 
with these provisions included and I personally think we did a 
good job.
    I will end, again, with my primary, my opening part of this 
was it is all about dollars and cents and priorities. And the 
number one priority is get the spectrum to the first line 
responders so they can communicate. The second major 
responsibility is to make sure that we have money to help in 
the interoperability. That is all what this debate is primarily 
responsible and I think, budgetary, we can defend the $990 
million for the set top converters.
    With that, Mr. Chairman, I will yield back my 20 seconds.
    Mr. Markey. The gentlelady from California. Let me go to 
the gentleman, if you wouldn't mind, let me recognize the 
gentleman from Michigan. I know he has got to run.

  OPENING STATEMENT OF HON. BART STUPAK, A REPRESENTATIVE IN 
              CONGRESS FROM THE STATE OF MICHIGAN

    Mr. Stupak. Thank you, Mr. Chairman, and thanks for holding 
this hearing. While I support the transition to digital 
television, I do not support legislation passed by the last 
Congress to implement the DTV transition because it does not do 
enough to help consumers and it fell short of what could be 
done to help public safety. Nonetheless, the legislation passed 
and now we have to make sure it is implemented in a way that 
best meets the needs of consumers and public safety.
    I supported setting a hard date to finally give an 
additional 24 MHz of spectrum to public safety agencies to 
improve first responder communications. I am also a strong 
supporter of freeing up this beachfront spectrum to speed 
advanced wireless and Internet services to rural America. 
Unfortunately, these benefits come at the expense of rendering 
69 million analog television sets useless. Many of these sets 
are in homes which have cable or satellite for their primary 
TV, but their other television sets in their homes will be 
affected by this transition.
    Perhaps more importantly, there are 21 million households 
who depend solely on over-the-air television. The average 
income of these over-the-air households is $30,000, which is 
representative of my district. Forty-one percent of the over-
the-air viewers can't afford cable or satellite. Over-the-air 
viewers are more likely to live in rural America and they are 
more likely to be older. Consumers didn't ask for this 
transition. They don't know it is coming and they are not going 
to appreciate being hit with a $50 TV tax. They are going to 
need to be educated about how to make their TVs work after 
February 19, 2009. Americans will need to be persuaded that 
this transition is a good thing.
    Under the best case scenario, we have a tall order ahead of 
us. Unfortunately, the Deficit Reduction Act did nothing to 
provide us for this best case scenario. Instead of funding for 
a robust coupon program and education campaign, we have a 
piecemeal approach that will inevitably lead to confusion and 
television sets being left in the dark come January 2009. Let 
me be clear, it did not have to be this way. I voted for an 
alternative bill that provided a converter box to every 
household that needed one. In addition, I fought to direct the 
remaining spectrum proceeds to help public safety update their 
communications equipment.
    Public safety officials need additional spectrum but they 
also need modern equipment. Yet, this administration has 
committed just $2 billion to interoperability upgrades since 
September 11 to meet a need that is estimated to be $18 
billion. I offered an amendment to direct $5.8 billion of the 
spectrum auction money to create a public safety communications 
trust fund for interoperability. Unfortunately, my amendment 
failed on a tie 24-24 party line vote. Republican leadership 
chose much of the $20 billion from the sale of the spectrum to 
offset another round of tax cuts for the wealthiest Americans 
rather than to adequately compensate consumers for this digital 
transition and invest in first responder communications.
    In closing, unless we want these converter boxes thrown at 
us, Congress had better meet its obligation to consumers and 
make DTV transition as inexpensive and as least burdensome as 
possible. With that, I yield back, Mr. Chairman. Thank you for 
the time.
    Mr. Markey. The gentleman from Oregon, Mr. Walden.

  OPENING STATEMENT OF HON. GREG WALDEN, A REPRESENTATIVE IN 
               CONGRESS FROM THE STATE OF OREGON

    Mr. Walden. Thank you very much, Mr. Chairman. I look 
forward to hearing from our witnesses today and appreciate the 
breadth and scope of their testimony. I do have to take some 
exception with my friend and colleague from Michigan when he 
indicated that the Deficit Reduction Act did nothing to help 
consumers. There is $1.5 billion in there to help subsidize 
these consumer converter boxes, which in my part of the world, 
is still a lot of money, billion and a half.
    Now, the one thing I would say is that I had my own 
reservations, as many of you know, about this legislation and 
the hard cutoff date, recognizing a cutoff date was essential, 
but was not convinced that the market was ready for this and 
that agreements had been in place before that spelled out how 
this transition would occur. Clearly, those agreements have 
gone by the wayside and we have a new law in place that sets a 
hard cutoff date.
    With a hard cutoff date in place, the worst thing we could 
do is change it, because, I think, the manufacturers are 
ramping up to make the converter boxes; consumers are beginning 
to get educated and the real issue for us now is how do we 
effectively educate consumers in a timely and appropriate way 
so that they are ready for this transition. I know at one 
point, the cutoff date was going to be New Years Day of 2009, 
which I thought was pretty stupid, actually, because most of us 
would wake up that day and turn on our televisions; if they 
didn't work, you had no place to except to the phone book to 
call your Member of Congress. I would prefer they go to Radio 
Shack or somewhere else and get the converter box. Of course, 
those stores would have been closed.
    The other thing I would say is I stayed up late last night 
to read the Constitution. Right next to the second amendment, 
which deals with guns, is how we deal with televisions and so I 
do think we have to be cognizant of this right of consumers to 
get TV the way they have been getting it in the least 
disruptive way or we are all going to hear about it, so it is 
important for all of us to get it right. The date is there, the 
transition needs to happen. First responders need the spectrum 
and frankly, the Government can better use the funds from the 
auction for essential Government services, including helping 
first responders.
    I think consumers are used to technological changes. Nobody 
likes having to buy one of these boxes or upgrade their 
software when some operating system changes, but we recognize 
that is the price of progress, too. So we are going to do our 
part to help those who need the help the most. We need to make 
sure that as few sets are rendered inoperable as possible and 
that HD signals are passed through the cable systems to analog 
sets in an un-degradated way.
    And I look forward to your comments today as we work to 
make this happen in a positive direction. I look forward to 
working with you in the future to make sure consumers are duly 
educated and ready for this transition. Thank you, Mr. 
Chairman.
    Mr. Markey. The Chair recognizes the gentlelady from 
California, Ms. Harman.

  OPENING STATEMENT OF HON. JANE HARMAN, A REPRESENTATIVE IN 
             CONGRESS FROM THE STATE OF CALIFORNIA

    Ms. Harman. Thank you, Mr. Chairman. Good morning to our 
witnesses. Over 5 years ago, former Congressman Curt Weldon and 
I introduced the Hero Act to clear 24 MHz of spectrum in the 
700 MHz band for our Nation's first responders for public 
safety communications. In the mid-1990s this committee and that 
Congress promised that the spectrum would be cleared by the end 
of last year provided that the DTV transition was well under 
way. The DTV transition was not well under way, so we have 
moved the deadline to 2009.
    I view this decision, to move the deadline, as extremely 
problematic. I believe there is ample evidence that we could 
face more terror or natural disasters on the scale or bigger 
than 9/11 and Katrina before 2009 and what will that mean? 
Well, ask Mary Fetchet, one of our witnesses today, who will 
explain to you exactly what that means and then sober up 
everybody and understand that we just better find the way to 
keep this promise.
    Mary and the 9/11 families like her are the reason Congress 
has taken action at all. And in the memory of Mary's wonderful 
son, Brad, and the numbers of first responders and other family 
members that were lost on 9/11, we simply cannot fail. Last 
week at our hearing with NTIA chief, John Kneuer, I said, and I 
just want to repeat it today, I feel very strongly about this; 
that this is not a broadcaster relief issue.
    This is a public safety issue and to those who are going to 
cite all the problems with the converter boxes and the details 
of the transition, I just say to you, you have spouses and 
parents and children who live in communities all over America. 
Those communities are vulnerable today, as they were on 9/11 
because we have not fixed this problem. If we have one of these 
catastrophic attacks and you lose your Brad, what will you say 
about your failure to act? I yield back, Mr. Chairman.
    Mr. Markey. The gentlelady's time has expired. Chair 
recognizes the gentleman from Virginia, Mr. Boucher.
    Mr. Boucher. Thank you, Mr. Chairman. I am going to waive 
an opening statement and reserve time for questions.
    Mr. Markey. Gentleman reserves his time. Gentleman from New 
Jersey, Mr. Pallone.

OPENING STATEMENT OF HON. FRANK PALLONE, JR., A REPRESENTATIVE 
            IN CONGRESS FROM THE STATE OF NEW JERSEY

    Mr. Pallone. Thank you, Mr. Chairman, and I want to thank 
you for holding this very important oversight hearing on the 
digital television transition. And I would also like to welcome 
our panelists, who will play a very large role in this mandated 
transition. Mostly, I am interested in what measures we can all 
take to prepare the country. With good intentions last year, 
Congress passed the law setting a hard date for the digital 
television transition.
    Without modification, such as a digital converter box or 
subscription service, approximately 70 million analog TVs will 
go black after February 17, 2009 and my concern is that most 
Americans have no idea that this transition is coming. The task 
of educating over a hundred million U.S. households is 
enormous. There should be no disagreement that we have not 
provided nearly enough funding to the various agencies 
responsible for the transition. Berlin, Germany needed nearly 
$1 million for its entire city and we have allocated a mere $5 
million for the whole country. Anyone can do the math and 
figure out that is not going to work.
    And now that the date is set, I do not believe it should be 
postponed. The resulting spectrum auction will have large 
impacts on the public safety communications and that should not 
suffer. Instead, we must all work together and share the 
responsibility of making this as smooth a transition as 
possible. I, myself, am taking steps to help educate my 
constituents. I am writing a letter shortly alerting them to 
the transition. I have also made arrangements with local radio 
stations to record public service announcements and I just want 
to commend the industries like NAB, LG and NCTA, who have 
already taken voluntary efforts to create a DTV transition 
coalition.
    I am afraid, however, that you will have to pick up where 
the administration leaves off and it is my hope that you are 
willing and ready to do so. We have a lot of work to do over 
the next 2 years. I strongly believe this must be a fully 
coordinated effort so that American consumers are not 
blindsighted by the transition to DTV. Obviously, today's 
hearing is an important part of that process. Thank you again, 
Mr. Chairman.
    Mr. Markey. The gentleman's time has expired. The Chair 
notes the presence of the ranking minority member of the 
committee, Mr. Barton. If he would seek recognition, we would 
recognize him at this time.
    Mr. Barton. Thank you, Mr. Chairman. It sounds like you 
have what I have had. You seem to have a little bit of a chest 
cold.
    Mr. Markey. I have already explained that it is pollen. It 
is global warming. It is excessive fossil fuels in the 
atmosphere finally coming back in this catastrophic----
    Mr. Barton. Having to put up with the pesky minority. We 
understand. I especially understand because I have sat where 
you are sitting now, so I----
    Mr. Markey. It is a burden I am willing to bear to be the 
majority.

   OPENING STATEMENT OF HON. JOE BARTON, A REPRESENTATIVE IN 
                CONGRESS FROM THE STATE OF TEXAS

    Mr. Barton. I would like to thank you for your continuing 
interest in the digital television transition. This is the 
second hearing in as many weeks that has been called to take a 
second look at legislation that we passed several years ago. 
The bill that we did pass was such a good compromise that it 
passed this particular committee 33 to 17. Then it also passed 
the House and the Senate.
    We understand that there are some concerns about the 
converter box program that is in the law as it currently is. We 
understand that there is some concern that we should do 
consumer education differently. Having said that, just because 
there is some lingering concerns about the bill doesn't mean 
that it is time to go back and redo it all over again. I 
personally believe that we go the balance right when we did it 
and I hope that we will stick with it.
    People in the industry and people in the country, the 
affected stakeholders, I think, will benefit by sticking with 
what we already have. Broadcasters are going to return 24 MHz 
of spectrum to be used by first responders, implementing one of 
the 9/11 Commission's recommendations. The FCC will auction 60 
MHz of spectrum for wireless broadband. One billion dollars of 
these proceeds are going to be used in grant programs to help 
give police, fire fighters and paramedics the equipment they 
need to better communicate with each other and with us when we 
need them most.
    Another $1.5 billion is available for consumers who may 
still wish to use their old analog television sets with rabbit 
ears after February 17, 2009. Under the NTIA's rules that have 
been promulgated, all households may request, free of charge, 
one or even two converter boxes, and the cost is going to be 
subsidized from the first $990 million allocated to the 
program. If NTIA needs the remaining $510 million, only homes 
without cable or satellite service will be eligible for this 
second round of funding. That is to ensure that the subsidized 
converter boxes go to those who really need them the most.
    I hope that the added money won't be necessary. A dwindling 
minority of Americans use analog television sets with over-the-
air antennas. Fewer still will want taxpayers to give them a 
subsidy. After all, they are taxpayers, too. Using broadcaster 
demand projections and FCC estimates of number of the over-the-
air cable, and satellite homes, it appears that we would need 
approximately 21.8 million subsidized boxes. The consumer 
electronics industry the ones who are actually building and 
selling the boxes--think that the demand is going to be 
considerably less than that.
     Regardless, the $990 million fund, by itself, can fund 
22.25 million converters, which is a number larger than 21.8 
million. Keep in mind, anyone can accumulate the requisite 
wealth to buy a $60 converter box, if they wish to, just by 
putting their pennies and dimes into their piggy banks.
    Yes, the Senate's Byrd rule stripped the consumer education 
requirements other than the $5 million for the NTIA. But these 
are the broadcasters' consumers. And those of the cable, 
satellite, retail and consumer electronics industries. They 
have every incentive to inform the American public how to 
manage the transition. They are in a far better position to do 
so, with almost 2 years still to go, I might add.
    I continue to think that the bill, as it is, is right, but 
I am not in the majority now. You can allocate more money for 
converter boxes if you think it is necessary. If you don't 
think industry is going to do enough to educate their own 
consumers, you can move H.R. 608, the bill that I have 
introduced with Mr. Upton and Mr. Hastert to replace the 
consumer education requirements that were stripped out in the 
Senate by the Byrd rule. Or you can introduce your own consumer 
education bill. We shouldn't squabble over the coupon program; 
the public safety and other benefits of this legislation are 
too important.
     I also, before I yield back, Mr. Chairman, want to welcome 
Mary Fetchet from the Voices of September 11th for testifying. 
I hope her presence will help us keep things in their proper 
context as we look at this issue. With that, Mr. Chairman, I 
hope you feel better soon. I yield back.
    Mr. Markey. I thank the gentleman very much. The Chair 
recognizes the gentlelady from California, Ms. Solis.

 OPENING STATEMENT OF HON. HILDA L. SOLIS, A REPRESENTATIVE IN 
             CONGRESS FROM THE STATE OF CALIFORNIA

    Ms. Solis. Thank you, Mr. Chairman, and I won't sound like 
Luca Brasi. But I want to thank you for this hearing, Mr. 
Chairman, and also Ranking Member Upton. I want to thank our 
witnesses that here today and I especially want to thank a good 
friend of mine, Alex Nogales, who has agreed to testify, 
representing the National Hispanic Media Coalition based in Los 
Angeles, for coming all the way out here today. I worked with 
Mr. Nogales for the past few years on telecommunication issues 
important to the Latino and under-represented communities.
    The deadline for the digital television transition is fast 
approaching. In just 9 months the NTIA's coupon program to 
provide consumers with financial assistance to purchase a set 
top digital converter box will soon begin and I join with my 
colleagues in voicing serious concerns that some consumers, 
particularly low-income minority communities, will be left 
behind in the DTV transition. Households with over-the-air 
television sets and no cable or satellite service are 
disproportionately low-income and many, in some cases, are 
Spanish speaking.
    The Deficit Reduction Act allocated a relatively small 
amount of money for the NTIA to educate consumers across the 
country about the transition and the set-top box coupon 
program. It seems that the NTIA and FCC are relying heavily on 
education and outreach from the industries affected most by the 
DTV transition. So therefore, I am eager to learn today how all 
of the industry is impacted, including broadcasters, cable 
providers, retailers, advocates and manufacturers are working 
to make the transition a positive change for all consumers.
    And I hope that the witnesses today will address outreach 
efforts to households with limited Internet access, language 
barriers, cultural barriers, outlining more creative solutions 
to ensure that all consumers are educated about the DTV 
transition. I want to thank the witnesses again and look 
forward to hearing from all of you.
    Mr. Markey. The gentlelady's time has expired. The 
gentleman from Pennsylvania, Mr. Doyle.

   OPENING STATEMENT OF HON. MIKE DOYLE, A REPRESENTATIVE IN 
         CONGRESS FROM THE COMMONWEALTH OF PENNSYLVANIA

    Mr. Doyle. Thank you, Mr. Chairman. Mr. Chairman, the world 
woke up on January 1, 2000 without computer outages, without 
power failures and without the end of the world as we know it. 
We woke up that day with no major problems because we had been 
talking about Y2K and the potential for problems. We are now 
less than 2 years away from the end of analog broadcasting as 
we know it and if we don't get this transition right, then 
dealing with constituents complaining about their TVs not 
working anymore will be the least of our concerns.
    A few years ago, 20 percent of Americans didn't know how to 
set the time on their VCRs. For millions of Americans, that 
darn VCR blinked twelve o'clock until they bought a TiVo or a 
DVD player. We now have the challenge of telling millions of 
people, who watch broadcast television, also known as our 
constituents, that the Government has broken their TV sets and 
that they have to act fast to get a fix. If we are going to use 
the spectrum to create interoperable communications for our 
first responders, prevent another tragedy that befell the 
firefighters on 9/11 and we should, then we have to get this 
right.
    Mr. Chairman, thank you and I yield back my time.
    Mr. Markey. Gentleman's time has expired. Gentleman from 
Texas, Mr. Green.

   OPENING STATEMENT OF HON. GENE GREEN, A REPRESENTATIVE IN 
                CONGRESS FROM THE STATE OF TEXAS

    Mr. Green. Thank you, Mr. Chairman, and following my 
colleague from Pennsylvania, some of us may still not be able 
to set our clocks on our DVDs. The digital transition, it 
seemed so far away for so long, it is hard to believe it is 
almost around the corner. In less than 2 years 69 million 
television sets will no longer be able to receive over-the-air 
signals due to an act of Congress and I know that 1.5 billion 
seems like a lot, but it is interesting, unfortunately, that 
act of Congress that did that only includes enough funding to 
cover maybe half to two-thirds of the cost for about one-third 
of those television sets.
    Millions of these sets were bought within the last few 
years, some as recently as 4 years ago and many consumers are 
not aware of it and I know my colleague from Oregon and I, 
Congressman Walden, talked about this a few years ago before 
the budget passed that included the transfer and the hard date, 
but it didn't include some of the consumer information that 
should be out there now instead of saying we are still talking 
about it. We are taking a big gamble that the public will not 
demand more coupons and I am afraid that we may lose that bet.
    Perhaps retailers and manufacturers who sold those 
television sets without warning consumers should contribute 
toward the coupon program. We expect that we are not going to 
get enough funds. The public owns the spectrum and we are 
moving them involuntarily, so we should compensate them. By 
failing to compensate all over-the-air viewers, this plan 
transfers the wealth from those who rely on over-the-air, 
primarily seniors and moderate income families, to the U.S. 
Treasury. Working families and seniors like many of my 
constituents use their television sets for years and do not 
tend to go out and purchase a $1,000 high tech television very 
often.
    I think there is a good chance we are going to need more 
funding for the program; the sooner we know about it, the 
sooner we can do it. Our district has lots of homes that rely 
on over-the-air, including middle class families, seniors, 
Spanish speaking consumers. Our office is going to do 
everything in our power to inform our constituents about the 
need to get their coupons early. We are probably going to 
include this information in about everything we send out for 
the next 2 years to make sure.
    My concern is that we should have a pre-order list for 
coupons where people can sign up ahead of January 2008. This 
would give consumers more time to sign up, starting 
immediately. It would also give us a better idea on how many 
boxes we are going to need earlier in the process, which will 
help plan ahead. This list could encourage production, ordering 
and stocking of the converter boxes. This information would 
help the transition by telling us about where the demand is and 
how strong it is that these converter boxes may be much better 
than some consumer surveys.
    If NTIA keeps a we should start out sooner, maybe we would 
have something proactive to tell consumers to do instead of 
telling them to get ready for January 1, 2008 and then starting 
help remind people. Again, I am glad our witnesses are here, 
Mr. Chairman, and I look forward to our committee to continue 
to publicize what is getting ready to happen to folks.
    Mr. Markey. Gentleman's time has expired. The gentleman 
from Nebraska, Mr. Terry.

   OPENING STATEMENT OF HON. LEE TERRY, A REPRESENTATIVE IN 
              CONGRESS FROM THE STATE OF NEBRASKA

    Mr. Terry. Thank you, Mr. Chairman, and I just want to say 
hello to John and follow up on our last conversation where I e-
mailed you and bragged about buying a new LG HD set that was on 
special at Nebraska Furniture Mart, so I am enjoying that, the 
transition, and it is the one that doesn't need a box, that is 
cable ready; one of the projects that we worked on and I would 
agree with all of the statements of my colleagues up here that 
we have to continue to build confidence in the transition and 
inform of the hard date and make sure that people aren't making 
mistakes in their purchases today or at least not making 
uninformed decisions when they go to Best Buy or Nebraska 
Furniture Marts of the world to buy a new television and that 
is why you are here today.
    In an unrelated issue that I think is important to 
confidence in the transition to digital and high definition, is 
an issue that is more for the broadcasters and cable folks to 
be before us, but when a local broadcaster refuses to allow the 
HD signal to be aired on a cable network, which has occurred 
twice in Omaha, and so I want to bring that up because I think 
that destroys confidence in the transition at an early stage, 
so we are talking about how to build confidence from now until 
the transition date, but what is occurring right now, there is 
an erosion, when those signals are hijacked.
    So I wanted to just put that out there and give it an 
opportunity. I may ask one of you what you feel about that. 
Now, with that laid on the table, I yield back to the chairman.
    Mr. Markey. Gentleman's time has expired. Gentleman from 
Washington State, Mr. Inslee.
    Mr. Inslee. I will waive.
    Mr. Markey. Gentleman from New York, Mr. Towns.

 OPENING STATEMENT OF HON. EDOLPHUS TOWNS, A REPRESENTATIVE IN 
              CONGRESS FROM THE STATE OF NEW YORK

    Mr. Towns. Thank you very much, Mr. Chairman, for holding 
this hearing. We need to make sure that DTV transition is 
handled smoothly because the benefits of transitioning are 
enormous, opening up desperately needed spectrum for first 
responders. I believe my constituents will support this 
transition if they know how to keep their TV signal and that 
they know why it is important. I look forward to hearing from 
our witnesses on how they plan to educate consumers and on what 
other ways Government or industry can take to prepare us.
    First, let me welcome all of the witnesses and I am 
especially pleased to see Mr. Glenn Britt, the CEO of that fine 
cable company, Time Warner, a leader in the transition digital. 
Glenn's presence is a testament to his commitment to make the 
transition a success. I look forward to hearing his thoughts on 
educating the public about the transition and making the 
transition as seamless as possible.
    There are varying estimates of the number of analog TV sets 
still in use and I am concerned that the outreach and 
implementation of this program will not be sufficiently 
targeted. How will one of my senior constituents know how to 
get and plug in their converter box? I have a very diverse 
district and how many different languages will the outreach be 
available for them. This level of detail in the program will be 
crucial to make sure our constituents don't lose their TV 
signal.
    In addition, I am eager to hear the witnesses' concerns 
about converter box technical rules. We are right to address 
the consumer education and other issues, but I believe that any 
uncertainty in the box technical rules will have serious 
repercussions all the way down the line because of the delay of 
manufacturing, testing, approval and distribution. I am eager 
to hear from our witnesses on these crucial considerations and 
I thank them for taking the time to appear before us today. And 
Mr. Chairman, on that note, I yield back the balance of my 
time.
    Mr. Markey. The Chair recognizes the gentlelady from 
Tennessee, Mrs. Blackburn.

OPENING STATEMENT OF HON. MARSHA BLACKBURN, A REPRESENTATIVE IN 
              CONGRESS FROM THE STATE OF TENNESSEE

    Mrs. Blackburn. Thank you, Mr. Chairman. I want to thank 
you and Ranking Member Upton for allowing me to participate in 
the hearing. This is an issue that is of tremendous importance 
to my constituents in Tennessee. So many are involved in the 
entertainment industry. And we know that there is another side 
to this, also, which is the public safety aspects and the 24 
MHz and having that spectrum made available and made available 
quickly.
    I think that we would all agree that the problems that are 
before us with the issue are solvable problems and we should 
not focus on those; we should focus on what will be the end 
result, which is improved safety in the times of national 
disaster. This is something, as the gentlelady from California 
so beautifully stated, this has languished for too long. We 
have allowed procrastination to take hold and this process not 
to be completed. The legislation has been passed. We know that 
this is something that should be done and done in a timely 
manner and that there should be not one single excuse accepted 
for missing this deadline.
    I look forward to hearing from our witnesses and again, I 
thank you for the opportunity to participate.
    Mr. Markey. The gentlelady's time has expired. All time for 
opening statements by members of the committee has expired.
     We will now turn to our panel. Our panel consists of Mr. 
John Taylor, who is vice president of public affairs for LG 
Electronics, a manufacturer of consumer electronics devices. 
Mr. Taylor represents LG in matters before Congress and the 
executive branch. James Yager, who is the chief executive 
officer of Barrington Broadcasting, a consortium of 21 local 
television stations located throughout the United States.
    Mr. Alex Nogales is president and chief executive officer 
of the National Hispanic Media Coalition, a nonprofit advocacy 
organization that represents the interests of Latinos in 
telecommunications policy. Next, Mr. Glenn Britt, who is the 
chief executive officer of Time Warner Cable, the Nation's 
second largest cable television operator. Next, it is our honor 
to have with us Ms. Mary Fetchet, who is the founding director 
of Voices of September 11th, an advocacy organization that 
represents families who lost loved ones in the World Trade 
Center attacks. Thank you for coming today.
    And finally, Mr. Michael Vitelli, who is senior vice 
president of consumer electronics and general manager of Home 
Solutions Operating Group for Best Buy. Mr. Vitelli is 
responsible for Best Buy's consumer electronics product lines. 
So each of you will have 5 minutes and then we will go to 
questions from the subcommittee members. Mr. Taylor, when you 
feel comfortable, please begin.

 STATEMENT OF JOHN TAYLOR, VICE PRESIDENT, PUBLIC AFFAIRS AND 
            COMMUNICATIONS, LG ELECTRONICS USA, INC.

    Mr. Taylor. Thank you, Mr. Chairman. My name is John 
Taylor. I am the vice president of public affairs for LG 
Electronics. I also serve as the chairman of the HDTV Committee 
for the Consumer Electronics Association and vice chair of the 
Video Division. I have been involved in HDTV personally for a 
number of years. In fact, I was at Zenith, Mr. Chairman, 20 
years ago working on HDTV when you held that first hearing. We 
should all take great pride in the progress we have made over 
these years and we have really come a long way. I feel like we 
are on the 20 yard line and we are going to make the touchdown 
in just 692 short days.
    A brief word on my company. We are one of the world's 
leading manufacturers of television sets and flat panel 
displays. LG is also the parent company of Zenith, which was 
one of the primary developers of the digital television 
standard. But I think apropos to today, it is important to 
point out that LG Electronics is also one of the early 
developers of the digital to analog converter box in 
conjunction with our friends in the broadcast area with the 
Association for Maximum Service Television and the National 
Association of Broadcasters. Two companies, LG Electronics and 
RCA, developed prototype boxes to help define the 
specifications and create a reference designed for the 
industry.
    Mr. Markey. Could you hold that up so the Members can see 
it?
    Mr. Taylor. Sure.
    Mr. Markey. Thank you.
    Mr. Taylor. And I will discuss that a little more in few 
minutes. Three issues I would like to address today. The NTIA's 
specifications for these converter boxes; the pricing and 
timing and availability of the boxes; and this very important 
issue of consumer education.
    First, the NTIA has now issued its specifications and rules 
which gives us, as manufacturers, the certainty we need to move 
ahead, complete the development of these boxes and prepare for 
mass production. The NTIA provides the appropriate level of 
features necessary to provide reliable reception and to enable 
consumers to use these boxes.
    The NTIA correctly did not require additional features 
beyond the basic function of the box, which is to receive 
digital signals and output them to existing analog sets. This 
kind of box doesn't include a DVR, digital video recorder or a 
DVD player. It doesn't even output high definition. We have 
other products that do that and consumers will buy those beyond 
the coupon program.
    But the NTIA did permit a number of valuable features not 
required, but as optional features that we think provide value. 
For instance, our implementation includes a very simple 
electronic program guide that allows consumers to navigate 
through these new digital channels, especially the new 
multicast channels that are coming from the broadcasters. And 
finally, the NTIA, in establishing minimum performance 
standards, we think, is very, very important to the success of 
the program to assure that the consumer experience measures and 
that consumers have a great experience when they get that box 
home.
    Second, regarding the number of coupons and the box price. 
The number of coupons is really hard to put your finger on at 
this point. We have heard lots of numbers here this morning. We 
think that there will be a demand for tens of millions of 
boxes, but when you look at what is going to happen over the 
next 2 years, between now and February 2009, more than 60 
million digital television receivers will be purchased by 
American consumers, separate from the coupon program. That is a 
result of the FCC's tuner mandate that requires all television 
sets shipped in interstate commerce, as of this past March, to 
have those digital television tuners. Our plan at LG 
Electronics is to introduce this converter box in time for 
early 2008 in time for the converter coupon program and expect 
it to sell for around $60.
    Finally, consumer education efforts are really crucial to 
the success of the overall program and the manufacturers are 
undertaking a vibrant consumer education effort. We are taking 
an active role in the new Digital Television Transition 
Coalition, whose singular goal is to assure that no consumer's 
analog TV goes without free over-the-air television service for 
lack of information. And even though we have just launched a 
month ago, there is a tremendous amount of momentum already 
with the Web site being launched and moving into multilingual 
Web sites and continuing that effort.
    My company is preparing for the launch of this box and we 
will have a toll-free number for consumers to call, easy 
installation instructions so consumers can understand. This 
basically is the box that goes on Grandma's TV and Grandma 
needs to be able to hook it up herself. It has a very simple 
input and out put, simple instructions, should be able to use 
your existing antenna.
    Finally, we are stepping up our sales training efforts, as 
well, to make sure that this is a successful activity and our 
colleagues in the industry are doing the same. I am proud to 
report that the consumer electronics industry will continue its 
efforts to educate consumers.
    [The prepared statement of Mr. Taylor follows:]

                      Testimony of John I. Taylor

     Mr. Chairman and members of the Subcommittee, my name is 
John I. Taylor. I am senior vice president at LG Electronics 
USA, Inc. I also serve as chairman of the High-Definition 
Television (HDTV) Committee of the Consumer Electronics 
Association (CEA) and vice chairman of CEA's Video Division. I 
also represent LG Electronics as a founding member of the new 
Digital Television Transition Coalition. I welcome the 
opportunity to appear before you today to speak about the 
exciting transition to digital television (DTV).
     LG Electronics USA is the North American subsidiary of LG 
Electronics, a $48-billion multinational electronics and 
communications firm. One of the world's largest manufacturers 
of television sets and of TV flat-panel displays, LG 
Electronics has established itself as a global digital leader, 
and its LG brand is among the fastest-growing in the United 
States.
     LG Electronics also is the parent company of Zenith 
Electronics Corporation (Zenith), the U.S. technology company 
that developed the VSB (Vestigial Side Band) digital 
transmission system adopted by the Federal Communications 
Commission as the centerpiece of the Nation's DTV broadcast 
standard.
     Decades ago, Zenith was instrumental in the founding of 
both the National Association of Broadcasters (NAB) and CEA. In 
addition to its long-time leadership in digital HDTV, Zenith 
pioneered industry standards for black-and-white and color 
television and is credited with the invention of countless 
industry-leading innovations, including Stereo FM radio, 
television stereo sound, television remote controls and flat 
color picture tubes, to name a few. Zenith was one of the first 
developers of HDTV technology, beginning in 1988. In 1993, 
Zenith helped found the Digital HDTV Grand Alliance, which 
developed the Advanced Television Systems Committee (ATSC) DTV 
broadcast standard.
     Building on this extensive experience, and the combined 
strengths of LG Electronics' worldwide engineering and 
production capabilities and the Zenith R&D capability in the 
United States, LG Electronics has led the industry in 
optimizing DTV broadcast reception. In particular, LG 
Electronics' fifth-generation VSB chips, which eliminate 
multipath interference concerns, are considered top performers 
by both broadcasters and consumer electronics industry 
analysts.
     As part of our commitment to driving the DTV transition to 
a successful conclusion, LG Electronics and its U.S. R&D lab, 
Zenith, partnered over the past two years with the NAB and the 
Association for Maximum Service Television in a joint effort to 
develop prototype high-performance, low-cost digital-to-analog 
converters to enable existing analog TVs to continue to receive 
free over-the-air broadcasts after the Nation's switch to all-
digital broadcasting in 2009. This alliance with broadcasters 
accelerated LG Electronics' product development timetable, 
resulting in prototypes that meet the goals set forth by the 
National Telecommunications and Information Administration 
(NTIA) and the establishment of a state-of-the-art reference 
design for the industry. So, I believe, it is obvious that LG 
Electronics has a significant stake in the digital transition.
     The Committee is focused today on the status of the 
Nation's transition to digital television technology. Mr. 
Chairman, LG Electronics shares your view that successfully 
concluding this transition is of critical importance. This 
Committee has been instrumental in advancing DTV's deployment, 
and as a result, today we are seeing exciting marketplace 
developments involving digital technologies. Digital 
transmission offers incredible high-resolution video, and 
anyone who has experienced HDTV becomes an instant believer in 
this technology. In addition to these benefits, the digital 
transition provides an opportunity to return spectrum for 
important governmental objectives (including public safety and 
homeland security needs) and to deploy new commercial 
technologies for consumers.
     Many important issues are associated with the DTV 
transition, including manufacture of boxes compliant with 
NTIA's requirements; government assistance to help consumers 
purchase boxes capable of converting free, over-the-air DTV 
broadcast signals for viewing on their existing analog TV sets; 
and consumer education. Please permit me to address these three 
areas this morning.
     When LG Electronics testified before this Subcommittee in 
2005, we stated that factors such as the level of technology 
and unit sales volume influence any estimate of converter box 
costs. NTIA now has issued technical specifications for 
converter boxes eligible to be covered by the coupon program, 
giving manufacturers the certainty we need to prepare for mass 
production of these devices. The NTIA rules help manufacturers 
to know what we must build and to have some ability to estimate 
the cost of our converter boxes.
     Consistent with the intent of Congress, NTIA's 
specifications provide an appropriate level of features 
necessary to provide reliable reception and to enable consumers 
to use the boxes satisfactorily. Some of NTIA's converter box 
elements are required, while others are permitted (but not 
mandatory). NTIA addressed encoding; output formats; Program 
and System Information Protocol (PSIP) processing; the range of 
capability for receiving radio channels; radio frequency input 
and output requirements; composite output; and interference 
levels. Also, NTIA required that converter box equipment must 
display all channels; must provide closed captioning, emergency 
alert systems, and parental controls; will include a remote 
control; and must meet energy efficiency standards. These 
parameters should yield converter boxes sufficient for average, 
non-technical consumers to enjoy the DTV experience.
     We are pleased that NTIA did not mandate additional 
features that are not required to convert a digital over-the-
air signal, as that would have increased the prices of 
converter boxes by a significant margin. Rather, NTIA permitted 
manufacturers to include a limited range of ``no frills'' 
functions in eligible converters so that they will be easy to 
use and perform well.
     For example, NTIA permitted the optional inclusion of a 
simple electronic program guide (EPG), and this adds very 
little to a converter box's price. But the EPG will make the 
box much easier to use, and this is especially important 
because digital broadcasters can ``multicast'' or transmit 
multiple programming streams via their DTV signals. This 
multicasting greatly expands the number of program offerings 
made available to over-the-air television viewers. Allowing 
simple EPGs in eligible boxes will enable these viewers to 
navigate multicast channels and thereby maximizes the number of 
viewers able to enjoy the benefits of DTV technology.
     In addition, we are pleased that NTIA's rules help to 
ensure that the performance quality of the converter boxes 
eligible for the coupons remains at a high level consistent 
with the needs and expectations of consumers. By adopting 
minimum performance requirements, NTIA has enhanced 
significantly the likelihood of success for the overall program 
by helping to assure that the devices eligible under the coupon 
program perform to the satisfaction of American consumers. 
NTIA's specifications are now clear, and at LG Electronics, we 
are moving forward rapidly to comply with these standards as 
quickly as possible.
     Regarding Government assistance for consumers to purchase 
converter boxes, we are pleased that NTIA provided that 
households with analog-only sets reliant on over-the-air TV 
services are not excluded from participating in the coupon 
program initially. By NTIA's expanding the definition of 
households eligible to participate in the coupon program beyond 
that proposed in its original notice, the program should 
attract more interest and benefit consumers.
     NTIA has recognized that many consumers may neither need 
nor want a coupon to purchase a converter box. Between now and 
February 2009, according to CEA estimates, American consumers 
will purchase more than 60 million television receivers and 
set-top boxes with over-the-air DTV tuning capability, 
independent of the converter box program. This is in addition 
to the 50 million DTVs purchased by consumers in the past 5 
years (2002-06).
     While it is unclear how many of these have actually 
displaced or will displace older analog-only TVs, these 
receivers no doubt will impact the number of American 
households needing a low-cost converter box under the coupon 
program. Given the rapidly growing number of households that 
are expected to have access to digital signals--either over-
the-air, via cable or by satellite--well before the 
transition's end in 2009, we are hopeful that sufficient funds 
will be available in the coupon program to ensure that 
converter boxes are provided to all households that need them.
     With regard to the price of converter boxes, LG 
anticipates that its converter boxes meeting NTIA's 
specifications should be available to consumers for around $60. 
Manufacturers anticipate producing tens of millions of 
converter boxes. Given this number, and with the certainty 
provided by NTIA's specifications, LG Electronics thinks that 
boxes can be available in our $60 price range for retail 
distribution by early 2008.
     Finally, we are pleased that, pursuant to Congressional 
direction, NTIA addressed the critical need for a vibrant 
consumer education effort related to the DTV transition. As you 
probably know, there is a cross-industry consumer education 
effort related to NTIA's program and the DTV transition 
generally.
     Spurring consumer interest in the converter box program 
and ensuring that consumers' participation in the program is 
not burdensome will require a broad-based effort that involves 
the government and multiple industries and stakeholders. As an 
active participant in the new DTV Transition Coalition, LG 
Electronics is fully committed to working with the government, 
our major retailers, and our colleagues in the consumer 
electronics and broadcast industries to facilitate the 
program's success.
     In particular, we are intensifying our own sales training 
efforts with retailers and collaborating with broadcasters to 
promote DTV technology. We also maintain an informative DTV Web 
site guide (http://us.lge.com/GuidetoHDTV/what/index.html), 
which introduces consumers to the features available through 
DTV technology. We will update this Web site on an ongoing 
basis with valuable information about the DTV transition and 
the converter box program.
     Consistent with NTIA's efforts to encourage manufacturers 
and retailers to provide adequate information to consumers to 
ensure that they fully understand how to install and use their 
converter boxes, LG will implement a special toll-free number 
that consumers can call to receive assistance with installing 
and connecting their new LG converter boxes. LG's converter 
boxes also will feature an easy-to-follow installation guide 
that includes simple instructions in multiple languages. We 
anticipate that these efforts will help consumers to use the 
devices, and prevent them from unnecessarily returning boxes to 
retailers.
     Of course, the converter box program is just one aspect of 
the digital transition effort. By 2008 there will be a range of 
options, including very affordable integrated DTV receivers. 
Those who want high definition reception and other features 
will pay more, just as they do today for progressive-scan DVD 
players. Manufacturers such as LG Electronics are doing our 
part to offer consumers a wide array of quality DTV products at 
affordable prices. Product prices will continue to decline, as 
they have done since DTV's introduction in 1998, and this will 
speed the transition.
     LG Electronics commends this Committee for its efforts to 
advance the digital transition, and for its attention to 
avoiding potential disruption to consumers when the final 
switch-over to digital broadcasting occurs. We look forward to 
continuing to work with you to ensure that all Americans are 
able to enjoy the tremendous benefits of digital television.
     I am, of course, pleased to respond to any questions you 
may have, and I appreciate the opportunity to appear before you 
today.
                              ----------                              

    Mr. Markey. Gentleman's time has expired. What we could do 
is actually bring out a TV set and ask a grandmother in the 
audience to take that box and to put it on very simply and see 
how long it takes Grandma to do it with the instructions handed 
to her. I bet she beats members of this committee. I thought 
grandmothers just called their grandchildren.
    Ms. Harman. Sorry, I am a grandmother. I am volunteering 
for this exercise. I am a lot less talented than some on the 
other side, obviously.
    Mr. Markey. Mr. Yager, you are recognized for 5 minutes.

     STATEMENT OF K. JAMES YAGER, CHIEF EXECUTIVE OFFICER, 
                BARRINGTON BROADCASTING CO., LLC

    Mr. Yager. Thank you, Mr. Chairman. Thank you, Ranking 
Member Upton and members of the subcommittee. My name is Jim 
Yager. I am the chief executive officer of Barrington 
Broadcasting, which owns and operates 21 television stations in 
medium and small markets across the country. I am testifying 
today on behalf of the National Association of Broadcasters and 
the Association for Maximum Service Television, Incorporated.
    We are here today to talk about the transition to digital 
television or DTV. America's broadcasters are taking the DTV 
challenge head on. As of last month over 90 percent of full-
powered television stations are providing digital programming, 
which was achieved at a cost of nearly $5 billion to the 
television industry. Of those stations remaining, many have 
faced specific technical problems; for example, the 
construction delays in New York City. According to recent NAB 
surveys, about 40 percent of Americans have any idea that the 
DTV transition is underway and among those who do, only 1 to 3 
percent realize that the transition will be completed by 
February 2009.
    In all, NAB estimates that 69 million television sets will 
potentially be impacted by the DTV transition. In other words, 
we have a lot of educating to do. The good news is that 
broadcasters take that educational campaign very seriously. 
Once consumers become aware of the transition, they will learn 
that they have three options to navigate it. First, consumers 
can obtain a DTV converter box that will convert the new 
digital signal for display on analog television sets. Second, 
consumers can buy new television sets with integrated digital 
tuners. Finally, consumers could decide to subscribe to a pay 
television service, like cable, satellite or telephone video 
service.
    For our part, broadcasters are engaged in consumer 
awareness campaigns. NAB has hired a full-time staff dedicated 
exclusively to the DTV transition. We have commissioned 
research and conducted focus groups not only to measure the 
demographics of who will be affected by the transition, but 
determine where these viewers get their information and how to 
best frame the DTV message with consumers.
    We have undertaken an active media campaign, not only 
gaining stories in national media, but in local newspapers and 
on local newscasts, as well. We will kick off a large speakers 
bureau, utilizing local station talent for community 
appearances at the local level. We are working on the launch of 
a DTV road show where we will have a van that goes from 
location to location with DTV demonstrations to help generate 
buzz on the transition. We are also helping coordinate a large 
coalition of organizations, 27 at last count, to help bring 
everyone who has an interest in smooth transition on to the 
same message regarding digital. In fact, AARP joined the 
coalition just yesterday.
    The coalition has launched a consumer Web site and local 
stations will also be launching their own Web sites. NAB has 
proactively met with European officials who have completed or 
are in the midst of their own DTV transition. We are also 
reaching out to NTIA and the FCC to ensure that our messaging 
is consistent and resonates with the American public. 
Broadcasters view our public service announcements as the real 
currency of the DTV marketing campaign. We are prepared to 
launch PSAs across the country beginning in 2008 to raise 
public awareness about the transition and consumer options.
    We may also employ crawls at the top of our screens during 
programming to complement the PSAs. We believe those PSAs 
should begin when the converter boxes become available to avoid 
any consumer confusion. The broadcasters and the coalition 
group cannot educate consumers by themselves. We want to work 
in partnership with the Government and each of you in Congress. 
For instance, we will supply you with articles for your 
constituent newsletters and DTV kits to educate your 
constituents in town meetings in your individual district.
    The NTIA coupon program is also in step in the right 
direction, but more needs to be done. All consumers who have 
analog sets that rely on over-the-air television signal should 
have access to coupons, especially those in under-served 
communities. Lower income households, minority people living in 
rural areas and seniors will be disproportionately impacted by 
the transition and the coupon program needs to work for them. 
Finally, other countries have successfully utilized a 1-800 
number to provide consumer information and the FCC and NTIA may 
want to consider a similar program.
    The bottom line is that television will change dramatically 
on February 17, 2009. The benefits of going digital are 
remarkable. Public safety will get its much needed spectrum and 
consumers will see clearer pictures, more programming and high 
definition television. And while we all have a lot in front of 
us, from broadcasters to retailers to manufacturers to you in 
Congress, we can join our efforts to make this happen in 
February 2009.
    Thank you, Mr. Chairman, Ranking Member Upton, for inviting 
me to testify. I look forward to answering your questions.
    [The prepared statement of Mr. Yager follows:]
    
    [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]

    
    Mr. Markey. Thank you, Mr. Yager, very much. Mr. Nogales.

STATEMENT OF ALEX NOGALES, PRESIDENT AND CEO, NATIONAL HISPANIC 
                        MEDIA COALITION

    Mr. Nogales. Thank you. Mr. Chairman and members of the 
subcommittee, thank you for giving me the opportunity to speak 
to you today about the National Hispanic Media Coalition's 
concerns regarding the status of the digital television 
transition. My name is Alex Nogales. I am the president and CEO 
of the National Hispanic Media Coalition and HMC is a 21-year 
old non-profit Latino civil rights advocacy organization based 
in Los Angeles, California. We have 13 chapters nationwide and 
our mission is to improve the image of American Latinos as 
portrayed by the media; includes a number of American Latinos 
employed in all facets of media and advocate for media and 
telecommunications policies that benefit the Latino community.
    In 2005 the Government Accountability Office reported that 
21 million U.S. households rely solely on over-the-air 
television. These 21 million households included a 
disproportionate number of Spanish language speakers, one-
third. Seven million people who will be impacted by the digital 
transition are Spanish language speakers. It is also estimated 
that one-third of the 21 million households include residents 
over the age of 50, many of whom live on fixed incomes. Million 
of these households will be in rural areas or will include 
persons with disabilities. Further, according to the National 
Association of Broadcasters, African American households are 22 
percent more likely to rely exclusively on over-the-air 
reception.
    In summary, households impacted by the digital transition 
will be minorities, low-income families living on a fixed 
income and requiring a well-defined and more specific 
educational outreach program than the overall population 
requires. I will refer to these groups as our target groups or 
target population. More specific educational campaign to these 
target populations must be proactive, consumer friendly and 
culturally and linguistically sensitive.
    Appropriate outreach to disabled, minority, rural, low-
income and senior citizens is essential. For example, the 
public service announcement promoting this initiative must 
include closed captioning for the hearing impaired and should 
be available in Spanish as well as other relevant languages. 
The call-in centers handling the voucher questions must include 
live operators that include Spanish speakers. Wait time should 
not go over 10 minutes and must accommodate telecom relay 
services to make it easier for the deaf to communicate by 
phone. And it is not sufficient to translate English materials 
to Spanish. Those doing the outreach must communicate with 
Spanish speakers in a manner where the message will be 
understood. Cultural awareness here is fundamental for the 
outreach campaign to be successful.
    Congress allocated $5 million to the National 
Telecommunications and Information Administration to educate 
consumers about the DTV coupon program. The Federal 
Communications Commission or FCC, has only requested $1.5 
million for consumer education effort in its 2008 budget 
request. That is a total of $6.5 million to educate 300 
million, about 2 cents per person. To put this in perspective, 
when Berlin, Germany transitioned to DTV, it spent $984,000 to 
educate about three million people, or 33 cents per person. Two 
cents versus 33 cents per person. Why is the city of Berlin 
willing to make this expenditure on its citizens, but our 
Nation?
    I want to jump ahead a little bit. We strongly encourage 
the NTIA to bring in community based organizations, CBOs, to 
represent the disabled, minority, rural and senior advocates 
that will help develop a thorough outreach plan to ensure that 
the outreach and educational components of this program is 
solid and has no holes. We can't afford to make mistakes on a 
program that is a first come, first served program where the 
population that are most in need of these programs run the risk 
of being the last to hear about the program.
    Already we see problems with the so-called one step 
clearinghouse of consumer information and tools provided by the 
NTIA and hosted by the DTV Transition Coalition. Its Web site 
has no consumer information in Spanish. How is that possible 
when we already know that one-third of the 21 million 
households that should be targeted consists of Spanish 
speakers? NAB estimates that about 5 percent of the population 
knows that the digital translation is taking place. I suspect 
the NAB is being optimistic. Not many people outside the 
beltway have heard about the digital transition and its 
possible impact on the households.
    This past weekend I was in Calexico, California visiting my 
family, most of whom are bilingual. Calexico is a little rural 
town on the border with Mexicali in Mexico. While having 
supper, I asked several heads of households sitting at the 
table if they knew about the digital transition. None of them 
did nor did they understand how it was going to impact them. 
This was not a scientific full granted, but I am inclined to 
believe the target population, my large family included, is 
oblivious to the digital transition and the effect it will have 
on them. If the target population doesn't learn of the 
transition until the year it is going to take place, then I 
don't think we are ready to transition to digital.
    NHMC also objects to the two-phased plan the NIT is 
proposing for the distribution of the coupons. The first phase, 
where $990 million is allocated----
    Mr. Markey. Mr. Nogales, could you summarize, please?
    Mr. Nogales. Of course. Thank you for the time. A well-
funded proactive consumer friendly and culturally sensitive 
outreach program needs to begin as soon as possible and should 
include a well-coordinated campaign that includes CBOs working 
closely with the NTIA. The money that is projected to be spent 
on the educational outreach program is not enough and should be 
supplemented. Since a predominantly high number of Spanish 
speakers will be impacted by this transition, bilingual and 
bicultural staff is essential.
     For any educational campaign to be effective, it is not 
only relevant that the person be able to speak the language, 
but also understand the culture. English written materials 
should not be translated to Spanish as they are seldom 
culturally effective. Materials to the Spanish speaking should 
be original and the appropriate place to advertise to the 
Latino community should be carefully considered.
    For example, Latinos, more than anyone else, consume a 
great deal of radio programming. A two-phased program with an 
added burdensome requirement for those that applies doesn't 
make sense.
    Mr. Markey. Mr. Nogales, I appreciate the detail that you 
want to go into in your opening statement. Your entire witness 
statement will be placed in the record and I think you are 
going to be given plenty of opportunity during the question and 
answer period to further elaborate on what you think the 
Hispanic community will need in order to make a transition.
    Mr. Nogales. Very good. Thank you, Mr. Chairman.
    [The prepared statement of Mr. Nogales follows:]

                       Testimony of Alex Nogales

    Mr. Chairman and members of the Subcommittee, thank you for 
giving me the opportunity to speak to you today about the 
National Hispanic Media Coalition's (NHMC) concerns regarding 
the Status of the Digital Television Transition.
    My name is Alex Nogales; I am the president and CEO of 
NHMC. NHMC is a 21-year old non-profit Latino civil rights, 
advocacy organization based in Los Angeles, California. We have 
13 Chapters nationwide and our mission is to (1) improve the 
image of American Latinos as portrayed by the media; (2) 
increase the number of American Latinos employed in all facets 
of media; and (3) advocate for media and telecommunications 
policies that benefit the Latino community. NHMC is also the 
Secretariat for the National Latino Media Council, a national 
coalition comprised of 15 of the largest Latino Civil Rights 
Advocacy groups in the nation. Additionally, NHMC is an 
executive committee member of the Media and Democracy 
Coalition, a national coalition comprised of many of the 
largest mainstream media and consumer advocacy groups in the 
nation.
    The transition from analog to digital television brings 
great opportunities but also great challenges. In 2005, the 
Government Accountability Office (GAO) reported that 21 million 
U.S. households rely solely on over-the-air television. Of 
these households, about 48% earn less than $30,000 per year per 
household. These 21 million households include a 
disproportionate number of Spanish language speakers: one-third 
or 7 million people who will be impacted by the digital 
transition are Spanish language speakers. It is also estimated 
that one-third of the 21 million households include residents 
over the age of fifty, many of whom live on fixed-incomes; 
millions of these households will be in rural areas or will 
include persons with disabilities. Further, according to the 
National Association of Broadcasters (NAB), African-American 
households are 22% more likely to rely exclusively on over-the-
air reception.
    In summary, households impacted by the digital transition 
will be minorities, low-income families, living on a fixed-
income, and requiring a well-defined and more specific 
educational outreach campaign then the overall population 
requires. I will refer to the groups that I just mentioned as 
our target groups or target population.
    A more specific educational outreach campaign to these 
target populations must be pro-active, consumer-friendly and 
culturally, linguistically sensitive. Appropriate outreach to 
disabled, minority, rural, low-income and senior citizens is 
essential. For example, the public service announcements 
promoting this initiative must include closed captioning for 
the hearing impaired and should be available in Spanish as well 
as other relevant languages. The call-in centers handling the 
voucher questions must include live-operators that include 
Spanish-speakers, wait time should not go over ten minutes and 
must accommodate telecom relay services that make it easier for 
the deaf to communicate by phone. And it is not sufficient to 
translate the English materials to Spanish. Those doing the 
outreach must communicate with Spanish speakers in a manner 
where their message will be understood. Cultural awareness here 
is fundamental for the outreach campaign to be successful.
    Congress allocated $5 million to the National 
Telecommunication and Information Administration (NTIA) to 
educate consumers about the DTV coupon program. The Federal 
Communications Commission (FCC) has only requested $1.5 million 
for consumer education effort in its 2008 budget request. 
That's a total of $6.5 million to educate 300 million people, 
about 2 cents per person. To put this in perspective, when 
Berlin, Germany transitioned to DTV, it spent $984,000 to 
educate about three million people, or 33 cents per person. Why 
is the City of Berlin willing to make this expenditure on its 
citizens, but our Nation is not?
    Furthermore, the FCC does not plan to begin its public 
education campaign until 2008, when the converter box coupons 
and the boxes are expected to be available on January 1, 2008. 
In our opinion, the FCC campaign is starting a year late. 
Consumers need to know about the DTV transition generally, and 
the coupon program specifically, as soon as possible, but 
certainly well before NTIA makes the coupons available to the 
public.
    We strongly encourage the NTIA to bring in community based 
organizations (CBOs) that represent the disabled, minority, 
rural and senior advocates that will help develop a thorough 
outreach plan to ensure that the outreach and educational 
component of this program is solid and has no holes. We can't 
afford to make mistakes on a program that is a first-come, 
first-serve program where the populations that are in most need 
of these coupons run the risk of being the last to hear about 
the program. Already, we see problems with the so-called one-
stop clearinghouse of consumer information and tools promoted 
by NTIA and hosted by the DTV Transition Coalition. Its Web 
site www.dtvtransition.org has no consumer information in 
Spanish. How is that possible when we already know that one-
third of the 21 million households that should be targeted 
consist of Spanish Speakers?
    NAB estimates that about 5 percent of the population knows 
that the digital transition is taking place. I suspect the NAB 
is being optimistic. Not many people outside the Beltway have 
heard about the digital transition and its possible impact on 
their households. This past weekend I was in Calexico, 
California visiting my family, most of whom are bilinguals, 
Spanish/English. Calexico is a rural area right on the border 
with Mexicali, Mexico. While having supper I asked the seven 
heads of households sitting at the table if they knew about the 
digital transition. None of them did, nor did they understand 
how it was going to impact them. This was not a scientific 
poll, granted, but I'm inclined to believe the target 
population, my large family included, is oblivious to the 
digital transition and the effect it will have on them. If the 
target population doesn't learn of the transition until the 
year it is going to take place, then I don't think we are ready 
to transition to digital.
    Obviously, not enough has been done so far to educate our 
target groups that this historic change is taking place and 
that their over-the-air televisions will go dark after February 
17, 2009 without a converter box. The outreach program needs to 
start today and more effort needs to be made by the NTIA, FCC 
and the DTV Transition Coalition to reach community-based 
organizations that focus on the target groups. We need more 
people outside of D.C. to know about the transition and be able 
to communicate in a clear and understandable manner to those 
that will be impacted.
    Finally, NHMC objects to the two-phase plan that NTIA is 
proposing for the distribution of the coupons. In the first 
phase, where $990,000,000 is allocated, pay-TV customers will 
be able to apply for up to two $40 coupons per household to 
purchase converter boxes. The second phase is only open to 
households that certify in writing that they rely on over-the-
air reception. So once the $990,000,000 is spent, those that 
apply late or do not find out about the coupon program in time 
will be burdened by an added certification that may deter them 
from applying. Changing eligibility mid-course will result in 
needless customer confusion. Indeed, the certification will be 
a deterrent to low-income families, especially those that do 
not dominate the English language. Ladies and gentleman, I have 
no doubt that the disenfranchised population that will be the 
most impacted by the digital transition will be the last to 
apply for the coupons. This being the case, having to certify 
in writing that they rely on over the air reception is just 
adding an additional burden that will lock many of them from 
applying for converter boxes. A two phase-plan with an added 
burden for those that are hardest to reach doesn't make a lot 
of sense. If the reason for this two-phase system is because 
NTIA thinks there is a likelihood that the program will run out 
of funds before all the impacted households have obtained their 
coupons, then NTIA should go back to Congress and ask for 
additional funding.
    Summary:

      A well-funded pro-active, consumer-friendly, and 
culturally sensitive outreach program needs to begin as soon as 
possible and should include a well-coordinated campaign that 
includes CBOs working closely with the NTIA.
      The money that is projected to be spent on the 
educational outreach program is not enough and should be 
supplemented.
      English-written materials should not be 
translated to Spanish as they are seldom culturally effective. 
Materials to the Spanish-speaking should be original and the 
appropriate place to advertise to Latinos should be carefully 
considered. For example, Latinos more then anyone else consume 
a great deal of radio programming.
                              ----------                              

    Mr. Markey. Thank you, sir. Next we will hear from Mr. 
Britt. Welcome.

 STATEMENT OF GLENN BRITT, PRESIDENT AND CEO, TIME WARNER CABLE

    Mr. Britt. Thank you, Mr. Chairman, Mr. Upton and Mr. 
Barton and members of the subcommittee. We, at Time Warner 
Cable, are one of the leaders in the conversion to digital. We 
provide our customers with high quality digital video services 
like high definition television and video on demand, as well as 
Internet access service and digital phone service. As of last 
December, approximately 7.3 million, or 54 percent of our video 
customers also subscribed to digital video services and 1.9 
million of those customers had taken our high definition 
service.
    We encourage our subscribers to move to high definition 
service by providing HD boxes at no additional cost over 
digital. Mr. Chairman, now that Congress has established a hard 
date for the end of analog broadcasting, I think all of the 
affected industries and elected officials have a common goal 
and that is to make sure that all of our consumers and your 
constituents are not left in the dark at midnight on February 
17, 2009.
    The cable industry is ready, willing and able to work with 
you and our industry partners to achieve this important goal. 
And to that end, in January 2007, NCTA, CEA and NAB agreed to 
join forces to form the DTV Transition Coalition. This 
coalition is comprised of a broad range of diverse entities 
representing affected industries and interest groups. This 
privately funded initiative will engage in coordinated 
marketing and public education strategies to help television 
viewers better understand the nature of the transition and to 
provide information about steps that consumers may need to take 
to maintain the over-the-air television signals.
    The coalition has launched a Web site targeted to consumers 
that offers information, important information about the 
transition and we will include this information in Spanish, as 
well. In addition, Time Warner Cable has established an 
internal working group to create a comprehensive plan to ensure 
our customers understand exactly what they need to do and maybe 
just as importantly, what they don't need to do.
    We will train our customer service representatives to 
answer the tough questions consumers will raise as the hard 
date gets closer. We will also reach out to all of the 
populations we serve, including a large number of Spanish 
speaking customers we have in Texas, California, New York and 
the Carolinas. We stand ready to commit the resources to help 
make this transition a success.
    Though an increasing number of customers are opting for 
digital cable services, a vast number of televisions are not 
equipped to receive digital signals. NCTA estimates that just 
in the homes of cable customers, there are 134 million analog 
television sets that are not equipped to receive digital 
transmissions or are not connected to additional set top box. 
With so many analog TVs still on the market, cable operators 
have a huge stake in ensuring that the digital transition is 
seamless for all our customers.
    Each cable operator's first priority is to make certain 
that its customers do not suffer any disruption in their 
television service. We believe we have the flexibility to 
ensure their customers can, on the first day of digital only 
broadcasts, continue to watch all of the stations they receive 
today on their existing televisions. This flexibility permits 
cable operators to employ a variety of solutions to ensure a 
seamless transition from the consumer's viewpoint.
    For instance, the cable operator may decide to convert the 
digital broadcast signal to an additional analog format at the 
head end and under this option, cable customers can continue to 
receive the service on analog television without a set top box. 
In cable systems that have significant digital penetration, 
another option might be to deploy digital set tops to every 
consumer. This option, however, would require these consumers 
to change equipment or to add a set top box where maybe they 
didn't have one before.
    Thanks to Congress and the NTA, cable customers will be 
able to have the ability to obtain coupons to purchase digital 
to analog converter boxes that will make the over-the-air 
digital broadcast signals available on analog TV sets that are 
not connected to cable. We look forward to continuing to work 
with you and other members of this committee on our shared goal 
of promoting an affordable and seamless digital transition. And 
I would be pleased to answer any questions during the Q and A 
period.
    [The prepared statement of Mr. Britt follows:]
    
    [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]

    
    
    Mr. Markey. Thank you, Mr. Britt. Again, we are honored to 
have Mary Fetchet, who is the founding director of the Voices 
of September 11th with us today. Thank you so much for being 
willing to appear before us. Whenever you are comfortable, 
please begin.

    STATEMENT OF MARY FETCHET, FOUNDING DIRECTOR, VOICES OF 
                         SEPTEMBER 11TH

    Ms. Fetchet. Good morning, Chairman Markey and Congressman 
Upton and our distinguished members, especially Congresswoman 
Harman, who I worked so closely with when we were trying to get 
legislation passed. It was an honor to work with her. And it is 
an honor to be here on this panel and I am relieved to hear 
that people are moving forward in this process.
    My name is Mary Fetchet and I am founding director of 
Voices of September 11th, a 9/11 family organization whose 
membership includes over 6,000 individuals worldwide. As you 
may know, my husband and I suffered the ultimate loss, as 
parents, when our 24-year old son, Brad, was tragically killed 
in the Tower 2 of the World Trade Center. Like many Americans, 
my sense of security and my faith in our Government's 
effectiveness was shattered on that horrific day.
    The past 5 years have been a painful education for me, 
grappling with the challenges presented by political 
maneuvering, Congressional inertia and powerful special 
interest groups. But due to the dedicated efforts of 9/11 
family members, the 9/11 commissioners and many of our elected 
officials, some progress has been made. However, I am 
frustrated by the slow progress concerning first responder 
communications. Imagine, if you will, being told that your 
loved one's death could have been prevented. Imagine then that 
the solution to this problem was identified a full 5 years 
earlier. Imagine further that nearly 6 years later little has 
been done. As you know, this is not a hypothetical example. It 
is an unfortunate reality that exists today.
    I was horrified to learn, actually when we were at a caucus 
meeting, sitting on a panel, that this final report of the 
Public Safety Wireless Advisory Committee, which was published 
in 1996 to the FCC and NTIA, nearly 11 years ago, identified 
the exact problems in first responder communications that still 
exist today. ``The lack of sufficient quality radio spectrum 
suitable for public safety users deters technological 
innovation, diminishes the responsiveness and effectiveness of 
public safety and ultimately compromises the safety of the 
responding officers and of the very individuals seeking their 
help.''
    I was baffled that a problem identified after the 1993 
World Trade Center bombing, confirmed in Oklahoma City, 
confirmed on 9/11 and confirmed during Hurricane Katrina, has 
yet to be corrected. I can think of no other words than 
negligence. The 9/11 Commission made a strong recommendation in 
their 2004 report urging the expedited and increased assignment 
of spectrum for public safety purposes. Less than a year ago 
Chairman Tom Kean and Vice Chairman Lee Hamilton asked a 
committee of your colleagues, ``Who can say that no disaster 
will strike us before 2009? It is inexcusable that we still 
haven't gotten our rescue workers the tools that they need to 
do their jobs.''
    This sentiment resonates strongly with American people, as 
well. In August 2006, Voices of September 11th conducted a 
national survey of over 2,000 individuals to measure their 
perception of preparedness. The results were sobering. Over 
two-thirds of respondents rate national preparedness as fair or 
poor. Local preparedness and home preparedness rate only 
slightly better. I fear, as Congresswoman Harman said, that 
another mother, father or sibling will suffer the same loss as 
my family. I fear not only for their loss but for the torment 
and anger that they, too, will experience following that their 
loved one's death could have been prevented had these important 
reforms been implemented.
    Please prove these fears wrong. We cannot afford to wait, 
cannot afford to jeopardize the lives of our first responders 
or the lives of those they are called upon to save. In the 
past, the Federal Government has neglected its fundamental 
responsibility to protect its citizens. Who will be held 
accountable when the next lives are lost? I would like to play 
the message my son left me around 9:00 a.m. on September 11th.
    [Recording played]
    As you can see, Brad was unaware that his life was in 
jeopardy and followed the direction he was given to remain in 
his office. They were safe and secure. Sadly, individuals 
trying to evacuate the building were sent back up to their 
offices. Firefighters and first responders who rushed into the 
building to save lives were not able to communicate. I remain 
convinced that Brad's life and the lives of over 600 other 
innocent citizens in Tower 2 could have been saved if the first 
responders were able to communicate on 9/11.
    Let me close as I began. My husband and I suffered the 
ultimate loss, as parents, when our 24-year old son, Brad, was 
tragically killed in Tower 2 of the World Trade Center. Today I 
am very hopeful, as I am hearing these panelists talk about 
moving forward and how they are going to approach converting 
the spectrum. And I believe that you will learn from the 
lessons of 9/11 and that with your support, our brave first 
responders will be better equipped to respond and minimize the 
loss of life in the next catastrophic emergency, whether it is 
a terrorist attack or a natural disaster.
    We all have an obligation, both public and private sectors, 
to ensure this radio spectrum transition. Appropriate funds 
must be dedicated with vigilant oversight by this committee to 
ensure we are spending limited homeland security dollars 
wisely. A concerted effort on all levels of Government must be 
made to work in a bipartisan manner and concrete deadlines must 
be adhered to. I implore you to make a promise to my family and 
the families like mine that we will not allow this problem to 
continue any longer.
    Voices of September 11th remains committed to working 
towards the full implementation of the 9/11 recommendations, 
especially in the area of preparedness and improved first 
responder communications. I make a personal commitment to 
support your efforts in educating the general public, as well 
as the efforts of everyone sitting here on the panel, as you 
move forward with the spectrum conversion. I sincerely thank 
you for the opportunity to speak today and I look forward to 
answering any questions.
    [The prepared statement of Ms. Fetchet follows:]
    
    [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]

    
    
    Mr. Markey. Thank you very much, Ms. Fetchet, and thank you 
for sharing your story with us today. Mr. Vitelli, you have 5 
minutes.

 STATEMENT OF MICHAEL VITELLI, SENIOR VICE PRESIDENT, CONSUMER 
       ELECTRONICS AND PRODUCT MANAGEMENT, BEST BUY, INC.

    Mr. Vitelli. Good morning. Chairman Markey, Mr. Upton and 
members of the subcommittee, my name is Mike Vitelli and I am 
pleased to be here today on behalf of Best Buy and the Consumer 
Electronics Retailers Coalition, otherwise known as CERC. Best 
Buy is the country's leading consumer electronics retailer with 
over 800 stores in 49 States with approximately 130,000 
employees. We are a founding and leading member of CERC, which 
includes other leading consumer electronic specialty retailers, 
major general retailers that sell consumer electronics and 
three major national retail associations.
    In the last Congress, you set a clear, definite, 
unconditional date for the end of analog broadcasts, which we 
agreed would be the single most effective thing you could do to 
complete the transition to digital broadcast signal. Since 
then, CERC and its members have worked proactively with the FCC 
and the NTIA. We look forward, as well, with working with 
members of this subcommittee, its leadership, any interested 
members, to help make this transition an unqualified success 
for our customers and your constituents, so I want to talk 
about four key points about the transition.
    First is the purchase of a new television is more complex 
than it needs to be and the education of consumers will help 
the transition. Best Buy research shows that 77 percent of all 
DTV shoppers visit Best Buy before they buy a TV. And they may 
not all buy at Best Buy, but we can use these visits to help 
people better understand the DTV transition. Television 
shoppers are now increasingly studious and deliberate. In 
addition to other stores, they actually visit a Best Buy store 
four or five times before buying a TV and almost 80 percent of 
our shoppers have researched their options online before they 
buy a TV.
    Buying a TV often involves in-depth dialog with our sales 
associates to learn the customer's particular requirements and 
how they are going to use it and what their budget is. The 
sales associate can then identify a combination of display 
features, single acquisition choices and what they home network 
options are to give them the best overall home entertainment 
experience.
    We expect that consumers with TVs that rely on antenna 
signals will find the option of a Government subsidized 
converter box attractive. Many customers will not need a 
converter box, but our opportunity for discussion with each of 
them fosters a better understanding about the transition, as a 
whole, and each informed consumer will then be better able to 
help others, like their parents, understand the transition. So 
second, that goes to public education about the transition to 
the DTV is critical and retailers are playing a role. Albert 
Einstein said you really don't understand something until you 
can explain it to your grandmother. And we try to do this as a 
business, as part of an industry group and as part of the 
broader coalition.
    CERC has worked with the FCC and the CEA to develop, 
publicize and distribute a DTV tip sheet with core information 
about digital television products and services. Best Buy, 
Circuit City and Radio Shack have distributed hundreds of 
thousands of copies of these to our stores, physically and 
electronically, and it has been published twice in retail 
industry magazine and remains on the CERC Web site today. CERC 
has also published a 3-page consumer guide, ``What You Need to 
Know About the February 17, 2009 DTV Transition'', and 
continues to update this document with each critical step in 
the transition and we are about to add more information about 
the NTIA regulations.
    Third, targeted public education about the need for 
converter boxes is required and needs to be simple. Last week, 
before the subcommittee, Assistant Secretary Kneuer stressed 
that the NTIA would leverage its own public education resources 
by working with the private sector. In anticipation of this 
need, CERC joined with APTS, NAB and CEA in founding the DTV 
Transition Coalition. This steering committee of a very broad 
coalition includes NCTA and the Leadership Conference on Civil 
Rights.
     The objective is to work with the FCC, the NTIA and the 
Congress to provide accurate and consistent information via all 
media and avenues to assure that no American household is 
without the information they need to handle the transition 
successfully. The goals of this broad public education campaign 
should be to help people understand whether they will and 
perhaps more importantly, whether they will not need a 
converter box; help the people that do need the box to 
understand how to receive one through the program and ensure 
that people understand the reasons why the transition is 
occurring and the many benefits and choices that it offers.
    Though a majority of Best Buy's customers will complete 
this transition without the need for a Government subsidized 
box, we know that the success of the transition will be judged 
by the experience of those who do need or want a converter box, 
which leads me to the final point. In order for NTIA's CECB 
program to be successful, the program has to work with 
retailers and their systems.
     CERC has been concerned that NTIA design a program that is 
feasible for a broad scale of small, medium and large 
retailers, including online only retailers, such as our member 
Amazon.com and thus far, we have appreciated the fact that the 
NTIA has shown sensitivity to our concerns and our advice. And 
we know that NTIA's selection of a turnkey program vendor, 
which it plans to announce on August 15, 2007 may be the key to 
determining whether the necessary electronics systems for 
processing coupons and handling payments will be feasible for a 
broad scale of retailers and their customers.
    So aside from the matter of expense, making any change in 
your point of sales system or payment system is dangerous and a 
daunting task. A single bug can bring the system down. In the 
case of a large retailer like us, this can mean sever 
inconvenience for our customers and a smaller retailer, can 
literally put them out of business. And no entity can afford to 
endanger its mission critical systems, whether that is for 
ringing up sales or tallying up votes and I think you will 
appreciate the fact that for the welfare of your constituents 
and local economies, the time for retailers to make this change 
in our mission critical systems shouldn't be during the holiday 
selling season.
    So NTIA has correctly left the door open for coupon 
redemption early in 2008 and a sufficient number of retailers 
are coming online. So in summary, the DTV transition is all 
about offering new choices. We and our competitors are in the 
business to offer consumers these options, help them to 
understand them and choose the options best for them. The 
coupon eligible converter box provides an option which our 
customers must be and will be well aware of.
    And Mr. Chairman, at last week's hearing, members of this 
subcommittee asked Secretary Kneuer to plan to work with them 
and their constituents to understand and anticipate the change. 
On behalf of CERC and all of its members, I expect and hope you 
will offer the same thing to us. We want to work with you, as 
well as the FCC and the NTIA and other members of the DTV 
Transition Coalition to make February 17 and 18 days that will 
pass only with the appropriate recognition for all that we have 
accomplished by working together. And on behalf of Best Buy and 
CERC and its members, thank you again for inviting me to meet 
with you today.
    [The prepared statement of Mr. Vitelli follows:]
    
    [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]

    
    
    Mr. Markey. Thank you, Mr. Vitelli, very much. We will now 
turn to questions from the subcommittee members.
    Mr. Vitelli, if a consumer walked into Best Buy today, 
could they still buy an analog TV set?
    Mr. Vitelli. There are, yes. The answer is yes. There are 
very few left.
    Mr. Markey. Are they told, do your sales people tell, are 
they mandated by you, by your company to tell the consumer that 
the TV will not work in 2 years without a converter box?
    Mr. Vitelli. Our education of our sales employees gets into 
a tremendous amount of detail about high definition, standard 
definition.
    Mr. Markey. So if I walked in, if I left here this 
afternoon, which I am going to do, and go into a Best Buy and I 
ask to buy that TV set right over there, knowing it is an 
analog, would the salesman tell me it won't work in 2 years?
    Mr. Vitelli. If you engaged in that conversation with that 
person, you should get into that conversation.
    Mr. Markey. No, no. I am asking does he give me or she give 
me a warning that it won't work in 2 years? I am saying I want 
that TV, I like that TV. Does the salesperson say it is a good 
TV, but it is an analog TV; it won't work in 2 years without a 
converter box?
    Mr. Vitelli. That is part of our training with our sales 
staff.
    Mr. Markey. So they will do that?
    Mr. Vitelli. That is part of our training.
    Mr. Markey. OK, so is there a sticker on the TV that says 
this will not work in 2 years without a converter box?
    Mr. Vitelli. Individual manufacturers are doing that. Some 
do and some don't.
    Mr. Markey. Now, what does Best Buy do? Does Best Buy put a 
sticker on the analog TVs?
    Mr. Vitelli. We are not putting stickers on the 
televisions.
    Mr. Markey. Is there a sign near the analog TV sets that 
says these TV sets won't work in 2 years? It is kind of like a 
clearance sale right now? When you know that those ties that 
cost $19.95 are the ties that they couldn't sell for $119? Do 
you have any kind of warning like that, Mr. Vitelli?
    Mr. Vitelli. No.
    Mr. Markey. You should. And I think our committee is going 
to insist that you do warn from now on and we are going to ask 
your association to warn all consumers that the analog TV set 
will not work in 2 years and we are going to ask you to report 
back to the committee as to the types of warnings on the sets 
or near those sets and what requirements you have placed on 
sales people for the next year because otherwise they are 
engaging in very bad consumer purchases.
    If I went into a Best Buy this afternoon, what are the 
chances that a salesperson would know about the digital TV 
conversion?
    Mr. Vitelli. Very high.
    Mr. Markey. Very high. What efforts will Best Buy make next 
January to ensure that the consumers are going to get the 
information they need as they are walking into purchase these 
converter boxes? Is there a training program you are putting in 
place?
    Mr. Vitelli. We certainly will when that time is there. We 
have actually not gotten into product discussions yet with any 
of the manufacturers about the box.
    Mr. Markey. Have you put in an order for converter boxes 
from Mr. Taylor's company or from other companies that are 
manufacturing them?
    Mr. Vitelli. We have not gotten a formal proposal, if you 
will, about boxes.
    Mr. Markey. When do you expect to place your orders for the 
converter boxes?
    Mr. Vitelli. Normally, the cycle of an order for a new 
product is about 3 to 4 months in advance of its arrival.
    Mr. Markey. Will you have enough converter boxes on the 
shelves of Best Buy on January 1, 2008? How many do you plan 
right now on having on the shelves of your stores on January 1, 
2008?
    Mr. Vitelli. We haven't done that analysis yet because of 
analyzing which stores they should be in, how many should we 
have, how many different manufacturers----
    Mr. Markey. Will they be in all stores, Mr. Vitelli?
    Mr. Vitelli. It will depend on what we perceive the demand 
to be.
    Mr. Markey. I am not hearing you correctly. The answer to 
that question is yes, they will be in all stores. Do you want 
to try that one again? There are 23 million homes that don't 
have a way of watching television unless they can buy a 
converter box. We want to hear you say all our stores will have 
converter boxes, Mr. Vitelli. Can you please say that right 
now?
    Mr. Vitelli. We will have boxes available for people.
    Mr. Markey. In all of your stores?
    Mr. Vitelli. On the assumption of when they are available 
and where they meet----
    Mr. Markey. No, we want them available on January 1 in all 
of your stores because that is when the converter boxes are 
going to be available for sale and the coupons will be in 
people's hands. Will you commit that you will have converter 
boxes available for sale on January 1 in all of your stores?
    Mr. Vitelli. If there are converter boxes available, we 
will have them in our stores.
    Mr. Markey. You will have them in all of your stores? Are 
you saying all or some, again?
    Mr. Vitelli. You are asking me to predict----
    Mr. Markey. I want you to just get an idea of the scope of 
this, Mr. Vitelli. They are having an election for president in 
France right now. There are 23 million homes in France. That is 
all there are. There are 23 million homes in America that don't 
have anything except analog TV sets. Now, imagine how big that 
issue would be right now in a presidential election if everyone 
France was being asked. I think that is the only question that 
the candidates for president would be getting asked.
    It is a big issue, huge issue, Hispanic community and they 
just don't subdivide into neat little communities across 
America, this Hispanic population or other communities. They 
tend to live in all States, in all cities and near all Best 
Buys and other retail stores. So we would really appreciate it 
if you could ensure that not only Best Buy but the rest of your 
industry, when we have you back here again, have put in place 
the program that will give us some assurances that every 
American will have access to it.
    My time has expired. Let me turn to the gentleman from 
Michigan, the ranking member of the committee, Mr. Upton.
    Mr. Upton. Well, I thank you, Mr. Chairman, and I just want 
to say to Mr. Vitelli, I very much agree that we do need 
warning stickers for all of our consumers. I can remember the 
story of Mr. Barton's wife going to get him a Christmas gift.
    Mr. Barton. No, it was I.
    Mr. Upton. Oh, you bought it? I though it was a gift from 
your wife.
    Mr. Barton. It was a gift, but I bought it.
    Mr. Upton. All right. But that was before we actually had a 
date, but we have a date now and it is important that every 
consumer, whether it be this afternoon or a year from now, when 
they go in, if there are analog sets, they know precisely that 
if they have over-the-air, it is not going to work without a 
converter box.
    And I will say that in the legislation that we moved in the 
last Congress, which was bipartisan, for the most part, did 
include that requirement in the legislation as the House passed 
it. And unfortunately, the Senate, with its parliamentary 
rules, were able to knock it out, and I wanted to say this 
before Mr. Markey left the room, but we had a bill that will 
require that, to put it back. It is H.R. 608 and I don't know 
if you have had a chance to look at it or not or the industry, 
but I appreciate, maybe at some point in the next few days, you 
might do that and come back in writing with a comment.
    It was introduced by Mr. Barton, co-sponsored by Mr. 
Hastert and myself, and it requires consumer education and just 
that, so that all consumers, and I am sad to say that it was 
introduced a couple months ago and we have no, other than the 
two co-sponsors, Mr. Hastert and myself, nobody else has co-
sponsored and if we want to see legislation move, we want to 
see a bipartisan, we want to see this requirement put back and 
maybe if we are able to get Mr. Markey's support and others, 
knowing that they now have the gavel, we can get this 
legislation moved. But it would require that consumer education 
for everyone going to any store, whether it be a Best Buy or a 
Sears, to have that requirement.
    Mr. Taylor, I appreciated your comment early on, saying 
that we certainly do need a hard date. And as you reflect back, 
you know that that was an issue that we worked on very hard for 
a good number of years. We had a number of different industry 
roundtables to figure out where things were and I again just 
brown nose Mr. Barton here for a second. He did pick a date and 
it was met with a lot of resistance. We moved the date just a 
little bit, but we made it firm and some have suggested that we 
delay the implementation of this, that we push it back further.
    And there were efforts in this subcommittee and maybe even 
the full committee, as well, to actually pick a later date than 
what we ended up with and thank goodness, Mrs. Fetchet, we 
defeated those amendments. And I want to tell you, from this 
side of the aisle, and I think Mr. Markey and I hope Mr. Markey 
and others would agree, that this date has to stick. It was a 
carefully balanced date that we picked.
    We didn't want the consumers not to be able to get over-
the-air TV, but we had to allow the time to really force the 
broadcasters to make the $5 billion in investment, as Mr. Yager 
said, to be able to get the cameras and the equipment. And 90 
percent of them have achieved that, whether it be in the market 
that serves my district in South Bend or Kalamazoo, or a larger 
market, as well. And we were successful because we did push the 
broadcasters, screaming a little bit, but they are going to 
make this date and that, then, allows us to take that 24 MHz 
and give it to the first responders.
    And through the sale of the analog spectrum the minute we 
were able to pursue to provide assistance for the first 
responders so they can, in fact, purchase the equipment down 
the road and I got to tell you, I want to thank Mrs. Harman, 
who is here. She was a leader. She worked with my colleague, 
former colleague now, Mr. Weldon, on the act and even though 
they had an earlier date, I think we all were convinced that 
this date works and I want to assure you that we will not allow 
that date to slip.
    I think we are in store to see this transition come 
somewhat seamlessly and we do need an education effort and I 
will just plug my bill one more time in the remaining 7 
seconds, actually, Mr. Barton's bill. H.R. 608 does exactly 
that and we have now 18 Republicans I am told that have 
cosponsored the legislation. No Democrats.
    Mr. Barton. That is fast work.
    Mr. Upton. Well, you got to put them in. You got to put the 
names in, but it does do a lot of things for education and 
reminds people that those analog sets need the converter box. 
We need to push the industry to make sure that they are 
available in every store around the country and I think that it 
can work and we appreciate very much your meaningful testimony. 
I yield back.
    Mr. Doyle [presiding]. Thank you, Mr. Upton. The chair now 
recognizes the chairman of the full committee, Mr. Dingell.
    Mr. Dingell. Mr. Chairman, thank you. These questions are 
for Mr. Vitelli. I think, for the most part, Mr. Vitelli, you 
could answer yes or no. Do you believe that information on the 
coupon program should be widely available through retailers?
    Mr. Vitelli. Yes.
    Mr. Dingell. Now, you have already distributed hundreds of 
thousands of DTV tip sheets, is that correct?
    Mr. Vitelli. Yes.
    Mr. Dingell. Now, given your testimony about the importance 
of DTV education, do you believe that the retailers of the 
country should see to it that there would be distribution of 
the coupon application forms inside every store that is going 
to deal with these kinds of sales of televisions?
    Mr. Vitelli. Yes.
    Mr. Dingell. Will Best Buy do that?
    Mr. Vitelli. Yes, we will.
    Mr. Dingell. Thank you. You are certainly to be praised for 
that and that is a commitment I think is of great value to the 
consumers of the country. Thank you. Now, I am concerned here, 
again, that retailers may be tempted to sell Americans 
expensive digital televisions rather than letting them know 
that they can buy coupons or rather, they can obtain coupons 
for low cost converter boxes. Is that a concern for you and for 
Best Buy?
    Mr. Vitelli. It is not a concern for me and Best Buy. Best 
Buy is a customer relationship selling environment, not an all 
pressure sales environment, so we engage with the customer, try 
to understand what their needs are and get them the best thing 
for their needs.
    Mr. Dingell. What should a responsible retailer do to 
prevent consumers from then being forced into buying more 
expensive and unnecessary digital televisions when they only 
need a converter box?
    Mr. Vitelli. As I just described, what we do is try to 
engage with each customer and understand what they are trying 
to accomplish and based upon that, give them the best thing for 
what that experience is and if all that experience is to get my 
analog TV to work, then that box is the number one thing that 
they need.
    Mr. Dingell. So you are trying, then, to see to it that the 
information is readily available in the stores to make that 
choice clear to your consumers and customers, is that right?
    Mr. Vitelli. As soon as those boxes are there, that will be 
part of our education process to make sure that we are giving 
the right information to all of our customers.
    Mr. Dingell. Now, do you think that retailers should 
maintain a sufficient supply of boxes at all times throughout 
the coupon program so that consumers are not being put in the 
position of being unable to redeem the coupons due to an 
inadequate or insufficient or nonexistent supply of retail 
outlets?
    Mr. Vitelli. Absolutely. The point I was trying to make 
earlier, I was struggling to make, is that air shipping a box 
from a central location can be just as effective as having it 
dispersed over stores. In some cases, it can be more effective 
because you can have an imbalance of where the inventory is, so 
the mechanics of getting somebody what they need quickly, there 
are multiple ways to do that. One answer might be have it in 
all stores. Another answer might be to air ship them the next 
day. There is multiple ways to solve the same thing, which is 
get people what they need.
    Mr. Dingell. Thank you. Now, I assume that the education 
programs that a responsible store would conduct would be to 
have prominent in-store signs and displays that would inform 
consumers of this situation and their choices?
    Mr. Vitelli. Each retailer does it a little bit 
differently. Signage is an important part of our stores. In our 
stores, the human interaction is probably the highest. In 
stores that have less sales people, signage could be, so it is 
going to be a mix, depending on individual retailers and how 
they engage with their customers.
    Mr. Dingell. But there should be an attempt on each 
retailer to see to it that the customers are properly informed 
of these matters?
    Mr. Vitelli. Clearly.
    Mr. Dingell. And that is more than just a slip by the cash 
register, something like that, is it not?
    Mr. Vitelli. I agree with you. It is more than that. Best 
Buy and the consumer electronic retailers have been talking 
about the DTV transition for some time.
    Mr. Dingell. Now, will there be point of sale symbols or 
logos that will denote converter boxes which are eligible for 
the coupon program should that be the case?
    Mr. Vitelli. I am not sure exactly what your question is, 
but I think the actual packaging of a converter box, saying 
that it is eligible for the coupon program would probably be a 
good idea because it is one of those products that will be 
available and it will be very visible and maybe designing the 
packaging that way could be a good way of communicating, as 
well.
    Mr. Dingell. Thank you. You have answered that question 
very well. Is Best Buy going to see to it that there is 
information about the coupon programs and eligible converter 
boxes in its advertisements and direct mailings?
    Mr. Vitelli. When the timing is right and we understand the 
sequencing, I would say absolutely, yes, and making sure that 
that is very clear. I think all retailers will look to do that 
during that timeframe.
    Mr. Dingell. Thank you, Mr. Vitelli, and thank you, Mr. 
Chairman.
    Mr. Doyle. Thank you, Mr. Chairman. The chair now 
recognizes the ranking member of the full committee, Mr. 
Barton.
    Mr. Barton. Thank you, Mr. Chairman. We have talked a 
little bit about H.R. 608, which is the bill that Mr. Hastert 
and Mr. Upton and I introduced back on January 22 to put into 
law those parts of the educational program in the DTV 
transition that were stripped out by the Byrd rule in the 
Senate several years ago.
    This bill does six things. It would require retailers to 
display signs near analog-only television sets on their 
shelves. It would require cable and satellite operators to 
provide DTV billing inserts explaining to their customers what 
is going on; require broadcasters to file regular FCC reports 
detailing their consumer education efforts, such as the airing 
of public service announcement over their stations. It would 
ask the FCC to create a public outreach program, including a 
DTV working group. It would require the NTIA to establish 
national energy standards for converter boxes so that the State 
regulations don't hinder the manufacture of efficient low-cost 
converter boxes. And it would ask that the FCC submit progress 
reports to Congress on the FCC, the private sector education 
efforts, the NTIA to submit progress reports to Congress on the 
coupon distribution and redemption effort.
    According to the bill, this would all start, some of these 
education efforts are supposed to start by May 1, 2007, which 
is only 2 months from now. Does everybody on the panel support 
this type of legislation--if not this particular bill? Is there 
anybody that doesn't support this? How many do support it? OK, 
let the record show nobody supports it.
    Mr. Taylor. May I?
    Mr. Barton. Yes, Mr. Taylor.
    Mr. Taylor. Many of those things are already under way. I 
should say that the consumer electronics industry had a 
voluntary labeling effort that started last year. If you were 
to buy an analog LG television set and we didn't have too many 
models left, but those that were available at retail starting 
last year had a label in English and Spanish that explained, 
once we had a hard date we were able to label it, which was 
very helpful.
    It explained that if you were going to use this for over-
the-air television, you would need a converter box in 2009, so 
some of us are doing that. Regarding the energy standards that 
I believe is included in the NTIA rules, this product, in order 
to be certified by NTIA to be sold for the coupon program, must 
have a 2 watt standby power and auto power down after 4 hours 
of nonuse, so that has been addressed. I mean, I think that we 
are making progress in a lot of these areas.
    And I have to tell you, as one who has been involved in the 
formation of the DTV transition coalition, the passion and 
commitment on the part of all the parties is unparalleled. 
Everybody is really committed to moving forward with or without 
legislation.
    Mr. Barton. Anybody else want to comment?
    Mr. Yager. Let me just say that it is very difficult for 
broadcasters to commit to a May start date on a program where 
promoting converter box when the consumer cannot get them at 
Best Buy or any other retail outlet. We are planning a full 
scale, full blown campaign to make the public aware, but 
setting it on a specific date, before we have a product for the 
consumer to actually purchase, I think would create tremendous 
confusion.
    Mr. Barton. What date would you recommend?
    Mr. Yager. Well, if the converter boxes aren't going to be 
available until the 1st of January 2008, I would recommend that 
we go to some time in November. You need a little lead time to 
ramp up the campaign, but May 1 is going to create tremendous 
confusion. I don't want to create panic in the marketplace 
early. But we do think we have a real job to do in educating 
the leadership in our communities through speakers, bureaus and 
other things, up until the point we get there. With all good 
reference to Best Buy, we have a lot of education to do at the 
retail outlet, itself.
    Mr. Barton. Mr. Britt, do you have any comment?
    Mr. Britt. Yes. I think four of us are involved in this 
coalition and through that coalition we support everything that 
is in the bill. Education is really the key, most important 
thing that has to happen here and I think we need to do all of 
the things you mentioned plus some more, so we do support that 
effort. Whether it needs to be legislated or not is something 
for all of you, but we do need to do the education.
    Mr. Barton. Well, I think Mr. Yager made that the May 1 
date is too early and we are very open on that. There seems to 
be concern, and I would even go so far as to say a legitimate 
concern that there needs to be a fairly comprehensive, 
coordinated, massive outreach program to make sure the public 
knows what is happening.
    We had these things that were in the law, in the bill that 
came out of the House, but got stripped in the Senate. So I am 
going to ask Mr. Dingell and Mr. Markey to hold a hearing on 
our bill and if we need to make some changes, fine. I think it 
would be helpful to have legislation that is supported just so 
that we know what the ground rules are. Mr. Hastert and myself 
and Mr. Upton are not trying to be cute about this.
    If we don't have it right, this is a bill that we are very 
open and flexible on, I will be asking Mr. Dingell and Mr. 
Markey to schedule a hearing specifically on the bill. If there 
are changes that need to be made, like Mr. Yager's that 
recommend action that those can be incorporated. I have several 
other questions, Mr. Chairman, but I will just submit them for 
the record.
    Mr. Vitelli. I just have one comment to your question.
    Mr. Barton. Sure.
    Mr. Vitelli. And I can't speak to every one of our 
competitors' inventory situation, but by May 1, plus or minus 
some days, there won't be any analog TVs inside of Best Buy.
    Mr. Barton. That is a moot point. OK.
    Ms. Fetcher. I just wanted to say we reach out to our 
constituents on a weekly basis. We send out a weekly newsletter 
and actually publicize a lot of what is going on here in 
Washington. We would be happy to do that. But I would also have 
you think about September as preparedness month and you have a 
Government agency, Ready.gov and FEMA and others that you might 
be able to publicize through them, through the American Red 
Cross, through some of the emergency planning, the police 
department, the fire department.
    Because I think the way that you frame the message is going 
to be so critical. You don't want to frighten the general 
public. You want to explain why this is being done, how it is 
being done and work with the coalition to coordinate the launch 
time and put a timeframe in place so you are working together 
with the private and public sector.
    Mr. Barton. Thank you. Thank you, ma'am.
    Mr. Doyle. Gentleman's time is expired. The chair 
recognizes the gentlelady from California, Ms. Harman.
    Ms. Harman. Thank you, Mr. Chairman. I want to second that 
suggestion that Mary Fetcher just made. September is Emergency 
Preparedness Month and there are programs in many States, 
including in California, to teach emergency preparedness in 
schools. It is a perfect opportunity to communicate a message 
without creating fear in those who are receiving it and I would 
recommend we would consider that.
    I also want to thank Mr. Upton for some of the comments he 
has made, including the one that he will not let this deadline 
slip. I am missing the mark up of the authorization bill for 
the Homeland Security Department right now because I feel so 
strongly that we cannot, we cannot violate, really, a sacred 
trust to those who died on 9/11 and I will do whatever it takes 
in this committee and in that committee to make certain that 
this deadline does not slip.
    A week before 9/11, my oldest son, I have four sons and a 
grandchild now, spent that week in one of the Trade Towers in 
the New York office of his San Francisco based investment firm. 
He was then 26. Brad Fetchet was 24. I don't know what floor he 
was on, but I do know that he could easily have been there on 
9/11 and I think any of you could tell a story like that, that 
someone you know, one of your family members could easily have 
been there on 9/11 and could tragically have suffered the fate 
that Brad Fetchet did.
    I don't know how Mary can listen to that tape. I am not 
sure I could listen to that tape. But I hope all of you felt a 
pain in your hearts when you heard that tape. A young child, 
one of the Fetchet's three children, who loves his parents, 
wanted to calm them down, never suspected that he would be in 
harm's way, in a place, at a time when had we had adequate 
interoperable communications, his life might have been spared.
    Let me ask the panel, did any of you have family members or 
dear friends who perished on 9/11, either in the Trade Towers 
or in the Pentagon or on those airplanes? Nobody? Did any of 
you know or do any of you know people whose family members 
perished? Yes. Well, OK, Mr. Vitelli, let us talk to you for a 
minute. I understand all the problems at Best Buy and I really 
know it is a massive chain. In fact, one of my other sons 
worked there for a summer, it is a very capable outfit. We shop 
there. But I don't care how many problems there are with this. 
If you had lost a family member or thinking about your friend, 
putting yourself in that friend's shoes, does that change 
anything about the testimony you just gave?
    Mr. Vitelli. There is no question in my mind that, 
actually, testifying after Mrs. Fetchet was very difficult.
    Ms. Harman. I would bet.
    Mr. Vitelli. And it does indeed make a lot of the things 
that we talk about seem very trivial.
    Ms. Harman. Thank you for that answer. It surely does to 
me, too. In another lifetime I was a corporate attorney. I get 
it, that all of this is hard. Some of my best friends are 
broadcasters, et cetera, but I think that nothing is harder 
than losing a family member needlessly in a future 9/11-type or 
natural disaster because we weren't ready. Does anyone think 
that that is less hard than the problems you all have been 
talking about?
    OK, so I think I am going to yield back the remainder of my 
time. I really am too emotional about this to ask detailed 
questions, but I would just say to this committee that we 
should stop at nothing to get this right. I am planning to 
review the Upton bill that has been discussed. I haven't seen 
it and I am going to study it. I think bipartisan cooperation 
is absolutely necessary here and a firmness of view that 
nothing, and I mean absolutely nothing, will cause this date to 
slip. I yield back the balance of my time.
    Mr. Doyle. Chair thanks the gentlelady. Chair now 
recognizes the gentleman from Oregon, Mr. Walden.
    Mr. Walden. Thank you very much, Mr. Chairman. I have a 
couple of questions for our witnesses and Mr. Taylor, let us 
start with you because you are the maker of the box, right? Or 
one of the makers of some of the boxes. Can you guarantee you 
will have an adequate supply of boxes available in time for Mr. 
Vitelli to have them on sale in his store by January 1, 2008?
    Mr. Taylor. We do plan to have sufficient quantities 
available by January 2008. We are in discussions with our 
retailers right now and preparing the launch plan.
    Mr. Walden. And Mr. Vitelli, isn't one of the issues you 
have is that you have got to make sure they have the boxes 
before you can commit that you will have them in your stores?
    Mr. Vitelli. Yes, that is true. And someone mentioned 
earlier, and I don't remember exactly who it was, it might have 
been Mr. Green, but I am not sure, but the idea of some 
preorder process.
    Mr. Walden. Right.
    Mr. Vitelli. To estimate the actual requirements. That 
actually sounded interesting to me when I heard it.
    Mr. Walden. Is that something you have done a rollout 
before of a new product?
    Mr. Vitelli. Generally not, because manufacturers have a 
certain amount of supply they can come up with and if it is 
hot, it is usually----
    Mr. Walden. Like Xbox, where people are camping out all 
night.
    Mr. Vitelli. I was just going to say, yes.
    Mr. Walden. Mr. Taylor, is there an opportunity, have you 
ever engaged in a preorder process? Do you think that would be 
necessary here?
    Mr. Taylor. We would be happy to look into that, sure.
    Mr. Walden. OK. I want to ask another question, Mr. Taylor. 
The coupons that are going to be available, you referenced that 
this box you have on display here is a simple dumb box, if you 
will let me use that term. It is very bright inside, but all it 
does is convert digital to analog, right?
    Mr. Taylor. It has other features, but that is the main----
    Mr. Walden. OK. And I can use my coupon for that. Can I 
upgrade to the smarter box with the recording capabilities and 
I will still use that $40 coupon to reduce the cost of that 
box?
    Mr. Taylor. You cannot, under the law nor the NTIA rules, 
use the coupon for anything beyond a basic box.
    Mr. Walden. A basic box.
    Mr. Taylor. But we expect many consumers will buy that 
upgraded box. In fact, we have on the market right now DVD 
recorders, DVD/VCR combos with the built-in digital TV tuners. 
I can't speak for others in the room, but I probably wouldn't 
partake of the coupon program. I would probably want to get one 
of those higher end boxes to use with that set in my bedroom.
    Mr. Walden. You are a consumer, just like I am and I sat 
here thinking the same thing. That is why I asked the question. 
And I can see where consumers, I don't know what lid I am 
opening on what box here, but consumers say why can't I use 
that $40 any way I want as long as I am getting a D-Day 
converter? So I don't know if that is something we are going to 
revisit or not, but Mr. Vitelli, I share the concern of some of 
my colleagues.
    I know when we debated this issue in this committee last 
year, 2 years ago, the notion that retailers might still be 
selling TVs that are destined to be antiques here pretty 
quickly or at least require a set top box, and I would 
encourage you, too, and I feel bad for you, actually, today 
because you are representing one company but you are really 
representing the whole industry and so we shouldn't be picking 
on Best Buy as some sort of problem here.
    But I think you understand a lot of us are concerned that 
without labels, without warnings, we are going to have 
consumers buying sets without the knowledge they are going to 
need one of those boxes and I just tell you, if I were on your 
end I would understand why you want to clear out analog TVs. 
Sure, you have got them or you are buying them or whatever, but 
I think, too, that in the long run, for consumer satisfaction, 
there will be a lot of grumpy folks a year from now or 2 years 
from now when they discover they have got to buy yet another 
component, so I hope we can, Mr. Ranking Member, get a hearing 
on your and Mr. Barton's bill.
    And I don't understand why we can't get that scheduled, 
given the importance of this issue to consumers and I know that 
the chair and the other chair are both gone right now, but I 
would certainly hope that we can get H.R. 608 up for a hearing, 
a markup, and include it for movement here in the near future.
    Mr. Yager, I guess I would like to ask you and the other 
panelists here, I am concerned about the rollout and the 
education portion of this program. As you know, I had concerns 
about the hard date and catching consumers unprepared or the 
industry, the makers of the boxes, unready to help consumers. 
Is there anything we need to do, other than those who call for 
more money, is there anything we need to do or you need us to 
tell you to do to educate consumers that you are not already 
going to do?
    Mr. Yager. I think it is going to be a willingness, 
Congressman, to participate in the program. That is, those 
mailers you send to your constituents to part of the program.
    Mr. Walden. But I mean for broadcast. At one point there 
was a requirement to force you to run ads, a certain number a 
day during certain day parts. Do you need us to do that or do 
you anticipate the industry is----
    Mr. Yager. No, I don't think we need you to do that. Other 
than Ms. Fetchet, nobody has a more vested interest in making 
this transition work than the over-the-air broadcaster. I mean, 
we are talking about our audience here. We are talking about 
our life blood. We have got to make sure these sets work come 
February 2009, so in trying to say we are going to mandate 
spots be run here or spots be run there gets a little 
difficult. We have a station in Marquette, Michigan that does 
70 shares with its newscast. Three spots on that station a week 
will reach the whole Marquette audience. I have got some other 
stations that 30 spots a week are going to require to reach the 
same kind of saturation point. I think you have got to leave 
this to the broadcast stations and the individual market.
    Mr. Walden. But you and the cable and everybody else are 
committed to getting this word out? That is what I want to 
know.
    Mr. Yager. Broadcast industry is serious, totally committed 
to getting the word out and I would assume cable is.
    Mr. Walden. And Ms. Fetchet, I can't----
    Mr. Doyle. The gentleman's time has expired.
    Mr. Walden. I just want to express appreciation for all you 
have done, Ms. Fetchet, to move this forward and I realize I am 
extended, but thank you.
    Ms. Fetchet. If I could say, too, if you could, if the 
Government could send out information to your constituents, I 
think that would be helpful and also the Government Web sites 
would be another way to just distribute information.
    Mr. Doyle. Thank the gentleman. Now the chair recognizes 
the gentleman from Michigan, Mr. Stupak.
    Mr. Stupak. Thank you, Mr. Chairman. I have been in and 
out, but I watched you a little bit in my office. I had a 
meeting with constituents. Every member of this committee 
supports a hard date. In our bill that we ran that ended up in 
a close vote on committee here, on the Democratic side, our 
hard date was April as opposed to February and there is a 
number of good reasons for it, since a lot of this is in rural 
areas that are affected the most and February, we are worried 
about getting out of our driveway, not what station we are 
getting on the TV.
    And I am glad that we have so many converts to 
interoperability. We don't have to wait for a hard date to do 
interoperability. What we need are the resources to put in 
there. There are patches that are available, as the hearing 
last week showed us about. Problems where the interoperability 
on Hurricane Katrina could have been done. If the 
administration would get behind interoperability instead of 
moving money, taking money, moving money, taking money.
    In fact, the $1 billion you see cut out of the cops grants, 
we have it in interoperability, so you are taking money out of 
cops to put it in interoperability. It is sort of a shell game 
and I hope we get away from it and really put a sincere effort 
into interoperability instead of all these excuses about hard 
dates and who has got this date and that date.
    And Ms. Fetchet, I hope we don't leave it to the Government 
to try to educate people, because we have not done a very good 
job. I hope we do leave it to the broadcasters, because they 
know what they are doing and they are much more effective in 
communicating what needs to be done as opposed to the 
Government.
    But Mr. Yager, if I may ask you this question. Satellite is 
not here, I wanted to ask them. But let me ask you a question 
because it comes up oftentimes in rural areas and since you 
have a station in my district, Marquette and Traverse City and 
a couple others, let me ask you this. Many people assume that 
if a consumer has cable or satellite, they will be just fine on 
their DTV transmission. Some consumers that depend on satellite 
TVs, other on cable, but I am concerned that not all satellite 
viewers will be fine. I wish satellite was represented here 
today, as I said, but let me ask you.
    According to the latest FCC filings, Equastar has local to 
local service in 170 television markets, while DirecTV has 
local into local service in 142 television markets. There are a 
total of 210 television markets. That leaves at least 40 
markets where satellite is not carrying the local broadcast 
channel. One of these, without local into local, is of course, 
Marquette, Michigan in our district, and you own that station 
up there. So will consumers in Marquette DMA, who have 
satellite, need to purchase a box to receive their signal over 
the air?
    Mr. Yager. They would have to purchase a box if they have 
an analog set. When Marquette starts transmitting in digital, 
which I mean, they are transmitting now in digital, but they 
also have an analog signal they are transmitting. When they go 
totally digital, they will have to have a box that would 
convert it to analog so that they can get a picture.
    Mr. Stupak. OK. In 1999 Congress allowed satellite 
companies to do local into local, but it did not require it. 
Later, Congress did a curious thing and mandated local into 
local in Hawaii and Alaska, but not the rest of the country.
    Mr. Yager. And we wish you would have in the Upper 
Peninsula.
    Mr. Stupak. I do, too. So do you thing the DTV transition 
provides an opportunity for satellite companies to roll out 
local into local nationwide to all television markets? And 
broadcasters have a date certain to switch to digital, February 
2009. Do you support a date certain for local into local 
rollout?
    Mr. Yager. Well, I certainly would support a date certain 
for local into local rollout. I think it is kind of unfair that 
the smallest markets in this country; Kirksville, Missouri; 
Marquette, Michigan do not have local to local service.
    Mr. Stupak. Correct. Thanks. Mr. Taylor, thanks for your 
testimony. Let me ask you this question. Who certifies the 
boxes that you make?
    Mr. Taylor. There is a self-certification process not 
unlike FCC's certification.
    Mr. Stupak. Self-service. Who does it, though?
    Mr. Taylor. The manufacturer.
    Mr. Stupak. OK, so manufacturers are putting forth these 
standards.
    Mr. Taylor. But there is also a process where the boxes are 
submitted to the NTIA.
    Mr. Stupak. OK.
    Mr. Taylor. And there is a stop gap measure there. If there 
is any inkling that there may not be the performance levels 
required, there is a closed loop.
    Mr. Stupak. So has NTIA approved this box, then?
    Mr. Taylor. Not yet. The rules just came out several weeks 
ago, so we are finalizing the design, but this box, we believe, 
will be compliant and we plan to do our testing in the near----
    Mr. Stupak. Do you have to submit it to FCC for any kind of 
approval or their guidelines?
    Mr. Taylor. I think there might be an FCC piece to this, 
but I have to admit I don't know that part of the rules.
    Mr. Stupak. OK. When do you anticipate these boxes being 
available so we could, like, run them to our district, see if 
they are going to work?
    Mr. Taylor. They will be available at retail in early 2008. 
I have a few prototypes. If you want to borrow one, we could 
talk after the meeting.
    Mr. Stupak. Thank you.
    Mr. Doyle. Gentleman's time has expired.
    Mr. Stupak. Thank you, Mr. Chairman.
    Mr. Doyle. Thank you. The chair now recognizes my friend, 
the gentleman from Illinois, Mr. Shimkus.
    Mr. Shimkus. Thank you. It is great to be here. Thank you 
for the panel. I have been in and out, as you can tell, 
conducting most of my meetings right in the hallway, so I 
appreciate you all coming. It is an interesting issue. My 
opening statement talked about dollars and cents and based upon 
NAB's survey and information about how many people are 
connected to satellite and cable and stuff, I think the $990 
million is enough.
    But if it is not, in the provision there is 450 million 
additional dollars to get rolled out to cover. And if it is 
not, then we can readdress that. It is not an issue that we 
want to stop this process. And first of all, Mary, thank you 
for coming and testifying. I co-chair the e-911 Caucus and so a 
lot of my work has been on 911 issues, working with the same 
communities that you work with.
    Just highlight for us again, as much as we got our big 
corporate titans here dealing in billions of dollars, we have 
to really remember that the issue here for us is interoperable 
communications, first line responders and ability to help that 
transition. I am going to give you a few minutes just to tell 
us again how important that is.
    Ms. Fetchet. Well, spectrum, I know that that is what we 
are talking about today and I am so happy to hear the 
panelists, but that is only one area that we have to look at. 
We have to look at equipment, we have to look at community 
planning both on the local, State, regional and Federal level. 
I was one of the family members that pushed for the creation, 
the commission, and met with several of your offices over the 
last 5 years plus. My background, I know nothing about 
politics. I am a clinical social worker, so this was a new 
forum for me and so I went into it very naively.
    But I remember the caucus and thinking about, after the 
report came out, about how critical it was to prepare our 
communities and I was just so struck, reading this final 
report, and when you look at the description in the World Trade 
Center in 1993 and the problems that they had with first 
responders not being able to communicate floor to floor, it 
just seemed like you could change the dates and it would be the 
same story.
    I do think there is a sense of urgency. I am concerned that 
we are going to have a nuclear attack here in the United States 
and I do think to respond to something like that, the response 
is much different today. People are not going to rush into an 
emergency. They have to be prepared. They have to have the 
right equipment and more importantly, they have to be able to 
radio out to the emergency response team and so I think the 
spectrum is an important part of it. Certainly having the 
equipment and then having the planning on the local, State and 
Federal level.
    Mr. Shimkus. I appreciate that. I do think of all the 
failures that we have done throughout the years I have been 
here, Katrina really highlighted a failure to move more rapidly 
and listening to the panelists' testimony, you understand MHz 
and moving and local interest, but you do bring a compelling 
interest to keep us to push forward and keep a hard date and 
move this forward so we don't have another experience like 
September 11 or Katrina where our first line responders cannot 
talk to each other. I really appreciate you being here.
    Mr. Taylor, can you talk about the sets that are being sold 
now with digital receivers? Part of the calculations that I 
used really didn't address that things were being rolled out 
now. Is that true?
    Mr. Taylor. It is hard to find an analog television set 
today, not that anyone would want to, but I have to tell you 
that when you see the very attractive pricing on digital 
television receivers of all shapes and sizes, the overall 
prices of flat panel displays came down by 40 percent last year 
on top of 40 percent reduction the year before. They are really 
hitting the mainstream. The install base of digital television 
receivers continues to rise.
    There was probably 50 million sold in the last 5 years and 
another 50 or 60 to be sold in the next 2 years, so America's 
love affair with the automobile has been transferred to 
television and high definition is the big driver these days and 
now that there is lots and lots of programming that is driving 
the market, it is not, I think many, many consumers are not 
going to wait to retrofit their old analog television set; they 
are going to replace it now.
    Mr. Shimkus. Thank you very much. I will just end by saying 
I like multiple pipes. I think digital transmission and 
receiving over the air gives the consumer one more choice 
versus cable and satellite now over the air and I am very 
excited about it. I yield back.
    Mr. Doyle. Gentleman's time has expired. Chair recognizes 
the gentleman from Virginia, Mr. Boucher.
    Mr. Boucher. Thank you very much, Mr. Chairman, and I also 
want to say thank you to our panel of witnesses for today. 
Sorry I didn't get to hear your prepared statements. I was 
unavoidably detained at another meeting.
    Mr. Yager, I have several questions for you. And welcome 
back to the committee, by the way.
    Mr. Yager. Thank you, sir.
    Mr. Boucher. Nice to see you again. I heard statements from 
a number of individuals earlier about the number of analog sets 
that are not connected either to cable or satellite. These 
would be sets that are over-the-air dependent. And some of the 
estimates suggested that that number of sets might be in the 
range of 20 million. Now, I think you might have a higher 
number because the 20 million sets probably would encompass 
those that are in households that do not have a cable or 
satellite connection. But even in households that do have a 
cable or satellite connection, there are sets that are not 
connected to cable. These would be perhaps on the second floor 
of the house where the wires don't run. And I recall from 
earlier hearings that we have had on this subject, that the 
number of sets in total that are over-the-air dependent is many 
multiples above 20 million, in fact, maybe as many as 70 
million. Is that consistent with your numbers?
    Mr. Yager. That is very consistent with our numbers. We 
estimate 19.6 million sets are TV-only sets, which would 
conform to your 20 million, but there are another 45 million 
sets that are second, third and fourth sets in a household that 
are not connected to a multiple distribution system that are 
analog only. So yes, the answer is yes.
    Mr. Boucher. Well, I think it is important to make that 
point and for the record, clearly to reflect it for the benefit 
of those who are operating under the assumption that the total 
universe of sets that we need to be concerned about is in the 
category of about 20 million. That obviously is not true. We 
are concerned, really, about the entire universe of 
approximately 70 million sets.
    And that is why it is very important that the NTIA 
regulations not restrict the eligibility for the digital to 
analog converter boxes just to those who live in homes that do 
not have cable or satellite subscriptions. And it is my 
understanding that the regulation will, in fact, provide for 
that broader eligibility. But the money that will be required 
will be necessary to go to the higher number potentially, not 
just to the 20 million level, so thank you for your 
clarification.
    The next question that I have of you relates to the public 
education campaign that we all now need to cooperate in 
mounting in order to make sure that TV owners across the 
country are aware of this impending transition. I am pleased to 
be joining with Mr. Walden, on this committee, in launching the 
Congressional HDTV Caucus.
    In that effort, we will be communicating with members of 
the House of Representatives, all 435 Members, providing 
information about the impending transition and then suggesting 
to them that they help educate their constituents; in town hall 
meetings, by putting information in their newsletters about the 
impending transition so that people will know that if they are 
going shopping now, they certainly want to buy a TV set that 
has a digital tuner. They have to be sure they are doing that.
    And second, that they have become aware of the converter 
box program and the availability of vouchers. So while we are 
doing that here in Congress, I think the broadcasters have some 
things they need to be doing, to. And let me just suggest some 
of those to you. I think it would be very appropriate for 
broadcasters to have public service announcements that are 
carried on local broadcast stations informing the television 
viewing audience of the impendency of this transition.
    I would hope that those public service announcements would 
begin, perhaps, in December of this year because the converter 
boxes will be available in January of 2008. People need to know 
that they are going to be available and PSA announcements on 
behalf of broadcasters would really help. So my first question 
to you is do you think the industry, generally, is planning to 
run these PSAs and if so, when will they start?
    Mr. Yager. The answer is absolutely we are planning to run 
the PSAs. We are planning to have a national campaign of PSAs 
plus very localized PSAs with the talent of our various 
television stations trying to explain to many of our viewers. 
They have the credibility in our market; our weather people, 
our anchors, so we will do both and December 2007 to start the 
PSAs is not too soon. We have got to balance this when the 
converter boxes are really available to the public because, as 
I said earlier, there can be nothing worse than to have demand 
for a product that a consumer cannot purchase.
    Mr. Boucher. Well, Mr. Taylor, if the broadcast industry 
across the country starts PSAs in December 2007, are there 
going to be converter boxes available pretty soon after that 
January date when the vouchers are going to be available?
    Mr. Taylor. Our plan is to have the boxes available at the 
first of the year.
    Mr. Boucher. OK. That is great. Well, do you think, Mr. 
Yager, that the broadcast industry, generally, will start those 
PSAs this coming December?
    Mr. Yager. I can almost assure you of that. At least, we 
have already started, in our group, with the educational 
campaign at local level and I would volunteer the NAB digital 
task force to work with you and Congressman Walden in making 
sure that the message you get out is adequate.
    Mr. Boucher. That is very helpful. Thank you. One other 
question. In Berlin, where they undertook a similar kind of 
transition several years ago, in advance of the transition 
date, the broadcasters there ran a scroll on the bottom of the 
television screen announcing the impending transition. Now, you 
have to be artful, obviously, in how you do that. There is not 
a lot of room there if you are going to watch a program, but 
there can be some contact information, a phone number or 
something provided and I am just wondering if any thoughts have 
been given to doing that?
    Mr. Yager. A lot of thought has been given to that, 
Congressman, and it is a good idea. The problem is we have 
closed captioning right now on the bottom of our screens and 
that is, Mr. Nogales talked about the need for serving that 
community, so we are thinking about a scroll on top of the 
screen. It is not an undoable.
    Mr. Boucher. I think the top is good, as long as the scroll 
is what counts. Mr. Britt, let me spend the rest of my limited 
time here with you and I am what I am asking about is what kind 
of signal the cable subscriber in the home is going to receive 
after the transition date? I asked a similar set of questions 
on February 17, 2005 to Mr. Michael Wilner, the CEO of Insight 
Communications. He basically said the following.
    Let me just ask a leading question by asking you if you 
agree with this. He said that every home would receive an 
analog signal after the transition so that if individuals 
wanted to keep their analog sets in operation through a cable 
connection they could do so. That would be either through a 
headend conversion with the signal sent to the home or the 
conversion of the set top box level with the industry providing 
the box. Do you agree with that? Is that still the industry's 
plan?
    Mr. Britt. Yes, I do.
    Mr. Boucher. OK. Question No. 2, a lot of people have now 
invested lots of money in high definition and they bought very 
nice sets. Can they rely, after the digital transition, in the 
full high definition signal that is being broadcast by the 
local broadcaster being passed through on cable to the home 
viewer?
    Mr. Britt. Yes, our plan is to carry high definition 
signals. As you know, there are many definitions of what that 
is, but we do plan to carry those and we carry many today 
already.
    Mr. Boucher. And can the viewer rely on those signals being 
provided to him on whatever tier service he happens to be 
subscribing to so that he would not have to subscribe to the 
higher tier of service just to get the high definition signal? 
Broadcasters provide this for free. Seems to me the cable 
subscribers ought to be able to get those on whatever tier they 
subscribe to. What would your answer to that be?
    Mr. Britt. In our case, we haven't fully addressed one part 
of that. In our case today, if you buy digital service, which 
does cost more than basic, and if you then want HD, we don't 
charge any extra for it. Most of the other cable and satellite 
companies do charge extra, by the way. We have not addressed 
yet somebody who buys basic only who might want HD. My guess is 
there aren't very many of those people.
    Mr. Boucher. We will have further discussions on that. 
Thank you, Mr. Chairman.
    Mr. Markey [presiding]. Gentleman's time has expired. 
Gentleman from Nebraska, Mr. Terry.
    Mr. Terry. Thank you very much, Mr. Chairman, for again 
holding this series of these important meetings or hearings. 
First of all, Mary, I want to join my colleagues in thanking 
you for being here. You provide an important perspective in 
that the reason for the hard date and moving forward on this is 
public safety. The end result is that a major part of the 
spectrum will be used for public safety and that is our 
ultimate goal, so thank you for reminding us, as we get bogged 
down into the nuances of stickers on boxes.
    That may sound rather silly to you and your focus is much 
deeper and emotional than that, and to my friend from Best Buy, 
I do buy there, as well, not just Nebraska Furniture Mart. In 
fact, your store manager at the Village Point store in Omaha 
has become very close to my wife. They are on a first name 
basis. I can't remember a name. But it is really neat to see a 
store manager greet people at the front when they walk in and 
even using their names on occasion, so you have got a good one 
at Village Point.
    With that, I want to jump back, then, Mr. Taylor, since he 
is the master of the box right now, are you able to tell us, 
without violating any LG insider secrets about pricing, what do 
you expect that box to retail for next year when it is released 
en masse?
    Mr. Taylor. Well, retailers actually do set the prices, but 
we----
    Mr. Terry. Well, your manufacturing price.
    Mr. Taylor. We anticipate that it will sell in the $60 
range at retail.
    Mr. Terry. OK. And our coupon is estimated to be $40 so the 
consumers still have a $20--is there a way to engineer that 
down to $40 or is the NTIA requirements so high that you can't 
do that?
    Mr. Taylor. Very difficult to do. There is already very 
little margin in here for the manufacturer or for the retailer, 
but it is the right thing to do, to make it as--our goal, in 
designing the box, was always to make it as affordable as 
possible, but at the same time, make sure it had the features 
necessary to take full advantage of digital and most 
importantly, to have the performance.
    Mr. Terry. I don't think that really answered my question 
about whether the NTIA set their requirements too high to have 
an affordable box that will match the coupon price.
    Mr. Taylor. I don't think, as far as we are concerned, we 
don't think it was ever contemplated that there would not be a 
co-pay on the part of consumers.
    Mr. Terry. OK. Mr. Yager had mentioned about 69 million 
unconnected television sets. Just in my own personal world, we 
have one TV that is not hooked up to cable because that is the 
one hooked up to the Xbox and we don't use it for TV at all, so 
I wouldn't use a coupon for that TV set even if you gave it to 
me. So I want to ask John, it seems pretty high to me that we 
are talking about 69 million TV sets that are going to need a 
converter box. Do you agree with that number? Does CEA agree 
with that number?
    Mr. Taylor. According to the Consumer Electronics 
Association, about 30 million television sets are used solely 
with video games and DVD players, so unless the consumer wants 
to hook an antenna up to them, they would not need a box, so 
that kind of comes right off the top. There are lots of numbers 
floating around out there. We think there is going to be a 
market in the tens of millions of units for these, but again, I 
would point out that millions of consumers, tens of millions of 
sets will be purchased over the next 2 years that have the 
digital tuner built in.
    Mr. Terry. Mr. Yager, very quickly, I appreciate a quick 
answer, your testimony suggests that we should be sending 
consumers two coupons to be able to get to these secondary 
tertiary level of TVs that aren't hooked up to cable.
    Mr. Yager. And that is the NTIA's recommendation, as I 
understand it.
    Mr. Terry. OK, and that is the National Association of 
Broadcasters' suggestion, as well?
    Mr. Yager. That is correct.
    Mr. Terry. OK. Just for the record, I will join Mr. Shimkus 
in saying that I think we need to have some level of fiscal 
responsibility in here and you also mentioned that there is not 
enough money set aside to do two for each household.
    Mr. Yager. Well, the law provides up to a billion and a 
half dollars for the converter boxes. What we don't know is 
what the demand is going to be and I am not trying to mislead 
you in terms of what we think the demand will be. When the 
television campaign begins to say that converter boxes are 
available, I think you are going to see a totally different 
dynamic on the part of the public because we believe television 
works and we believe we can sell a product and it would put----
    Mr. Terry. Well, my time is up, but I appreciate your 
restating that for the record and Mr. Chairman, if you would 
give me 5 seconds, I still stand by my original position that I 
earn $160,000 here. I have one TV set that is for a game. I 
don't need a coupon and it is almost insulting to this 
Government that we are going to send me or others in like 
positions multiple coupons.
    Mr. Markey. The gentleman's time has expired. The chair 
recognizes the gentlelady from California, Ms. Solis.
    Ms. Solis. Thank you, Mr. Chairman. I want to begin by 
thanking Mary Fetchet for coming and talking so eloquently 
about what we need to do here in the Congress to enter into 
more discussion and debate about interoperability. And I say 
that in all sincerity, because when you hear about the impact 
of what we are talking about with respect to all the witnesses 
today, if people, a large number, millions of people don't even 
have access to, say, the digital components and equipment and 
television and what have you, that is soon to come, that is 
even going to be even more disastrous when there is, say, 
perhaps another disaster.
    And California is a prime area for that. We have 
earthquakes, we have fires. If people, for example, that don't 
speak English are in a remote area and don't have access 
because they are going to be cut off, how do we communicate 
with them? How do we keep those lines of communication going?
    So my question, I guess, for Mr. Yager and Mr. Britt, and I 
thank you all for coming, is you mentioned the kind of outreach 
programs that you are prepared to do, but I don't hear about 
any concrete efforts where you have a plan of action, because 
this is coming so soon, a strategic plan. Have you gone out, 
have you talked to people from the various communities that are 
going to be most heavily impacted and what kind of plan is 
that? And I will go to Mr. Yager first.
    Mr. Yager. The answer is yes, we have. In our own company, 
we have a station in Texas on the Texas-Mexican border where we 
are fully intending to do our PSAs in Spanish. It is a very 
strong Hispanic market. We have been advised by the NAB, in 
response to Mr. Nogales's question about a Web site. There will 
be a Spanish language Web site up on the conversion, probably 
within the next 2 weeks. Every general manager in our company 
is charged with getting to the leadership of their community to 
explain to them first what is going to happen. It is amazing to 
us how little is known about the conversion, even in Congress, 
other than the House Commerce Committee.
    Ms. Solis. Just quickly, is there any attempt to also put a 
1-800 number with individuals who speak the language, other 
than English?
    Mr. Yager. Absolutely.
    Ms. Solis. OK, then. For Mr. Britt I would also ask you 
what efforts you have underway?
    Mr. Britt. Yes. We have a very direct relationship with our 
customers. We send them bills every month. Many of them call us 
every month. And we operate in communities where people speak 
many languages, including Spanish. And we always have people 
who are able to speak those languages and we have people who 
write materials that are culturally sensitive so it is not just 
English translated. So we are going to use those skills in this 
education effort, which is very important.
    Ms. Solis. I would just like to bring to Mr. Yager and to 
your attention, Mr. Britt, that just reading your testimony, 
you mentioned you have advisory groups that you are talking to 
about planning for all of this and I noticed that you mention 
the leadership conference on civil rights, but I see no major 
Hispanic national organization involved. Can you please make an 
effort to do that immediately? And then my next question is for 
Mr. Nogales, because you have traveled so far. What have we 
missed here that we should probably highlight or underscore in 
terms of how we really reach these niche markets that are out 
there that we still have not uncovered?
    Mr. Nogales. Thank you very much for the question. I have 
been sitting here very patiently hoping to get into this. I 
think we all understand that the security concerns of this 
country are paramount, but the other part of what we are 
supposed to be doing here is transitioning a population from 
analog to digital.
    I think that relying on the broadcasters, the cable 
companies, the satellite, everybody else, that they are going 
to help us and they are going to somehow bridge all the 
differences is wrong. I think that community based 
organizations can do a much better job, especially when it 
comes to niche markets, such as the Latino community.
    I haven't really heard anything that we are working with 
the community based organizations to get the word out to our 
population. If 7 million of the people that we are looking at 
that need transitioning are not going to be included because 
community based organizations are not going to be part of the 
equation, I don't see how that is going to be done. So with all 
due respect to everyone here, I say that we have to invest 
monies to make sure that community based organizations are 
really involved in helping our population transition over, 
otherwise it is not going to happen.
    Ms. Solis. And just lastly----
    Mr. Markey. Could I, just only because we have 10 minutes 
left to go here and I would like to have the remaining members 
ask questions, if that is all right.
    Ms. Solis. That is fine.
    Mr. Markey. I thank you. gentlelady's time is expired. 
Chair recognizes Speaker Hastert.
    Mr. Hastert. I thank the chairman and I thank you for 
bringing these witnesses before us. I think your testimony, 
Mrs. Fetchet, about what happened on 9/11 really puts us into 
focus, why we are doing this--is to make sure there is spectrum 
available for a new dynamic way that people can talk to each 
other and so we can prevent the kind of disasters, at least 
after the fact, that happened on 9/11 so that our responders 
can respond and do the job they have to do.
    So I thank you very much for being here and your testimony. 
I listen to this and think about all the things that are going 
to happen before February 17, 2009. Congress will stand for 
election and be sworn in to the 111th Congress before then, so 
we have to go through all that process. We are going to elect a 
new President. He will be elected, he will be sworn into office 
before all this. Americans will pay their income taxes twice 
before all this happens, so in our minds we have a lot of 
things we have to do.
    And probably guys like me have an old black and white TV in 
my little townhouse in Washington with two rabbit ears. Let me 
tell you how old it is. It has got Magnavox on it, so anyway it 
is going to be February 18 and I am going to turn that TV on to 
get the morning news and all of a sudden it is not going to 
work. So I will probably go down to Best Buy or someplace and 
say ``hey, have you got any of those boxes left'' and I won't 
have the coupon and I will be paying $60 or $70. Well, I hope 
you got boxes left after February 17.
    But the fact is people who tune it to your TV stations and 
they are your customers, aren't they, in a sense? Is that 
correct?
    Mr. Yager. That is absolutely correct.
    Mr. Hastert. And if you are not making sure that you have 
those people still in your system, you lose them, right?
    Mr. Yager. Shame on us if we do.
    Mr. Hastert. And in a sense you lose revenue. Some of them 
might be subscribers but the other people are people that buy 
from your advertisers.
    Mr. Yager. That is correct.
    Mr. Hastert. So in a free market sense, it is really 
important that those people go out and do the things that they 
have to do because you are going to lose a customer, right?
    Mr. Yager. Absolutely.
    Mr. Hastert. So you are probably going to do whatever 
announcements you have to make beforehand, remind people that 
if you have an old black and white set, like me, maybe I will 
have to get----
    Mr. Yager. Well, I may get this box for you, right here.
    Mr. Hastert. Oh, thank you. Mr. Taylor, these people in a 
sense are your customers, too, right?
    Mr. Taylor. Absolutely.
    Mr. Hastert. And if they aren't warned beforehand the type 
of product that they are going to buy, whether I walk into the 
Wal-Mart store that is just down the road from me, I am out in 
the country, or a Best Buy or whatever, if people aren't told 
the truth about what they are buying, retailers and your 
industry suffers, isn't that true?
    Mr. Taylor. Absolutely.
    Mr. Hastert. So it is really in your best interest.
    Mr. Taylor. There aren't very many analog sets left on 
retailers' shelves, thankfully.
    Mr. Hastert. Do you have any black and whites?
    Mr. Taylor. No more black and whites, sorry to say.
    Mr. Hastert. Out of luck.
    Mr. Taylor. But even those that are, manufacturers did 
voluntary labeling a year ago, when we had the hard date, to 
make sure consumers understood that when February 2009 rolls 
around, you would need an additional piece of equipment to be 
able to receive over-the-air----
    Mr. Hastert. I don't even have a TV hooked up for an Xbox. 
I don't know what an Xbox is. But that happens. I know we have 
a vote and I want to extend my appreciation to the chairman for 
allowing me to take a couple minutes and testify, I think the 
free market is working and I think, to the extent that 
Government can help it, we will. And just the fact that these 
coupons are going to be available to people that need it. 
Again, Mrs. Fetchet, I thank you for your testimony and for the 
cause of this, why this is really happening. And I will yield 
back my time.
    Mr. Markey. Gentleman's time has expired. The Chair is 
going to recognize the gentleman from Pennsylvania, the vice 
chair of the committee, Mr. Doyle. There are 6\1/2\ minutes 
left for four votes out on the House floor. I will leave it to 
his discretion as to adjourning the hearing.
    Mr. Hastert. Mr. Chairman, before we close. Will you accept 
our opening statements?
    Mr. Markey. Without objection, all of the statements will 
be included in the record. I yield to the gentleman from 
Pennsylvania.
    Mr. Doyle. Thank you, Mr. Chairman. Mrs. Fetchet, I just 
want to echo my colleague's sentiments that the questions we 
have for the rest of the panelists today pale in comparison to 
our responsibility to make sure first responders have 
interoperability and you have my personal commitment that there 
will be no backtracking on the date and that we will do what we 
can to do that as soon as possible.
    Now, Mr. Taylor, apparently you are not the person to ask 
what this set top is going to cost because you are not the 
retailer, so Mr. Vitelli, let us ask you, can you tell this 
committee, with any degree of certainty, that these set top 
boxes that people are going to come in with coupons for are 
going to cost around $60? Is that what you see happening at 
Best Buy?
    Mr. Vitelli. How much are they going to cost, John?
    Mr. Taylor. Around $60.
    Mr. Vitelli. It will probably be close to that because we 
have products today that we sell at low margins. We have 
products that we sell at different points and they are all over 
the map.
    Mr. Doyle. So when Mr. Taylor says he expects the box to 
retail at around $60, are you going to sell it to him for $60 
and have him sell it for free? Is that it, Mr. Taylor?
    Mr. Taylor. That is what we would consider the 
manufacturer's suggested retail price, but it is up to 
retailers to set the actual----
    Mr. Doyle. OK, so is $60 a real number?
    Mr. Vitelli. I don't know. I have not gotten a proposal 
from anyone specifically yet.
    Mr. Doyle. So we don't know what the real number is?
    Mr. Vitelli. I don't, yet.
    Mr. Doyle. And Mr. Taylor, you say you are going to have 
boxes ready at the beginning of the year. How many boxes do you 
anticipate, not a sufficient quantity, I am not going to hold 
you to an exact number.
    Mr. Taylor. I don't have a number today. We will work that 
number out with our retailers in the coming months.
    Mr. Doyle. Just wing it for me. Three million?
    Mr. Taylor. Way too soon to say. Just don't know yet.
    Mr. Doyle. So we have got these 23 million customers. Let 
me just ask that one question. I think there is going to be, by 
the way, to my friends on the Republican side, I don't think 
there is going to be plenty of money because I think there is 
going to be so much up-selling going on here that we are going 
to see very few people come in with that coupon and leave the 
store with one of those kind of boxes. I think they are going 
to be, I don't want to call it bait and switch, but I think 
there is going to be a lot of up-selling. Mr. Vitelli, is it 
your opinion that at your Best Buy stores that there is going 
to be an effort to try to get these consumers to buy TV sets or 
fancier boxes or when they come in with that coupon are you 
just going to hand them the set?
    Mr. Vitelli. As I mentioned earlier, what we do at Best 
Buy, we do not have a pressured sales environment. We talk to 
the customer about what they are trying to accomplish and what 
they are trying to do and if they come in with the coupon and 
they want to buy a box, they will get a box.
    Mr. Doyle. OK. At this time I want to yield to my friend, 
Mr. Inslee, for the balance of my time.
    Mr. Inslee. Thank you. I just want to ask about the 
frequency, the penetration of the PSAs that people will 
receive. When we run for office, the people who do our media 
tell us there are a certain number of points that you have to 
have until a message is actually received. How many points will 
people receive as a result of the efforts, either of the 
Federal or private enterprise on these PSAs?
    Mr. Yager. Points are referring to a rating point and 
normally, they are broken down. A rating is that percentage of 
the total audience that is viewing television at any given time 
and in any given market. We always recommend about 150 to 200 
rating points a week if you are trying to sell a product or a 
commodity to a viewer. We think we will probably far exceed 
that. You have got to remember that again, our vested interest 
in making this transition kind of seamless for the viewer is 
absolutely critical to the television industry.
    Mr. Inslee. So how many points throughout the course of the 
campaign would a person be exposed to?
    Mr. Yager. That is really going to depend on how fast the 
demand develops for the boxes. If the demand is great for the 
boxes in the early part of 2008, obviously toward the end of 
the year, the points will go down. If it continues strong, I 
mean, if it continues and the demand is not there, we will 
continue to promote right up until February 17.
    Mr. Inslee. So has the industry made any commitment that 
any of us can count on that enough points will be put out on a 
PSA to make sure all those coupons are used?
    Mr. Yager. I don't know how we could do that, make a 
commitment in terms of points to get all the coupons. What we 
can commit to is creating the demand for the coupons and making 
sure the public understands the need to have a box to operate 
an analog set after the 17th of February 2009.
    Mr. Inslee. Let me just express, and I am not sure you can 
solve this, but one of the frustrations we have here is we are 
very concerned, I have been very concerned. I still don't think 
that our approach to these coupons is adequate to the Americans 
that are going to be very frustrated by this experience and we 
think it is very important this information be obtained by 
Americans. And we are trying to get a handle on what people 
will really see and it is pretty amorphous. I hear the industry 
saying they have good intentions, which I appreciate, and I 
think it is sincere, but is there anything you think you could 
give us more to sort of have more real parameters on what it 
will really look like in real life?
    Mr. Doyle. And I would advise my friend that we are down to 
54 seconds on our vote.
    Mr. Yager. I don't think I can answer the question in 54 
seconds, but we are committed to using the talent and the 
personnel of our television stations who have the credibility 
in the local markets we serve to advise the American public 
about what is the whole transition.
    Mr. Inslee. Thank you.
    Mr. Doyle. And I want to thank the panelists. It is the 
chair's intention to adjourn this hearing at this point. Mr. 
Taylor, I would just leave you with one thought. When people 
call that toll-free number on your set top box, could there be 
a human being on the other end of the phone, please?
    Mr. Taylor. There will be in Huntsville, Alabama.
    Mr. Doyle. Thank you. Thank you. This meeting is adjourned.
    [Whereupon, at 1:00 p.m., the subcommittee was adjourned.]
    [Material submitted for inclusion in the record follows:]
    
    [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]

    
    


                  STATUS OF THE DTV TRANSITION--PART 2

                              ----------                              


                      WEDNESDAY, OCTOBER 17, 2007

              House of Representatives,    
         Subcommittee on Telecommunications
                                  and the Internet,
                          Committee on Energy and Commerce,
                                                    Washington, DC.
    The subcommittee met, pursuant to notice, at 9:40 a.m., in 
room 2123, Rayburn House Office Building, Hon. Edward J. Markey 
(chairman)
    Present: Representatives Doyle, Gonzalez, Inslee, Rush, 
Eshoo, Stupak, Green, Solis, Dingell, Upton, Stearns, Deal, 
Shimkus, Radanovich, Terry, Ferguson, and Barton.
    Also present: Representative Blackburn.
    Staff present: Amy Levine, Colin Crowell, Tim Powderly, 
Maureen Flood, David Vogel, Philip Murphy, Neil Fried, Courtney 
Reinhard, and Garrett Golding.

OPENING STATEMENT OF HON. EDWARD J. MARKEY, A REPRESENTATIVE IN 
        CONGRESS FROM THE COMMONWEALTH OF MASSACHUSETTS

    Mr. Markey. Good morning. Welcome to the Subcommittee on 
Telecommunications and the Internet. This is the subcommittee's 
second in a series of oversight hearings on the status of the 
digital television transition. Unfortunately, prior oversight 
hearings have left this subcommittee with a DTV picture that is 
fuzzy at best. Our goal going forward will be to get better 
reception from the Federal Government, industry and community 
groups about how they might work better in concert to ensure 
that millions of Americans do not lose free over-the-air 
television after the transition from analog to digital 
broadcasting on February 17, 2009.
    I am encouraged by some recent Government efforts to help 
consumers navigate the transition successfully. After our last 
hearing, the Commission required retailers to inform consumers 
when television equipment only has an analog tuner by 
displaying a Government-mandated consumer alert near the 
device. Not only does such a notice assist consumers in making 
fully informed decisions before bringing home an analog-only 
TV, it also serves to educate consumers about the DTV 
transition itself.
    The Commission has rigorously enforced this rule. Seven 
retailers are facing almost $3 million in fines. In addition, 
the Commission also has assessed penalties against 
manufacturers for importing TVs lacking digital tuners. I 
commend FCC Chairman Martin for sending a strong message that 
the Government will not tolerate the TV equivalent of war 
profiteering.
    I encourage the Commission to vigorously monitor and assess 
the transition as it proceeds. For instance, the FCC could send 
employees into participating stores to make sure that retailers 
are sufficiently stocking and selling the converter boxes 
subsidized by the coupon program, and not just hocking the $500 
digital TV sets. The Commission should also spot-check digital 
devices, including converter boxes, to make sure they include 
mandatory pro-consumer technologies. Like the V-chip and closed 
captioning and those other features, we have to ensure that 
they actually function properly for consumers.
    I also want to applaud Assistant Secretary John Kneuer for 
NTIA's decision to hire IBM to manage the Digital-to-Analog 
Converter Box Coupon Program. IBM and its subcontractors appear 
to have the expertise and proconsumer orientation necessary to 
implement a successful coupon program if other elements and 
entities in the transition work in concert and do their part.
    The most critical component of a successful DTV transition 
is consumer education. Ultimately, the Federal Government is 
responsible for making sure that more than 300 million 
Americans are adequately informed, not the industry or consumer 
groups. It is, after all, Government mandates that will render 
obsolete millions of analog TVs. Both the FCC and NTIA have 
been preparing consumer advisories, creating Web sites, holding 
forums and meeting with public- and private-sector groups. The 
current plan relies heavily on the good graces of industry and 
the voluntary efforts of committed consumer and community 
groups to get the job done. However, because the amount of 
money available to the Commission and to the NTIA for consumer 
education for their respective aspects of the transition is 
highly limited, more must be done.
    Affected industries appear to be stepping up to fill some 
of the void. Thus, recent commitments by the cable industry, 
broadcasters and public television to air millions of dollars' 
worth of messages about the transition on TV will be critical 
to the success of this effort. But all of those efforts are 
purely voluntary.
    As Chairman Dingell and I suggested to Chairman Martin 
earlier this year, there is value in mandating a minimum level 
of compulsory consumer education on the part of industry, 
particularly given that these requirements can be monitored and 
enforced. I am pleased that Chairman Martin took our suggestion 
to initiate a rulemaking, and I hope he adopts those rules 
expeditiously as the deadline draws near.
    This leads me to the aspect of the DTV transition that 
needs greater clarity and coordination. According to the report 
being prepared at my request by the Government Accountability 
Office, no single organization has assumed responsibility for 
the overall transition. It is as if we have a team of able 
running backs and receivers running around the field searching 
for the end zone, but no quarterback running the plays. Indeed, 
according to the GAO, there is no comprehensive DTV transition 
plan, no monitoring and no contingency plan.
    I want to commend the GAO for their excellent work in 
preparing for today's testimony, which provides us with an 
Emergency Broadcast System alert about challenges ahead with 
sufficient time to take corrective action. It is my belief that 
while NTIA has responsibility for the consumer coupon program, 
the FCC has primary responsibility for the overall digital 
transition. Chairman Martin, I think that makes you Tom Brady 
for our DTV purposes.
    Mr. Upton. A good Wolverine, I want you to know.
    Mr. Markey. That is where Mr. Upton and I really feel good. 
We are Michigan and Boston bond on this Tom Brady issue. And 
giving you this mantle, Mr. Chairman, is the highest accolade 
that can be bestowed on a bipartisan basis in this committee.
    Mr. Upton. Hail to the victors, right?
    Mr. Markey. You are the Nation's DTV quarterback, and we 
will be counting on you and the Commission for the leadership 
to coordinate the various aspects of the transition, which is 
so important for public safety, economic growth, innovation, 
consumer welfare and the future of television itself. I look 
forward to hearing from today's witnesses.
     Let me turn to recognize the ranking member of the 
subcommittee, the gentleman from Michigan, Mr. Upton.

   OPENING STATEMENT OF HON. FRED UPTON, A REPRESENTATIVE IN 
              CONGRESS FROM THE STATE OF MICHIGAN

    Mr. Upton. Thank you, Mr. Chairman. Good morning to all.
    I would like to thank the witnesses for testifying today on 
this very important subject. This is not our first hearing on 
the topic, and, given the importance, I don't think it will be 
the last.
    Still a year and a half away, the DTV transition is an 
issue that continues to generate an outstanding amount of 
attention. And I am absolutely confident that as we move closer 
to February 2009, an even brighter spotlight will shine on the 
DTV transition, so much so that the transition will be a 
success, and consumers will not be caught off guard.
    We should certainly commend the cable and the broadcast 
industries for stepping up to the plate to help educate the 
public about the digital television transition. We still have 
more than a year to go. Their already outstanding efforts and 
commitments are sure to increase as the deadline approaches. 
Specifically, local broadcasters are to be commended for their 
proactive initiatives to educate Americans on the transition to 
DTV. It is comforting to know that the broadcasters understand 
the critical importance of educating Americans on this issue so 
that a seamless transition can take place in February 2009. 
Individually each local broadcaster has already had to invest 
significant sums, millions of dollars to move the transition 
forward, and had it not been for their hard work and sacrifice, 
that transition would not be possible.
    The fact remains it is in the financial interests of the 
broadcasters, pay-TV companies, manufacturers, retailers to 
make sure that each TV viewer in the household knows about the 
DTV transition. The last thing the industry wants to do is lose 
viewers, and I am confident that they will do everything 
necessary to ensure that that does not happen.
    Some of the industry's plan is similar to a measure that I 
introduced with Mr. Hastert and Mr. Barton in January, H.R. 
608. Similar provisions would be law today had it not been for 
the Senate procedural rules that stripped the consumer 
education provisions from the original DTV legislation that was 
enacted in the last Congress. And if any of my colleagues on 
either side of the aisle have doubts or concerns about the 
industry's resolve to educate consumers, I would ask them to 
cosponsor our bill, H.R. 608.
    Much of the focus has been external, looking at industry 
and the NTIA and the FCC; however, there is much that we can do 
as Members of Congress to educate our constituents. My Web site 
already has information about the DTV transition, as well as 
links to external sites with information about the DTV 
transition. In the next few weeks, I plan on launching a new 
Web site with even more comprehensive DTV education. 
Congressional franking rules also permit Members to include 
information about the transition through our constituent mail. 
Everyone has a role to play, and I would urge my colleagues to 
do their part.
    Additionally, the cable industry has taken a significant 
step forward in promoting an orderly transition by voluntarily 
agreeing to carry the broadcasters' digital and analog signals 
for the next 3 years, which mirrored what this committee passed 
last year, and which the FCC recently adopted.
    Chairman Martin has also proposed a new multicast must-
carry mandate on cable operators, and I happen to believe that 
imposing that standard at this point would perhaps threaten an 
orderly transition, and I look forward to hearing more about 
that as the question-and-answer period moves forward.
    Lastly, I would like to again recommend the auctioning of 
white spaces. The market is much better than we regulators at 
determining the value of and the best use for the spectrum. 
There are likely a number of possible areas, and one that has 
recently been raised is an alternative to special access. All 
potential providers and services should be given an opportunity 
to compete for that spectrum in a fair auction. Licensing would 
also have the added benefit of protecting against any 
interference with digital TV should it arise. The recent test 
results released by the FCC demonstrate that that might be a 
problem.
    At a minimum FCC testing is needed, and I am glad that that 
is going to happen. It is too important to risk with the use of 
unlicensed devices. Further, it has and will demonstrate the 
tax for value in auctioning the spectrum.
    I look forward to hearing from the panel this morning.
    The 9/11 Commission understood the importance of ensuring 
that our first responders have the equipment and the spectrum 
necessary to communicate in times of emergency. I am proud that 
we were successful in not only passing the DTV transition in 
the last Congress, but provided a helping hand to enable our 
first responders to better protect all of America.
    I also have a letter from Chairman Martin indicating that 
the number of exclusively over-the-air homes has once again 
dropped and now is only at about 13 percent. The letter also 
indicates that the legislation, H.R. 608, that we introduced in 
January would help reduce litigation over the FCC's authority 
to impose consumer education requirements. I have three letters 
from the Cable Association, the Broadcast Association and 
Univision concerning their recent announcement to launch about 
$1 billion to combine the consumer education. And I would ask 
unanimous consent that these documents be placed in the record.
    Mr. Markey. Without objection.
    Mr. Upton. And with that, Mr. Chairman, I yield back the 
balance of my time.
    Mr. Markey. The gentleman's time has expired.
     The Chair recognizes the gentleman from Michigan, the 
chairman of the full committee, Mr. Dingell.

OPENING STATEMENT OF HON. JOHN D. DINGELL, A REPRESENTATIVE IN 
              CONGRESS FROM THE STATE OF MICHIGAN

    Mr. Dingell. Mr. Chairman, I thank you for your courtesy. I 
commend you for holding this hearing. It is a matter of great 
importance to the country as we are going to find out as the 
event comes near. The digital television transition might well 
be the most important telecommunications issue before this 
committee.
    I want to express my appreciation to the panel for being 
with us this morning. Gentlemen, thank you. We appreciate your 
help, and we need it, and we look forward to it.
    This oversight hearing is the second in a series regarding 
the DTV transition. The transition promises great benefits to 
consumers, including more and higher-quality over-the-air 
programming, new advanced wireless services, and by use of the 
analog spectrum currently reserved for broadcast television, 
first responders and other public safety communications. We 
must, however, make sure that the Government and industry have 
done all they can to ensure that no consumer wakes up on 
February 18, 2009, to find their television screen has gone 
dark, and also to find that we are incapable of providing them 
with the proper information for the switchover.
    Much work remains to be done for a successful transition, 
and, quite frankly, I am not satisfied that we know what that 
might happen to be. First and foremost, there has to be 
Government leadership. As our GAO witness will testify, there 
is currently no clear leader in the transition. That must be 
defined much more clearly. The Federal Communications 
Commission should be the agency spearheading this transition. 
The NTIA, or the National Telecommunications and Information 
Administration, has a distinct, statutorily defined role in 
administering the converter box coupon program, and it is an 
extremely important role, but appropriately the FCC should be 
leading the transition and working with NTIA and others to 
coordinate these many efforts.
    I urge the FCC to consider an interagency task force to 
facilitate a smooth transition, similar to the one that was 
established to address Y2K. That interagency task force spent 
nearly 2 years on its missions with a clear priority and a 
sense of urgency to prepare the Nation for any effects that 
might be brought about by the arrival of the year 2000. We need 
a similar approach to the problems now before us. We face a 
shorter timetable for the DTV transition, and I believe that 
the administration must approach the DTV transition with the 
same diligence as the previous administration employed for Y2K.
    The converter box coupon program is a critical element. 
Each and every consumer who will need a converter box to view 
over-the-air programming must have one. Coordinating the 
logistics of this program and the distribution of coupons for 
converter boxes presents a tremendous challenge, one on which I 
am not satisfied that we have properly conducted our inquiries 
or arrived at our conclusions.
    I look forward to the testimony of IBM, the vendor selected 
by NTIA to implement this enormous undertaking, about its plans 
to carry out a very important job. We will also receive 
testimony from consumer groups about the various constituencies 
that should be informed and educated about the transition. Many 
at-risk populations, such as the elderly, the economically 
disadvantaged, people with disabilities and those who live in 
rural and other underserved areas and communities will need 
particular attention.
    As I noted before, digital television holds great promise 
for the country, and we all look forward to its potential being 
fully realized, but at this moment it is uncertain that it will 
be fully realized or will be realized without a great level of 
pain, discomfort and inconvenience. We must also ensure that 
all Americans will enjoy the benefits that can follow the end 
of analog TV on February 17, 2009, and the institution of the 
digital system that we look forward to.
    I want to thank our witnesses again and observe that each 
of them has an important role here today. We are here to help 
you facilitate a successful transition, and I look forward to 
working with you over the next 16 months.
    Mr. Chairman, I thank you for your courtesy to me.
    Mr. Markey. The gentleman's time has expired.
    Mr. Markey. The Chair recognizes the gentleman from Georgia 
Mr. Deal.

  OPENING STATEMENT OF HON. NATHAN DEAL, A REPRESENTATIVE IN 
               CONGRESS FROM THE STATE OF GEORGIA

    Mr. Deal. Thank you, Mr. Chairman.
    I thank our witnesses for being with us today. And I would 
like to raise several issues relating to the DTV transition 
with you.
    First of all, I would like to address the FCC's recent dual 
carriage order which deals with the broadcast carriage 
obligations of cable operators after the digital transition in 
television. The order requires cable to pass along the digital 
signal of must-carry broadcasters in both digital and analog 
formats to their subscribers. Unfortunately it does not provide 
an exemption for small operators. Rather, it allows cable 
systems with limited capacity to file for a waiver to relieve 
them of this obligation.
    I am concerned with this decision as it essentially 
acknowledges the dual carriage rule will be burdensome for 
small cable providers due to their unique technological 
limitations. It seems ill-advised for the Commission to enact 
rules which force small rural cable operators with limited 
means to go out and hire a DC lawyer simply to navigate the 
FCC's often unpredictable waiver process.
    In the same vein I would like to comment on proposals at 
the FCC to impose multicast must-carry requirements on cable 
operators. I have long advocated for less regulation and more 
free-market principles in the video marketplace. I find 
proposals to impose more must-carry requirements disturbing. It 
is important that consumer preference, not Government mandates, 
determine what viewers watch. In addition, by implementing new 
must-carry mandates, the Government is creating a video market 
with little or no incentive to develop or produce high-quality 
programming. I would urge the Commission to avoid a path of 
increased regulation.
    Lastly, I would like to briefly comment on the ongoing 
testing of white-space devices at the FCC. I understand and 
agree with the need to conduct additional testing to ensure 
that no interference to broadcast or wireless microphone 
services, and commend the Commission for its willingness to 
continue working on this issue. Television's white spaces hold 
a potential for great innovation, including low-cost rural 
wireless broadband service and the wireless distribution of 
content within the home and office. For entrepreneurs, white 
spaces provides nearly boundless possibilities for development 
and exploration. It is important for us to build on the initial 
FCC tests which prove that the concept that white-space devices 
can detect and avoid both digital television and wireless 
microphone signals, and I thank you for continuing to test 
those devices.
    Thank you, Mr. Chairman. I look forward to hearing the 
Commissioners, and I yield back my time.
    Mr. Markey. The gentleman's time has expired.
    Mr. Markey. The Chair recognizes the gentleman from 
Pennsylvania Mr. Doyle.

   OPENING STATEMENT OF HON. MIKE DOYLE, A REPRESENTATIVE IN 
         CONGRESS FROM THE COMMONWEALTH OF PENNSYLVANIA

    Mr. Doyle. Thank you, Mr. Chairman.
    Mr. Chairman, just a few hours ago the tiny U.K. town of 
Whitehaven and the surrounding area just began its DTV 
transition. It is the canary in the coal mine, so to speak, and 
I hope that we will be able to learn something from the switch 
that is happening over there today.
    That said, back over here I am worried that we are not 
doing enough to educate and inform consumers of the switch. Mr. 
Chairman, Procter & Gamble spent $128 million in 2004 to market 
the Swiffer broom to American consumers, and GM has pledged 
$100 million to promote its new Malibu. But NTIA has only $5 
million to inform American consumers that they don't need to 
spend too much out of pocket to keep their TV sets working 
after the Government mandates the transition to digital TV. And 
the FCC has a total of $1.5 million to help talk about the 
transition as a whole.
    Now, compare that to the city of Berlin, a city which has 
only 3.4 million residents. They needed to spend $1 million; or 
the U.K., which is spending over $400 million to educate their 
country.
    Mr. Chairman, it is not that America has not had to educate 
our people on this kind of a scale, but we have never done it 
on a shoestring like this. Instead America has chosen to 
encourage the private sector to step up to the plate.
    Because we are relying so much on the private sector to 
educate and inform the American public, we have to remember 
that these guys are competitors. Now, that is a good thing, but 
I want to make sure that the vigorous competition doesn't harm 
the need for clear, useful and informative messages.
    Back before the turn of the 21st century, FCC Chairman 
William Kennard reached across the aisle and chose then-
Commissioner Michael Powell to be in charge of the FCC's 
preparation for Y2K. Now, Y2K went off without much of a blip. 
And, Mr. Chairman, I hear that people are only now beginning to 
finish the canned goods they socked away in their basement. I 
think it would be useful to work through a Commissioner. They 
would be able to help the industries and the associations 
involved work better together.
    Chairman Martin, they say making policy is like baking a 
cake. I have read your testimony, and I have to say I hope the 
details of your proposed consumer education order are as sweet 
as the frosting looks. But we should not be distracted by 
unrelated and irrelevant policy goals. DTV should not be an 
excuse so that people throw anything on the wall to see what 
sticks. And just like DTV shouldn't be a windfall for 
regulators, it should also not be an unfair windfall to 
retailers and manufacturers.
    Now, I love my big-screen HDTV, and I am glad I have other 
flat panels at home, too, but I can afford them, and I wanted 
the better picture quality. But a study published by U.S. PIRG 
suggests that retailers aren't telling their staff the right 
information about the transition. The transition's first line 
of defense, the retail sales clerk, often weren't aware of 
affordable converter boxes coming to the market soon, much less 
that there will be a coupon to compensate them to keep their TV 
working.
    Mr. Chairman, I look forward to hearing the testimony of 
Ms. Fazlullah on this issue, and the other witnesses, and I 
yield back.
    Mr. Markey. The gentleman's time has expired.
    The Chair recognizes the gentleman from Oregon Mr. Walden.

  OPENING STATEMENT OF HON. GREG WALDEN, A REPRESENTATIVE IN 
               CONGRESS FROM THE STATE OF OREGON

    Mr. Walden. Thank you very much, Mr. Chairman. Thanks for 
having this additional hearing on the DTV transition.
    I want to welcome the Secretary and the Commissioners and 
others who testify today. Unfortunately I am going to have to 
step out, but I will take your testimony and read it later.
    Four hundred eighty-nine days from today it all happens. 
Millions of Americans will be affected, and our phones will 
ring off the hook. As chairman of the Congressional Digital 
Television Caucus, along with my colleague Rick Boucher, I am 
pleased that the subcommittee is having this hearing today, and 
we are doing everything we can as a caucus to educate our 
colleagues and others not on this committee about what lies 
ahead. We have got to get this right, and we have to work 
collaboratively to ensure a smooth transition.
    I appreciate the fact that the cable industry and the 
broadcast industry together are spending more than $900 million 
to air English- and Spanish-language advertising on cable and 
broadcast stations. I have already begun to see those ads. I 
think that is essential to educate consumers about what lies 
ahead. Certainly it will complement the $5 million that NTIA 
has on hand to spend on consumer education. But clearly the 
bulk of the heavy lift here will be done by cablecasters, 
broadcasters and satellitecasters. The NAB says that their 
efforts will reach some 98 billion audience impressions over 
the course of the campaign, and I applaud the commitment of all 
who are involved.
    I also think it is important to recognize the Digital 
Television Transition Coalition. It is a broad-based group that 
is comprised of business and industry groups as well as grass-
roots organizations that share an interest in a smooth 
transition.
    I am pleased to hear that the coupon NTIA is putting out 
will actually look like a gift card. Indeed it is. And 
consumers are familiar with gift cards, and it will make it a 
lot easier to use when they go to get the converter boxes.
    It is important we not take our eye off this ball. We have 
to carefully consider the feedback of our witnesses today in 
order that we get a transition that is as smooth as possible, 
and that consumers are both educated about what is coming 
toward them and have the ability to connect appropriately so 
that they don't lose contact with the digital TV world.
    Mr. Chairman, thank you again for this hearing and for the 
work that you and the subcommittee are doing, and we look 
forward to a smooth transition in 2009.
    Mr. Markey. The gentleman's time has expired.
     The Chair recognizes the gentleman from Texas Mr. 
Gonzalez.
    Mr. Gonzalez. Waive opening.
    Mr. Markey. The Chair recognizes the gentlelady from 
California Ms. Eshoo.

 OPENING STATEMENT OF HON. ANNA G. ESHOO, A REPRESENTATIVE IN 
             CONGRESS FROM THE STATE OF CALIFORNIA

    Ms. Eshoo. Thank you, Mr. Chairman, for holding this second 
DTV hearing. It is an important one.
    And welcome to the witnesses.
    I think that we all know that digital transition holds 
great hope for both broadcast television and wireless 
broadband, and the members of this committee know it very well 
because it is obviously our jurisdiction. We have worked on 
this for a long time. We kind of know the language that 
surrounds the issue, and we drill down almost every time we 
meet on something that has something to do with the issue.
    There are, I think, important and noteworthy efforts that 
have taken place in the private sector to provide guidance to 
customers for the transition, but I think that we are assuming 
that it is penetrating and that it is understandable. I, for 
one, think that we are falling short. The good news is I think 
we have time to do something about it, and I think that a very 
well coordinated, comprehensive DTV transition plan really has 
to be taken seriously and implemented.
    I want to tell a story of something that occurred when I 
was home this weekend. I heard from a number of constituents 
both at town hall meetings and when I went to Mass on Sunday. I 
attend Mass at a place where the retired sisters, the Religious 
of the Sacred Heart, live. Now, they are all Ph.D.s, former 
college presidents, RAND, some of the most prestigious 
institutions of learning in our country. So this is not a slow 
group. The only thing that might be slow is their walk now 
because they are retired.
    Well, they had received a notice that they were not going 
to have C-SPAN anymore. And I have to tell you, to be 
surrounded by almost 60 nuns after Mass waving these cards, I 
don't know about you, Mr. Chairman, or anyone else, but that is 
a tough audience. So it said to me that even the message that 
is going out is kind of written in someone else's 
telecommunications language.
    And that may seem anecdotal and a sweet story, but I think 
that we need to pay attention to that. We know the language, 
and we think we have a handle on how this is going to work. But 
that TV set and what comes across it and what it means to fill 
the hours and to inform people in our country or to entertain 
them, whatever the purpose might be, is very, very important. 
So this transition has to have relevancy to it. People need to 
know what the actual steps are. Is it going to cost them more? 
Do they have to get a box? Who do they call? Why do they have 
to pay more?
    So I think we have a ways to go. At one time I offered an 
amendment here with a former colleague now, Mr. Bass, that the 
local PBS stations would be in charge of at least some of the 
education on this to people in communities across the country. 
Now, I know that about $5 million has gone to the NTIA. I think 
that has gone to a PR firm. I think $5 million is a drop in the 
bucket. If something has been carried, I don't watch TV all the 
time, in fact very little of the time, but I have never picked 
up on anything, and I am not the important one. The people that 
we represent are.
    So I think we have a ways to go on this, and I think that 
Commissioner Adelstein has made a very important recommendation 
that we have a transition task force. And it needs to be 
coordinated, it needs to be clear, it needs to be relevant. And 
do you know what? How about some simplicity to it so that 
people understand it?
    So thank you, Mr. Chairman. I look forward to the 
witnesses. And don't forget the story of the Religious and the 
Sacred Heart.
    Mr. Markey. The gentlelady's time has expired.
    The Chair recognizes the ranking member of the committee, 
the gentleman from Texas, Mr. Barton.

   OPENING STATEMENT OF HON. JOE BARTON, A REPRESENTATIVE IN 
                CONGRESS FROM THE STATE OF TEXAS

    Mr. Barton. Thank you, Mr. Chairman. It is good to see our 
friends here today and the first panel and then our second 
panel also. It is good to have another hearing on the digital 
transition, which, as we all know. Is coming next year or year 
after next, in February 2009. The exact date is February 17, 
2009.
    For those of you that wonder where that date came from, I 
don't know that I have ever said this publicly, but Mr. Markey 
and Mr. Dingell had a lot to do with it. I wanted a shorter 
date, and they pointed out that we probably need to get the 
presidential election out of the way and the Super Bowl and 
that that would be a good day. So for those of you that wonder 
how legislation is done, this was a bipartisan negotiation 
where Mr. Dingell and Mr. Markey convinced myself and Mr. Upton 
that that was a good date. And I am happy to say that in all of 
these hearings that we have had and the public comments, that 
date has held.
    Our manufacturers are moving to have the set-top converter 
boxes and the TVs with the digital receivers in them, and the 
private sector is gearing up to do the public outreach, which 
we are going to hear more about today. And our friends in the 
Government that have to implement the program are moving ahead 
with their program.
    So we think we have enough money. We set aside $1 billion 
to go to the first responders for their interoperable 
communications equipment after the auction is held in January 
2008. We also set aside up to $1.5 billion for the converter 
box program. And those converter boxes are beginning to be 
manufactured as we speak.
    Mr. Upton and myself sent a letter to Chairman Martin not 
too long ago asking him for his comments about how many people 
might have to use those converter boxes. He replied recently in 
a letter that the FCC predicts only about 13 percent of the 
television sets in America on that date will actually be rabbit 
ears or antennas and need some sort of a box. We all know that 
the market is changing and that there is every reason to 
believe that by the time that date gets here, that that number 
will be even less.
    There is also some question about how many people will 
actually feel like they want to use the coupon. Again, just as 
a personal aside, Mr. Markey and myself, I should say Chairman 
Markey, I have got to call him Chairman Markey now that he is 
sitting there with the gavel, we did a contest to see who had 
the most obsolete TVs, and I thought I won with 13 TVs in 
various domiciles here and in Texas. But Mr. Markey won the 
contest for the most obsolete TV. He claims he has a little old 
black and white portable that he shaves by. So we will get a 
converter box for that for him and put a gold label on it, the 
first one issued or something, so that it gets converted.
    We are very happy that the private sector is beginning 
their public outreach program. We don't have a witness from the 
National Association of Broadcasters here today, but they said 
earlier this week that they are going to spend up to $700 
million in public education to show their viewers if they need 
to be prepared for the digital transition.
    Mr. Chairman, I have got quite a bit of boring commentary 
in my written statement that I will put into the formal record, 
but let me end up by saying that if we need to do more 
legislatively, Mr. Upton, Mr. Hastert and myself have 
introduced H.R. 608, the Digital Television Consumer Education 
Act of 2007. We had a number of consumer education provisions 
in the House bill when this became law in the Deficit Reduction 
Act, but because of the Byrd rule, those are considered 
nongermane in the Senate and were stripped out on a 
technicality. So at some point this year if we need to do more 
legislatively, I would recommend to the committee and the 
subcommittee that H.R. 608 would be a good place to start.
    With that, Mr. Chairman, thank you for the hearing, and I 
yield back my time.
    Mr. Markey. I thank the gentleman very much.
     My little screen is about 6 inches wide and about 25 years 
old, and it has just been looking at me at my eye level.
    Mr. Barton. Does it still work?
    Mr. Markey. Oh, yes, as I shave in the morning. 
Unfortunately, the converter box is probably going to be three 
times as big as this little TV, so it is going to become a 
logistical problem.
    Mr. Upton. Make sure you don't plug it in next to the sink. 
You might get a little shock.
    Mr. Markey. We do need warnings not only for nuns, but for 
Congressmen as well. It is really going to be a tricky 
transition.
    The Chair recognizes the gentlelady from California Ms. 
Solis.

 OPENING STATEMENT OF HON. HILDA L. SOLIS, A REPRESENTATIVE IN 
             CONGRESS FROM THE STATE OF CALIFORNIA

    Ms. Solis. Thank you, Mr. Chairman.
    I would like to thank our ranking member and also the 
witnesses and panel that are going to be speaking here today.
    We only have 75 more days before we actually implement this 
program. That is not a long time. So I know that we have a lot 
to cover during our session here, and I hope to hear some 
innovative ideas of how we can fast-forward the information 
that is going to be so sorely needed in many of our 
communities.
    And one example I would like to point out is recently 
Univision, one of the largest Spanish-language networks, 
actually rolled out PSAs and is also promoting radio ads and a 
1-800 number operated with the FCC and NTIA for Spanish-
speaking consumers. That is a good start. I would hope that 
other major Spanish-language networks, as well as Asia 
networks, will also contact you and we have that rollout 
happening as soon as possible.
    I want to applaud also the cable industry and the 
broadcasters also for stepping up to the plate and putting in 
funding to also provide for PSAs and outreach. But one thing I 
am still concerned about is the fact that there is still so 
many people that don't know about this change that is going to 
be occurring, and the fact that so many of them are in 
communities of color, low-income, disadvantaged, elderly. In my 
case in my district, this is the situation where we still have 
rabbit ears that dominate many of the households in East Los 
Angeles and the San Gabriel Valley.
    So I am looking for leadership, and I am hoping that the 
FCC will take that leadership on and will help to provide 
clarity so that everyone is on board, and we really, clearly 
understand what it is that we are doing. And I raise that issue 
because in a commentary that I sent to the FCC, I asked for 
clarification on just language usage in terms of how you talk 
about a converter box, and we found that there were several 
different translations, and some that I wasn't aware of that, 
to be honest, are not words that are easily understood by many. 
And I think someone who went to college understands a little 
bit better than, say, maybe a grandmother who only has maybe a 
sixth-grade education.
    So I think there has to be clarity. I think there have to 
be standards at some point. And I think that the stakeholders 
have to be brought in and told and somehow directed as to what 
it is we are going to be doing.
    So I would ask the FCC to please become more engaged in 
this effort and provide the kind of leadership that is so 
sorely needed. We talk about converter boxes. There are 
different words you can use in Spanish to explain what that is. 
It is very confusing. And I know you stepped in and helped to 
weigh in and clarify that, but I think that is just one little 
instance. There is going to be more of that happening. And I 
would just hope that we could work together to see how we can 
provide that clarification.
    So I look forward to hearing your testimony and also 
working with you and also other stakeholders in this process.
    Thank you. I yield back.
    Mr. Markey. The gentlelady's time is expired.
     The Chair recognizes the gentleman from New Jersey Mr. 
Ferguson.

 OPENING STATEMENT OF HON. MIKE FERGUSON, A REPRESENTATIVE IN 
             CONGRESS FROM THE STATE OF NEW JERSEY

    Mr. Ferguson. Thank you, Mr. Chairman. I thank you and Mr. 
Upton for holding another hearing on the status of the DTV 
transition with less than a year and a half to go. This 
subcommittee can play a key oversight role, and it is in both 
the Government's and the industry's interest that the DTV 
transition proceed smoothly and efficiently and that no viewers 
are left behind.
    To that end I want to commend the industry's timely 
efforts. Both the broadcasters and cable have stepped up to the 
plate, presenting comprehensive and multifaceted DTV education 
campaigns that aim to ensure that all Americans, whether they 
subscribe to cable or receive over-the-air signals, will be 
educated to help make a seamless transition to digital 
programming.
    We in Government have an important role to play as well, 
from Congress to the NTIA to the FCC. We have to all work 
together to make sure that the transition is a success. And 
while we wait with interest for the FCC to rule on the DTV 
consumer education initiative, I urge this subcommittee to move 
the Digital Television Consumer Education Act, which will 
provide the Commission with additional authority to expand 
their capabilities for education and outreach.
    In the meantime, as the Commission proceeds with their 
order, I also want to strongly urge that it stay focused on 
educating our constituents and making the DTV transition a 
success, and to refrain from pursuing anticompetitive 
policymaking. We heard Mr. Doyle before talk about throwing a 
lot of things at the wall and to see what sticks. I would say 
we have to keep that in mind specifically when I refer to the 
continuing discussion at the FCC of multicast must-carry. I 
sincerely hope that the FCC does not allow itself to get 
sidetracked by a proposal that is not only unnecessary, but it 
is anti-free market, and, frankly, it is constitutionally 
suspect. The Commission already adopted a dual carriage 
requirement in September. Adding a multicast must-carry 
obligation to that at this critical point in time is an 
unwarranted distraction and could even be viewed as 
irresponsible. I strongly urge the Commission to continue its 
cooperation with NTIA and their good work in educating the 
American public and to focus on a successful transition rather 
than needless Government mandates and regulation.
    I want to thank you again, Chairman Markey and Mr. Upton, 
for holding this hearing. I thank our witnesses for attending. 
I look forward to hearing from them and getting their 
perspectives and updates on the status of the DTV transition, 
because this is something all of us clearly want to and need to 
get right.
    Thank you, Mr. Chairman. I yield back.
    Mr. Markey. The gentleman's time is expired.
     The Chair recognizes the gentleman from Texas Mr. Green.

   OPENING STATEMENT OF HON. GENE GREEN, A REPRESENTATIVE IN 
                CONGRESS FROM THE STATE OF TEXAS

    Mr. Green. Thank you, Mr. Chairman. And I would like to 
thank you for holding this hearing on the digital transition.
    I welcome our witnesses and look forward to their 
testimony.
    As we approach a start date for the converter box coupon 
application and distribution, it is important we bring in all 
involved parties to assess the situation and address the 
shortcomings that might occur anywhere in the process. It seems 
the transition is coming down to the tracks like a train at a 
full speed, and preparations are not keeping pace, especially 
education outreach efforts. I am very concerned that there have 
been no coordinated campaign to educate people first and 
foremost that the transition is coming, much less why they need 
a converter box, or that coupon program exists and they may 
start applying in January.
    I have seen a few commercials on the transition, but they 
have not been very clear and straightforward. If someone is not 
familiar with the transition, I doubt the commercials I have 
seen will give them any indication of what is going to happen. 
The toll-free number set for the converter box program, the 
800-DTV-2009, provides only limited recorded information. It 
doesn't offer an opportunity to speak to an operator about the 
transition.
    The Government's consumer education efforts would greatly 
improve by adding a national DTV call center and hotline where 
consumers could call in and ask questions of live staff who 
speak multiple languages and can help the elderly and people 
with disabilities. It appears that a lot of the outreach and 
education efforts are Internet-based. This is not going to 
affect inventory in vulnerable populations, such as the elderly 
and non-English-speaking households that typically rely heavily 
on the over-air reception and access to the Internet at low 
percentages than any other population. I understand there is 
going to be efforts to work with groups like AARP, the VA and 
other organizations that represent potentially vulnerable 
populations. But we are only 2-1/2 months away from the date 
applications for converter boxes can be submitted. This process 
seems to be moving much slower than it should.
    Monday's commitment by the National Association of 
Broadcasters to spend $700 million on DTV education and 
advertising is a promising sign that broadcasters nationwide 
are committed to ensuring there is a successful transition. And 
the cable's industry commitment of the $200 million in 
advertising is promising as well. I hope to see similar by all 
involved parties.
    The second issue I am extremely concerned about is 
retailers taking advantage of customers when they bring in 
their coupons for converter boxes. The FCC did a commendable 
job enforcing the analog labeling requirements by issuing 262 
citations to retailers who were not in compliance with the 
labeling order. I hope a similar proactive approach is taken 
with regards to consumers going into stores with coupons to 
pick up their boxes. It would be easy for a retailer employee 
to take advantage of a consumer who did not know the specifics 
of the converter box program or what other viewing options are. 
With the Consumer and Governmental Affairs Bureau and several 
FCC field offices across the country, I think it should 
seriously consider sending employees to stores to determine 
that these types of deceptive practices are going on.
    I am also aware of the DTV education notice of proposed 
rulemaking and hope you are able to move forward with that 
order quickly, especially with the language requiring employee 
training by participating retailers. Again, I want to thank our 
witnesses in having visited a few retail outlets over the last 
6 months. Earlier this year there was no information at all, 
but within the last month there is more information in a lot of 
the big-box retailers. At least there is information of that 
source so they don't end up buying an analog TV that was 
available, and, frankly, it was available last February and 
March, and now we are seeing that changed. But hopefully those 
folks who bought that analog TV and got a good deal on it 
understand that they are still going to have to have a 
converter box.
    With that, I yield back my time.
    Mr. Markey. The gentleman's time has expired.
     The Chair recognizes the gentleman from Illinois Mr. 
Shimkus.
    Mr. Shimkus. Mr. Chairman, I will waive. And I think Mr. 
Terry was before me anyway.
    Mr. Markey. The Chair recognizes the gentleman from 
Nebraska Mr. Terry.

   OPENING STATEMENT OF HON. LEE TERRY, A REPRESENTATIVE IN 
              CONGRESS FROM THE STATE OF NEBRASKA

    Mr. Terry. Thank you.
    Just to start off, I do think this is an important hearing, 
and we have had a series of hearings on the digital TV 
transition. And I think the folks in front of us in the 
audience can understand that we are nervous about the 
transition and how it is going to roll out because it has the 
potential, as one of my colleagues said, to really make our 
phones ring.
    Now, I have had a series of meetings with FCC officials on 
this subject, NAB, our local TV stations in Omaha, and I feel 
fairly comfortable where we are at. As Greg Walden said, we are 
400 and some days, a year and 4 or 5 months out. So on the 
timing issue of how and when we press it, I think is something 
worthy of discussion, because if you do it too early, you are 
going to create--I don't want to say a panic, that would be an 
exaggeration, but a concern too early. You want to do it at the 
right time where people can actually go out and get their 
boxes, get the coupons. You need to do it a little bit in 
advance. But if you are going to do it a year and 5 months 
early before coupons even come out, then I think you have 
mistimed the communications.
    And in regard to the discussions about how much money is 
being put up at the Federal level, again, I am not so concerned 
about that, because when I meet with the local officials, I am 
pretty impressed that each one of the TV stations in my 
district have a plan. And it is fairly aggressive in doing 
PSAs. And when I asked what programs; yes, they are going to 
run it, the Matlock rerun in the afternoon. They aren't just 
going to run these at 2:00 a.m. They want to make sure that 
their viewers have the information necessary; that if they rely 
on over-the-air TV, that they will get their set-top box and 
not miss a day.
    They have also agreed, and I don't know if this is just 
unique to Nebraska, but they are working with the United Way to 
make sure that they communicate with the various groups, 
whether it is the disabled community, deaf community, senior 
population, minority population, whatever. We are working, our 
TV stations are working, with United Way and the Office on 
Aging and other groups to make sure that the message gets out. 
So I see a pretty good plan out there. And I think the issue is 
not just about money, but about the effort.
    And I yield back.
    Mr. Markey. The gentleman's time is expired.
     The Chair recognizes the gentleman from Washington State 
Mr. Inslee.

   OPENING STATEMENT OF HON. JAY INSLEE, A REPRESENTATIVE IN 
             CONGRESS FROM THE STATE OF WASHINGTON

    Mr. Inslee. Thank you. I would like to address, we had some 
previous discussion about white spaces. I just was reading an 
article today I thought was kind of interesting in one of the 
Hill documents here, pointing out there has been some 
discussion about interference. And it was pointing out that 
Dell, HP and Philips are major retailers of high-definition 
sets, which would mean if there was going to be interference 
from white spaces, that they would be undercutting their own 
business model, if you will. And I thought it was an 
interesting comment, because I think it indicates at least 
three major players whose business model would be damaged if 
there was interference want to see movement forward to continue 
testing and continue to develop our white spaces solution. And 
I hope that would be the direction that we move.
    There also has been a suggestion that that become auctioned 
and that we allow folks to camp on spectrum. And I don't think 
that that is the most useful use of this spectrum. I hope that 
we are moving forward with continued testing in this regard to 
maximize use of this. I keep talking to folks who are ready at 
the gate to start access to these new technologies. I hope we 
are moving in that direction and look forward to discussion of 
that today. Thank you.
    Mr. Markey. The gentleman's time has expired.
     The Chair recognizes the gentleman from Florida Mr. 
Stearns.

 OPENING STATEMENT OF HON. CLIFF STEARNS, A REPRESENTATIVE IN 
               CONGRESS FROM THE STATE OF FLORIDA

    Mr. Stearns. Thank you, Mr. Chairman and Chairman Martin. I 
appreciate your forbearance here as we go through these opening 
statements. I think we are in pretty good shape here.
    Mr. Terry mentioned that he feels pretty confident about 
where we are at, and I sort of feel pretty confident myself, 
especially because the consumer electronic industry. Now, these 
are the ones that are going to be actually selling the boxes. 
Now they predict demand for subsidized boxes will be closer to 
8 million, and I think the FCC estimates over-the-air cable and 
satellite homes and broadcasters, estimates of interest, there 
should be a demand for 22 million subsidized converter boxes. 
So we have quite a discrepancy between the 22 million and the 8 
million. And according to recent reports, fewer consumers will 
be using these analog television sets with over-the-air 
antennas by February 17, 2009. So perhaps fewer still will need 
the subsidy.
    As Mr. Barton mentioned, the Nielsen estimates that only 13 
percent of TV households, representing about 14 million homes, 
will rely exclusively on over-the-air antennas on January 1, 
2008. So I think that is all good news. Furthermore, under the 
FCC rules, all television receivers manufactured since March 1, 
2007, must be able to receive digital signals over the air.
    So the combination of the new predictions, the combination 
of the FCC rules that are stated, I think when this actually 
occurs, there will be fewer consumers in need of this analog 
box because there will be less analog TV signals. And so I 
think that is all good news.
    Not to mention that the National Association of 
Broadcasters has a great amount of, shall we say, something at 
stake here. They recently announced a $700 million PSA campaign 
for the DTV transition. This effort will encompass a broadcast 
network and 95 TV broadcasting companies and include TV spots, 
educational programs and banners on TV Web sites.
    In addition, my colleagues, last month the cable industry 
announced it was launching a $200 million English- and Spanish-
language TV advertising campaign that will run until February 
2009. Spanish-language broadcaster Univision has begun airing 
30-second PSAs explaining the DTV transition on its TV network, 
local TV stations, radio stations and online sites.
    So, my colleagues, these examples demonstrate that market 
and nongovernment solutions to the DTV transition exist, they 
are working. The estimates are showing that it is coming down 
from the discussions we have had over a year ago. And I think 
that is all good news. But, as Mr. Barton, the chairman, talked 
about, if the Democrats want, they could move H.R. 608, the 
bill that he and Mr. Upton and Mr. Hastert introduced to 
replace consumer education requirements that were stripped from 
the original legislation by Senator Byrd in the Byrd rule. So 
we have a fallback. It is time to move on. The 24 MHz and 1 
billion for public safety is too important to be squabbling 
about. So I think we have good news in the offing with the 
combination of the National Association of Broadcasters, these 
new estimates that are coming in, and the FCC's ruling, and I 
look forward to their testimony.
    Thank you, Mr. Chairman.
    Mr. Markey. The gentleman's time is expired.
     The Chair recognizes the gentleman from Michigan Mr. 
Stupak.

  OPENING STATEMENT OF HON. BART STUPAK, A REPRESENTATIVE IN 
              CONGRESS FROM THE STATE OF MICHIGAN

    Mr. Stupak. Thank you, Mr. Chairman, and thank you for 
holding this hearing on the status of digital transition 
television or digital television transition. It is important 
that we stay on top of this issue as we are just 16 months away 
from the hard date deadline for the transition from analog to 
digital across America.
    More than 14 million households in the United States are 
completely dependent on free, over-the-air television. An 
estimated 41 percent of these households do not have the access 
or economic resources to switch to cable or satellite. Sixteen 
months is a very short time to handle such a significant 
transition. By relying so heavily on individual private 
interest to carry out the public service of consumer education, 
I believe we risk confusing Americans without uniformity in how 
the transition message is delivered.
    Consumer education is only part of the problem. Once they 
are properly notified, how will consumers in rural areas 
receive these converter boxes? Unlike Mr. Green, we don't have 
these big box stores that he speaks of. Rural communities like 
the district I represent cover a lot of territory, are sparsely 
populated, and are disproportionately dependent on analog 
transmission. If the experience of broadband deployment is any 
indicator, corporations driven by profit will not take into 
account the needs and challenges of rural consumers.
    Despite my concerns, I also realize that transition from 
analog to digital television holds tremendous promise if 
properly implemented. By freeing up the spectrum, hopefully 
rural America can begin receiving broadband where none exists 
thanks to new wireless technologies. Entry into the market will 
be less cost-prohibitive, and we can begin closing the digital 
divide. In addition, first responders will be able to move into 
the newly unoccupied spectrum, which they will use to work 
towards interoperability. However, the equipment for this 
transmission is expensive, with costs estimated to be over $20 
billion. But once completed, it will make our Nation safer.
    I have introduced H.R. 3116, the Public Safety 
Interoperability Implementation Act, which would create a trust 
fund for public safety agencies from the spectrum auction 
proceeds. Public safety is far too important and for far too 
long have been shortchanged. And so with the spectrum, but 
without proper equipment and infrastructure, there really is no 
value to law enforcement. I look forward to working with the 
Chairman in advancing my legislation.
    Mr. Chairman, thank you for holding today's hearing. I look 
forward to the testimony of our witnesses. I know many of us 
will be jumping back and forth because the FISA bill is on the 
floor today. I look forward to participating in this hearing as 
much as possible. Thank you, Mr. Chairman.
    Mr. Markey. The gentleman's time has expired.
     We also have with us the gentlelady from Tennessee Mrs. 
Blackburn, who has joined us, although she is not a member of 
the subcommittee. Would you like to make an opening statement?
    Mrs. Blackburn. Mr. Chairman, I will waive.
    Mr. Markey. Then the gentlelady will waive her opening 
statement.
    But I see arriving is the gentleman from Illinois Mr. Rush. 
And I would inquire as to whether or not he would like to make 
an opening statement at this time.
    Mr. Rush. Mr. Chairman, I will waive.
    Mr. Markey. The gentleman from Illinois will waive as well.
    Any additional statements for the record will be accepted 
at this time.
    [The prepared statements follow:]

Prepared Statement of Hon. Edolphus Towns, a Representative in Congress 
                       from the State of New York

    Thank you, Chairman Markey and Ranking Member Upton. I am 
very pleased that the subcommittee is holding this hearing. 
These oversight hearings allow us to keep the pressure on and 
make sure the DTV transition is handled smoothly because the 
benefits of transitioning are enormous, opening up desperately 
needed spectrum for first responders. I believe my constituents 
will support this transition if they are properly educated on 
how to keep their TV signal, if they feel they are treated 
fairly, if they know their Government is behind them, and they 
know why it's important. I look forward to hearing from our 
witnesses on how they plan to handle the operations and 
contractors carrying this complicated effort out and on what 
other ways government or industry can take to prepare us.
    I would like to welcome all of our witnesses today and 
congratulate them on their commitment to public service. I also 
want to make certain they know that this transition is a time 
in their careers when they can really shine. A smooth 
transition would be a crowning achievement that they could hang 
their hat on all their lives. Government agencies, industry, 
and public interest groups should work hand in hand so that 
they all have the right information they need to target the 
populations that are most vulnerable. I am particularly 
concerned with making sure seniors have the help they need to 
make the transition.
    I am pleased to learn of the efforts of local broadcasters 
and cable companies to begin educating millions of American 
television viewers on the transition to digital television. 
They play an important role in providing my community with 
timely news and information and it is imperative that viewers 
not lose access to such a critical service.
    Thank you, and I yield back the balance of my time.
                              ----------                              


Prepared Statement of the Hon. Lois Capps, a Representative in Congress 
                      from the State of California

    Mr. Chairman, thank you for holding this important hearing 
and for keeping our subcommittee focused on the continued 
oversight of the digital television transition.
    All of us on the subcommittee are fully aware of what will 
take place on February 17, 2009--but unfortunately our 
constituents are not.
    For those constituents who hear of the transition and 
attempt to make inquiries, the answers they receive can leave 
them even more confused.
    That said, for the purposes of this hearing I would like to 
focus on the need for a comprehensive DTV transition strategy, 
the need for accountability, and the need to promptly address 
the concerns of the deaf and hard of hearing.
    As GAO has reported, the lack of a comprehensive plan--or 
planning body--to oversee and implement various facets of the 
transition leaves our most vulnerable consumers at risk.
    Over 20 million households will need to purchase at least 
one converter box, and yet if a consumer walked into a retailer 
today with questions about the conversion they would likely be 
given misinformation.
    Where is the comprehensive plan to educate our consumers? 
Or to provide appropriate accountability mechanisms so that 
consumers are protected from misinformation and any potential 
glitches in the transition?
    Lastly, I want to be sure that we do all that we can to 
ensure that populations with hearing and vision impairments are 
not left behind in this transition. To this end, I look forward 
to the testimony of Mr. Stout and to hearing his 
recommendations in this area.
    Thank you again, Chairman Markey, for holding this hearing.
                              ----------                              

    Mr. Markey. Let us turn to our very, very distinguished 
panel. First of all, I would like to apologize to you for the 
number of Members who have arrived, kind of in historic 
numbers, to make opening statements before the beginning of a 
hearing. You are wondering what is going on, I am sure, and it 
is very simple. ``congressional expert'' is an oxymoron. It is 
a contradiction in terms, like Salt Lake City night life. I 
mean, there is no such thing as a congressional expert compared 
to real experts.
    However, on this one subject, a relationship between 
television sets and their constituents, Members of Congress are 
experts. This is one thing we all understand in our bones. And 
every Member wants each of you to understand how deeply we are 
immersed in ensuring that this digital television transition 
does not affect our constituents in a way that is adverse. And 
so we apologize to you, but that is something that you should 
understand in terms of how this panel, I think every 
Congressperson, will view this issue.
    So we will begin with John Kneuer, who is the Assistant 
Secretary for Communications and Information at the National 
Telecommunications and Information Administration from the 
United States Department of Commerce. We welcome you back, Mr. 
Kneuer. Whenever you are ready, please begin.

      STATEMENT OF JOHN M.R. KNEUER, ASSISTANT SECRETARY, 
COMMUNICATIONS AND INFORMATION, NATIONAL TELECOMMUNICATIONS AND 
    INFORMATION ADMINISTRATION, U.S. DEPARTMENT OF COMMERCE

    Mr. Kneuer. Thank you, Chairman Markey and Ranking Member 
Upton, members of the committee, for the opportunity to appear 
again before this committee.
    I am pleased to report that NTIA is making great strides in 
accomplishing the task Congress laid out in the Digital 
Television Transition and Public Safety Act of 2005. As you 
know, the DTV Act required NTIA to establish and implement a 
program allowing eligible U.S. households to obtain up to two 
$40 coupons to be applied towards the purchase of digital-to-
analog converter boxes. Now, when I last testified before this 
committee, NTIA's converter box program was in its earliest 
stages, and members of this committee appropriately asked 
important questions about how the program would ultimately 
unfold. Specifically members wanted to know who would be 
responsible for issuing coupons to consumers. Would 
manufacturers produce boxes to meet consumer demand? Would 
enough retailers participate in the program so that boxes would 
be widely available? And, most significantly, how could we 
possibly educate the American public with the $5 million made 
available for consumer outreach under the statute?
    Today I am pleased to report that NTIA, in coordination 
with other Government agencies, and in collaboration with a 
broad array of market participants, service organizations and 
consumer advocacy groups, has made enormous strides to ensure 
that the converter box program is run effectively, that 
consumers will have widespread access to coupon-eligible 
converter boxes, that the television viewing public is well 
informed about the transition, and that those members of our 
society with special needs could access the assistance they 
need to continue to have access to over-the-air television 
after the transition.
     On August 15, NTIA awarded a contract to IBM to manage 
three broad functional aspects of our coupon program--systems 
processing, financial processing and consumer education and 
communications. Under the contract, IBM is leading a team of 
partners that includes Corporate Lodging Consultants, which is 
responsible for retailer management, coupon distribution, 
coupon redemption and payment; Epiq Systems, which is handling 
coupon distribution and consumer support; and Ketchum, Inc., a 
global public relations firm that is leading the consumer 
education program. Each of these companies has extensive 
experience in each of the functional areas and has successfully 
implemented large and complex national programs.
    NTIA is on schedule to meet its obligations under the act, 
and beginning January 1, 2008 and continuing through March 31, 
2009, consumers will be able to request two $40 coupons per 
household to purchase an approved DTV converter box.
    We have also adopted rules to provide guidance to converter 
box manufacturers regarding the submission of test results and 
sample equipment for evaluation and certification. Pursuant to 
our regulations, certified converter boxes will possess 
performance features based on industry-accepted DTV standards 
as well as on FCC requirements for other television products.
    The regulations required, for example, to NTIA-certified 
converter boxes comply with the FCC's parental control or V-
Chip rule, emergency alert system rules, and closed-captioning 
requirements for converters. NTIA has certified Digital-to-
Analog Converter Box models from multiple manufacturers, and 
equipment from other vendors is currently being evaluated and 
tested.
    I am pleased with the number of manufacturers that have 
filed notices of intent and test submissions. I suspect more 
boxes will be certified over the weeks leading up to the 
transition, and a list of certified converter boxes, including 
make and model numbers, will be distributed with consumers with 
their coupons. We have also worked diligently with retailers to 
assure that consumers will be able to easily obtain converter 
boxes during the transition period.
    NTIA is actively working to make the program accessible and 
attractive to a full range of retailers in order to gain 
participation not only from large chains but from regional 
outlets and small, independent local stores as well. This month 
alone, we will send out approximately 25,000 mailings to 
smaller retailers so they can be made aware of the program and 
they can have information on how they can participate.
    At our public meeting and Expo on September 25th, Radio 
Shack, with 4,400 company-owned stores and 1,600 franchisees, 
announced they intend to participate in the program. In 
addition to stocking converter boxes, Radio Shack will train 
its sales associates on the coupon program, as well as engage 
in consumer education efforts both in the stores and on its Web 
sites. I expect other retailers will follow that lead.
    With regard to consumer education and outreach, to maximize 
the value of our $5 million in consumer education funds, NTIA 
has been working through partnerships to leverage support from 
a diverse range of stakeholders. In particular, the industries 
most directly affected by the transition--the broadcast, cable 
and consumer electronics industries--are actively informing 
their viewers, subscribers, and customers about the February 
17, 2009 transition date and the variety of options that 
consumers have to respond to it.
    Last month, the National Cable and Telecommunications 
Association announced a $200 million campaign to raise consumer 
awareness. On Monday, the National Association of Broadcasters 
launched its marketing campaign, valued at nearly $700 million, 
which was intended to generate 98 billion discrete impressions 
with consumers. The Consumer Electronics Association is running 
radio spots and has developed consumer-friendly tools, 
including a video that helps consumers understand their 
options.
    In addition to the broad public education campaign, NTIA 
recognizes that certain segments of society are more directly 
impacted by the DTV transition and may be least equipped to 
manage it on their own. Accordingly, we have identified five 
target groups for particular consumer education efforts: 
seniors, the economically disadvantaged, rural residents, 
people with disabilities, and minorities. These groups depend 
on over-the-air television to a greater extent than does the 
general population, and NTIA will carefully design and market-
test its consumer education materials to ensure the materials 
are accessible to and can be easily understood by these target 
communities.
    In addition, we are working in partnership with trusted 
intermediaries for these groups in order to get the word out 
and to provide help in obtaining and in installing converter 
boxes. By educating those groups and service organizations that 
already reach and assist these targeted communities, we will 
maximize available resources to ensure that DTV transition 
assistance gets to those who need it most.
    Working together in a broad public-private partnership, 
including NTIA, the FCC, more than a dozen Federal Government 
departments and agencies, market participants, and literally 
hundreds of nonprofit and service organizations, I am confident 
that we as a nation will conclude this transition smoothly, 
that consumers will be well-informed, and that financial and 
other assistance will be available to those who need it.
    Thank you, and I will look forward to your questions.
    [The prepared statement of Mr. Kneuer follows:]
    
    [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]

    
    
    Mr. Markey. Thank you, Mr. Kneuer, very much.
     Our next witness is the Chairman of the Federal 
Communications Commission, Kevin Martin.
    We welcome you back, and we enjoy working with you, and we 
thank you for being here today. Whenever you are ready, please 
begin.

STATEMENT OF KEVIN J. MARTIN, CHAIRMAN, FEDERAL COMMUNICATIONS 
                           COMMISSION

    Mr. Martin. Good morning, Chairman Markey, Ranking Member 
Barton, Ranking Member Upton, and all of the members of the 
committee. Thank you for inviting me to be here today to talk 
about the digital transition.
    Thank you, Chairman Markey, for the favorable comparison to 
Tom Brady. Except for, hopefully, my wife, I think you are the 
only person who might compare me to Tom Brady, but I appreciate 
the comparison nonetheless. With my athletic prowess, I thought 
a more apt comparison or analogy might be to our Red Sox 
manager, Terry Francona, but after last night's loss for our 
team, I am not sure that that is as good a comparison today.
    I certainly am as mindful as you are that February 17, 2009 
is only 16 months away, and I appreciate the opportunity to 
tell you what the Commission has been doing to try to prepare 
for this unprecedented event. I believe a successful completion 
of the digital transition depends upon minimizing the burdens 
placed on consumers and maximizing their ability to benefit 
from it. The Commission has taken some important steps to that 
end, but there is still more we need to do. Our efforts to date 
have been threefold:
    First, we have been focused on getting the right policies 
in place to facilitate a smooth transition.
    Second, we have been actively enforcing our roles to 
protect consumers.
    Third, we have been promoting awareness of the transition 
through our consumer education and outreach efforts.
    Through all of our activities, the Commission is committed 
to ensuring that no American is left in the dark. Now, our top 
priority has been to implement policies that will minimize the 
burden borne by consumers and maximize their opportunities to 
benefit from this upcoming transition.
    First, the Commission acted to dramatically reduce the 
number of consumers who would need a converter box to view 
broadcast signals after the transition.
    Second, we are resolving the main technical issues.
    Third, we are employing our authority and industry's 
resources to conduct a far-reaching effort to inform consumers.
    Finally, it is my hope that the Commission acts to 
encourage and to facilitate broadcasters' abilities to offer 
free additional changes so that DTV transition is a benefit 
rather than a burden to consumers.
    The Commission recently adopted an order that guarantees 
that all cable customers will be able to watch all of the 
broadcast stations after the digital transition. Specifically, 
the Commission took action to ensure that cable operators 
continue to make signals of all broadcast stations viewable 
after the transition, as the must-carry statute requires. With 
this action, we were able to significantly reduce the number of 
Americans potentially needing a converter box to watch 
broadcast stations post-transition.
    Making sure that the almost 35 million households that 
subscribe to analog cable are taken care of allows us to focus 
all of our energies on assisting the nearly 15 million 
households that rely exclusively on over-the-air signals.
    Now, in August of this year, the Commission also adopted 
the final DTV table of allotments. This order provided over 99 
percent of the full power television stations across the 
country with their final digital channel assignment. Today, 95 
percent of all television stations are already broadcasting in 
digital.
    In April of this year, the Commission also adopted a 
labeling order that required sellers of analog-only televisions 
to disclose that at the point of sale. Retailers must state 
that the TVs include only an analog tuner and, therefore, will 
require a converter box to receive over-the-air broadcast 
television signals after February 17, 2009.
    At the suggestion of Chairman Dingell and Chairman Markey, 
we initiated a DTV education notice of proposed rulemaking 
earlier this year. I recently circulated to my colleagues an 
order that would require the following: Broadcasters would use 
PSAs and screen crawls throughout the day to inform viewers 
about the transition. Broadcasters would also publicly report 
on these education efforts on a quarterly basis. MVPDs, cable 
operators and satellite operators would provide monthly inserts 
about the DTV transition in their customers' billing 
statements. Manufacturers of television receivers and related 
devices would provide notice of the upcoming transition to 
consumers when they are selling their equipment. All of the 
Commission's DTV partners would provide quarterly updates on 
their consumer education efforts. Finally, we would continue to 
work with NTIA to ensure that the retailers participating in 
the converter box program are appropriately training their 
employees and informing their consumers.
    Finally, I believe that one policy action in particular 
could fundamentally change for the better the course of the 
digital transition. Broadcasters should be able to and be 
encouraged to use their digital spectrum to send multiple 
television signals to consumers for free. Right now, a 
broadcaster using analog technology transmits one programming 
stream, which we think of as a television channel. With the 
digital spectrum, broadcasters can put out not just one 
programming stream but several, so a broadcaster could 
broadcast two or three channels at the same time--for instance, 
a movie channel, a 24-hour news channel or a sports channel--
with no additional cost to the consumer and no need for 
additional spectrum.
    In short, multicasting enables broadcasters to provide 
consumers with more free television programming. I believe that 
the ability to view new broadcast channels would facilitate the 
transition by providing people with an incentive to get a 
converter box.
    As things stand today, over-the-air consumers have the 
burden of purchasing a converter box just to maintain the 
status quo. This burden is probably why a majority of those 
aware of the transition think that the Government is on the 
wrong track, according to a recent APTS survey. The message we 
have been sending is simply not appealing: You need to buy a 
new box or you will lose your TV altogether.
    But what if we had a more positive message: If you get a 
new digital television or a converter box, you will be able to 
watch a wide array of new, free programming. Then what was a 
burden will become a meaningful benefit. The opportunity to 
enjoy more programming choices would give consumers an actual 
incentive to be excited about adopting digital technology, and 
the faster they get that technology, the fewer Americans there 
would be at risk of being left behind in the dark in the 
digital transition.
    Now, this proposal is how it worked in Germany. In Berlin, 
the opportunity to receive more free channels drove people to 
proactively purchase converter boxes instead of viewing the 
need to do so as a burden. Before the transition, over-the-air 
viewers in Berlin received only 12 channels, but after the 
transition, they received 27. A German Government report 
analyzing the transition concluded that the switchover resulted 
in less protests than they had anticipated, in part because of 
the added value of receiving more services and channels.
    Indeed, the GAO has also analyzed the Berlin transition and 
has made similar findings. Mr. Goldstein, who also has done a 
study on Berlin, concluded that the government industry and 
consumer representatives with whom we spoke mentioned several 
factors as contributing to the success of the Berlin DTV 
transition. These factors included the following:
    The DTV transition provided enhanced consumer value for 
Berlin households as the number of channels available through 
terrestrial television increased from approximately 11 to 27, 
and it included an electronic programming guide. These new 
channels were available through terrestrial television, 
following the DTV transition, and they existed on cable and 
satellite systems. And there was good cooperation between the 
Government officials and industry, which helped ensure that the 
consumers all received these additional channels.
    I believe that what worked in Germany could work here as 
well, and I have circulated a proposal to my colleagues that 
will help facilitate multicasting and will require cable 
companies to carry these additional multiple streams as free 
programming to consumers. And I am hopeful that a majority of 
the Commission will soon realize the potential benefit of this 
policy for the DTV transition.
    Now, the Commission's DTV enforcement efforts have also 
focused on protecting consumers from the unknowing purchase of 
TVs without digital tuners. We are enforcing three rules: the 
requirement to label analog-only televisions; the prohibition 
on shipping analog-only televisions; and the requirement that 
the V-Chip function with digital technology.
    With respect to labeling, our staff has inspected nearly 
1,280 retail stores and Web sites, and we have issued nearly 
280 citations, notifying retailers of violations. We have 
circulated among the commissioners notices of apparent 
liability against 14 retailers, for a total of over $3.5 
million. We have also issued NALs against two companies for, 
apparently, shipping only analog televisions, receivers and 
equipment.
    Finally, thanks to information referred to us by Chairman 
Markey, we have circulated NALs against three manufacturers for 
violating our V-Chip rules as well. The fines total over $11 
million. One company had failed to include a V-Chip in the 
digital television altogether, while two others had made TVs 
whose V-Chips were not capable of being updated and adjusted to 
changes going forward.
    The swift enforcement of all of our DTV-related rules is 
critical to protecting consumers, and our activities in this 
area will continue to be a priority.
    Now, in addition to our policy and our enforcement 
activities, the Commission has been actively promoting consumer 
awareness of the upcoming transition. Given our current 
resources, we are prioritized, reaching consumers who are the 
least likely to be aware of the transition, including senior 
citizens, non-English speaking and minority communities, people 
with disabilities, low-income individuals, and people living in 
rural and tribal areas. We have focused our efforts on three 
primary activities: presenting DTV information at conferences 
and events; disseminating information via the news media; and 
partnering with industry, consumer and other groups to help 
facilitate the message.
    Now, with respect to conferences and events, the Commission 
staff has been distributing DTV education materials at as many 
conferences as possible. In the last few months, we have 
attended or have participated in 30 conferences. Earlier this 
month, I spoke about the digital transition at a technology 
summit that was part of the Congressional Hispanic Caucus 
Institute, and we plan to participate in at least 30 more 
events this year. We are also utilizing the agents in the 
Commission's field offices around the country to expand the 
scope of our consumer education efforts. Representatives in 
each of our field offices have been targeting communities that 
risk getting left behind in the DTV transition. Through the 
work of our field agents, we are able to reach consumers in 36 
States. We have distributed information to over 1,400 senior 
centers, senior organizations, community centers, and groups, 
and have given nearly 50 presentations.
    Mr. Markey. Mr. Chairman, you are going to get a lot of 
questions. Is it possible that you could summarize?
    Mr. Martin. Sure.
    We anticipate providing information to over 2,000 
organizations and making another 350 presentations just this 
year.
    Obviously, I would ask that my full statement be entered 
into the record. With all of the rest of the activities that we 
have had ongoing, I think we are committed to devoting 
significant resources in facilitating the transition, 
continuing with our three-pronged approach of policy making, 
enforcement and consumer outreach, and we intend to take 
whatever actions are necessary to minimize the potential burden 
of the digital transition on consumers and to maximize the 
ability of consumers to benefit from it.
    Thank you.
    [The prepared statement of Mr. Martin follows:]
    
    [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]

    
    
    Mr. Markey. Thank you. Your entire statement, which looks 
voluminous, will be included in the record in its entirety.
     Our final witness on this first panel, Mr. Mark Goldstein, 
is the Director of Physical Infrastructure Issues for the U.S. 
Government Accountability Office.
    We welcome you, Mr. Goldstein. We appreciate your work on 
behalf of the subcommittee. Whenever you are ready, please 
begin.

      STATEMENT OF MARK L. GOLDSTEIN, DIRECTOR, PHYSICAL 
  INFRASTRUCTURE ISSUES, U.S. GOVERNMENT ACCOUNTABILITY OFFICE

    Mr. Goldstein. Thank you, Mr. Chairman. I will be brief in 
the interest of time. I know you have a lot to do this morning 
yet.
    Mr. Chairman and members of the subcommittee, I am pleased 
to be here today to report on our work on the progress made in 
the Nation's transition to digital television. We have a 
detailed report on the public and private sector efforts 
underway to implement the transition; that will be issued in 
November 2007. The findings that I am reporting to the 
subcommittee today are based on our draft report and, 
therefore, are preliminary.
    In my testimony today, in particular I will discuss the 
progress made by Federal entities in conjunction with other 
stakeholders in facilitating the transition; the progress made 
in educating consumers about the transition; the progress made 
implementing a subsidy program for converter boxes; the 
technical issues facing the broadcast industry in meeting the 
transition; and the future work on the progress of the 
transition that we plan to undertake in the next 16 months.
    In summary, No. 1, the FCC and the NTIA, in conjunction 
with other stakeholders, have taken steps to facilitate the 
transition. For example, the FCC has conducted periodic reviews 
to report on transition progress, and NTIA has issued a 
contract for administrating a converter box subsidy program. In 
addition, private sector industry have begun preparing for the 
transition. Despite public and private sector interaction 
designed to help facilitate the transition, however, we found 
that no comprehensive plan exists for the DTV transition. 
Without such a plan, meaningful guidance for coordinating 
responsibility and for measuring progress might not be 
available to the private or public sector.
    Two, several Federal and private sector stakeholders have 
begun consumer outreach and education campaigns with both 
independent and coordinated efforts underway. The FCC and NTIA 
have developed informational materials and have begun direct 
outreach to consumer groups. In addition, private industry 
stakeholders have created the DTV Transition Coalition and are 
voluntarily conducting outreach efforts. However, these efforts 
are in the planning stages for the most part, and challenges 
remain. An expert panel that we convened identified potential 
challenges in key practices for our consumer education 
campaign, such as defining goals and objectives and 
establishing metrics to measure success.
    Three, NTIA has made progress in implementing the converter 
box subsidy program, but the program's outcome depends on the 
voluntary participation of retailers and manufacturers. The 
retailers we contacted expressed concerns about the possibility 
of a redemption system that would affect their point-of-sale 
systems, and they stated they would need more information on 
IBM's technical solution before they could assess the impact on 
their systems and whether it would affect their participation. 
With limited or delayed retailer participation, consumers might 
face difficulties in redeeming their coupons for eligible 
converter boxes.
    Four, although most television stations already transmit a 
digital signal, technical and coordination issues such as 
antenna replacement and tower construction may present 
challenges for broadcasters in preparing for the DTV 
transition. In addition, cable and satellite television 
providers must coordinate with broadcasters to ensure that they 
can continue to receive and to transmit the digital broadcast 
signals after the transition. Further, select stations that 
retransmit television signals, known as ``translator 
stations,'' are not required to cease analog broadcasting. 
These stations may choose to retransmit a digital signal or 
they may convert the digital signal to analog and continue to 
broadcast in analog after February 2009.
    Five, we plan on reporting on the progress of the DTV 
transition, including public and private efforts in 
facilitating the transition; the status of consumer education 
and awareness about the transition; IBM and NTIA's 
administration of the converter box subsidy program; and 
industry technical preparations throughout the upcoming 
transition period.
    For example, we will continue to monitor consumer education 
programs and plan to conduct a series of consumer surveys 
throughout the year prior to the transition date. The surveys 
we conduct will be aimed at determining the population that 
will be affected by the transition and the public awareness of 
the transition. Throughout the transition process, we will 
continue to monitor Government and industry consumer education 
efforts, and will analyze the efforts compared with key 
practices for consumer outreach. In addition, we plan to survey 
broadcasters on the technical issues that must be addressed 
prior to the transition date.
    Mr. Chairman, this concludes my statement. I would be happy 
to respond to any question that you or any member of the 
subcommittee may have.
    [The prepared statement of Mr. Goldstein follows:]
    
    [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]

    
    Mr. Markey. We thank you, Mr. Goldstein, very much, and we 
thank each of our witnesses.
     The Chair will now recognize himself for a round of 
questions. I am going to begin with you, Mr. Goldstein.
    You have testified here this morning that the Federal 
Government lacks an overall DTV transition plan, that it has no 
plans to monitor the transition and has no contingency plan 
should the transition run into problems.
    What in your judgment is the biggest threat to the overall 
success of the transition that could be mitigated if the 
Federal Government engaged in comprehensive planning?
    Mr. Goldstein. Mr. Chairman, we felt with respect to the 
overall planning that there were not strategic goals, that 
there were not strategies and resources that were defined, that 
there was not an identification of key stakeholders, that there 
was not a risk mitigation plan that would have included 
understanding the alternatives, should issues arise that had 
been undeveloped and unprecedented, and so that really 
concerned us.
    We are not advocating that the Government take over control 
or be a czar, but the Government, particularly the FCC in its 
role of being in charge, essentially, of the Government's 
spectrum and of the airways, we felt had a broader 
responsibility to be able to ensure that the risks in the 
transition be mitigated as best as possible, because otherwise 
the challenges that we talk about in our testimony in all of 
its aspects, whether it is consumer education, whether it is 
the ability to have a box, whether it is some of the technical 
issues related to ensuring that the footprint of the analog and 
digital airwaves that people are still able to receive even if 
they--even if you go out and you get a box and you have that 
box, if the broadcast companies and the cable companies have 
not had sufficient conversation to determine whether or not 
cable head-ins can still receive the broadcast signal, you are 
still going to have consumers who are in the dark.
    So there are still plenty of issues that need to be dealt 
with. And we think that greater coordination and greater 
communication at all levels are necessary. And this can be 
done, we think, best through having a more comprehensive 
planning process that the Government at least ensures gets 
underway with the private sector involved.
    Mr. Markey. Thank you, Mr. Goldstein, very much.
    We do not want to make anyone a czar either. The Russians 
killed the czar. We want to make them Tom Brady. That is our 
goal and our effort.
    Let me ask you this, Mr. Kneuer. As I understand it, the 
NTIA will not reissue a coupon if a consumer's coupon expires 
after 90 days. So tell us what would happen in the following 
situation:
    A consumer has a coupon for a converter box. On the 90th 
day, the consumer goes to Best Buy to use the coupon, but Best 
Buy does not have any boxes in stock. As a consumer, although I 
have procrastinated until the last day, I have done what I am 
supposed to do.
    What happens at that point? Am I out of luck?
    Mr. Kneuer. One of the things we are talking with retailers 
about is precisely the circumstance you described, that a 
consumer comes in--whether it is the 90th day or it is the 15th 
day--and there are not boxes in the stores. It is whether or 
not they can conclude that transaction with the consumer in the 
store, either treat it as an online transaction for the 
consumer to come back or to have it delivered to their home or 
to have the consumer come back and pick it up at that time. So 
we do want to make sure that consumers are not disenfranchised 
in that circumstance.
    The more systematic approach is to encourage the broadest 
possible participation by retailers and the broadest possible--
--
    Mr. Markey. It should not be a requirement, though.
    Should it be a requirement that retailers have to honor 
that coupon if they have walked into the store before the 90th 
day?
    Mr. Kneuer. That is something we can look into making an 
affirmative requirement as a business case in the program. It 
is not currently included in the program.
    Mr. Markey. No. What I am saying to you is that I recommend 
to you that you make it a requirement. That is, if the retailer 
is participating in the program and someone shows up and they 
are representing themselves to have these boxes, what about the 
issue of then should the retailer then have to ship it free of 
charge to the consumer if they did not have it in the store?
    Mr. Kneuer. I do not think we have authority to require 
additional subsidies if it is part of their normal mail order 
process. If they do things free of charge or if they charge for 
the mailing of it, I do not think that in our program we would 
have the authority to require that----
    Mr. Markey. But do you have the authority to require them 
to have boxes in stock?
    Mr. Kneuer. No, we do not have the authority to require 
supply chains. We do not.
    Mr. Markey. So what do you get for participating? They can 
represent that they have them. People show up. ``We do not have 
them, but we have this wonderful digital TV set here. Why don't 
you buy the digital TV set? We do not know when we are going to 
have those converter boxes that we advertised in the newspaper 
saying that we have.''
    So how do we handle that situation? It is rife with 
potential for a bait and switch.
    Mr. Kneuer. Sure. Sure. That is sort of obvious consumer 
fraud, a classic bait-and-switch campaign where they advertise 
``We are your DTV coupon eligible box headquarters,'' and they 
do not have boxes; they just have $500 TV sets, and they are 
doing hard sells on consumers.
    Our vendor, who has responsibility for the retailer 
relationship, for certifying retailers, is going to be doing 
spot checks in stores to make sure that they are educating 
their consumers, that they do have----
    Mr. Markey. But what conditions can you put on retailers in 
order to make sure, if they are going to represent they have 
these boxes, that they have them and, if the consumer shows up, 
that the retailer will provide them to the consumer and that 
there is no extra charge if they are out of those boxes at that 
time?
    Mr. Kneuer. If we found evidence of a retailer that was 
consistently out of stock, there may, in fact, be times that a 
retailer does run out of boxes, but if we had reports or 
evidence that there was a consistent pattern, we would have the 
ability to decertify those retailers.
    Mr. Markey. Right. So, again, the coupon has expired; there 
is no box; it is not the consumer's fault; it is the retailer's 
fault. What are we going to do for the consumer?
    Mr. Kneuer. Irrespective of whether it is the 90th day or 
the 15th day, in our outreach and in our conversations with 
retailers we are raising this issue with them. Can you execute 
the point-of-sale transaction----
    Mr. Markey. But what do you do if they do not comply? What 
if they don't? What are you going to do?
    Mr. Kneuer. If they do not agree to have those sorts of 
processes in place?
    Mr. Markey. Yes. What are you going to do to them?
    Mr. Kneuer. Those are the sorts of things that we are 
working through on a business case with the retailers.
    Mr. Markey. Yes. I think the retailers have to know up 
front what you are going to do to them, and then they will 
comply. If they think you are going to be counseling them at 
the 90th day, just talking to them, then unfortunately there 
are going to be too many consumers out there who will be 
walking around a store, without any converter box being in it, 
now being counseled by this salesman, ``You know these new 
digital TVs only cost $350. You should get one of these anyway. 
Why wait?''
    So why don't we try to figure out some way of having a real 
set of sanctions that can be imposed upon them and that they 
know about it and that they are being told very clearly what 
will happen to them if they do not honor that coupon as it is 
being presented.
    Mr. Kneuer. Throughout our relationship with retailers and 
in designing this program, we want to balance those sorts of 
requirements on retailers with also having it be a program so 
that we have a very broad cross-section of retailers. There may 
be rural stores or smaller retailers that are not part of big 
chains and that do not necessarily have the capability to do 
shipping and transactions of that kind. So we want to make sure 
that we are doing everything we can to make sure the retailers 
are educating consumers and that retailers that participate in 
this program are not engaging in those sorts of fraudulent 
activities. But we also want to make sure that we are not 
raising burdens that exclude classes of retailers that may 
serve people in other communities other than the large----
    Mr. Markey. OK. Again, what I am saying is, in my district 
where we have all big stores, I just want them to know that 
there is going to be a penalty. Now, it sounds like you want to 
make a rural America exception, that rural Americans can be 
treated differently, those consumers. Then if you have got a 
separate set of protections for rural Americans that is not as 
stringent as for urban and suburban, I would like to hear that. 
But I think where there are big stores, there should be.
    Mr. Kneuer. No. We absolutely will have sanctions. If there 
are retailers that are actively misleading customers and that 
are consistently out of supply, and we have evidence to the 
fact that they are using this simply----
    Mr. Markey. I am saying even beyond consistently.
    I am talking about that consumer who is standing there. 
They do not know anything, and they have to have some 
protection. The store manager has to be there to say, ``But we 
are going to honor it. Do not worry. We will get it for you in 
a week.''
    Mr. Kneuer. That is why we are in discussions with 
retailers, to find out what their capability to do that is. It 
is certainly something that we want them to be able to do, to 
make it as easy for consumers and to not disenfranchise 
consumers when they show up at the end of the expiration date.
    Mr. Markey. OK. Well, I think there have to be very firm 
requirements that are placed upon these stores.
    My time has expired.
    The Chair recognizes the gentleman from Michigan, Mr. 
Upton.
    Mr. Upton. Well, thank you, Mr. Chairman.
    I have a number of questions as well, and I just want to 
say that as I and as Chairman Markey have indicated, do not get 
between us and our TVs. We all have our own MOs as we watch the 
programming that we do, and I for one have already seen the ads 
that have been on my cable company a number of times over the 
last couple of weeks. In fact, I know, based on some 
constituent conversations, that our constituents are beginning 
to get a glimmer of the changes that are there, and it is not 
too early for this process to begin because they want to be 
ready. Particularly for those with over-the-air broadcasts--of 
which, though, I have cable at my home in Michigan--clearly 
those questions are starting to be asked. And I think that it 
is important for folks to realize if they have--I made a speech 
this morning at breakfast. If you have a set with cable or 
satellite, really you do not need to worry about getting that 
cable box.
    The question, Mr. Chairman, that I have for you is: as 
people are beginning to watch these ads, they are beginning to 
say, ``Where do I need to get the box?'' it is my understanding 
that they are going to be available in many retailers after the 
first of the year.
    Where are we in terms of the number of boxes that are 
certified? How many do you think that we will have certified 
and ready to go to the store shelf by the first of the year?
    I understand that--I think behind Mr. Kneuer--oh, there it 
is. Is that bigger than your TV?
    Oh, Markey left. I do not know if that is bigger than Mr. 
Markey's is. Is that bigger than your TV? Do you see the 
converter box over here? You are not going to electrocute 
yourself.
    John, hold it up for him to see.
    Mr. Kneuer. I think this is, in fact, the very first box.
    Mr. Upton. Has that been certified?
    Mr. Kneuer. This is a certified box. We have certified 
multiple boxes from multiple manufacturers. We have a huge 
expression of interest from lots of manufacturers.
    The way the system works is in order to get certified, they 
need to submit boxes to us for testing. We are working under an 
MOU with the FCC and are using their labs, but we test them to 
make sure that they perform the function for which they are 
designed, which is the digital----
    Mr. Upton. So how many have been certified already, how 
many different boxes?
    Mr. Kneuer. We have multiple boxes from multiple 
manufacturers. I think we have three.
    Mr. Upton. Three so far? How many do you expect that we 
will have ready by the end of this calendar year?
    Mr. Kneuer. I would not hazard or make a guess as to the 
total number, but we have had boxes submitted by major 
manufacturers and have a very large expression of interest from 
multiple supply sources.
    Mr. Upton. Of those that have been certified, are they 
already in production, then? Are they getting them ready in the 
warehouses to be shipped out?
    Mr. Kneuer. That is my understanding, yes.
    Mr. Upton. Mr. Goldstein remarked in his testimony that he 
was aware that perhaps some of the major retailers were not 
quite ready for the boxes. Have you found that? Have either of 
you--I know this is probably more of a question for, I guess, 
IBM, and we are going to have another hearing later on this 
month. What have you heard?
    Mr. Kneuer. One of the things that we focused on in putting 
out our request for a proposal was how would you deal with 
retailers and how would you make this a program that would be 
nondisruptive to the ordinary retailer operation.
    As to the point-of-sale issues that Mr. Goldstein was 
talking about, in fact, it was IBM's experience in point-of-
sale and back-office software sorts of issues that that was one 
of the stand-outs of their proposal. In fact, the retailers 
that we have spoken to are very comfortable with the IBM point-
of-sale system. In fact, IBM has designed point-of-sale 
operations for large retailers, so it is a system that----
    Mr. Upton. So you have talked to Best Buy and to Radio 
Shack and to Sears?
    Mr. Kneuer. CLC, our vendor who has responsibility for the 
retailer outreach, is in negotiations and discussions with a 
large number of the top, I think, 50 largest retailers. Like I 
said, then we are also reaching out to small, local retailers. 
We are sending out 25,000 letters to those small retailers.
    Mr. Upton. Do you see any distress signs thus far?
    Mr. Kneuer. No.
    Mr. Upton. Again, I know it is going to be the focus of 
another hearing.
    Mr. Goldstein, where did you get your information? Which 
retailers seem to be posing some problems or not having the 
right information?
    Mr. Goldstein. Congressman, we talked to a number of 
different retailers, and I would be happy to provide that 
information to you later on. We can tell you which ones and the 
like.
    We did talk to IBM just the other day, because we are 
continuing our work, of course, and in our discussions with 
IBM, they did indicate that they are in serious negotiations 
with 23 large retailers right now. But they do not have a 
target date right now as to when they are going to be ready to 
redeem the coupons, and they are seeking input from the 
retailers for this.
    Mr. Kneuer. I think part of that disconnect may have been 
that the retailers had yet to have those conversations with 
IBM. And I think as they are having those conversations, they 
are getting a very high degree of comfort that the point-of-
sale issues are going to be very miniscule.
    Mr. Upton. What I have heard from the retailers that I have 
talked to is that they are excited about this new product 
because they are going to have a new product that will bring 
people to their stores, and that they are anxious to get it on 
the shelves so that, in fact, they can begin to redeem--I mean, 
it is a product that they want and want to be able to sell.
    Mr. Kneuer. When we deliver the coupon to consumers, we 
will send them not just the list of certified eligible boxes by 
serial number, but the name of retailers and the locations of 
those retailers by their Zip Codes. So, if you request a coupon 
and it gets sent to your Zip Code, there will be a geographic 
range saying, These are the stores in your community that you 
can go to. And I think retailers will want to be on that list.
    Mr. Upton. OK. I yield back.
    Mr. Doyle [presiding]. Thanks, Mr. Upton.
    The Chair will now recognize himself.
    Mr. Kneuer, I just want to follow up on something Chairman 
Markey asked you about.
    Now, your contractor has the ability to track these 
individual coupons through the system from issuance to 
redemption; is that correct?
    Mr. Kneuer. That is right.
    Mr. Doyle. It seems to make sense to me that if they can be 
tracked, you can also track to see if someone's coupon expires, 
and you will know if someone used it.
    Mr. Kneuer. That is right.
    Mr. Doyle. So I can think of many good reasons, in addition 
to what Mr. Markey brought up, if someone goes to a store a 
couple of times and they are out of the boxes, or someone is 
deployed in Afghanistan or in Iraq, or some senior citizen's 
grandkids are going to hook up the box and are not going to 
come until Thanksgiving. There are just a lot of reasons.
    If you can track these coupons and you can see when they 
have expired, why not err on the side of the consumer and just 
put them to the back of the line and reissue these coupons?
    Mr. Kneuer. The statute says that consumers may request up 
to two coupons and that they expire within 90 days. So I think 
the statute constrains our ability to reissue coupons, to issue 
more than two coupons, or to allow them to go beyond 90 days.
    Mr. Doyle. Why not fix the statute? I mean why not make 
this consumer-friendly? If we can track these coupons through 
the system, and we have the ability to do that, I mean why not 
just change the statute and make it more friendly to the 
consumer?
    Mr. Kneuer. I would defer to the Congress on the change.
    Mr. Doyle. Yes, I think maybe we should think about doing 
that because it should be more consumer-friendly.
    Chairman Martin, we do not want a czar, but what is wrong 
with a benevolent dictator or a guru or something like that? 
Why not have someone at FCC quarterbacking this thing to make 
sure that all of the various private sector groups that are 
going to be doing this outreach and information are coordinated 
in those activities? Why not have someone making sure that the 
message that is being put out there is clear?
    Mr. Martin. Oh, I do not think I have any problem with--and 
I think the Commission is involved in trying to quarterback a 
lot of these issues, as you would say.
    I think that the issues that we are discussing from GAO's 
standpoint involve technical issues, policy issues and 
education issues that are related to the box program. And I 
think the Commission is very involved in trying to set 
frameworks, timeframes, and goals for us to reach on the 
technical issues and on the policy issues.
    I think that the consumer education issues and the DTV box 
program are ones that are not solely in the FCC's control. That 
is something that we work on jointly with NTIA, and I think 
that the Commission is actively working on coordinating those 
efforts. Some of the resources that Congress decided on should 
be provided NTIA to coordinate the DTV box program. They should 
be responsible for $5 million in the education budget.
    As you indicated in your opening, we do not even actually 
have the $1.5 million. That is in this year's budget request. 
We requested money last year, and we received none from 
Congress on doing DTV education.
    So I do not have any problem at all with the Commission's 
taking an active role and trying to be involved in these 
issues, and I think we are.
    Mr. Doyle. As to what you have just said, NTIA is going to 
spend $5 million which is a drop in the bucket of what needs to 
happen. I mean the bulk of the real money that is going to get 
spent educating consumers is coming from the private sector. It 
is going to be the cable industry's spending however much they 
are spending and the broadcasters' spending however much they 
are spending. As I said in my opening statement, we have to 
remember these people are also competitors, and so the question 
is: What kind of message--predominantly, the message consumers 
are going to hear is going to be the $200 million cable message 
and the $500 million, whatever that figure was, broadcaster 
message. The $500 million NTIA message--we run campaigns here, 
and we know what rating points are. If I am spending $50,000 on 
my message and Mr. Upton is spending $5 million on his, people 
are going to hear his message, not mine, and he is going to 
win. So the message that our consumers are going to hear is 
really going to be a message of the broadcasters and the cable 
industry who are competitors, and not the government that does 
not have a vested interest in the message.
    So how do we make sure who on the Government level, whether 
it is NTIA or the FCC, is sort of watching all of this and is 
making sure that consumers are getting a clear message?
    Mr. Martin. Oh, I think it is going to relate to the coupon 
program. I think NTIA has to be the one that is watching it to 
make sure that those messages get to consumers about their 
rights and their responsibilities related to the DTV coupon 
program. I think that has to be NTIA. That program is a part of 
their responsibility.
    On the general DTV transition, I think the Commission would 
end up being the one watching to make sure that those messages 
are not misleading and that they are informing consumers in an 
appropriate way.
    Now, I am hesitant to say that we would be editing those 
messages ahead of time. And I think that that is what you were 
saying about you are not sure that there is a need for a czar, 
so to speak, of this. But I think the Commission is involved, 
and should be, in working with the industry to make sure that 
the messages that they are going to put out are going to be 
targeted to be the most effective.
    I think that in addition to the voluntary efforts that the 
industry has put forth, we have proposed, as Chairman Dingell 
and as Chairman Markey have suggested to us, that we have 
certain requirements for certain kinds of messages that should 
be put out. For example, a PSA campaign in scrawls that would 
be put out by broadcasters to inform their viewers, we would 
dictate that it would have to be done during certain day parts, 
and it would increase in frequency as we approach the 
transition.
    On those messages that we are requiring, I think that we 
would have a more direct role in supervising them, just like in 
the message that we require the consumer electronics 
distributors to put out for the tuners to say, ``Here is the 
message you have to tell consumers if you are selling a 
television without a digital tuner.'' Similarly, I think we 
will be involved in the message when we are requiring the 
industry to actually put that forth. It is different from the 
voluntary messages that they are putting out.
    Mr. Doyle. So, if you see messages coming out of the 
broadcasters or out of the cable industry or out of the private 
sector that you think are not clear messages to the consumers, 
the FCC will step in and take action?
    Mr. Martin. Yes. I think that if they were not clear or 
they were misleading messages, I think, yes, we would step in.
    Mr. Doyle. OK. I see my time has expired.
    I will now yield to the ranking member, Mr. Barton, from 
Texas.
    Mr. Barton. Thank you, Mr. Chairman.
    A point of full disclosure. When we designed this program 2 
or 3 years ago, we could have gone either way. We could have 
had a regulatory model telling the Government exactly what to 
do, and when to do it, and who has got to do it; or we could 
kind of set a loose framework, provide some funding and trust 
in markets. We decided on the latter, to do the market.
    I say that because I have listened with interest to what 
Chairman Markey and Congressman Doyle have said when kind of 
painting these worst-case scenarios. And I would have to say 
that if we used the same analysis in each of our campaigns, 
every member of this committee and in the Congress gets here 
because we get elected. We get elected every 2 years, in 
November.
    If the GAO went down to the sixth district of Texas, which 
I represent, and did an investigation of my campaign today, 
they would find out I am not doing any advertising; I do not 
have my volunteers manning the polls; I am not actively out 
doing advertising on radio or TV or in the newspapers. I do 
have $2 million in the bank. I know when the election is, and I 
am comfortable that when the appropriate time comes, I will put 
the campaign together, and hopefully the voters will reelect 
me. But I am not doing it today.
    Now, to go to Mr. Markey's question to Mr. Kneuer, I do not 
know how it is going to work in everybody's households. But in 
my household, what will probably happen is, sometime around 
Christmas of 2008, my wife will say, ``Joe, you know that DTV 
conversion is coming up. Have you got the converter boxes?'' I 
will say, ``No, Terri, but I will get it done.'' And I will not 
do it. Then on February the 19 or whatever the exact date is, I 
will get up and I will turn the TV on, and I will say, ``Darn, 
the TV is not working.'' Terri will say, ``Well, Joe, did you 
go get the converter box?'' I will say, ``No, I did not.'' She 
will say, ``Well, you had better go get it.''
    Now, I do not plan ahead, so I will just go to the nearest 
place, which I think is a Radio Shack, and I will walk in with 
my little coupon that has been provided to me by mail--or the 
debit card--and I will say, I want my two converter boxes.
    Now, let us say that there has been a run on converter 
boxes at that Radio Shack. They will say, ``I am sorry, Mr. 
Barton, but we are out of converter boxes.'' I am not going to 
call Mr. Markey or the FCC, I am just going to go to Wal-Mart. 
Now, my wife would call ahead. She would say, ``Do you have 
converter boxes?'' but oil is only $90 a barrel, so I will just 
hop in the SUV, and I will drive around until I find one.
     I do not think we need a regulatory model where there is a 
penalty if Radio Shack does not have the converter boxes. 
Somebody will have them at Best Buy, Circuit City, K-mart or 
Wal-Mart. You can get them on the Internet. Somebody will have 
a converter box for the Joe Barton household, you know?
    I am just not concerned as much as the chairman and as some 
of my friends on the majority that this thing is all going to 
go to heck in a handbasket. Because I trust markets, I trust 
self-interest, I trust the ability of people to visually become 
cognitive that something different is going to happen and to 
take active steps to make sure that they are ready for it. I 
just believe that.
    Now I want to ask you, Mr. Kneuer: Do you think that you 
have got adequate funding to provide the coupons for the 
converter boxes that will be necessary? Do you think the money 
that is in the law is sufficient?
    Mr. Kneuer. I do. If you go by the various estimates that 
we have been quoting here this morning, on demand, if we access 
the entire $1.5 billion, we have the ability to fund more than 
30 million coupons, and that is in excess of any of the 
predictions of demand that we have seen.
    Mr. Barton. I will ask Chairman Martin. Do you feel the FCC 
has got a handle on the technical issues that are involved with 
the down conversion at the cable head? I know there has been 
some concern about that. Do you feel like your staff and the 
experts at the FCC can work with the cable industry to make 
sure that works OK?
    Mr. Martin. Yes, I do. I think that we have been working on 
that, and that was one of the important issues we tried to 
address just recently in September when we made sure that we 
were working on the requirements to make sure that the cable 
consumers, including the analog consumers, are still able to 
watch those----
    Mr. Barton. I see that my time has expired, so here is my 
last question.
    Forget all of the concern about everything else. I want to 
ask each of you three gentlemen: On a personal basis, do you 
feel that you have enough time to convert your television sets 
by February 2009, or is there something the Government needs to 
do to help you get ready to do that in the next year and a 
half?
    Mr. Kneuer. I am all digital.
    Mr. Barton. You are ready.
    What about you, Mr. Martin?
    Mr. Martin. I am ready.
    Mr. Barton. What about you, Mr. Goldstein?
    Mr. Goldstein. I am ready as well.
    Mr. Barton. All right, that is three. OK. I think we are 
going to make it, Mr. Chairman.
    With that, I yield back.
    Mr. Markey [presiding]. I thank the Chair.
    The Chair recognizes the gentleman from Texas, Mr. 
Gonzalez.
    Mr. Gonzalez. Thank you very much, Mr. Chairman.
    My questions will go to Secretary Kneuer and to Chairman 
Martin.
    When we had a hearing back in March, in our staff memo--we 
need to commend that, by the way. Their memos are so excellent.
    Let me read something here.

    By law, the coupon program must begin on January 1, 2008 
and run through March 31, 2009. For the initial $990 million 
minus up to $100 million in administrative expenses, all U.S. 
households will be eligible to apply for up to two such coupons 
worth $40 each. If the initial funds are not adequate, the ad 
permits NTIA to certify that the program needs additional funds 
up to $510 million, bringing the cap total for the coupon 
program to $1.5 billion, minus up to $160 million in 
administrative fees. For these additional funds, the NTIA has 
chosen to restrict eligibility to exclusively over-the-air 
households. Households that subscribe to cable or satellite but 
that also have over-the-air television sets will not be able to 
receive coupons for this portion of the funding. Consumers 
requesting coupons during this stage will have to self-certify 
to NTIA that they do not subscribe to cable, satellite or other 
pay television services.

    Now we fast-forward, and I will read from today's 
memorandum, because that was March. Come September, the FCC 
does issue a ruling, and--if I can find the relevant part here. 
This is from today's memorandum:

    It has long been assumed that cable operators would 
accommodate their subscribers with analog television sets by 
down-converting broadcasters' digital signals to analog, and 
the head-in are providing subscribers with set-top boxes that 
down-convert a digital program into analog. Though, there was 
some concern * * *

    and it goes on about a couple of areas

    * * *  in September, the FCC adopted rules to ensure that 
all cable television subscribers, including those with analog 
equipment, can receive all local broadcast television signals 
after the DTV transition. Approximately 35 percent of all 
television homes, or 40 million households, subscribe to analog 
cable.

    It seems to me that, if we had had that in place, maybe we 
would not have had that memorandum, Mr. Kneuer, as to how we 
would proceed with the first portion of the money and then 
proceed to the second. Please educate me on this. It appears to 
me that you probably, as a result of the FCC's ruling in 
September, have captured a huge audience.
    Will you now have a situation where people who have no need 
for the converter boxes--and you are going to say, ``Why would 
they go and get one if they do not have any need?'' that is 
because certain things reside in the hearts and souls of 
certain people in this country. They would go over there, 
redeem the coupons, the vouchers, and get a converter, when in 
fact they have an analog TV, but because the cable company is 
obviously reconverting at the head-in, there is no need. So why 
in the world would you do that? Well, because they know that 
Mr. Markey and Mr. Barton are probably right, that there are 
probably going to be additional outlets for boxes, black 
markets and such, because the only ones who would have had to 
certify that they truly needed it would have been that second 
batch of individuals that seemed to be, really, the total 
universe that we are going to be mostly concerned with.
    What are the consequences of the September accommodation or 
ruling by the FCC on the original plan on how we were going to 
divvy up the monies? That is the first part of the question. 
But time goes on, and I want to give everybody enough time. So 
that is the first question to both the assistant secretary and 
to the chairman.
    Then the second question, Mr. Chairman, is going to be--and 
I appreciate what you are doing regarding the multicast aspect 
of it. I am just going to assume something. Correct me if I am 
wrong.
    If we allow the reconversion of digital to analog at the 
head-in, what does that do to capacity? What does that do to 
the ability of the cable company to actually free up that space 
where we can have additional channels?
    Now, I may be totally wrong on the technology, and I do not 
understand it, and I do want you to educate me on that because 
I know I have checked with my Time Warner people in San Antonio 
and, in essence, I think one digital signal is the equivalent 
of, I think, six analog signals, the same space. And I am not 
really sure if that is an accurate description. How does that 
impact your vision regarding multicast? And then you predicate 
it on additional space. I always try to reduce it to the most 
simple analogies.
    So the first part of the question: What are we going to do 
with all of these people who really do not need boxes, but they 
purchase them? Let us just say that could happen.
    Mr. Kneuer. When we designed the program and looked at that 
issue, looking at the legislative history and the record that 
we developed, we always expected that cable households would 
continue to have television in one form or another after the 
conclusion of the transition. There was also the realization 
that many cable households and satellite households have 
additional television sets that may not be hooked up to their 
service provider. The conclusion was that this transition was 
going to have a very broad impact across households and across 
American consumers. So we wanted to make the availability of 
financial assistance very, very broadly available, so we had no 
restriction on eligibility for the first $1 billion. If you are 
a cable household and you have additional sets that are not 
hooked up to the service provider--you have got Mr. Markey's 
set in the bathroom that you use in the morning--you ought to 
be able to get financial assistance if that is what you want.
    We wanted to shift the focus with the second $500 million 
to make sure that if demand started to outstrip the capacity of 
the program, that we would focus the resources to make sure 
that no household would completely lose access to television, 
without financial assistance. So those cable households would 
still have access to television after the conclusion of the 
date. Households that rely exclusively on over the air would be 
most at risk of losing television altogether, so we wanted to 
make sure the money went as far as it could possibly go to 
serve those consumers who most need it. And I would not change 
our decision based on the action that they took in September.
    Mr. Gonzalez. Chairman Martin.
    Mr. Martin. The action that we took in September was in 
doing our best to protect as many consumers as possible so that 
the analog cable consumers who subscribe to analog cable today 
will be able to watch broadcast TV the day after the 
transition, just like they did the day before.
    Some of those consumers may have other televisions that are 
not hooked up to cable. And I think that is what Secretary 
Kneuer was referring to, that they might still want to apply 
for a coupon. I would leave it up to the discretion of NTIA to 
determine how to utilize their limited resources to prioritize 
who should be at the top of and in the front of the line. What 
we are doing is trying to make sure that we can do everything 
we can to put the burden as less as possible onto consumers.
    As to the second question----
    Mr. Gonzalez. And I misspoke. It is one digital equals six 
analog.
    Mr. Martin. It is actually--there are disputes about how 
many digital signals can fit within what used to be the 
capacity of taking up an analog channel on cable. Some people 
say six; some people say up to 20. There is something in Comm 
Daily today that says up to 20-some, people claim. But 
regardless, when you switch over the cable system from an 
analog channel to a digital channel, you can fit in a lot more 
channel capacity. So I think that even if you just required 
carriage of the multi-casted signals on the digital tier, there 
seems to be significant amount of capacity on the cable 
systems. They could end up taking that on, and it will have a 
significant positive impact on the reach of those additional 
broadcast stations.
    Mr. Gonzalez. Thank you very much.
    Mr. Markey. The gentleman's time is expired. The Chair 
recognizes the gentleman from Oregon, Mr. Walden.
    Mr. Walden. Thank you, Mr. Chairman. I appreciate the 
opportunity to ask just a couple of questions. I just want to 
make sure, for the record, coupons are due out and available by 
January 1 2008?
    Mr. Kneuer. January 1, 2008.
    Mr. Walden. And how would somebody get that coupon?
    Mr. Kneuer. Either by phone, by mail, by fax, over the 
Internet. They can call on the phone and give their 
information. They can get on the Internet, and there will be a 
form available. There will be forms in hard copy generally 
available from a variety of sources. And so they can either 
mail that in or fax that in.
    Mr. Walden. How many people are likely to apply?
    Mr. Kneuer. In January?
    Mr. Walden. Total number available to apply, you estimate?
    Mr. Kneuer. The eligibility is for all U.S. households. And 
a variety of different sources are coming up with different 
predictions on demand. We are doing some polling and things on 
that as well.
    Mr. Walden. And what do you think?
    Mr. Kneuer. Fewer than the 30-plus million that we have an 
ability to fund.
    Mr. Walden. The reason I ask that is that I am assuming it 
is going to be in the $15 to $20 million range, I don't know. I 
am kind of pulling a number out of the air, as we all probably 
are right now. I remember going through the signup for Medicare 
prescription part D. There was an overwhelming of the phone 
system. There was a problem with the Internet system, all of 
that, as consumers tried to sign up for prescription drug 
coverage. You might want to talk to your friends at HHS about 
their lessons learned from that process as you go into, 
especially the dial-up part. Because of the waits on phones 
were very long and very frustrating, obviously, for folks. So, 
January 1, the coupons should be available to apply for. And 
how long would it take for a consumer to get that coupon back 
after they apply, if they go online? What are your folks 
telling you?
    Mr. Kneuer. For the very early phases of the program, we 
are going to manage the distribution of the coupons that we get 
requests for based on the availability of boxes and the 
availability of retailers. So if there is not widespread 
availability of boxes and widespread retailer participation in 
early days of 2008, we probably wouldn't send those coupons out 
until we had that visibility. But once the full system is in 
place, it will be a matter of days on the turnaround getting 
into the mail from the time we receive the request.
    Mr. Walden. It strikes me that that is going to be a 
frustration point for consumers who apply and don't get it. And 
maybe they were going to go 60 miles away outside of their Zip 
Code to get a box, and they can't do it.
    Mr. Kneuer. We have the ability to adjust the program in 
lots of different parameters throughout the entire part of the 
program. So the early forms will probably indicate expect a 
number of weeks for delivery. Or if you call on the phone, they 
will say the coupon will be there in a couple of weeks. Later 
it will be adjusted to match up with the supply. We don't 
anticipate in all of the research that we have done and the 
visibility we are getting from our vendors, we do not 
anticipate a large volume in the early days of 2008.
    Mr. Walden. What about the rollout of the boxes themselves? 
You brought a prototype there.
    Mr. Kneuer. This is actually a for market. It is not a 
prototype. This is a certified box.
    Mr. Walden. And are there any certified boxes available 
today in a retailer that you are aware of?
    Mr. Kneuer. Not coupon-eligible boxes. There are some 
digital-to-analog conversion devices that are integrated into 
other devices, DVD players and such.
    Mr. Walden. And when do the manufacturers tell you they 
will have these boxes ready to actually roll out and in the 
stores in the retailer outlets?
    Mr. Kneuer. Throughout our management of the program, it is 
going to be collecting information from the participating 
retailers, from manufacturers to the extent we can. A lot of 
this is very business, proprietary and sensitive information, 
so they don't want to put into a public record, we are shipping 
X number of units to the following stores because that can 
dictate competitive behavior by others. But we are working with 
the retailers who are certifying and getting a sense from them, 
because, like I said, when we deliver a coupon, we are going to 
deliver a list to the consumers, the certified boxes, here is 
where you go to get them.
    Mr. Walden. And I am thinking in my district, which is very 
rural--and I live in one Zip Code and people not too many miles 
away live in another--there is no retailer in that Zip Code. So 
are you going to pull multiple Zip Codes?
    Mr. Kneuer. We are working on the best way to deal with 
that scenario.
    Mr. Walden. Like within a 20-mile or 50-mile radius?
    Mr. Kneuer. It may not be exclusively Zip Code specific. We 
have the Zip Code of the consumer because that is where we are 
mailing the boxes. And then we may say it may be a geographic 
within 10 miles, within 15 miles. We are working through what 
we have the capability to do.
    Mr. Walden. I hope those of us, especially in rural areas, 
you will look at how big a swath you need to reach out to. It 
may be 100 miles. I have parts of my district that are at least 
100 miles to the nearest stop light, and I am not exaggerating, 
and 5 miles to the nearest freeway. And so what works in an 
urban area, as you well know, won't work in a rural area. Can I 
beg your indulgence?
    Mr. Markey. Only that the roll call is about to break, and 
I want to allow the members. I apologize to you.
    Mr. Walden. I remain deeply concerned about the rollout of 
the boxes, would be the one point I would leave you with.
    Mr. Markey. I thank the gentleman. Just to make sure as 
many members can ask questions.
    The gentlelady from California, Ms. Eshoo.
    Ms. Eshoo. Thank you Mr. Chairman. All the members have 
asked really terrific questions. I think the gentleman from 
Oregon has really asked some practical ones. The answers give 
me some pause, but you still have time to work on them. Now, 
Mr. Kneuer, you spent some time, I think in your written 
statement, certainly in your spoken statement, about the 
message. Now, you are responsible for coordinating it. What is 
the message that you have approved with the various 
organizations? Do you know it off the top of your head? Is 
there a tag line that then has some of the details? What is it? 
What is the campaign to inform people?
    Mr. Kneuer. What we are spending the most money on of our 
$5 million is coming up with tailored messages for tailored----
    Ms. Eshoo. Do we have them yet? Do you have them?
    Mr. Kneuer. They will be market tested and polled so that 
people understand them as best they can for those particular 
constituencies.
    Ms. Eshoo. I would really like to know what they are when 
you come up with them.
    Mr. Kneuer. Sure.
    Ms. Eshoo. Because I think that it is very important. Now, 
let me ask about something that you had in your written 
statement about the solution to the challenges of the education 
program. You said it is not the establishment of a single 
digital transition authority or single Government mandated 
message but that a multiplicity of messages and sources of 
information is critical to a well-informed consuming public.
    Now, the GAO, in their latest report on the transition, 
stated that there isn't any comprehensive education plan, and 
without one, there are no defined goals, objectives or metrics 
for measuring success. So have you developed a metric? How are 
you going to measure what you are doing?
    Mr. Kneuer. We have the ability throughout the program, 
like I said, to measure the trends for request of coupons, for 
redemption of coupons in different areas.
    Ms. Eshoo. I'm sorry, I didn't hear you. You do have a 
metric by which you are going to measure?
    Mr. Kneuer. We will measure in real time the geographic and 
demographic request for coupons or redemption of coupons. The 
point of the testimony was that consumers have lots of 
different choices on how best to effect the----
    Ms. Eshoo. I understand that you said that you are going to 
do that. I am asking you how you are going to measure your 
objectives? Just to say that you are going to do it doesn't 
mean that it is going to be successful. So once you put it in 
place, how are you going to measure it?
    Mr. Kneuer. There is going to be----
    Ms. Eshoo. That is irritating; isn't it? I know.
    Mr. Kneuer. All of the different----
    Ms. Eshoo. You feel like someone is banging on your head.
    Mr. Kneuer. We are going to do a measurement on the request 
for and redemption of coupons. We are working very broadly on a 
public-private partnership with the other Federal agencies, 
with other service organizations, with the broadcasters and 
with the cable companies. They are doing polling to get 
information on what the level of awareness is by demographic, 
by geography and then focusing their education based on that 
polling. We then are working with them to make sure as they are 
making them aware that they are also making them aware of the 
availability of our program. So it is, lots of different market 
participants and constituency groups that have an interest in a 
successful transition working together, like I said, in this 
very broad public-private partnership.
    Ms. Eshoo. I think that when you develop these ``messages'' 
that your PR people, or however you are coming up with this, I 
think it would be interesting to have it brought back to the 
committee. This is essentially a campaign.
    Mr. Kneuer. Absolutely.
    Ms. Eshoo. I think the people up here know something about 
developing a message and having it be effective and having it 
be relevant so people really know what is coming and what they 
need to do themselves.
    Chairman Martin, one of the commissioners has recommended, 
as you know, a DTV task force. Do you support that? Do you 
think it would be helpful? Do you think that there is another 
way to go? I have a sense where you are, but for the record.
    Mr. Martin. I am happy to end up coordinating as much as 
possible with the other Federal agencies. What one of the other 
commissioners has called for is for there to be an 
intergovernmental task force like there was in Y2K. That was 
actually established by an Executive order. The FCC itself 
didn't establish the Y2K task force. It was an Executive order 
that established an interagency task force. And so that is not 
something that I can end up even controlling. But I am happy to 
end up continuing to coordinate with Chairman Kneuer.
    Ms. Eshoo. So where is it, though? Is it going to be that, 
or it is not?
    Mr. Martin. I don't anticipate that there is going to be a 
further DTV task force that will be established across 
different agencies. I think that we will already end up 
coordinating. We have memorandums of understanding on issues, 
and we can continue to do that. But that is within our 
authority.
    Ms. Eshoo. Well, first, it is going to be in the pity in 
terms of how it works with the American people.
    Mr. Markey. I thank the gentlelady.
    We have time for one more questioner. Then we are going to 
break and come back after three roll calls on the House floor. 
I would ask the witnesses to please wait because there will be 
other members who will be returning to ask questions.
    And at this time, I will recognize the gentleman from 
Georgia, Mr. Deal. He will be our last questioner at this 
point, and then we will break and come back after the roll 
call.
    Mr. Deal. Mr. Chairman, since my colleague Mr. Shimkus has 
been here the whole time and I have had to leave, would it be 
proper to defer to him, and then I will be back after the 
break?
    Mr. Markey. It will be proper for you to defer, and it 
would also be a good example for other witnesses as to how 
somebody keeps getting reelected and understand how politics 
works.
    So I recognize the gentleman from Illinois, Mr. Shimkus.
    Mr. Shimkus. Thank you, Mr. Chairman. I want to thank my 
colleague. I didn't ask that. He was just very gracious. I will 
just make a couple quick points.
    I am a supply guy. I am more supply and energy and really 
more supply for the consumers. And the thing that gets lost and 
the great thing about the digital transition in DTV, it gives 
the consumer another choice. And I think it was talked about in 
the opening statements, about more channels. So if we can 
phrase the debate of buying the converter box and you get more, 
that is good. We want cable. We want direct satellite. We want 
free over-the-air. We would like to see broadband deployment of 
video services. That competition will be great.
    So I am excited about this. And I am a market person. The 
market can do this. And I think the market already is. The 
question was asked about how many coupons. Different 
associations have their own opinion. I think the broadcasters 
think 23 million. The communication electronics association 
thinks 8 million. In its first 24 hours on sale, Mr. Doyle has 
left, but he would appreciate this, ``Harry Potter and the 
Deathly Hallows,'' the seventh and the first--and final 
installment of the book, in 24 hours sold 8.3 million books. 
Surely we can get, whether it is 8 or 23 million, digital 
converters out if we allow the market to do it.
    I can guarantee you that the Government could never get 8.3 
million books out in a 24-hour period. I can guarantee you 
that. So let us set some high standards. Let us trust the 
market. Let us check it. But the market wins over Government 
providing goods and services hands down lowest cost, quickest 
response time, day in, day out, bar none.
    Chairman Martin, there are a couple concerns, though. One, 
the multi-cast must-carry order will affect some small cable 
companies, and there is a waiver process that I know of that 
exempts some of these companies. Can you describe this process 
as to how many waivers have been granted as of today?
    Mr. Martin. I think you probably are referring to the 
viewability order where we said that they have to down convert 
the digital signals and continue to carry them in analog to 
their analog customers. There actually haven't been any 
requests for a waiver yet. We just adopted that ruling in 
September, so there haven't been any requests yet.
    Mr. Shimkus. Mr. Kneuer, there is also concern about the 
household issue and senior citizen centers, and how are we 
going to deal with the definition of a household when you have 
a community under one roof in essence?
    Mr. Kneuer. It depends on the community and on the senior 
citizen facility. I know many of them are actually more like 
apartment buildings, is the way they are viewed from the postal 
service, so that they actually have their own address and their 
own household, and they would be able to participate. The sorts 
of facilities that don't have that, that are much more closer 
to a hospital-like facility, I think for most of those 
television is supplied as part of that. But that is, again, the 
reason that we are working with these trusted intermediary 
groups, the sorts of organizations and service groups that 
provide assistance to people in those sorts of facilities 
making sure they understand the program, they understand the 
transition and that they can make assistance of the DTV 
transition part of the overall assistance they provide.
    Mr. Shimkus. Thank you.
    Two last things. One is advertising does work. We are all 
examples of that. And I know the industry that wants to sell 
things will want to do advertising, and that is where I am 
going to put my faith and trust in over the Government doing 
the advertising.
    The second thing is, if the chairman, with the indulgence 
and because my ranking member is not here, for some brownie 
points, I would like to submit into the record Ranking Member 
Upton's editorial published in The Hill on October 16 on white 
spaces.
    Mr. Markey. Without objection, it will be.
    Mr. Shimkus. And that is all I have, Mr. Chairman. I yield 
back.
    Mr. Markey. The gentleman's time is expired. There are 6 
minutes left to go to vote on the floor. So, at this time, we 
will take a brief recess. It will actually be approximately 20 
to 25 minutes, and then we will reassemble. This hearing now 
stands in recess.
    [Recess.]
    Mr. Markey. The subcommittee will reconvene. And we welcome 
you all back. I think we are going to have a bit of an 
uninterrupted stretch right now. The Dalai Lama is going to be 
receiving a Congressional Gold Medal. And I honestly do wish I 
could be over there, but in a way, we are going to make sure 
that poor people and minorities are protected if we can get 
this hearing to work in good shape.
    Let me turn and recognize the gentleman from Georgia, Mr. 
Deal.
    Mr. Deal. Thank you, Mr. Chairman. And I will try to be 
quick.
    First of all, let me follow up, Chairman Martin, with a 
question asked by Mr. Shimkus with regard to the dual-carriage 
issue as it relates to small cable companies. I believe you 
said you had not received any request for waivers at this time. 
One of the concerns we have heard expressed is that they are 
concerned that, if they file a waiver and it is denied, as to 
whether they would have sufficient time then to go back and 
become compliant, have you given thought to that issue and have 
you taken any steps in that direction? Maybe for example how 
long a timeframe would it be from the time a waiver request is 
submitted until a determination is made? Could you elaborate on 
that please?
    Mr. Martin. I haven't given any thoughts to the timeframe, 
but I certainly will to make sure they are given that 
opportunity to make sure they come into compliance. But I would 
point out, and I think this is important in the context of 
talking about whether small cable operators who are saying that 
they need a waiver process, right now all of these same small 
cable operators are required and are successfully carrying 
broadcast channels to all of their viewers. And all we are 
saying is that, the day after the transition, they should have 
to do the same thing the day after as the day they are doing 
before; that all of their customers should still continue to 
get broadcast channels and that the digital transition for 
broadcasters should not be an excuse that a cable operator can 
remove a broadcast channel from the tier of channels that they 
are currently providing them to. So they are not going to be 
required to do anything additional, which is one of the reasons 
why I was skeptical of their concern in the expression that 
they have about why this is going to take up additional 
capacity. Because right now, they are already required to 
deliver those signals to their customers in an analog format, 
because they have analog customers. So they are not going to 
take up any capacity on their systems than they are doing 
today. So I am happy to end up looking at individual small 
operators if they say this is going to be an additional burden. 
But I am not sure I understand how it is an additional burden 
because, right now, the law requires them to deliver a 
broadcast system to an analog cable customer the day after the 
transition. All I am saying is and the commission said is, the 
day after that transition, they still have to deliver a signal 
to that analog customer. So it shouldn't be any additional 
burden than it is the day before. But we will take a look at 
the waiver process. But I think we have to put in context the 
digital transition should not be an opportunity for cable 
operators to disenfranchise consumers from the broadcast 
stations they receive today.
    Mr. Deal. Of course, I think their concern is they will 
then be in the dual-carriage capacity.
    Mr. Martin. But our rule did not require dual carriages. 
Our rule requires it to be viewable by everyone. If they have 
digital customers, they are required to deliver it in digital 
format today. And if they have analog customers, they are 
required to deliver in analog to customers today. They have 
chosen to do dual carriage by the design of their system. The 
rule is no different after. So if they have, if they want to 
provide set-top boxes to allow for their customers to watch 
analog signals so that their digital customers can still watch 
analog signals, some cable systems design their system that way 
and deliver their signals and meet their must-carry 
requirements in that manner, and they would still be able to do 
that. It is not a dual-carriage requirement. Dual carriage in 
the commission when we considered that was a debate about 
whether we should require the cable operators to carry both the 
analog broadcast signal and the digital broadcast signal. That 
would have been two broadcast signals they would have been 
required to carry to all of their homes. This is not dual 
carriage. We did not require that.
    Mr. Deal. Mr. Secretary, I believe you stated previously 
that you believe that allowing unlicensed devices to operate in 
the white spaces would be an efficient use of the spectrum. Do 
you still believe that, and if so, would you elaborate on your 
position on that?
    Mr. Kneuer. Sure. The President launched a spectrum 
initiative for the entire administration back in 2003. And one 
of the activities we have been undertaking as part of that 
initiative is identifying efficiencies in spectrum use. We in 
the 5 gigahertz band were trying to find a way for unlicensed 
Wi-Fi like devices to operate in the same spectrum that is 
allocated to Government radar systems those sorts of sharing 
arrangements, different services using the same allocations of 
spectrum, present really powerful efficiencies and are a good 
way to use the spectrum. It is not easy. When we did it at five 
gigahertz for Wi-Fi like devices, unlicensed devices to co-
exist with Government radar systems, we didn't solve those 
technical issues with the first attempt or the second or the 
third. It took an awful lot of hard work kicking the lawyers 
out of the room, getting the engineers in the room and working 
out these issues. I am confident that innovators and 
technologists can find these sorts of efficiencies. But the 
predicate that we had to allowing them into the band was 
demonstrating that it was on a non-interference basis and that 
it was technically sound. So I certainly support efforts to 
improve the efficient use of the spectrum by having the 
spectrum that is otherwise lying foul of being put to use. But 
you need to do the hard technical work up front. And I think 
the commission is working on that and the industries are 
working on that. And all I would say is, if at first you don't 
succeed, try, try, because you can achieve these efficiencies, 
but you have to do the hard technical work.
    Mr. Deal. Thank you.
    Mr. Markey. The gentleman's time is expired.
    The Chair recognizes the gentleman from Nebraska, Mr. 
Terry.
    Mr. Terry. Thank you, Mr. Chairman.
    Chairman Martin, I am not going to ask you a USF question. 
I know that is unusual. But I will ask you something completely 
different now, an issue that is of concern to several of my 
small businesses back home that, as you know has a call center 
capital. And one of the questions or issues I have been working 
on is the clarification whether you can call a cell phone that 
has been left as the primary phone number to use, for example, 
if they have missed a payment or debt collection or something 
like that. If I recall from the letter I received back, is that 
FCC is exploring that, perhaps an order on that issue. I was 
just wondering where that is in the process? And I know you 
didn't come prepared to answer that question today, so if you 
need to get back to me on that, I would appreciate it. But all 
I want to know is where it is in the process.
    Mr. Martin. Absolutely. And if I could, I would prefer to 
make sure I give you the most accurate information and get back 
to you on it.
    Mr. Terry. I would appreciate that. Now, it has been pretty 
thoroughly discussed, but the one issue that I really wanted to 
go through is the supply of these set-top boxes starting in 
January when the coupons become available. This committee went 
through pure hell on the part D rollout. And we had CMS in 
front of us look us straight in the eye blinking 100 percent 
confidence, that they had it all under control and there was 
going to be no issues on the rollout. And it was one of the 
biggest fiascos that we have been put through because they did 
not anticipate that on the first day of eligibility to sign up 
that there would be a mass of people signing up. The system was 
not prepared. The vendors weren't prepared. CMS wasn't prepared 
for that. And I just want to cover, once again, what the 
process is when people are going to, or in January 2008 when 
the coupons first become available, what the protocol or the 
system to make sure that there are adequate number of boxes 
sitting on the shelves. So, Mr. Kneuer and Chairman Martin, 
that falls in your jurisdiction. Again, set out how we are 
going ensure that there is enough set-top boxes on the shelves.
    Mr. Kneuer. The statute calls for us to be ready to begin 
processing coupons in January 2008. Everything we have done is 
to encourage as much market participation by the market actors 
to be engaged as early as possible. The way I think we are 
going to manage January 2008 is syncing up the public education 
campaign with the availability of boxes and retailers. There 
has not been a very large public education campaign as of right 
now driving people to our program. And that is one of the ways 
that we coordinate in this public and private partnership with 
NAB and others, the broadcasters, the cable industry and others 
to say link it up as the availability comes up.
    Mr. Terry. So if I am interpreting somewhat sarcastically, 
if they don't know about it in January, they won't go get a 
box?
    Mr. Kneuer. That's right. So we want to manage consumer 
expectation. If we have visibility into the supply chain from 
both the retailers and the manufacturers that we hear from 
large national chains that actually, do you know what, we are 
ready January 1, then we will start driving the public 
education campaign to make sure that people are taking 
advantage of that. While we don't have those levels of 
commitment. We haven't heard from a major retailer saying, let 
them know we have got a warehouse full of these things today, 
and we have got our point of sale done, and we are ready to go 
January 1, 2008. I haven't heard explicitly otherwise either. 
While the vote was going on, I just got an announcement from 
Best Buy. They had removed all analog sets from their 
inventory. They are all digital. They have announced their 
intent to take part in our program and to have coupon eligible 
boxes in their stores in early 2008. They haven't said January 
1; they said early 2008. So everything I have seen from 
interest from manufacturers, from the certifications we have 
been doing, from the expressions of interest that our vendors 
are having and the discussions they are having with retailers, 
we are going to have broad availability of retailers, broad 
availability of boxes with plenty of time for consumers to take 
advantage of this program before February 2009. If it is not 
necessarily January 1, 2008, we want to sync up our consumer 
education activities so we don't misalign their expectations. 
But we are ready on January 1, 2008.
    Mr. Markey. The gentleman's time has expired. So Best Buy 
announced today they are not going to sell any more analog TV 
sets?
    Mr. Kneuer. That they have removed them all from their 
inventory was the announcement.
    Mr. Markey. It is like announcing you are not going to sell 
any more black and white TV sets since October 2007. So, thank 
God. Maybe other companies will. Because we will have a hearing 
here by the way. We will be having a hearing here like in the 
middle of January 2008, like 15 days in so that we can see how 
close it is to CMS. And so that will be a big moment. So Best 
Buy is at least trying to start to move where they are going to 
be hopefully by that date.
    Let me turn and recognize the chairman of the full 
committee, the gentleman from Michigan, Mr. Dingell.
    Mr. Dingell. Mr. Chairman, I thank you.
    Gentlemen, thank you for being here. I am going to make 
several statements, and then I am going to ask you if you agree 
or disagree. It is vitally important that the DTV transition 
proceed smoothly. It is important that consumers be fairly 
treated, properly informed and prepared for the transition, and 
that there must be close cooperation amongst the different 
Federal agencies. Is there any disagreement with that 
statement?
    Mr. Martin. No.
    Mr. Dingell. Gentlemen, yes or no, do we need an 
interagency task force focused on the transition in order to 
see to it that the responsibilities of the different agencies 
are properly carried out? Beginning on the right with NTIA.
    Mr. Kneuer. I don't know that we necessarily need a 
formalized task force in practice and day in and day out. We 
are coordinating with the FCC, with 13 other Federal agencies. 
So I think we have the functional equivalent of a task force in 
place.
    Mr. Dingell. All right.
    Mr. Martin. I don't know that we need a task force. I 
certainly think we need coordination, and I think we are 
working hard at doing that with NTIA and FCC today.
    Mr. Dingell. All right, sir.
    And Mr. Goldstein.
    Mr. Goldstein. We haven't recommended a task force. We have 
recommended much greater comprehensive planning, as I 
indicated, so that you do have better risk mitigation so we 
understand the kinds of issues that may crop up and how to deal 
with them at this point.
    Mr. Dingell. Now, Mr. Martin, I believe you told Ms. Eshoo 
that certain agreements amongst Federal agencies and 
departments have been made concerning the DTV transition. Is 
that so?
    Mr. Martin. Yes.
    Mr. Dingell. Would you see to it that the committee is made 
privy to those agreements, that copies are submitted to us for 
purposes of the record and that we understand what is in them?
    Mr. Martin. Yes.
    Mr. Dingell. What are those agreements and with whom are 
they made and what do they do?
    Mr. Martin. We have an agreement with NTIA to test the 
converter boxes to make sure that our engineering labs can test 
them to make sure that they can function appropriately. And I 
believe that either--I know that that memorandum of 
understanding, the existence of it I have made public before in 
either questions to this committee or to the Senate Oversight 
Committee, but I haven't provided the actual memorandum of 
understanding but of course I will.
    Mr. Dingell. Now, Mr. Goldstein, would the FCC need 
additional statutory authority to convene a task force to 
accomplish the proper coordination amongst the different 
departments that are going to be addressing these questions?
    Mr. Goldstein. I don't believe so, sir. I believe that they 
have that authority today.
    Mr. Dingell. You think it can be done under existing 
authority. Now, would anybody disagree that the lead agency in 
addressing these questions should be the FCC? Yes or no.
    Mr. Martin. I wouldn't agree that it should be addressing 
all of these questions. I certainly think we have an important 
role. But certainly, in the converter box program and the 
education in the spending of the $5 million that Congress gave 
to NTIA to spend on education, NTIA has to be the lead agency 
on those two because that is what Congress determined that they 
should be.
    Mr. Dingell. Now, Mr. Martin, this question. You have been 
given $2 million for DTV consumer education that is up from 
$1.5 million that the FCC had requested. The In Berlin, The 
German Government spent $1 million on consumer education in 
just one city with 3.4 million people. There are over 300 
million people in the United States. Do you have enough money 
to provide the necessary education and public information on 
this matter? Yes or no.
    Mr. Martin. No. If we are solely responsible for educating 
all the consumers, I think additional money would be necessary.
    Mr. Dingell. And I think that, Mr. Goldstein, you would 
agree that the FCC could do a better job with more money?
    Mr. Goldstein. We haven't looked at it, sir, specifically.
    Mr. Dingell. How much money does the FCC need to conduct a 
proper information and education program for the people on what 
is going to happen when this DTV changeover takes place? Could 
you give us that answer either now, Mr. Goldstein, or could you 
tell us at some future time in response for purposes of the 
record?
    Mr. Goldstein. I can't give it to you today, sir.
    Mr. Dingell. Would you please submit that answer for the 
record?
    Mr. Martin, what is the amount of money you in fact need?
    Mr. Martin. I can provide that to you, although I am not 
sure I can provide in public the amount of money we requested 
this year in our budget, but I will provide that to you.
    Mr. Dingell. I would like to have the answer, then, for 
purposes of the record.
    Mr. Martin, I believe you have asked for more money than 
you have been given by either the OMB or the Appropriations 
Committee. What is the amount you asked for?
    Mr. Martin. That I am happy to end up providing. I am not 
sure I am able to provide the amount.
    Mr. Dingell. Please submit it. This is a congressional 
committee. We have jurisdiction over your affairs. We are 
entitled to have this information. It should be public. I 
expect to get it. I hope that you will cooperate in seeing to 
it that we do so. And I would assure you that this committee 
will have the answer. And I am requesting that you submit it 
for purposes of the record.
    Mr. Martin, if you would then please inform us, if you 
would receive additional funding, how would you use these 
funds? Would you please submit that for the record if you 
please?
    Mr. Martin. Sure, of course.
    Mr. Dingell. Mr. Chairman, I have a number of other 
questions to ask. I will defer until the proper time. But I 
would like to know about the coupon funding and a number of 
other matters related to that. And I commend you for this 
hearing. And thank you. And to our witnesses, I also say thank 
you.
    Mr. Markey. The chairman could have more time if he wants, 
of course.
    Mr. Dingell. If the Chair would be so gracious and I would 
not offend any of my colleagues, I have just a couple more 
questions.
    Mr. Markey. Would any of my colleagues be offended if Mr. 
Dingell is given more time? The Chair hears no objection, Mr. 
Dingell. I think the objection might come from the witness 
table.
    Mr. Dingell. I have great respect for my colleagues, and 
the last thing I want to do is to affront them.
    Gentlemen, this is a question for the GAO and for NTIA. 
NTIA has $1.5 billion to operate the converter box coupon 
program. The program is being launched, I understand, in two 
phases. First, $890 million for any consumer who wants to take 
advantage of the program. The last $450 million is reserved for 
analog-only over-the-air households. I understand we expect a 
surge in coupon requests at the end of the program in late 2008 
or early 2009. Would you, Mr. Martin or Mr. Kneuer, give us the 
answer, do you expect those surges, and is that a fair 
statement? Yes or no.
    Mr. Kneuer. I would expect that the demand for boxes will 
increase as we get closer to the date as the education campaign 
ramps up, as consumers become aware that actually this date is 
rapidly approaching.
    Mr. Dingell. Thank you. I am transgressing on the time of 
my colleagues, so I have got to hold these answers very short. 
Mr. Martin, your comment.
    Mr. Martin. I expect that Secretary Kneuer is correct, that 
it would ramp up as we got closer to the date.
    Mr. Dingell. Now, I would like to ask each of you 
gentlemen, is it possible that some people who need a coupon 
will not be able to get one because there will not be enough 
money provided? Starting with Mr. Kneuer and then Mr. Martin 
and Mr. Goldstein. Is the answer to that yes or no?
    Mr. Kneuer. No, I don't think there will be anybody left 
behind for want of resources. All the demand estimates we have 
seen we have got adequate resources.
    Mr. Dingell. Mr. Martin.
    Mr. Martin. I guess I am not as confident in that. I would 
have to look at all of the figures that they have seen. 
Because, as I understand it, there is a cap on the amount of 
money the program can provide, and the demand could exceed that 
cap. So, yes, I think they could exceed that cap.
    Mr. Dingell. Mr. Goldstein.
    Mr. Goldstein. I am not as confident either, sir. I think 
it is unclear how many people at this point will try to redeem 
coupons.
    Mr. Dingell. Have you performed any studies, beginning with 
Mr. Kneuer, Mr. Martin and Mr. Goldstein, to tell us what the 
answer is? Do we have every reason to believe there will be 
sufficient money on the basis of any study or not?
    Mr. Kneuer. We have been looking to studies from market 
participants and other enemies. And as I think there have been 
testimony earlier this morning, those estimates range from----
    Mr. Dingell. Have you performed a study?
    Mr. Kneuer. We have not performed a proper analysis.
    Mr. Dingell. Has anybody, to your knowledge, performed a 
study?
    Mr. Kneuer. Yes. Industry and market participants.
    Mr. Dingell. Who?
    Mr. Kneuer. The consumer electronics industry, as well as 
the public broadcasters.
    Mr. Dingell. Would you please see to it that your 
communications with the consumer electronics industry are 
submitted to the committee so we may know what has been 
accomplished, sir?
    Mr. Goldstein. As part of our work ongoing for the 
Congress, we are going to be doing a survey to try to undertake 
and understand much better what the demand is going to be, how 
many households are out there and what the awareness is.
    Mr. Dingell. Would you see to it that anything relevant to 
that and to the question asked is submitted for the record 
please?
    Mr. Goldstein. Yes, sir.
    Mr. Dingell. Mr. Goldstein, could NTIA use more money to 
fund the coupon program or not? If so, why and how much?
    Mr. Goldstein. We don't know yet, sir. I think it depends 
on how much we expect demand to be. And as I indicated, that is 
something we don't know yet.
    Mr. Dingell. As a student of these kinds of matters, Mr. 
Goldstein, would you tell us whether adequate study and thought 
has been given by the two agencies, the FCC and the NTIA, as to 
whether the funding in the programs are adequate?
    Mr. Goldstein. I would like to try to answer that for the 
record. I am not sure that I could do it off the top of my 
head. Let me get back to you, sir.
    Mr. Dingell. Would you submit then a proper answer to that 
question for purposes of the record.
    Mr. Goldstein. Yes, sir.
    Mr. Dingell. Mr. Chairman, you have been very gracious, and 
my colleagues you have been very gracious. Mr. Chairman, I 
would like to submit a letter to the three agencies asking a 
number of questions. And I would ask that the record remain 
open so that that may be submitted to the agencies if you 
please.
    Mr. Markey. Without objection, the questions will be 
submitted to the witnesses and their answers will be included 
in the record. Without objection, so ordered. The gentleman's 
time has expired.
    Mr. Martin and Mr. Kneuer, have you met on this issue in 
person in the last month?
    Mr. Kneuer. We have spoken on the phone about it. I don't 
know that we have gotten together. Maybe in the park with our 
kids, but mostly on the phone.
    Mr. Markey. You talk about DTV in the park?
    Mr. Kneuer. On occasion. That is the kind of life that we 
do in fact live.
    Mr. Markey. I would recommend that the two of you meet.
    Mr. Kneuer. But also I would be remiss not to point out 
that, on September 25, we had a public forum that Chairman 
Martin was gracious enough to address our group. Ours was 
coordinated with theirs, which was the next day, and our staff 
was there. I was unable to be there because of other 
commitments.
    Mr. Martin. We were together on September 25, but we have 
spoken several times on the phone.
    Mr. Markey. Excellent. And I think the committee would feel 
good if we knew you were meeting over the next 3 months in 
person.
    The Chair now recognizes the gentleman from Michigan, Mr. 
Stupak.
    Mr. Stupak. Thank you Mr. Chairman. And welcome again to 
our witnesses.
    Chairman Martin, if I may, I know Mr. Deal asked some 
questions about the small cable operators, but let me ask you a 
few questions if I may. Just last month, the FCC issued an 
order requiring cable companies, large and small, to pass along 
a digital signal of must-carry broadcasters in both digital and 
analog formats to their subscribers. It did not provide for an 
exemption for small operators. But cable systems with limited 
capacity may file for a waiver to relieve them of this 
obligation. I am troubled with this, especially as I reflect on 
my district, as I have some of the smallest mom-and-pop cable 
operators in the country with a subscriber base as small as 133 
subscribers. Now, the further notice of proposed rulemaking 
stated it would examine the impact of this requirement on small 
and midsize cable operators. So what steps do you plan to take 
in your further notice of proposed rulemaking to take into 
account the limited financial resources of small rural cable 
operators?
    Mr. Martin. Well, first, I would like to start out by 
correcting what the rule did last September that we adopted. It 
didn't require them to always pass along both a digital and an 
analog signal. It required them to make the signal viewable to 
all of their subscribers just as it is viewable today.
    Mr. Stupak. So they have to carry two of them, right?
    Mr. Martin. No, not necessarily. It could be a system that 
only had analog customers. They would only have to carry an 
analog. Or it could be that there are set-top box converters 
that actually have an analog tuner included so then all viewers 
would still be able to view all of the signals. So it depends 
upon the design of the system. But the important thing to 
remember is that those mom-and-pop cable systems in your 
district are required today to make sure that the analog 
broadcast signal is carried so that it is viewable by all the 
subscribers. All we are saying is that the switch from analog 
to digital broadcasting by broadcasters should not result in 
the removal of any of those signals from the cable system. 
However, they are delivering them today; they have to continue 
to deliver them. And that shouldn't require any additional 
capacity on the system because they are required to be 
delivering them today, and they are doing so successfully. What 
I would imagine us doing is understanding how a cable operator 
in your district is going to have the amount of capacity they 
have to dedicate to this increase when they are successfully 
delivering it today. So today they are taking an analog----
    Mr. Stupak. Why don't you just waive for these small cable 
operators? If it is a signal they have always been using, why 
can't they just continue to use that same signal as opposed to 
having to come back for a further notice of proposed 
rulemaking, which is expensive and time-consuming for small 
cable operators?
    Mr. Martin. Because waiving the rule would mean that your 
constituents who are served by those subscribers would no 
longer get access to broadcast signals. Today a broadcaster 
puts out an analog signal, the cable operator takes the analog 
signal and delivers it to all of its subscribers. That means 
that he has analog subscribers that he delivers it in an analog 
format. All our rule says is that because we are requiring the 
broadcaster to switch from analog to digital broadcasting, the 
cable operator must deliver that digital signal's content to 
those analog homes. And they should not be able to stop 
delivering it only because the broadcaster was required to 
switch from analog to digital. Some of the cable operators 
wanted to reclaim capacity and no longer use it for broadcast 
signals and, in effect, stop providing broadcast signals to 
their customers. And what we said is, you can't do that. The 
digital transition is not an excuse to reclaim capacity and 
stop delivering broadcast signals. They can do it exactly as 
they are doing it today, so there is no additional burden 
whatsoever.
    Mr. Stupak. So you can craft a rule in which these small 
operators were exempt from this? I just think, when you have a 
133 subscriber base, it is very expensive to keep coming back 
to the FCC.
    Mr. Martin. If we exempt them from that that means they 
will not receive their broadcast signals and that will increase 
the demand on the set-top box converter program, and then that 
will increase the problems associated with the DTV transition. 
So I don't see why we should have the digital transition be an 
excuse for cable operators to no longer carry broadcast signals 
they were already required to be carrying.
    Mr. Stupak. I guess we will disagree on this. Let me ask 
you this one then. As you know, not all broadcasters are making 
the DTV transition on February 17, 2009. I am referring to the 
low powered television stations, class A stations and 
translators. Consumers in those markets might have different 
viewing options and therefore might require different consumer 
education efforts than the consumers in the rest of the 
country. In fact, the GAO points out in their report perhaps 
the hardest group to educate is a group of consumers who have 
to do nothing for the DTV transition. So how are you addressing 
these consumers as a larger part of your consumer education 
program?
    Mr. Martin. Well, when Congress established the hard 
deadline, they did exempt out certain kinds of broadcast 
stations that weren't required to make that transition. While 
you are right they are not required, those consumers are not 
required to get a converter box at the same time, those 
stations are still going to have to go through a digital 
transition. So these consumers still trying to go get access to 
converter boxes is important.
    Mr. Stupak. Well, do you have any kind of hard date set?
    Mr. Martin. No. We have allowed those stations to 
transition at the same time if they want to, but we haven't 
established a hard date to require them to.
    Mr. Stupak. Do you have any plans to speed the transition 
for these broadcasters, or it will allow them to broadcast on 
analog indefinitely, because most of them are on analog?
    Mr. Martin. Most of them are on analog. And we have allowed 
them all to transition, if they would like to, to digital at 
any time, but we haven't required it because of the expense 
that they would incur. And it was actually as I said Congress's 
judgment that they decided that a hard date would not 
necessarily apply to those new stations.
    Mr. Stupak. If we exempt out the class A stations and the 
low-power ones, it seems to me it would have been easier to do 
it with the small cabler operators on my previous question. I 
don't deal any more with congressional direction, but it would 
have been easy to do it, too, because of the same factors. 
Thank you.
    Mr. Markey. The gentleman's time has expired. I don't see 
any other members who are on the subcommittee. And so the 
gentlelady from Tennessee, Mrs. Blackburn, who faithfully 
attends all of our telecommunications hearings, even though she 
is not a member of the subcommittee, and sits through all of 
the eye-watering detail in a way that would put her in the 
upper percentile of most attentive members, is recognized for a 
round of questions.
    Mrs. Blackburn. Thank you, Mr. Chairman. I appreciate your 
courtesy to continue to follow this issue. I enjoyed my service 
on the Telecommunications Subcommittee and continue to work on 
these issues. Secretary Kneuer, from the hearings we have had 
in the past, I honestly believe the market is going to take 
care of a lot of this information with the public and the 
retailers such as the move made by Best Buy today. They are 
going to do what is in the best interest of their customers. We 
know that that is going to take place. But I have found it so 
interesting, Mr. Goldstein, the survey that you referenced, the 
NAB survey that you referenced in your testimony, in which they 
found only 57 percent of over-the-air only customers were not 
aware of the DTV transition. And as you look at that and reread 
it, you realize their finding was that 43 percent of all of 
those customers know that that transition is taking place and 
have an awareness of that. And I find that a remarkably high 
number. And being here on Capitol Hill, I do not know if you 
walked around out here and randomly conducted that survey if 
you would find 43 percent of those that you encountered aware 
that this transition is taking place. So I would love to hear 
from you a little bit more about that survey, about the 
methodology that was used, how they came to the universe that 
they surveyed. Do you have that information or can you get that 
to share with us?
    Mr. Goldstein. I would be happy to get that information for 
you. It is a NAB survey, not our own, so I would like to work 
with them a little, and I will be happy to supply that 
information to you.
    Mrs. Blackburn. I think as background for that statement 
that it would be interesting to us. Because so many of our 
questions have centered around the awareness that people have 
and people knowing the steps to take, the time line to follow 
to make certain that they are not left in the dark and that 
they are still receiving some transmission. Also, Chairman 
Martin, the Intergovernmental Advisory Committee that was 
rechartered in June, it is made up of your 15 representatives. 
And what I would love to know is how often this group is 
meeting, what the results are that have been yielded to that, 
the recommendations if those are going to be public 
recommendations. And the chairman touched briefly on 
interfacing with the NTIA, what you all are doing there. And I 
think the Secretary, you and the Secretary mentioned that. And 
the other component of that is to know if you all are taking 
this information to local governments? Because we all know as 
this transition becomes imminent that the city halls and those 
city commissioners are many times going to be the ones that 
pick up that phone and take that call. So I would like to know 
a little bit more of the detail that is surrounding that 
process, if you will please, sir.
    Mr. Martin. Sure. The Intergovernmental Advisory Committee 
as you referenced, the commission just adopted an order 
reconstituting that organization. We just recently announced 
what the parties were going to be, who the individual 
Government representatives were going to be on that committee. 
When we reconstituted it in the spring, we actually asked for 
applications who wanted to be a part of it. We just announced 
who are those people that will be a part of it. Asked them to 
meet and actually asked them to address this very issue. How do 
we incorporate the local governments into this process? Just as 
we have done on the consumer side where we have already met 
with consumer organizations and gotten feedback from them on 
how we can better integrate their ideas and those organizations 
into our information process. And we have done things 
successfully at the local level like on the American Library 
Association, but we haven't at the local government level, 
which is what we have asked that group to look at.
    Mrs. Blackburn. If I may interrupt just a moment then, so 
with this group you do have a plan of action for moving forward 
with local governments?
    Mr. Martin. Yes.
    Mrs. Blackburn. OK.
    Thank you, Mr. Chairman. I yield my time back.
    Mr. Markey. Thank you. And we thank the gentlelady for 
participating. We are going to complete this panel.
    Chairman Martin, if you could let the committee know when 
you are going to finalize the technical rules for the 
transition that would be very helpful to us. You can do it in 
writing or you can just give us the----
    Mr. Martin. Sure. Most of the technical rules have actually 
been completed. We released the final DTV table of allotments 
in August. There are several recompetitions. Some people didn't 
like the channel assignment they got and have come back in and 
asked. And we also had several waivers for people that missed 
the original deadline that then went to the bottom of the list. 
But we released the final DTV table of allotments. We have got 
some recompetitions that we will be dealing with in the next 
few months. But 99 percent of the channels have already been 
dealt with. We have also got one final order on the 
maximization of replication issues that is due out by the end 
of this year.
    Mr. Markey. If there is anything remaining to be finalized, 
please do so. And we would also request that you also work with 
Secretary Kneuer on this issue of retailers taking advantage of 
people who might not fully understand that they are being moved 
over to a digital TV set when they actually qualify for a 
converter box that would work very well with their old TV set. 
So if you could have a partnership with Secretary Kneuer to 
accomplish that goal.
    Mr. Martin. Sure.
    Mr. Markey. Thank you. This has been a very productive 
hearing. What I would like, at the indulgence of the members, 
just to give each one of you to give us the 1 minute you want 
us to remember from your testimony as we are finishing right 
now. Just give us your 1 minute summary, here we are nearing 
the end of October.
    Mr. Goldstein.
    Mr. Goldstein. I think, Mr. Chairman, that the transition 
is moving along. We have seen a lot of progress. And I think 
the other witnesses have told what a lot of that progress is. 
However, we are concerned still that there are a lot of things 
that are left to be done, a lot of which is voluntary. It is 
not required by private industry that they participate. A lot 
of private industry will participate. And there is already 
evidence that it is doing so. But this is a very big 
transition. And to leave it all or mainly to voluntary 
participation and to some planning, but not extensive planning 
that really analyzes all the potential problems and loopholes 
and the like, I think we feel is probably not in the best 
interest of the Government at this point in time. And so we do 
think there is additional work that the Government, principally 
FCC in conjunction with NTIA, still needs to do.
    Mr. Markey. Thank you Mr. Goldstein, and thank the GAO for 
their good work.
    Chairman Martin.
    Mr. Martin. I think we have made significant progress on 
the technical policy, on the technical policy issues. 
Additional work needs to be done on the educational front. But 
I think the single most important thing that we can end up 
doing is changing our message from a negative one, that if you 
don't go buy a converter box, we are going to take away your TV 
signal, to a positive one, which says that if you go buy a 
converter box, you will get something additional out of it. And 
I think that the most important thing we can end up doing there 
is facilitating multi-casting so that over-the-air homes can 
have access to multiple broadcast signals without having to go 
and take advantage of the digital transition, without having to 
go buy an expensive HDTV set.
    The over-the-air homes are disproportionately lower income. 
Telling them that the only way they will get advantage of this 
is to go buy an expensive HDTV set is I think a negative 
message for them. And I think if we are going to expect them to 
go out and purchase over-the-air converter boxes, even with the 
coupons that have been provided, they should be getting 
something for it. And I think to do that, we have got to 
facilitate multi-casting.
    Mr. Markey. Thank you.
    Secretary Kneuer.
    Mr. Kneuer. It may look like we are down 3-1, but the 
series hasn't started.
    Mr. Markey. I like that analogy.
    Mr. Kneuer. The efforts that some view as voluntary are 
actually being driven by enormously powerful market self-
interest, and I expect them to continue. And we have got a 
program that has been put in place and is going to be run 
effectively and efficiently for the American people.
    Mr. Markey. Thank you.
    And we thank this panel. It has been very helpful to this 
committee. Thank you.
    And now we will just take a brief moment here while we 
allow the first group of panelists to move on. And we will have 
the second group of witnesses come up and sit in front of their 
names.
     So we welcome our second panel. We apologize to you for 
the length of the first panel, but obviously these issues are 
very important to the American public. And this panel is 
equally as distinguished as the first and is critical in our 
ability to understand the issues.
    We will begin with Claude Stout. He is the executive 
director for telecommunications for the Deaf and Hard of 
Hearing, Incorporated. He is testifying on behalf of the 
Coalition of Organizations for Accessible Technology, which 
promotes the development of accessible communications devices 
for people with disabilities.
    We welcome you, Mr. Stout. Whenever you are ready, please 
begin.

        STATEMENT OF CLAUDE STOUT, EXECUTIVE DIRECTOR, 
 TELECOMMUNICATIONS FOR THE DEAF AND HARD OF HEARING, INC., ON 
    BEHALF OF THE COALITION OF ORGANIZATIONS FOR ACCESSIBLE 
                           TECHNOLOGY

    Mr. Stout. OK. Thank you, Mr. Chairman.
    Chairman Markey, Ranking Member Upton and members of the 
House Subcommittee on Telecommunications and the Internet, I am 
honored to have this opportunity to testify on an issue that 
affects millions of television viewers with disabilities.
    My name is Claude Stout, and I am the executive director of 
telecommunications for the Deaf and Hard of Hearing, Inc., also 
the Chair of the Deaf and Hard of Hearing Consumer Advocacy 
Network. I am pleased to offer my testimony today on behalf of 
the Coalition of Organizations for Accessible Technology, COAT. 
This is a coalition of more than 130 national, regional and 
community-based organizations.
    If all goes well, digital TV captioning would be the best 
invention since, hmm, analog TV captioning. You see, when I was 
young, I could not understand why my family was laughing while 
they were watching Jack Benny, Lucille Ball, Johnny Carson, as 
well as other comedians. Now I understand because of the DVDs 
that are out today with captions. And it was only when I 
entered Gallaudet University in the late 1970s that I was able 
to watch the ABC World News Tonight, not at 6:30 p.m. with 
everyone else--at dinnertime--but past my bedtime, at 11:30 
p.m. Today, with grateful appreciation and tinged with anxiety, 
we are about to take the next step towards full integration in 
television.
    The COAT Coalition represents more than 31 million 
individuals with hearing loss, 10 million individuals who are 
blind or who have vision loss, and millions of other 
individuals with other disabilities who benefit greatly from 
accessible television programming. Along with access to 
televised news, information and entertainment, access to 
televised emergency information enables these populations to 
understand and to appropriately respond to warnings of 
hazardous weather and other emergency conditions. COAT 
affiliate members are excited by the promise of digital 
television--the better television quality and multicasting.
    Like most consumers, we look forward to the benefits of 
technological advances. Unfortunately, in the history of 
technological advances, people with disabilities are often left 
behind. In fact, we are already witnessing this phenomenon with 
digital television. Increasing numbers of individuals are 
seeking to purchase digital television sets or components and 
systems that provide digital video programming, and 
distributors are offering expanded digital programming. At the 
same time, we are receiving increasing reports of significant 
technical difficulties with the pass-through and the display of 
closed captioning. Time and again, our constituents report 
disappearing, delayed, garbled or otherwise unintelligible 
captioning on television shows that previously provided 
relatively problem-free captions.
    A major difficulty for us in the DTV transition experience 
is determining the cause of these closed-captioning problems. 
For example, the failure to receive captions can be the fault 
of the local TV station or cable TV service that has begun 
broadcasting or offering digital programming, the inability to 
pass through captions on the program distributor's set-top box, 
or a failure in the equipment used to receive and display the 
DTV programming, such as the receiver or its connecting 
components.
    In addition to these technical difficulties associated with 
the DTV transition, there is some dispute over the extent to 
which TV networks now covered by the captioning rules are 
obligated to continue providing captions as they shift to 
digital programming.
    When a standard definition analog network, whose 
programming has already been captioned, converts to or creates 
an HD channel with a similar programming lineup, the new HD 
channel should be held to the same closed-captioning obligation 
as its analog predecessor. However, some broadcasters and cable 
networks have taken the position that their new HD channel is 
a, ``new network'' that qualifies for an exemption from the 
FCC's captioning rules during the first 4 years of the 
network's operations.
    If this interpretation were to be upheld, consumers would 
find themselves having to wait an additional 4 years to see 
captioning on programming which, but for its HDTV status, would 
already have to be captioned. This new network interpretation 
of the captioning rules violates Congress's intent to ensure 
the uninterrupted provision of closed captions with the onset 
of advanced technologies. It is commonplace for television 
viewers to select their channels and other TV settings from on-
screen menus, but if you are blind or have low vision, you 
cannot access this information through a point-and-click, if 
you will, remote control or even use these menus.
    Nevertheless, individual manufacturers have already 
demonstrated the technical feasibility of incorporating 
accessible user interfaces. When accessible user interfaces are 
required on all video devices, the incremental costs of adding 
these features will become negligible.
    Caption viewers have also reported considerable problems 
navigating menus, some of which are hidden to activate captions 
after connecting the receivers, the monitors, set-top boxes and 
recording play-back devices that compromise their digital 
equipment. Often the interface that controls captions is buried 
several layers into an on-screen menu that is difficult, if not 
impossible, to find.
    We know from experience that most manufacturers will not 
incorporate accessible user interfaces on their television sets 
or components unless mandated to do so. Virtually all 
technology-related access features have come about only after 
they were mandated by Federal law; for example, televisions 
with built-in closed captioning decoders. This is because the 
disability market still is not large enough, forceful enough, 
or wealthy enough to impact the manufacturer product design. No 
manufacturer wants to be the only one putting resources into 
accessibility features.
    Consumers with disabilities have also encountered 
significant barriers when attempting to contact distributors of 
video programming and manufacturers of DTV equipment with 
concerns about accessing closed-captioning or video 
description. Customer service representatives or technical 
support personnel are often unfamiliar with closed-captioning 
and video description. Furthermore, many consumers with 
disabilities remain unaware of their right to file informal 
complaints with the FCC or the Commission's ability to mediate 
and to resolve their problems. Additionally, even consumers 
with disabilities who may be aware of the complaint procedures 
often choose not to use those procedures because they find the 
complaint process too difficult to navigate. This is because 
the process for filing informal closed-captioning complaints 
with the FCC requires consumers to first notify distributors 
responsible for the delivery and the exhibition of the 
programming.
    In summation, in order to smooth the transition to digital 
television for people with disabilities, COAT urges Congress to 
take the following steps: Direct the FCC immediately to clarify 
that it is the responsibility of broadcasts and other networks 
to continue captioning programs on their HD digital networks 
and show precaptioned programming with captions at all times.
    Number 2, reinstate the FCC's video description rules.
    Number 3, direct that digital televisions be designed so 
that individuals with vision and other disabilities can access 
all their functions.
    Number 4, direct the FCC's complaint procedures so that the 
consumers with hearing loss and who are having difficulty 
accessing closed captions on DTV have a user-friendly means of 
seeking assistance and resolution from the FCC.
    I am going to jump to the end. Remember, just as colors 
bring out extra meaning in video, captions or video description 
gives us a complete experience in television viewing.
    I want to thank you, and I would like to leave my oral 
statement for the record with you as well. Thank you.
    [The prepared statement of Mr. Stout follows:]
    
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    Mr. Markey. I thank you very much, Mr. Stout, and all of 
your testimony will be included in the record in its entirety.
     I will note that I see Karen Strauss sitting right behind 
you. And you might have noticed me limping in and out of the 
committee hearing room, but that is because I actually had an 
Achilles rupture while playing basketball with nine 20-
somethings outdoors, and that included her son, Jeremy, which 
is something I probably will not be doing again.
    Ms. Strauss. I hope you feel better.
    Mr. Markey. Thank you. I appreciate it.
    The next witness will be Amina Fazlullah, who is an 
attorney for the U.S. Public Interest Research Group. The U.S. 
PIRG recently conducted research into DTV consumer education 
efforts by retailers.
    So we welcome you. Whenever you are ready, please begin.

    STATEMENT OF AMINA FAZLULLAH, STAFF ATTORNEY, MEDIA AND 
    TELECOMMUNICATIONS, U.S. PUBLIC INTEREST RESEARCH GROUP

    Ms. Fazlullah. Thank you, Chairman Markey, Ranking Member 
Upton and members of the committee.
    My name is Amina Fazlullah, and I am a media and telecom 
staff attorney for the United States Public Interest Research 
Group. U.S. PIRG is the Federation of State Public Interest 
Research Groups, a nonpartisan, nonprofit public interest 
advocacy organization that is based in 30 States.
    On behalf of our members across the country, I want to 
thank you for the opportunity to testify at today's hearing on 
the upcoming digital television transition.
    It has been nearly 2 years since Congress established the 
official transition date from analog television broadcasting to 
digital. Yet, virtually no U.S. consumer knows what will happen 
on February 17, 2009. I know that there was a 46 percent number 
that was out there, but I think that there are plenty of 
consumers who are still out there who are not aware. On that 
date, television broadcasters will switch from analog to 
digital signals.
    The transition offers the country the return of a valuable 
``beachfront property'' spectrum, that can be used to enhance 
emergency communications, to spur innovation, and to improve 
broadband connectivity.
    One other thing will happen on February 17. Every consumer 
who watches over-the-air television with an analog set will 
have their set go dark, including the estimated 22 million 
customers in this category, or 8 million households, with at 
least one member who is older than 50.
    The Government is, of course, at least aware of this 
problem, and Congress has allocated funding for an education 
program. The relevant agencies have required that manufacturers 
stop producing new analog televisions and that retailers 
properly label their remaining analog televisions at the point 
of sale, a problem that we find in the stores to still be 
occurring.
    Congress has also allocated funding to provide coupons to 
help consumers pay for the necessary converter boxes to get 
their analog television sets to work again. Yet, based on 
preliminary U.S. PIRG research which we will discuss today, 
neither the Government nor the retailers are adequately 
preparing consumers for the impending DTV transition.
    Industry stakeholders have made substantial promises to 
inform the public, and I am heartened to hear today of moves on 
behalf of Radio Shack and Best Buy.
    While U.S. PIRG agrees that this transition cannot be 
successful without the support of industry, we believe that 
industry's participation must be mandated and closely monitored 
to ensure that consumers receive full protection throughout the 
transition.
    As of August 2007 and, actually, as recently as the end of 
September, U.S. PIRG completed preliminary studies that 
surveyed the top five electronic retailers in the DC Metro 
area. As a quick update to our study, we are starting to push 
those studies into 10 different States across the Nation to 
follow up on our preliminary results.
    Our initial findings in the DC area were based on 
interviews with clerks and supervisory personnel, and they are 
alarming. They show that despite industry promises to educate 
and prepare personnel, all five top retailers have personnel 
who provided inaccurate or even misleading information.
    Our surveyors found that, when asked, retailers did not 
acknowledge the existence of converter boxes or the coupon 
program. In many cases, the retail staff told surveyors that, 
to continue to receive broadcast signals, that their only 
choice would be to buy a brand new television set or even an 
upgraded HDTV--a more expensive, high-definition television--
which is not necessary to receive digital television signals.
    In the Virginia area Wal-Mart, our surveyors were told that 
their only option was to buy a brand new HDTV or sign up for 
cable service. In a Virginia area Best Buy, our surveyors were 
told that the upcoming transition meant that signals would now 
all be HDTV signals, and consumers would have to buy a brand 
new HDTV to continue getting their over-the-air television.
    In another Virginia area Best Buy, our surveyors were told 
that to continue receiving television signals after the 
transition, they would have to purchase a useless HDTV tuner, 
which would have cost them at least $170.
    In a Virginia area Target, our surveyors were told of 
converter boxes, but were told that there were no discounts, 
that there was no Government program, and that a brand new 
digital television set would actually be cheaper than the 
converter box program at initial cost.
    In almost every store surveyed, we found a number of analog 
television sets on the shelves, sometimes labeled on the box or 
on the shelf; but in all stores, it could be easy for consumers 
to miss the warning labels. Throughout this fall and this 
year's holiday shopping season, it is crucial that bargain 
hunting shoppers are not duped into purchasing a slightly 
discounted analog television set when they will have to 
purchase a converter just months later.
    Our surveys were designed to account for a lack of boxes on 
the shelves and the--at that time--unknown manager of the 
coupon program, but Best Buy was the only store at that time to 
provide print information in both Spanish and English. 
Unfortunately, their store representatives had clearly not read 
the brochure and were unable to repeat or even reference the 
brochure.
    We have only a few months to ensure that the benefits of 
the transition do not come at a cost to our most vulnerable 
consumers. And while the return to Spectrum holds exciting new 
opportunities for nationwide, broadband or wireless service, we 
have got to make sure that we put efforts into the transition 
and efforts into research and into preparing consumers.
    Thank you.
    [The prepared statement of Mr. Fazlullah follows:]
    
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    Mr. Markey. Thank you. We very much appreciate it.
    Mr. Markey. Our next witness is Michael Benjamin. He is the 
executive director of Family, Career and Community Leaders of 
America. That is a national nonprofit student organization that 
will participate in a grassroots campaign to educate consumers 
about the DTV transition.
    Welcome, sir. Whenever you are ready, please begin.

  STATEMENT OF MICHAEL BENJAMIN, EXECUTIVE DIRECTOR, FAMILY, 
            CAREER, AND COMMUNITY LEADERS OF AMERICA

    Mr. Benjamin. Thank you very much, Chairman Markey, Ranking 
Member Upton and members of the committee. We thank you for the 
opportunity to provide you with the information about the role 
that Family, Career and Community Leaders of America will play 
in this transition event that will take place on February 17, 
2009.
    As the executive director of Family, Career and Community 
Leaders of America--and I will refer to ourselves as ``FCCLA'' 
for it is just too long of a name--I am pleased to be 
representing an exemplary youth organization that will be 
involved in assisting citizens throughout the United States to 
become more aware of the analog to digital television coupon 
program.
    As you mentioned, FCCLA is a national nonprofit student 
organization that helps young men and women become strong 
leaders in families, careers and communities through family and 
consumer sciences education programs. FCCLA has been in 
existence since 1945, and for most of you, it looks as though 
you are older than 25. So up until 1999, it was known as the 
Future Homemakers of America, FHA. So in 1999, we changed our 
name to reflect the changes that obviously were taking place in 
society.
    FCCLA members are students in middle schools and high 
schools who are organized by local chapters in school settings. 
FCCLA membership is open to students of all races and religious 
beliefs and can be found in public, private and homeschool 
settings. Family and consumer science teachers serve as FCCLA 
chapter advisors. Throughout the United States, we have more 
than 225,000 students and nearly 7,000 local chapters in all 50 
States, Puerto Rico and the Virgin Islands. FCCLA is one of the 
largest career and technical student organizations as endorsed 
by the U.S. Department of Education, the Office of Vocational 
and Adult Education.
    For over 60 years, FCCLA members have been achieving 
positive student outcomes and successes through national 
programs based on identified community needs. One example of a 
FCCLA program that has addressed a youth-related concern is 
what we call STOP the Violence. It is students taking on 
prevention. STOP the Violence was created in 1999 following the 
Paducah, KY school shooting after the local chapter president 
was injured. The STOP the Violence program empowers youth with 
attitudes, skills and resources to recognize, report, and 
reduce youth violence. The program was funded by the U.S. 
Department of Justice and the Office of Juvenile Justice and 
Delinquency Prevention until 2006. During that period of time 
from 1999 through 2006, FCCLA trained 38,000 individuals in 
almost 6,000 chapters with this program.
    So why is FCCLA involved in this program? We have labeled 
our campaign ``Keep Your TV On.'' For this initiative, FCCLA 
has partnered with the Best Buy Company, Inc. and Geek Squad 
and has involved NTIA and other partners, including media 
outlets, to increase awareness of FCCLA and the digital 
television converter box coupon program.
    NTIA provided the opportunity for FCCLA to connect with 
partners involved in the transition. Project ideas were being 
made available to FCCLA advisors to integrate this campaign 
into their classrooms. Best Buy Company, Incorporated, and Geek 
Squad have provided FCCLA with $50,000 to be used as incentive 
awards and publicity for the campaign. FCCLA youth leaders will 
take the lead on this consumer education, grassroots effort 
that will benefit communities nationwide, utilizing the Best 
Buy ``blue shirts'' and Geek Squad agents where available.
    We will begin promoting this full-time campaign at our 2007 
national/regional meetings at which over 9,000 students and 
their advisors will come together in four cities throughout the 
United States: Atlanta, GA and Buffalo, NY on November 9 
through the 11th; Denver, CO and Minneapolis, MN on November 16 
through the 18th.
    Following the campaign kickoff in January 2008, Keep Your 
TV On Awards will be given out each month between January and 
May, and each month up to 10 chapters will receive $500 gift 
cards from Best Buy. In June, all national winners will be 
enrolled in a grand prize contest of $3,000. The contest and 
campaign will be highlighted in our various publications, such 
as Teen Times, and through our various networks to our teacher 
advisors.
    Mr. Chairman, FCCLA is involving youth across the country 
in community engagement by doing its part to help raise 
awareness of the analog-to-digital transition and the converter 
box coupon program. We appreciate the opportunity to appear 
before your committee and to provide you with this update on 
how FCCLA will be involved in this effort.
    Thank you.
    [The prepared statement of Mr. Benjamin follows:]
    
    [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]

    
    
    Mr. Markey. Thank you, Mr. Benjamin, very much.
    Our next witness, Nancy Zirkin, is the vice president and 
director of public policy for the Leadership Conference on 
Civil Rights. LCCR is one of the Nation's oldest coalitions of 
civil rights organizations, and it is a founding member of the 
DTV Transition Coalition.
    We welcome you. Whenever you are ready, please begin.

STATEMENT OF NANCY M. ZIRKIN, VICE PRESIDENT/DIRECTOR OF PUBLIC 
         POLICY, LEADERSHIP CONFERENCE ON CIVIL RIGHTS

    Ms. Zirkin. Thank you very much, Mr. Chairman, and thank 
you for inviting me to actually testify today.
    As the chairman said, I am Nancy Zirkin, vice president and 
director of public policy for the Leadership Conference on 
Civil Rights. LCCR is the Nation's oldest and most diverse 
coalition of approximately 200 national, civil and human rights 
organizations.
    Imagine for a moment that it is February 17, 2009. You are 
an ordinary citizen--a mother or a grandpa from Kalamazoo--and 
you turn on your TV to see the weather, and it is blank. You 
did not get the message that our Government has mandated that 
all signals had to be digital.
    The great switch from analog will have a profound impact on 
millions of Americans, especially seniors, the poor, the 
minority community, people with disabilities, and those whose 
first language is not English. But the reality today is that 
everybody needs a TV, not just for entertainment but for the 
news--what is happening locally, nationally and worldwide. 
Imagine 9/11 without TV coverage, and you understand how 
important having a working television is to the 21 million 
American households who now rely solely on free analog TV.
    LCCR believes that access to all communications in the 21st 
century is not a luxury but a fundamental right of every 
American. And the challenges involved in preparing Americans 
for the digital TV transition are of such magnitude that a 
strong congressional response is required, for in the end, 
voters will look to Congress if their TVs go dark.
    LCCR applauds Congress for recognizing the need for 
Government support to help consumers know about the coupon 
program, but we are as troubled as Mr. Doyle is. The $5 million 
allotted by Congress to educate consumers about the coupon 
program is a tiny amount to support the kind of public 
education effort that is required. Since the goal of the DTV 
public education campaign is to research everyone in each 
State, it is not unlike State Senate campaigns; and to put it 
in perspective, California, Ohio and Pennsylvania have a 
combined population of about 21 million households, and the 
combined cost of last year's Senate campaigns in these States 
was $22 million. Five million dollars to educate all 50 States? 
I don't think so.
    Our fear is that people who will be most affected by the 
change will not hear about it and will not have access to any 
of the coupons. We are also concerned that our most vulnerable 
populations will be the least likely to receive the first-come, 
first-served limited number of coupons for the converter boxes, 
leaving them with only unaffordable options. Congress can help 
make sure that that does not happen by actually determining 
that the coupons go to those who need them most. We urge you to 
consider the following unmet needs as you assess the status of 
the DTV transition.
    First, there needs to be sufficient funding appropriated to 
ensure a smooth transition, including funding private 
charitable groups that work directly with the populations most 
at risk.
    Second, there needs to be a comprehensive plan in place to 
attract how the education effort is progressing. It should 
include research, outreach and rapid response to ensure that 
those who are most at risk of losing service know about the 
transition and how to obtain getting a coupon.
    Finally, there needs to be coordination among all Federal 
agencies on educational outreach, with the replication of these 
efforts at the State and local levels.
    Finally, let me say that LCCR, through our member 
organizations representing over 60 million Americans, will do 
our part to educate consumers. But we and the DTV Coalition 
cannot do it without additional help and oversight from the 
Congress and from NTIA.
    Thank you, Mr. Chairman.
    [The prepared statement of Ms. Zirkin follows:]
    
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    Mr. Markey. Thank you, Ms. Zirkin.
     Our final witness is Tom Romeo, who is the director of 
Federal Services for Global Business Services, IBM Corporation. 
Mr. Romeo directs IBM's contract from the Federal Government to 
manage the Digital-to-Analog Converter Box program.
    We welcome you, sir. Whenever you are ready, please begin.

 STATEMENT OF TOM ROMEO, DIRECTOR, FEDERAL SERVICES FOR GLOBAL 
               BUSINESS SERVICE, IBM CORPORATION

    Mr. Romeo. Thank you, Chairman Markey and members of the 
subcommittee, for the opportunity to testify before you today. 
My name is Tom Romeo, and I am the director of Federal 
Servicess for IBM's Global Services Business for the public 
sector. I am here today to talk about IBM's role in 
implementing the NTIA Digital-to-Analog Converter Box Coupon 
Program.
    As you know, NTIA awarded IBM the contract to provide 
services for the coupon program on August 15, 2007. IBM and its 
business partners--Ketchum Public Affairs, Epiq Systems, and 
Corporate Lodging Consultants--will provide services in four 
areas: consumer education about the converter box coupon 
program; coupon distribution and redemption; support for retail 
store participation; and financial processing to reimburse 
retailers to maintain records and to prevent waste, fraud and 
abuse. Let me explain our goals for the program.
    IBM designed the coupon program to be consumer-focused, 
easy to use, and to provide maximum choice and access for both 
consumers and retailers. Our goal is to successfully 
communicate the details of the converter box program to 
targeted consumers, to distribute coupons and to complete the 
redemption process with minimal waste, fraud and abuse.
    The IBM team brings a diverse set of business process 
skills to the project. IBM will act as the system integrator 
and will provide overall project oversight. The team includes 
three primary partners, with extremely relevant experience 
supporting key elements of the program.
    Ketchum is a global public relations agency IBM has worked 
with for more than 10 years. They will provide consumer 
education and outreach. Epiq Systems has deep experience in 
executing consumer programs with geographically dispersed, 
hard-to-reach populations. They will staff the critical 
consumer-facing help desk and manage coupon distribution to 
consumers. Corporate Lodging Consultants, CLC, will work with 
retailers through the certification process and financial 
processing to reimburse retailers.
    Now, let me briefly describe the four areas of service. For 
the consumer education program, we have four primary work 
streams. First, we are developing messages and materials that 
educate consumers about the coupon program. Secondly, we are 
building on the outreach that NTIA has already done to over 150 
public and private sector partners. Third, we have created a 
strategy to leverage earned media across TV, radio, print, and 
online outlets. Fourth, we are establishing metrics to 
determine the saturation of the message. This will allow us to 
adjust both messaging and target audiences over the course of 
the coupon program.
    Consumer support begins with the coupon application. The 
application and distribution process is simple, consumer-
focused, and provides multiple channels for access. Consumers 
can apply for coupons via the phone, Web, or by picking up a 
paper application available in their community, and mailing or 
faxing it in to the Consumer Support Center. Web and phone 
support will be available 24 by 7, in six languages in addition 
to English, and will include support for those in need of 
hearing-impaired access. Consumers can expect to receive their 
coupons within 2 to 3 weeks after the order. The coupon is 
plastic and resembles a gift card, something familiar to 
consumers, and is easy to use. Information about where to 
purchase a coupon-eligible converter box in their local area is 
included with the mailing.
    Our retailer program has a two-pronged approach to recruit 
both national retailers and smaller local retailers to 
participate in the program. The Retailer Support Center opened 
on October 1 with live operators. The system provides multiple 
channels for both large and small retailers to certify their 
eligibility and enroll. All participating retailers will 
receive training about the coupon program. Making sure the 
sales associates are knowledgeable about the program will help 
achieve the best possible consumer experience.
    The coupon redemption process is also designed to maximize 
retailer participation and to minimize waste, fraud and abuse. 
Six different redemption options are offered to retailers. All 
are based on real-time coupon authorization at the point of 
sale. For smaller retailers, Internet and automated telephone 
options are also available and will operate in realtime, making 
a telephone the minimum technology required to participate in 
the program.
    In a typical chain-store experience, the consumer will 
present the coupon card, which is then swiped at the cash 
register just like a credit card or a gift card transaction. 
The system authorizes the transaction. The consumer pays any 
cost above the $40 value of the coupon, and leaves the store 
with a converter box. Authorization data is then matched up 
with sales data and audited before the information is 
transferred to the U.S. Treasury for retailer reimbursement.
    In conclusion, the NTIA coupon program requires innovative 
thinking, leading technologies and cooperation among retailers, 
broadcasters, Government agencies, and many community-based 
organizations.
    The IBM team is pleased to be part of this vital program 
and recognizes there are many challenges along the way to 
February 17, 2009. Our team is ready to meet those challenges 
and to work to ensure that consumers across the United States 
have continued access to free television broadcasting, 
including educational, entertainment, emergency, and homeland 
security information.
    Thank you for the opportunity to testify, and I am happy to 
answer any questions.
    [The prepared statement of Mr. Romeo follows:]
    
    [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]

    
    
    Mr. Markey. Thank you, Mr. Romeo.
    So that completes the opening statements from the 
witnesses. The chairman will now recognize himself for a round 
of questions.
    Ms. Fazlullah, you are bringing very troubling findings to 
our committee. People in your organization went out to stores, 
and they found out that people were not being given the 
accurate information by those who worked in these stores. 
Target has already been fined for not properly labeling their 
analog TV sets.
    Are you concerned that in January, Target will be how that 
store views a consumer walking into the store, as someone who 
might be moved up to an HDTV set that costs $500 or $1,000, 
when all they need is a converter box for their analog TV set 
in order to be able to receive a digital signal?
    Ms. Fazlullah. Yes, definitely. I think any of the top five 
retailers still have personnel in their stores who are not 
aware of the appropriate pieces of the transition, and as a 
result, upselling is a serious problem.
    We do not make any conclusions in our report as to whether 
or not it is on purpose or anything like that. I think there is 
a lot of confusion out there in terms of what the details are. 
What we find troubling is that, when you go to a store 
representative, you expect them to have some expertise on the 
question or, at the very least, be able to guide you to the 
appropriate resources.
    Mr. Markey. So you are not sure they are taking advantage 
right now?
    Ms. Fazlullah. I would say that what they are doing in the 
stores right now definitely takes advantage of consumers, but I 
cannot say if it is on purpose or for just a lack of training.
    Mr. Markey. Ms. Zirkin, do you think that there is a real 
risk here that these retail stores will take advantage of 
consumers?
    Ms. Zirkin. I absolutely do. And for our communities, Mr. 
Chairman, the problem is that a TV is a total luxury; 48 
percent, I believe--and I can check on that--of all over-the-
air households have an income of under $30,000 a year. So, for 
them, it is a real stretch even to be able to afford what they 
would have to put up in terms of the coupons, and that is why 
we are so concerned.
    Mr. Markey. Thank you.
    Mr. Stout, I share your concern that the closed captioning 
is not adequately supported by new digital television 
equipment, even though the manufacturers have a legal 
obligation to ensure that that function is included. The FCC 
just circulated a consumer advisory on closed captioning. Does 
that alleviate your concern?
    Mr. Stout. I have not read that consumer advisory that was 
just released yesterday, but I will give you our feedback to be 
added to the record at a later date.
    Mr. Markey. OK. Please do so. I have been working with 
Karen and with everyone associated with you going back to the 
late 1980s in terms of closed captioning being built into the 
law, and I would like to ensure that we do everything to 
maximize the accessibility for your community.
    I also want to make sure that everyone knows that Karen's 
son, Jeremy, was not covering me when I ruptured my Achilles 
tendon. Just so that is clear for the record.
    Mr. Romeo, I am concerned that retailers are not opting 
into the converter box program. Many of the retailers argue 
that the system upgrades they must make to process coupons are 
too onerous to implement before the Christmas rush.
    How difficult are those system upgrades? Can they be 
accomplished before this holiday season so retailers can stock 
boxes in January 2008 when the coupons become available?
    Mr. Romeo. Sir, we are just starting to engage now in 
conversations with those retailers, but they have happened very 
quickly. We have talked to 23 of the largest retailers.
    Mr. Markey. Is it a big deal? How hard is it?
    Mr. Romeo. We have given them six options to participate.
    Mr. Markey. Is it a big deal? Is it hard to do?
    Mr. Romeo. It is not a big deal. It is not hard to 
participate. With the simplest option, they can send paper, 
too.
    Mr. Markey. So if they do not have it done on January 1, 
they will have no excuses?
    Mr. Romeo. If they choose an option which is more automated 
for them, they would have to make a modification to their 
system. And during the Christmas season, they may choose to 
defer that until later next year, but I expect that we will 
have very broad participation by the retailers.
    Mr. Markey. Yes. I mean my feeling is that since this 
program is not very difficult for retailers to participate in, 
my expectation would be and the committee's expectation would 
be that they would be ready on January 1 to deal with this rush 
of consumers who would be coming to their stores. And we are 
going to be making that very clear to the retail community.
    I will now turn and recognize the ranking member of the 
committee, the gentleman from Michigan, Mr. Upton.
    Mr. Upton. Well, thank you, Mr. Chairman.
    I am sorry I missed some of the testimony, but I was glad 
to get pieces of it, and I have got a couple of questions that 
I want to ask.
    First of all, Ms. Fazlullah, you indicated in your 
testimony a couple of retail stores. I just wondered if they 
were in my neighborhood when you mentioned Target and Best Buy. 
They all seem to be together in my neighborhood right off Route 
1 in Alexandria. Is that where they were?
    Ms. Fazlullah. Those were some of the stores that we went 
to, yes.
    Mr. Upton. How long ago was it that you were there? My son 
seems to want to go there every week for something, so----
    Ms. Fazlullah. Actually, we went to those stores, I 
believe, at the end of September; but we also visited them over 
our preliminary survey, which was in August.
    Mr. Upton. In August. The ads, at least as I have seen them 
as a consumer, have just started to run, and NAB is beginning 
to run their ads, I believe, this week, right? This week. So 
the word is now, unless you were in line in this committee room 
to get in over the last number of months, I would venture that 
most consumers do not know yet about the change, and that 
information is going to get out there.
    I understand, Mr. Chairman, that we are going to have 
another hearing in a couple of weeks, right? At the end of 
October?
    It will be in 2 weeks with a lot of the consumer groups, 
with the retail association, and we will be anxious to see the 
progress that they have made. But I will be checking with my 
folks, and I will visit some of those stores and see what is 
going on to make sure that they, in fact, have the information.
    One of the concerns that I have heard already from a 
consumer who saw the ad was ``I want to get my box now,'' but 
because they are not ready yet--they are not actually 
delivered--there is a reason why the cards have not been 
shipped out yet for people then to actually go get them. As we 
have seen in the demonstration, one of the selling points--and 
I have urged the NAB to do this--is that consumers will 
actually get a better picture when they convert it to digital 
than on their analog sets, so there will be an advantage to 
them to, in fact, get a better reception with the card.
    Mr. Benjamin, in your testimony, one of the concerns that 
has been expressed is how hard or how difficult it will be to 
reach certain segments of the demographic groups that are out 
there. What is your reach of the organization, both in terms of 
geography and demographics, in terms of communicating with 
folks who may hear that message?
    Mr. Benjamin. I would say, of the 225,000 members who we 
have had over this past year, a large percentage of those are 
located in the Midwest and southern region parts of the United 
States, which tend to be more rural than, perhaps, other 
sectors of the country. In fact, in many of our cases, we have 
chapters in schools that have 150 students in the high school, 
which, really, is indicative of the size of that community. So 
we think that we will have a significant outreach into the more 
rural areas of the country. Although, we are in, as I 
indicated, all 50 States.
    Mr. Upton. Well, again, as I have sat down with my local 
broadcasters--and my district is the southwest corner of 
Michigan, so we get Chicago over-the-air TV, but we rely a lot 
on South Bend, Kalamazoo, and Grand Rapids. We have some fairly 
rural areas in my district, but that is why it is so important 
for the broadcasters themselves, now that they have the message 
and now that they have the ads, to beam it into those of us who 
watch in order to get our attention and so that, in fact, those 
with just over-the-air will get that message, and then we need 
to obviously follow through with them to make sure that they 
get the card and are able to install the converter boxes as 
they become available.
    Mr. Romeo, do you suspect that there will also be, in 
essence, mail order or Internet sales of the boxes through the 
retailers in addition to individuals just going to Best Buy or 
to Target or to Sears or wherever?
    Of the retailers that you have talked to initially, are 
they planning to do the same thing? Is it going to be in a 
catalog?
    Mr. Romeo. Yes. So online retailers are we talking about? 
Yes. We believe there will be strong participation on that 
front.
    Mr. Upton. As they get that card, that gift card that they 
otherwise would swipe, will there be a number there to identify 
on the Internet so that they will be able to claim the credit?
    Mr. Romeo. There will be.
    Mr. Upton. I yield back.
    Mr. Gonzalez [presiding]. Thank you very much.
    Let me just ask the witnesses: How much will the consumer 
have to pay for that converter box that has been approved and 
that is the genuine article? They are going to get a coupon for 
$40. What is it actually going to cost, do we know?
    Mr. Benjamin. I heard the cheapest one is about $70, 
somewhere in that area, but I believe it is going to be more 
than the $40 coupon.
    Mr. Gonzalez. Yes. I am under the impression--and members 
of the committee and, I know, Mr. Markey would probably have 
the answer--that it is anywhere from $50 to $70, which means it 
is more like $70 to $100 or whatever. But I am not sure that 
the consumer is aware that it is going to cost more than the 
$40 coupon when they get up there. I think that is actually an 
important piece of information.
    Ms. Zirkin, you pointed out something that is so important 
because it is my concern, but I do not know what we are going 
to do about it, and that is that the coupons should go to those 
who need it the most. My fear is, the way it is set up, it is 
the least likely scenario, and that is not going to be the 
result, because I do not think we have any priorities, and let 
me explain, and then I will ask you what we do about it.
    Let us say we have someone who has cable access at home but 
that not all of their televisions are cable-connected, and so 
they need the box for the other TVs. The cable companies, 
obviously, at the head-in are going to reconvert, and they are 
fine, all right? That person probably is the best informed of 
any because we have the broadcasters, and we have the cable 
industry out there bombarding them with the information, so 
they are probably going to constitute the greatest number of 
coupon redeemers.
    Then I have got somebody who has got a vacation home and 
decides, ``We do not have cable or satellite out there, and I 
will get one for my vacation home.'' Then we probably have the 
person who needs it the most, that person who truly has the old 
set--analog--and so on. Quickly, because I have a question for 
Mr. Romeo: What do you propose we do? Because it does not look 
like that particular category of consumer is going to be really 
a priority.
    Ms. Zirkin. And the other thing about that particular 
community is that they do not have Internet access. So that all 
of the fancy things, they are not going to get. I mean we 
believe we are looking at a disaster for these 21 million 
households, and what we are proposing at LCCR--and we cannot do 
it alone because all of our organizations are all public 
interest. Many of our organizations have conventions, have 
workshops. We can penetrate with the materials if we can get 
help, which is why we have stressed over and over again that $5 
million for public education is simply not enough.
    Mr. Gonzalez. Ms. Zirkin, I am going to try to get this 
question in real quick to Mr. Romeo there.
    I do not know if you can address this, because the person 
who is doing all of your outreach--is it Ketchum? What is the 
name?
    Mr. Romeo. Ketchum, yes.
    Mr. Gonzalez. All right. Do you know what partnerships they 
are actually entering into? It might be with Mr. Benjamin's 
group or so on. But what I am saying is that it is a noble 
effort and we need to do it. But what is obvious to me is: What 
does everyone have in common who may have an analog television? 
That is, it has got to get plugged in, right? So they have to 
have electricity. That means they have to have utilities. That 
means they are probably getting a utility bill.
    Are we thinking in terms of how we are going to piggyback 
on other governmental entities at the Federal, State and local 
levels, and especially utility companies?
    You all may have already thought this through, and you are 
going, ``Wow, Charlie, you are a genius,'' but are you aware of 
anything like that? Because that is the only way you are going 
to get into that house.
    Mr. Romeo. Sir, we are working closely with NTIA to take 
advantage of existing relationships, but I know there are 
discussions with all of the other Federal agencies to use their 
outreach to take advantage and to get the consumers that way.
    Mr. Gonzalez. I will really suggest, sir, that that effort 
is at the local government and utility level and, if we have 
any obstacles/impediments, that we start figuring out what that 
is now because tomorrow or January 1 is basically here.
    Really quick, Ms. Fazlullah. I go into the electronics 
store. I have got a $40 voucher, and I have got a salesperson 
who says, ``Hey, for another $100 or another $150, I can get 
you something that converts to signal but also allows you to 
play a DVD. For another $150, I can get you something that 
converts a signal, plays a DVD, and you can even record.'' What 
can we do about that?
    Ms. Fazlullah. I think it is important that the Government 
step in and set actual guidelines as to what retailers are 
saying to the consumers about the DTV transition. Having set 
guidelines that put down on paper, ``These are the pieces of 
the DTV transition that need to go into the hands of your 
personnel so that they can then say the correct things to 
consumers'' is important.
    Then, on the other side, if there are retailers that are 
actually upselling, then we have got to have a process in place 
to actually punish them for that.
    Mr. Gonzalez. Fine.
    Ms. Fazlullah. I do not know if that is really adequately 
in place.
    Mr. Gonzalez. I do not think we are going to be able to do 
that, but I appreciate it because I think it is a real 
quandary. My time is up. Thank you very much for your testimony 
today.
    At this time, I recognize Mr. Walden.
    Mr. Walden. Thank you, Mr. Chairman.
    I just have to follow up on this. Are you really saying 
that, if a clerk says to me when I go in, ``Here is what your 
coupon is good for, for this converter box.'' Or, ``Mr. Walden, 
we also have these other options available to you,'' that 
somehow that retailer should be punished for upselling? That is 
what I heard you say in response to Mr. Gonzalez's question.
    If they say, ``Oh, and this one has got a DVD player, and 
this one will do that and has,'' you know, ``a big, new 
picture,'' you said we have got to take care of that and have a 
script. Are you serious?
    Ms. Fazlullah. Well, I am serious about the fact that we 
need to have adequate information for consumers in these 
stores. I think it is a really confusing process.
    Mr. Walden. That is not my question here.
    My question, though, was this went further than just 
somebody's scamming a customer and a bait and switch and a 
fraud, which I am with you all the way on. If they say ``Yes, 
come in and use your coupon'' and then they do not happen to 
have boxes for, oh, a year, that is a different deal. But what 
I heard was we have got to regulate from the Federal Government 
what a salesperson says in terms of other options a consumer 
might want to take advantage of.
    Ms. Fazlullah. I don't think that--I'm sorry if that is 
what it appeared. But I would actually like a process for fraud 
and upselling, which I think is very confusing. In 
conversations that I have had with the FCC and with the FTC, it 
is unclear what you do with consumer fraud situations with 
upselling. Do you go to the NTIA when there is a problem with 
the coupon program, or do you go to the FCC when there is a 
problem with the----
    Mr. Walden. I am reclaiming my time because there is a 
difference between bait-and-switch and upselling, I think, as I 
understand it, which is offering consumers other opportunities 
and choices. Is that a problem? Do you call that a fraud?
    Ms. Fazlullah. I would say maybe my definition of upselling 
is actually where you don't provide the adequate information 
about the converter box program or alternative situations as 
opposed to just jumping ahead and trying to sell an HDTV.
    Mr. Walden. I think you need to train, and I think you need 
to make sure that the customer representatives know the whole 
deal on the consumer box. I fully agree with that. But if we 
start trying to write scripts for every salesperson in every 
retail outlet in America and then have the speech police come 
in and decide, I can't tell you that that TV has a converter 
box and a DVD player, and by the way, this one also has a 
stereo or whatever in it, and these are your options, then I 
think we have got a problem.
    I am going to go to Mr. Romeo. Tell me how the process is 
going to work if I am a consumer and I apply for a card in 
January? I heard earlier today from the Secretary that they are 
going to delay the rollout of those cards commensurate with the 
product rollout. Now, what I want to get at is an issue that I 
apply. I live in a little town, but it is 60 miles from a major 
city in Oregon--Portland. Tell me how this database is going to 
work where you are going to list the stores I can go to that 
will have these converter boxes? How do you know where I shop 
or where I want to shop, and am I going to be limited? I know I 
can use that coupon anywhere. But let us say, on January 10, I 
am ready to go celebrate my birthday by getting my coupon that 
I ordered and going into Portland to a Best Buy and buying one 
of these converter boxes because I know they have them when 
perhaps the Radio Shack in Hood River doesn't. Who is going to 
decide for me when I get that coupon?
    Mr. Romeo. If you order the coupon, so we are working with 
NTIA on the rollout details. But in that scenario, we haven't 
talked about--we have the information from where you live when 
you order the coupon. We have your address. We have a list of 
certified retailers throughout the country. So we can send you 
the list of certified retailers in your geography. And that 
could be Zip Code or much broader than that. We are still 
working with NTIA on that.
    Mr. Walden. And I concur that is a good idea to get the 
list or at least allow me somewhere where I can go and get a 
list. I have a district that is 70,000 square miles. It would 
stretch from the Atlantic to Ohio. It is an enormous district. 
And so when you limit to a Zip Code or a 15-mile radius or 
something----
    Mr. Upton. If the gentleman will yield just for 1 second. 
But you are also going to be able to get them through a mail 
order house or on the Internet where they can actually get them 
delivered.
    Mr. Romeo. And those would also be listed on the mailing, 
that you can order online. If there are retailers who provide 
the box online, they would also be listed.
    Mr. Walden. I guess I am just trying to get to where 
consumers have as many options at their disposal as possible to 
get a coupon whenever they want to get it, get it returned to 
them, and then they make the decision. Because the Government 
doesn't always know--I know I am slightly over. I am kind of 
like the last one here, other than Mr. Terry. But anyway, I 
will quit. Thank you.
    Mr. Gonzalez. And to follow up on Mr. Walden, in my 
discussion, I don't mean to infer that someone is going to be 
able to get credit for the $40 on the upgrade. But I am also in 
the real world where I can see $40 rebates being offered by 
certain sellers when they do go and they upgrade.
    Mr. Walden. So what would be wrong with that? If it is not 
the taxpayer subsidizing, it is some other company.
    Mr. Gonzalez. I am just saying that if you have somebody 
there with a $40 coupon, the consideration for the consumer is 
that they are getting credit for the $40. If they upgrade, they 
are not going to be able to apply that $40 credit. Therefore, I 
think what would happen is simply, it would be replaced by what 
would be, again, a $40 rebate just to go ahead and address the 
$40 that they are not going to be able to actually, I guess, 
cash in on. I do see a problem with that. I think people are 
going in there with the intention of what is a Government 
mandated arrangement, and it is not bait-and-switch, but 
definitely you have a captive audience, and you have certain 
individuals. I don't know the degree of sophistication. But I 
think you are going to run into some problems, and you need to 
anticipate it. To the extent that we educate individuals I 
think will go a long way. But I am saying, Mr. Walden is not 
wrong to say there is only so much we can do to protect any 
consumer.
    The Chair at this time would recognize Mr. Terry from 
Nebraska.
    Mr. Terry. I appreciate that Mr. Gonzalez.
    Mr. Romeo do you realize that it all stops with you.
    Mr. Romeo. I do.
    Mr. Terry. Everything we are talking about is going to be 
put on your plate. And I was asking some of my colleagues 
earlier on an issue that kind of bothered me. We talked a 
little bit about the bait-and-switch and the consumer or 
potential fraud on the consumer. I want to switch the 
discussion now, since we have discussed that, to fraud on the 
program. Because it seems by, just the system as it has been 
described to us, you sign up for this voucher, the debit card. 
You get it. You take it to your electronics retailer and get a 
box. It seems to me that it is ripe for fraud in a lot of 
different areas. And the first is asking for the debit card. 
What would prevent me from going up and down my block in my 
neighborhood knowing that every household is entitled to two, 
and you go up and down most blocks. And frankly, in Omaha, no 
matter what part you go to, even in the poorer section, you are 
going to find that most houses, every TV is already hooked up 
to cable. So they will sit there and say, I will give you 20 
bucks, you give me your two vouchers or give me your access to 
these two vouchers. Or likewise, developing a black market in 
some way for the equipment. I see a lot of different ways to 
turn this into cash for people at the expense of the program. 
Has IBM thought through this? How are they going to stop? Where 
do you anticipate potential fraud? Because, believe me, this 
will turn into fraud. There will be stories on it. Have you 
thought through the points that are most vulnerable, and what 
are you doing to prevent it?
    Mr. Romeo. Yes we have thought through many of the points 
of fraud. The coupon itself will only be redeemed. So the 
financial payment for the coupon will only be made when it is 
matched to a certified box sold at a retailer. And the retailer 
will get that money directly. So having a large value of 
coupons means that you will have to go to a retailer and redeem 
those coupons for certified boxes in that retailer. We also 
will look for patterns. So if there were a neighborhood that 
just ordered a tremendous volume of coupons and they were maybe 
redeemed in another State, we would see a fraud pattern in that 
and start to turn that over to NTIA for investigation.
    Mr. Terry. I am not sure that gives me a great deal of 
confidence. What type of system do you have in place to track 
whether you see a bump in what you would determine as 
fraudulent activity besides just out-of-State activity with the 
coupon?
    Mr. Romeo. Without getting into too much detail on the 
security, protections on the system, this is a credit card 
provider using the system that they use for credit card 
transactions. And they have a variety of methods to ensure that 
they are not defrauded from the use of their cards. So we are 
employing a lot of the pattern recognition that they would 
employ in their credit card systems today.
    Ms. Zirkin. If I could say something, Mr. Terry. I think 
you have a very good question. And I think that there are two 
issues here. Fraud is one. But who is getting the boxes? And it 
is going to be very important in our opinion that the Congress 
with GAO track where it is going. Because it has to be an 
independent tracking. Nobody wants to wake up on February 17, 
and you all are going to be called, not me. And so I think it 
is in everybody's best interest to have the tracking done by 
the Congress and GAO so that you can see patterns.
    For instance, in Detroit, if you see in the inner city that 
really many fewer coupons are being redeemed, then you have to 
think about or ask what is happening in terms of the public 
education. Or, in New York City, 10024 Zip Code, if there are a 
lot of them being redeemed, what is happening here? So I think 
the fraud point is important, and who is getting it is very 
important. Thank you, sir.
    Mr. Terry. That is a very good suggestion. And I will then 
suggest to our chairman that we follow through on those.
    Mr. Markey. And I will follow your suggestion.
    I will now turn and recognize the gentleman from Illinois, 
Mr. Shimkus.
    Mr. Shimkus. Thank you, Mr. Chairman, and I appreciate you 
all for being here. You are competing with the Dalai Lama, 
which is big competition, but I believe, on February 17, 2009, 
the Dalai Lama is not going to have a complaint about whether 
his TV goes dark, but we will be receiving some of those. So 
thank you for your interest obviously and being here during 
this period.
    A couple quick questions, if you will. And Mr. Romeo first. 
I was talking to one of my staffers. IBM administers one of the 
welfare programs in Indiana. Is that correct? Is that the right 
State?
    Mr. Romeo. It is.
    Mr. Shimkus. And successfully?
    Mr. Romeo. Right.
    Mr. Shimkus. And it is credited with obviously providing 
the services in a timely beneficial manner. I wish I knew all 
the details, but I just put the connection together. So you 
have experience in dealing with stuff like this.
    Mr. Romeo. We also run a very large portion of CMS's 
financial reporting, so depending on claims for CMS.
    Mr. Shimkus. So it is probably safe to say that you have 
confidence you are going to be able to track the supply of the 
converter boxes as well as the coupon demand and redemption to 
ensure that the program runs smoothly?
    Mr. Romeo. Yes.
    Mr. Shimkus. And I think the track record speaks to that so 
far. But we are pretty gun shy. We had a very successful 
Medicare prescription D program now. But the implementation of 
it led a lot of us to have concerns about that the first couple 
of months. So if there is skepticism, that is kind of the short 
term where Members have had to deal with that.
    Mr. Benjamin, the question is, won't your program have 
consumer education benefits on multiple levels? First, you will 
be educating your 225,000 student members. Second, they will 
likely educate their parents. And third, they will be able to 
educate their communities. And doesn't this show how a simple 
grassroots idea can be used to leverage awareness.
    Mr. Benjamin. Yes. We are looking at a multiplier effect. 
And you are absolutely correct. Starting with the individual 
members--and let me just say that, even though we talk about 
225,000 members, that usually translates more or less into a 
10-1 ratio because those are members; they are not students in 
a class who may not be members but who will be getting this 
information. So it starts in the classroom. Then it works to 
the school. They have student body rallies and what have you. 
So there it would be at the school level, then the parents and 
then, of course, connecting with the community. And we are 
working with the various partners, the National Association of 
Broadcasters, so that hopefully we would be linking up with 
local television stations as well. So it is a tremendous 
multiplier effect that we hope to see out of this effort.
    Mr. Shimkus. And actually more than I would have even 
imagined. But we do know that it is the youth that really push 
technology. I remember going to a communications electronics 
show, and the MP-3, they were just rolling it out. And I was 
amazed at how just the demand for music really driven by 
current kids was really pushing technology. So I imagine these 
kids are going to be saying, hey, mom, dad, we better be ready.
    Mr. Benjamin. The other thing that is going to drive, I 
think, our chapters to be involved is the fact that they will 
be able to get some of these electronic gadgets, if you will, 
as a result of the prizes that will be offered. And they do 
love competition.
    Mr. Shimkus. That they do. And I will try to finish on this 
last question. Ms. Zirkin, your concern is this first-come, 
first-served nature of the converter box. I kind of mentioned 
that, in the first panel, with the 8.3 million books sold, the 
Harry Potter books sold, which I stood in line for and bought 
three with my two sons, so I am very aware. And some of those 
came in a bookselling beforehand. This is a tradition of the 
Shimkus family now. I am glad the series is over. But where we 
stood in line for a couple hours at midnight, bought our two 
books, went to bed at 3:00 in the morning, got up whenever and 
about 10:00, another book came in the mail. So we had, in 
essence, three books, but we did the pop culture thing to do. 
And the NTIA, we talked about the numbers, about what is 
projected. The CEA says 8 million, broadcasters think, what, 
23. The budget that is in place is for about 33.5 million 
coupons. And so we are pretty comfortable with that. But 
shouldn't we have focused on a--we had a debate when we moved 
the bill about doing a means testing. Should we have addressed 
a means testing as to really those who can't afford it deal 
with the coupons versus a coupon for everybody even if they 
don't need it?
    Ms. Zirkin. I think your Harry Potter analogy is very, very 
good, and that goes to my concern. Harry Potter, unless you 
have been under a rock for the past 8 or 10 years, everybody 
knows about Harry Potter. Not everybody, my concern, is going 
to know about this. And that is why, in my testimony, I really 
stressed the whole public education effort. I think that if 
people know about it, people are going to go get it. My concern 
is reaching those people, many of whom are poor or working 
poor.
    Mr. Shimkus. Shouldn't we have means tested the coupons?
    Ms. Zirkin. I can't speak to that.
    Mr. Shimkus. We will probably find out. If we have enough, 
there won't be an issue. If we don't have enough, it might have 
been part of the debate that we should have addressed.
    Ms. Zirkin. I think NTIA attempted to in the last half 
billion dollars that is allocated. But I am not sure how that 
is going to work. And that is why we really are advocating 
oversight, which Chairman Markey is doing and others. But I 
think it is going to be critical. Because if there is a problem 
and if we see problems next year in terms of who is getting 
them, then I think Congress is going to have to step in at some 
point so that this is not a disaster.
    Mr. Shimkus. I think Chairman Markey will do a great job of 
oversight.
    Ms. Zirkin. I do, too. Thank you.
    Mr. Markey. Thank you. And I thank the gentleman from 
Illinois.
    Mr. Shimkus. H.R. 608. I yield back.
    Mr. Markey. Anyone watching this has no idea what H.R. 608 
is.
    Mr. Walden. Maybe we should have a hearing on it.
    Mr. Markey. We will have a hearing, by the way, in another 
couple of weeks with industries that are responsible for making 
this work. And by the way, this thing is coming this 
Thanksgiving; it is coming in 5 more weeks, 6 more weeks. 
People are going to be in department stores all over America in 
4 or 5 weeks. And this is going to be a big moment where these 
stores better be ready to give people the honest information 
they need. The broadcasters, the cable industry, they better 
have already explained to people that they may be walking into 
a trap; they may be walking into situations that are going to 
be very dangerous for them as they purchase their new TV set. 
So let us do this. Let us have each one of you give us your 
best 1 minute for what it is that you want the committee to 
remember about your testimony. So I will begin with you Mr. 
Romeo.
    Mr. Romeo. Thank you. I just would like to say that IBM is 
in a position with our partners to execute the program in a 
successful manner. And we will be ready and operational on 
January 1. And we have designed the program to ensure that both 
the consumer and the retailer have a satisfactory transaction 
in the process.
    Mr. Markey. Ms. Zirkin.
    Ms. Zirkin. At the risk of repeating myself again, I urge 
that the Congress provide intense oversight with the General 
Accounting Office and be ready to actually step in so that 
nobody's TV goes dark. Because remember who folks are going to 
be coming to on February 7, 2009.
    Mr. Markey. Who is that?
    Ms. Zirkin. I think it is every Member of Congress. It 
might be every Member of Congress. It is certainly not going to 
anybody at this table. Thank you, Mr. Markey.
    Mr. Markey. Thank you. I appreciate it.
    Mr. Benjamin.
    Mr. Benjamin. I think FCCLA with its 225,000 students, 
7,000 chapters, will be prepared to engage in larger 
communities with our keep your TV on campaign.
    Mr. Markey. Thank you for your work, Mr. Benjamin. Do you 
guys give out merit badges? Is there something you can win for 
doing this?
    Mr. Benjamin. Well, they do give competitions. And in this 
case, the chapters, depending on how they stack up with other 
chapters, will get $500 coupons to purchase electronic 
equipment from Best Buy.
    Mr. Markey. That is excellent. For turning in Best Buy, 
they will be able to get a certificate to go into Best Buy. 
That is great.
    Ms. Fazlullah.
    Ms. Fazlullah. I think one of the most important statements 
that is in our testimony is that we need to have a coordinated 
effort from Government on this. And I think the GAO noted this 
earlier, that there isn't really a leader. And we need have 
coordination among the different pieces of Government that are 
acting on this so that there can be a guiding hand for the 
retailers, for the public interest folks and for the consumers 
at large.
    Mr. Markey. Thank you.
    And finally, you, Mr. Stout.
    Mr. Stout. OK. I just wanted to clarify one part with you. 
Earlier you had asked me about the consumer advisory that was 
sent out yesterday. And I had just talked with some of my 
staff. And they said that the advisory doesn't address any of 
the issues that you had. In closing, I just wanted to 
emphasize, just in 1996, Congress finally mandated the FCC and 
the industry to provide us with closed captions. And it is one 
thing that you would get access to; it is also another thing to 
see the access continued. We have experienced the change from 
analog over to digital programming. We want to be able to 
experience complete accessibility there. We are like all other 
Americans; we deserve full TV access. Thank you.
    Mr. Markey. Thank you, Mr. Stout.
    And this committee agrees with you, and that is why we have 
consistently passed legislation to accomplish that goal. And we 
will take whatever action it takes in order to ensure that that 
happens in this area as well.
    So today's hearing has given us an emergency broadcast 
system alert that the transition to digital TV is fast 
approaching, and several challenges loom. We have established 
that the FCC is the quarterback of the transition, but we need 
to see better coordination, better planning and contingency 
work being done, as the GAO recommended in their testimony here 
today. We obviously have consumer groups and hard-to-reach 
citizens for whom a comprehensive consumer outreach and 
education program is the top priority.
    In 2 weeks, we will have another hearing to obtain 
testimony from key industries. We will have an opportunity to 
assess industry announcements regarding outreach and education 
at that time. And we then will about 3 weeks before 
Thanksgiving and the Christmas sales season opens have a real 
idea of where we are. This has been an excellent panel. We 
thank you for your testimony. The hearing is adjourned with the 
thanks of the subcommittee.
    [Whereupon, at 2:35 p.m., the subcommittee was adjourned.]
    [Material submitted for inclusion in the record follows:]
    
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                  STATUS OF THE DTV TRANSITION--PART 3

                              ----------                              


                      WEDNESDAY, OCTOBER 31, 2007

              House of Representatives,    
         Subcommittee on Telecommunications
                                  and the Internet,
                          Committee on Energy and Commerce,                                                    Washington, DC.
    The subcommittee met, pursuant to notice, at 9:35 a.m., in 
room 2123, Rayburn House Office Building, Hon. Edward J. Markey 
(chairman) presiding.
    Present: Representatives Doyle, Harman, Gonzalez, Inslee, 
Boucher, Towns, Eshoo, Stupak, Engel, Green, Capps, Solis, 
Dingell, Upton, Hastert, Stearns, Wilson, Radanovich, Walden 
and Barton.
    Staff present: Amy Levine, Mark Seifert, Tim Powderly, 
Colin Crowell, Maureen Flood, David Vogel, Philip Murphy, Neil 
Fried, and Courtney Reinhard.

OPENING STATEMENT OF HON. EDWARD J. MARKEY, A REPRESENTATIVE IN 
        CONGRESS FROM THE COMMONWEALTH OF MASSACHUESTTS

    Mr. Markey. Good morning, ladies and gentlemen. We welcome 
you to this very important hearing on the digital television 
transition. As all of our Members can see, we have the single 
largest panel ever gathered to testify on any one subject in 
the history of the United States Congress, and in order for us 
to be able to accomplish this goal, beginning with the 
chairman, who is going to limit himself to 1 minute, I am going 
to ask if each of the members of the subcommittee would also 
limit themselves to 1 minute in their opening statements so 
that we can get to these witnesses and end it before the 
children begin trick-or-treating this evening. That would be my 
goal.
    And so I will begin by recognizing myself. Happy Halloween. 
In a little over a year, millions of American consumers will 
find out if the digital television transition is a trick or a 
treat. Will stores trick them into buying equipment they don't 
need? In February 2009 will they see their screens summarily 
turn as black as a Halloween cat? Will they long for the old 
analog signal even with its friendly ghosting; or conversely, 
will it be a wonderful treat? Will it be a bag full of digital 
delights, including the eye candy of a better pristine picture, 
breathtaking high-definition programming and perhaps multiple 
streaming of new sources and channels?
    Nothing is scarier this Halloween than the prospect of 
millions of consumers disillusioned and upset with a 
Government-mandated transition that has gone awry. For this 
reason we are holding today yet another digital television 
oversight hearing.
    We obtained testimony just 2 weeks ago from consumer 
groups, the chairman of the FCC, the head of the NTIA, as well 
as important testimony from the GAO about the status of the 
transition and suggestions for improvement.
    Today we have an expert panel of witnesses, of industry 
stakeholders to inform the subcommittee about their 
perspectives of the transition with just over a year to go 
prior to the hard date and just 2 months before the Government 
converter box coupon program begins. We will be working with 
the FCC and the industry on these issues. I want to thank the 
witnesses for their willingness to testify today and sincerely 
hope that this hearing goes well.
     The Chair recognizes the gentleman from Michigan, the 
ranking member of the subcommittee, Mr. Upton.

   OPENING STATEMENT OF HON. FRED UPTON, A REPRESENTATIVE IN 
              CONGRESS FROM THE STATE OF MICHIGAN

    Mr. Upton. Thank you. I will try to be as brief as well. I 
just note that the clock didn't start until you were well into 
your statement.
    I am just glad that daylight savings time has not switched 
until Sunday with trick or treat, so our trick-or-treaters 
tonight have that extra hour of sunlight, one of the things 
that you and I worked on together in the last Congress as the 
2005 bill, so that hopefully we won't have as many accidents 
today.
    Mr. Markey. And I want to congratulate you on that, Mr. 
Upton.
    Mr. Upton. We worked together. It was a good thing.
    I thank you for holding this hearing on the transition to 
DTV. We welcome our panel and our many witnesses that are here 
today.
    I would just note that in February 2006 President Bush 
signed into law the legislation that designated midnight 
February 17, 2009, as the date to complete the transition from 
analog to digital TV broadcasting. The transition from analog 
to digital television represents the most significant 
advancement of TV technology since color TV was introduced 
decades ago. And I would remind all of us here that there was 
legislation introduced early on in this Congress, H.R. 608, the 
Barton-Upton-Hastert DTV Consumer Education Act, which goes a 
long way to assure folks that, in fact, we will see that 
transition move in an orderly way.
    Who will be affected once the proverbial switch is flipped? 
Cable, satellite and TV companies will take steps to continue 
providing service for their TV subscribers. These consumers 
will not be noticeably impacted by the DTV transition. The 
cable and broadcast industries have already stepped up to the 
plate to help educate the public about digital TV transition 
with still more than a year to go. Thank you. By introducing 
public education campaigns that will total nearly a billion 
dollars, B as in big, it is comforting to know that industry 
understands the critical importance of educating Americans on 
this issue so that, in fact, a seamless transition can take 
place in February 2009.
    Mr. Chairman, I am going to ask my full statement be part 
of the record. I look forward to interacting with our 
distinguished panel today to make sure that, in fact, this is a 
success, and not only today, but at the end of the day. And I 
yield back.
    Mr. Markey. The gentleman's time has expired.
     The Chair recognizes the gentleman from Pennsylvania, 
Michael Doyle.
    Mr. Doyle. Thank you, Mr. Chairman. And my treat to you 
today will be to waive my opening statement so we can get to 
our witnesses. I yield back.
    Mr. Markey. The Chair recognizes the gentlelady from 
California, Jane Harman.

  OPENING STATEMENT OF HON. JANE HARMAN, A REPRESENTATIVE IN 
             CONGRESS FROM THE STATE OF CALIFORNIA

    Ms. Harman. Thank you, Mr. Chairman.
    I would point out that if our witnesses were female, it 
would take far fewer of them to communicate this information. 
That is not part of my opening statement.
    Good morning, Mr. Chairman, and welcome to our witnesses. 
Our lengthy witness list today is ample evidence that a broad 
range of industries, not to mention 300 million Americans, have 
a stake in the DTV transition. Six years after the 9/11 
attacks, first responders still cannot communicate horizontally 
or vertically on a national basis.
    My views are well known. The 700 MHz TV spectrum should 
have been cleared by 2006. Any delay beyond February 2009 is 
totally unacceptable and dangerous. February 2009 is less than 
16 months away. Half of all Americans are clueless about what 
the DTV transition is. Education efforts by industries 
represented here today must hit the streets now.
    I am fond of saying that perfection is not an option, but 
failure to complete this transition is not an option either. 
When we are attacked again, sadly that is my prediction, we 
will be measured by our response. A national, integrated, fully 
interoperable network is the indispensable requirement.
    I yield back the 13 seconds remaining.
    Mr. Markey. The gentlelady's time has expired.
    The Chair recognizes the gentleman from Texas Mr. Gonzalez.
    Mr. Gonzalez. Waive opening.
    Mr. Markey. The Chair recognizes the gentlelady from 
California Ms. Eshoo.

 OPENING STATEMENT OF HON. ANNA G. ESHOO, A REPRESENTATIVE IN 
             CONGRESS FROM THE STATE OF CALIFORNIA

    Ms. Eshoo. Thank you, Mr. Chairman, for holding yet another 
hearing on this important issue.
    There are several points that I wanted to make. I am going 
to drop some of them, but I do want to say this: Last week the 
committee heard the testimony of the FCC Chairman Martin in 
support of a multitasked must carriage. The chairman, of 
course, believes that cable providers must be mandated into 
carrying all five digital channels. The theory purported by the 
chairman asserts that if carriage is mandated, broadcasters 
would produce the content on their extra channels.
    Right now in my district, not one commercial broadcaster 
produces additional content on these extra channels except some 
who air the weather radar 24 hours a day. But public television 
stations across the country are using additional channels. In 
my district KQED has five new channels they are broadcasting, 
and they have a channel that is dedicated to children's 
programming and another 24-hour Spanish-language channel.
    So what I would like today is to hear from the broadcasters 
and have them explain to the committee why commercial 
broadcasters are not producing content for these extra channels 
and why public television is able to do so and air this content 
while commercial broadcasters are leaving these channels 
fallow.
    I think there is a lot of work to be done as we roll out 
this transition. I think it needs to be coordinated, both by 
industry and the Government. And I look forward to hearing the 
comments that our witnesses are going to make today.
    Thank you, Mr. Chairman.
    Mr. Markey. The gentlelady's time has expired.
     The Chair recognizes the gentleman from Oregon Mr. Walden.
    Mr. Walden. Thank you, Mr. Chairman. I am going waive my 
opening statement.
    Mr. Markey. The Chair recognizes the gentleman from Texas 
Mr. Green.

   OPENING STATEMENT OF HON. GENE GREEN, A REPRESENTATIVE IN 
                CONGRESS FROM THE STATE OF TEXAS

    Mr. Green. Thank you, Mr. Chairman, for holding the 
hearing. I welcome our panel.
    This is the third hearing specifically on DTV this year, as 
well as the issue brought up when we had the FCC Commissioners 
in front of our subcommittee this year. And I will keep my 
remarks less than 1 minute.
    In previous hearings we have yet to hear convincing 
testimony that there is a concerted effort to coordinate 
consumer education campaigns and make sure Americans know that 
DTV transition is coming, let alone what will be happening in 2 
months when they can start applying for the converter box 
coupons. It is troubling that the NTIA and the FCC outreach 
efforts of an Internet base is not going to help groups such as 
the elderly and non-English-speaking households that typically 
rely heavily on over-the-air broadcasts, that do not access the 
Internet at high rates. I look forward to the testimony and any 
efforts that Congress, the FCC or NTIA need to implement to 
ensure the smooth transition.
    Last Monday's commitment by the National Association of 
Broadcasters has spent $700 million on DTV education and 
advertising, a promising sign that broadcasters nationwide are 
committed to ensuring there is a transition; the cable 
industry's commitment of $200 million in advertising as well. 
And I hope to see a similar commitment by all the parties 
involved.
    And, Mr. Chairman, again I thank you for holding this third 
hearing, and I am sure before February 2009 we will have many, 
many more hearings.
    Mr. Markey. I thank the gentleman. The gentleman's time has 
expired.
     The Chair recognizes the gentleman from Florida for 1 
minute, Mr. Stearns.

 OPENING STATEMENT OF HON. CLIFF STEARNS, A REPRESENTATIVE IN 
               CONGRESS FROM THE STATE OF FLORIDA

    Mr. Stearns. All right. And I see it is 1 minute.
    Thank you, Mr. Chairman. Thank you for holding this 
hearing.
    My staff has indicated we have had in the last two 
Congresses--this one is not done--we have had almost 10 
hearings on this subject, so there certainly is an ample 
opportunity for us to comment on this.
    I would like to make my full statement part of the record.
    Our position, or at least my position, is a free market is 
working to help the transition go as smoothly as possible. 
Consumers continue to connect their televisions to video 
services offered by cable, satellite and new telephone 
providers. Furthermore, under FCC rules all television 
receivers manufactured since March 1, 2007, must be able to 
receive digital signals over the air. Moreover, many TVs not 
connected to cable or satellite are sitting in people's attics 
never turned on and are used only for videotapes, DVD or video 
games. At least that is the case in my house. We have these TVs 
all over the place. My son uses them for video games. None of 
the consumers in these situations will need converter boxes.
    So, Mr. Chairman, I think we are making great strides here, 
and I think we are bringing ample opportunity for hearing on 
this issue, and I appreciate the opportunity to talk. Thank 
you.
    Mr. Markey. The gentleman's time is expired.
     The Chair recognizes the gentlelady from California, Hilda 
Solis.

 OPENING STATEMENT OF HON. HILDA L. SOLIS, A REPRESENTATIVE IN 
             CONGRESS FROM THE STATE OF CALIFORNIA

    Ms. Solis. Thank you, Mr. Chairman. And I would like to 
welcome our witnesses this morning.
    I am really excited that Univision is here today because 
they are one of the few broadcasters that I know of that has 
already launched radio ads and PSAs to help provide information 
to the Spanish-language community regarding the transition that 
is going to be before us. So I want to applaud you for that, 
and also say that we also have to focus in on low-power 
television stations in the DTV transition. And I will submit my 
statement for the record.
    Mr. Markey. The gentlelady's time has expired.
     The Chair recognizes the gentleman from California Mr. 
Radanovich.

 OPENING STATEMENT OF HON. GEORGE RADANOVICH, A REPRESENTATIVE 
            IN CONGRESS FROM THE STATE OF CALIFORNIA

    Mr. Radanovich. Good morning, Mr. Chairman. Thank you for 
holding this hearing.
    I, like many of my colleagues, are primarily concerned 
about consumer education on this issue. For future business 
models to succeed, the private industry needs a smooth 
transition, and the market forced necessary to motivate these 
businesses to make that effort are obviously in place. We have 
seen this thus far in the consumer education campaigns that are 
already going on. Cable television, for example, was a leader 
in this effort when it announced a $200 million comprehensive 
consumer education campaign back in early September and has 
provided a great service. Many retail stores are participating 
in educating their consumers, placing signs in their stores and 
alerting their consumers about the transition. Just a few weeks 
ago the broadcasters announced their own comprehensive $697 
million campaign, including television commercials, educational 
outreach and community activities, to help inform their many 
customers. You basically cannot watch TV anymore without seeing 
a commercial where a very nice elderly woman tells you what is 
about to happen to your TV signal.
    This type of outreach is necessary. I commend you for all 
of your efforts that you have made thus far, and I look forward 
to the hearing in these efforts.
    Thank you, Mr. Chairman.
    Mr. Markey. The gentleman's time has expired.
     The Chair recognizes the gentlelady from California, Mrs. 
Capps.

   OPENING STATEMENT OF HON. LOIS CAPPS, A REPRESENTATIVE IN 
             CONGRESS FROM THE STATE OF CALIFORNIA

    Mrs. Capps. I will be brief, Mr. Chairman.
    Thank you again for holding this hearing. Your leadership 
on this issue means that media and consumers are taking note 
and learning more about the digital television transition and 
how it will affect them.
    I want to thank Chairman Dingell and my colleagues on the 
Energy and Commerce Committee for passing the 911 Modernization 
Act yesterday. The recent widespread wildfires in central and 
southern California were a stark reminder of why 911 
modernization is vitally important. So I hope we can continue 
this focus on public safety by strengthening 211 services so 
that families and individuals can seek and obtain critical 
services in times of need.
    The wildfires have also brought to the fore that unexpected 
events can have powerful consequences on the DTV transition. In 
this vein it is my hope that the FCC is taking into 
consideration the impact that wildfires and other disasters can 
have on broadcasters that are trying to meet the DTV transition 
statutory deadline.
    I will submit my further statement to the record, Mr. 
Chairman, and yield back.
    [The prepared statement of Mrs. Capps follows:]

  Prepared Statement of Hon. Lois Capps, a Representative in Congress 
                      from the State of California

    Mr. Chairman, I'd like to thank you again for holding this 
hearing. Your leadership on this issue means that media and 
consumers are taking note and learning more about the digital 
television transition and how it will affect them.
    I'd also like to thank Chairman Dingell and my colleagues 
on the Energy and Commerce Committee for passing the 911 
Modernization Act yesterday.
    The recent, widespread wildfires in central and southern 
California were a stark reminder of why 911 modernization is 
vitally important.
    I hope that we can continue this focus on public safety by 
strengthening 211 services, so that families and individuals 
can seek and obtain critical services in times of need.
    The wildfires have also brought to the fore that unexpected 
events can have powerful consequences on the DTV transition.
    In this vein, it is my hope that the FCC is taking into 
consideration the impact that wildfires and other disasters can 
have on broadcasters that are trying to meet the DTV transition 
statutory deadline.
    I also expect that the FCC will take into consideration 
stronger protections for small cable providers in complying 
with the recent dual-carriage order.
    I would like to extend thanks to our panel today for coming 
in to testify; I am very interested to hear what actions you 
all have pursued to ensure that adequate consumer protections 
are in place throughout the transition.
    Government, retailers, service providers, and broadcasters 
are all holders of the public trust.
    Some of the most vulnerable members of our society are 
counting on us to guide them through this transition, and I 
hope that you all will join us in ensuring that their trust in 
our intentions is not misplaced.
    Thank you again, Chairman Markey, for holding this hearing.
                              ----------                              

    Mr. Markey. The gentlelady's time has expired, and all time 
for opening statements by members of the subcommittee have 
expired. So we will turn to our panel, and we will begin by 
recognizing Mr. Ron Bruno. Mr. Bruno is the president of the 
Community Broadcasters Association and President of Bruno-
Goodworth Network, Incorporated.
    Welcome, Mr. Bruno. Whenever you are ready, please begin.

   STATEMENT OF RON BRUNO, PRESIDENT, COMMUNITY BROADCASTERS 
    ASSOCIATION, PRESIDENT, BRUNO-GOODWORTH NETWORK, INC., 
                         PITTSBURGH, PA

    Mr. Bruno. Thank you, Mr. Chairman, Ranking Member and 
members of the committee. As you said, my name is Ron Bruno, 
and I am recently elected the president of the Community 
Broadcasters Association. We are the trade association that 
represents the Nation's class A and low-powered television 
stations. I am also the president of Bruno-Goodworth Network, 
as you said, a company based in Pittsburgh. We own and operate 
11 class A television stations in Pennsylvania, Ohio and West 
Virginia. I appreciate the opportunity today to testify.
    Class A television stations were created in 1999 by 
Congress because it recognized the benefit of local 
programming. These stations are small businesses that boast the 
largest percentage of minority ownership in the television 
broadcast industry. They agree to adhere to a strict set of 
regulations, one of which is to provide a minimum of 3 hours a 
week of local programming every week. In fact, class A stations 
are the only stations mandated by law to produce local 
programming. AM stations, FM stations, full-power television 
stations are not mandated by law. Class A LPTV stations are the 
only stations mandated by law to produce local programming.
    Simply put, Mr. Chairman, long before localism was a 
buzzword in this industry, class A stations were serving their 
local communities with local programming. There are 910 class A 
and class A qualified stations providing local programming to 
underserved communities. Despite following the same regulations 
as full-power stations and providing the mandatory hours of 
local programming each week, these stations are not entitled to 
carriage rights with the exception of those in very small 
communities. As a result of this inequality within the 
broadcast industry, my flagship station in Pittsburgh, WBGN, 
has recently been forced to lay off 75 percent of our staff. We 
have eliminated our local news segment. We have cut all high 
school sports and other programs. WBGN was once thriving with 
more than 18 hours of local programming every week and drawing 
tremendous cumulative ratings of 10 percent in the market. We 
are now broadcasting less than 6 hours of local programming 
weekly.
    Mr. Chairman, if the playing field between full-power 
stations and class A stations is not leveled, mandated local 
programming by many small community-based broadcasters will 
cease to exist in the digital world. In 1992, approximately 80 
percent of the television viewers in this country watched TV 
over the air with an antenna; 25 years later we are barely at 
12 percent. Broadcasting exclusively over the air with no cable 
or satellite is no longer a viable business model.
    As a result class A stations have attempted to make private 
arrangements with cable companies in an effort to obtain 
carriage. The demands of these cable systems have been too 
onerous, and class A stations across America are dying. In my 
specific case, Comcast recently cancelled my original 
arrangement to be on their system, which was I would pay 
Comcast a quarter of a million dollars annually to be carried 
in Pittsburgh. Their new offer was for me to pay $2.4 million 
annually for carriage, which was the highest implicit rate 
formula they could get out of leased access. As stated, we are 
a small business dedicated to providing local programming, but 
the charges demanded by Comcast for us were simply too high, 
and they would be too high for any class A operator in America.
    After an extended negotiation with Comcast, the result has 
been that we are now carried on less than half of the Comcast 
system in our market at substantially more money. The real 
tragedy in all of this is Comcast isn't presenting anything on 
the channel that we used to use. They just display a slide on 
the screen that says ``Leased Access Channel,'' and they use a 
bad font at that.
    The tragedy like this is happening all across America; 
California, Texas, Washington State, Oregon, Massachusetts, 
Michigan, Florida, Georgia, Mississippi, New York, New Jersey--
I could go on and on--where local programming is dying, jobs 
are disappearing and businesses are being destroyed.
    Class A broadcasters really enjoy broadcasting, Mr. 
Chairman. We enjoy providing local programming to our 
communities. We know that we will be out of business unless 
Congress acts to level the playing field on carriage rights, 
and to that end we have put forth a proposal that is very 
simple and fair and would ensure mandated local programming 
from class A stations will continue to exist in a digital 
world.
    Our proposal calls for willing class A stations to 
immediately cease analog broadcast and convert straight to 
single-digital-only operations. This will expedite the 
transition to nationwide digital TV service as well as free up 
valuable analog spectrum for Government use or auction. In 
exchange for moving directly to digital on a single channel, 
these stations would be granted carriage rights within the 
grade B contour on the basic tier of the digital cable system, 
not the analog, the digital cable system.
    Let me be clear about our proposal, Mr. Chairman. It does 
not include carriage rights throughout the designated market 
area. We are not trying to be superstations. We only want to be 
seen to the areas that we cover in the areas that we cover 
within our grade B contour, which is how far our stations 
extend, no more no less.
    Mr. Chairman, I appreciate this time today and sincerely 
hope that you and the members of the committee will recognize 
the urgency of this industry's situation and act in a manner 
that benefits small businesses, local programming and, most 
importantly, consumers. Thank you very much.
    Mr. Markey. Thank you, Mr. Bruno, very much.
    [The prepared statement of Mr. Bruno follows:]
    
    [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]

    
    
    Mr. Markey. Now we will turn and recognize Mr. Patrick 
Knorr, who is the president and general manager of Sunflower 
Broadband.
    Welcome, sir.

  STATEMENT OF PATRICK KNORR, PRESIDENT AND GENERAL MANAGER, 
               SUNFLOWER BROADBAND, LAWRENCE, KS

    Mr. Knorr. Thank you, Mr. Chairman and members of the 
subcommittee.
    As you said, my name is Patrick Knorr, and I am general 
manager of Sunflower Broadband, an independent cable business 
in Lawrence, Kansas. We serve about 35,000 customers providing 
advanced cable, high-speed Internet and local phone service.
    I am also chairman of the American Cable Association. The 
ACA is the voice for nearly 1,100 small and medium-sized cable 
companies together serving about 8 million households. Our 
members range from family-run businesses serving one community 
to multiple-system operators focusing on smaller markets in 
rural areas. In fact, more than half our system serves less 
than 1,000 customers, and most serve rural communities with 
only a few hundred homes.
    Small cable operators are important businesses in their 
communities. Along with providing broadcast and cable 
programming, many of our members offer community programming 
not carried by other operators. In addition to providing 
competitive voice services in many smaller communities, our 
members are the only providers of high-speed Internet access 
and are stepping up to provide competitive voice services that 
Congress has desired.
    ACA and its members are committed to ensuring a successful 
digital transition, and know we have a role in educating 
consumers about that transition. ACA is an active member of the 
Digital Television Transition Coalition working with other 
businesses, trade and industry groups to ensure no customer is 
left without broadcast television because of a lack of 
information about the transition. Our ACA Web site features a 
graphical link to the DTV transition Web site, and already some 
of our members are airing public service announcements on their 
system about the transition.
    ACA has already hosted two events this year focused on the 
transition. At our independent show, an annual gathering of 
small cable operators, the ACA held an educational panel 
discussing the transition. And more recently we hosted an event 
in Washington, DC, where NTIA's assistant secretary for 
communication and information, John Kneuer, spoke to our 
members about the transition and the Digital-to-Analog 
Converter Box Coupon Program.
    While ACA and its members are committed to the digital 
transition, we also know the switch to digital will produce 
unique burdens on our systems, which, if not appropriately 
dealt with, will cause harm to consumers and especially in 
those small markets and rural areas. Small cable operators want 
all their customers to continue to receive the same broadcast 
stations after the transition, including all must-carry 
stations. For this reason the ACA filed comments with the 
Federal Communications Commission earlier this year seeking 
flexibility to convert broadcasters' digital signals to analog 
and address the lack of standards in converting high-definition 
signals to standard definition, including analog, which remains 
unresolved.
    In September, to our dismay, the Commission adopted new 
rules that effectively force many small cable operators to 
offer must-carry broadcast stations in both analog and digital, 
a dual-carriage obligation, after the digital transition.
    For the foreseeable future it is a finance infeasibility 
for many small cable operators to comply with this order 
without significant harm to consumers. The dual-carriage 
obligation requires operators to purchase costly equipment and 
set aside additional bandwidth. Many small operators do not 
generate the revenue necessary to support the expensive 
equipment, and others do not have the spare capacity to carry 
each must-carry broadcaster's signal twice.
    While the order does permit cable systems with channel 
capacity of 552 MHz or less to file a waiver from the dual-
carriage obligation, it unfairly requires systems with limited 
financial resources to engage in a process with the FCC with an 
unsure outcome. If an operator can't afford the equipment, what 
makes the Commission think they can afford a lawyer?
    The FCC plans to issue a Further Notice of Proposed 
Rulemaking on this order's impact on small operators. And we 
ask members of this committee to urge the FCC to devise more 
flexible rules for systems with both a small base of customers 
and with those with limited channel or bandwidth capacity, or 
Congress should pass legislation to do so.
    Finally, we urge Congress to find ways to help small 
operators provide local broadcast services in digital to 
consumers in smaller markets and rural areas. Let me be clear, 
all small cable operators want to provide their consumers with 
digital television services, but in reality, owners of small 
systems can neither afford to upgrade their facilities nor 
purchase the digital set-tops necessary to offer this advanced 
service.
    In 2005, Congress recognized the financial hardship that 
low-power and translator stations face in upgrading their 
facilities from analog to digital and set aside significant 
funds to assist in their transition. The ACA believes a similar 
program should be considered to help small cable operators.
    Mr. Chairman and members of the committee, thank you again 
for the opportunity to testify.
    Mr. Markey. Thank you, Mr. Knorr, very much.
    [The prepared statement of Mr. Knorr follows:]
    
    [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]

    
    
    Mr. Markey. Next we are going to hear from David Barrett, 
who the is the president and chief executive officer of Hearst-
Argyle Television. He is representing the National Association 
of Broadcasters here today.
    Welcome, Mr. Barrett.

 STATEMENT OF DAVID J. BARRETT, PRESIDENT AND CHIEF EXECUTIVE 
      OFFICER, HEARST-ARGYLE TELEVISION, INC. NEW YORK, NY

    Mr. Barrett. Thank you, Mr. Chairman. Good morning, Ranking 
Member Upton and members of the subcommittee. My name is David 
Barrett. As Mr. Markey noted, I am the president and CEO of 
Hearst-Argyle Television. I welcome the opportunity to 
participate in today's discussion about the digital television 
transition.
    In just 475 days American broadcasters will complete the 
most significant advancement of television technology since the 
advent of the color television as we cease analog transition in 
February 2009. At that point our digital signals, which provide 
vastly superior video and audio quality, enhanced viewing 
choices and the potential for greater program diversity, will 
be available for American television consumers.
    Unquestionably the transition presents an enormous 
challenge for broadcasters, but the transition is a critical 
business imperative for those of us in the television industry. 
The livelihood of all of us in this industry depends on getting 
it done and done well. Be assured that we are committed to 
doing everything we can to make the transition seamless for our 
viewers. Our objective and our commitment is that Americans 
will be fully educated and fully informed about the transition, 
and that they will understand their options that no set will go 
dark due to a lack of information.
    As evidence of this commitment, on October 15th NAB 
announced the largest, most impressive, and the most pervasive 
volunteer effort in television history to educate consumers on 
the switch to digital television. Over 1,000 stations have 
committed to participate in a multifaceted marketing program 
valued at close to $700 million. This marketing program is 
unprecedented and will far exceed the most ambitious public 
service announcement programs that have ever aired in the 
history of television or radio.
    The program will consist of DTV action spots today 
available in English and Spanish. And I would add that these 
spots are already being adapted in multicultural languages in 
markets like Los Angeles. All these spots will be closed-
captioned. These spots, along with the production tool kit for 
local customized application, will be distributed to every 
television station in America, including our friends at public 
television stations across the country. Stations will air 30-
minute DTV education programs, use crawls for reminder 
messaging, and feature a 100-day countdown clock to the 
February 2009 deadline.
    NAB's road show Trekker will visit over 600 locations 
nationwide. A speaker's bureau has been established to touch 
every locality at the grass roots, senior centers, high 
schools, churches, rec centers and the like. And stations will 
use their Web sites and are using their Web sites to inform, 
educate and market our message through the transition. I will 
note that there have already been over 5,000 new stories 
reported about the transition, and I believe that number will 
grow exponentially.
    Every single television network is participating in this 
campaign along with 113 broadcasting companies representing 
1,078 TV stations nationwide. And this is only beginning as we 
expect more to join as we move forward in the coming days.
    The combined elements of this multiplatform, multifaceted 
marketing campaign will generate 98 billion advertising 
impressions, which is a marketing measurement for the number of 
persons reached with a given message. Therefore, we in good 
faith do not believe it is necessary for Congress or the FCC to 
impose mandatory PSA requirements on television stations.
    It is plainly in our self-interest, aside in addition to 
our overall public stewardship, to make sure that American 
people are fully informed about this transition. We will leave 
no viewer behind, and we look forward to working with Congress, 
the subcommittee, Chairman Martin and the FCC to report our 
efforts periodically to make it very transparent and to work 
together to assure a successful transition.
    This effort only builds upon what broadcasters have already 
done, including the creation of an industry and Government 
coalition of over 170 groups and organizations, including the 
FCC and NTIA; the launch of a Web site, www.DTVanswers.com; 
delivery of DTV tool kits to every Member of Congress; and 
congressional staff briefings on how Members can educate their 
own constituents.
    In my view, the key to making the DTV consumer information 
and education effort work is to empower creative, innovative 
and localized marketing by stations who know best how to 
communicate with their local communities. The NAB program I 
briefly described will achieve that goal.
    Finally, I respectfully encourage members of the 
subcommittee and the Commission not to jeopardize the success 
of the digital transition by prematurely opening up the 
television broadcast spectrum to personal and portable 
unlicensed devices that FCC testing has found to cause harmful 
interference. We share your sense of urgency and that of FCC 
Chairman Martin to accelerate industry-wide consumer 
information and educational efforts that will fully inform and 
educate Americans about the digital transition.
    Thank you, and I look forward to responding to your 
questions.
    Mr. Markey. Thank you, Mr. Barrett, very much.
    [The prepared statement of Mr. Barrett follows:]
    
    
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    Mr. Markey. Our next witness is Michael Willner, who is the 
vice chairman and chief executive officer of Insight 
Communications. He is representing the National Cable and 
Telecommunications Association before us today.
    Welcome, Mr. Willner.

   STATEMENT OF MICHAEL S. WILLNER, VICE PRESIDENT AND CHIEF 
    EXECUTIVE OFFICER, INSIGHT COMMUNICATIONS, NEW YORK, NY

    Mr. Willner. Mr. Chairman, thank you. I have noticed--I 
think this is my third or fourth hearing on DTV, and the font 
on my script gets larger and larger each time I come back so I 
can see it.
    I would like to thank you and Ranking Member Upton and the 
members of the committee for inviting me today. My name is 
Michael Willner, and I am the vice chairman and CEO of Insight 
Communications, and we are the ninth largest cable operator in 
the United States.
    The transition to digital television will make it possible 
for our Nation to reclaim and reallocate valuable spectrum for 
enhanced public safety communications and increased wireless 
broadband services. It is critically important for all affected 
industries to work with the Government in a cooperative and 
coordinated manner. We need to educate Americans in what they 
need to do to get ready for and how they will benefit from this 
successful transition.
    When I testified before the subcommittee in 2005, I 
suggested that you could and should set a hard date for the end 
of the transition, and I committed at that time that whatever 
date you chose, the cable industry would be ready, willing and 
able to ensure a smooth and seamless transition for our 
customers. You chose February 17, 2009, and we are ready, 
willing and able to meet that date.
    We are proud to be one of the founding members of the DTV 
Transition Coalition, working with the broadcast consumer 
electronics industries, satellite, as well as many other 
organizations to educate Americans about the digital 
transition. We are committed to helping the coalition develop 
and implement a unified message that can be reinforced across 
multiple platforms.
    In early September the cable industry launched our 
extensive consumer education campaign, including English- and 
Spanish-language TV advertising valued at over $200 million. 
These spots are designed to reach millions of cable and 
noncable viewers with useful information about the DTV 
transition. The industry is now in a second round of 
advertising spots focused on alerting customers to the NTIA's 
coupon program for digital-to-analog converter boxes. Those ads 
are scheduled to run on our systems, I know, as early as this 
week.
    Our commitment extends far beyond simply running television 
ads, though. NTIA revamped its entire Web site, which now 
focuses predominantly on the digital transition. And we have 
created English- and Spanish-language Web sites linked to our 
home page to provide consumers with easy-to-understand 
information.
    The NTIA will also distribute a communications DTV tool kit 
to cable systems nationwide, which will include bill stuffers, 
on-screen scrolls, telephone on-hold messaging, sample e-mails 
for broadband customers, Web site banner ads for company Web 
sites, employee education materials, very important, and 
brochures for distribution at community events.
    I would note that many of the components of our education 
campaign are based on ideas that were suggested by the 
leadership of this very committee, and we remain open to 
additional ideas on how we can further advance the DTV 
educational efforts as we move forward.
    I do, however, have one area of concern regarding the 
carriage of digital broadcast signals after the transition. We 
are committed to provide a seamless transition to all of our 
customers. We do question the constitutionality of a Government 
mandate that requires cable operators to carry all must-carry 
broadcast stations in both digital and analog formats. 
Nevertheless, in 2005 we worked with you to include a carriage 
commitment in legislation that was approved by the committee. 
Although that DTV carriage provision was not included in the 
final bill, we did craft a 3-year voluntary carriage commitment 
with you and your staffs. The FCC approved an order 7 weeks ago 
which is supposed to mirror our voluntary 3-year plan; however, 
we are still very anxious to review the actual text of that 
decision which has not yet been released.
    And based on our information that we do have up to now, the 
FCC's order is clearly deficient in one major respect as you 
heard earlier today, and that is that the Commission declined 
to provide an exemption for very small cable systems as the 
committee did in 2005. And this doesn't affect my company or 
many of the members of NTIA, but this is a serious issue in 
rural America. And we hope that the Commission will be guided 
by your actions in the past to use a further notice to provide 
clear and unconditional exemptions for small cable systems in 
its DTV carriage order.
    Mr. Chairman, the cable industry has made a massive 
commitment to ensure a smooth transition to digital 
broadcasting. We continue to stand ready to work with you and 
the members of the subcommittee and to remain a leader in 
making sure that we all get it done right.
    Thank you again for the time to testify before you, and I 
will be here to answer questions.
    Mr. Markey. Thank you, Mr. Willner, very much.
    [The prepared statement of Mr. Willner follows:]
    
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    Mr. Markey. Our next witness is Joe Uva, who is the chief 
executive officer of Univision Communications.
    Welcome, sir.

   STATEMENT OF JOE UVA, CHIEF EXECUTIVE OFFICER, UNIVISION 
               COMMUNICATIONS, INC., NEW YORK, NY

    Mr. Uva. Thank you, Mr. Chairman. Good morning, Ranking 
Member Upton and members of the subcommittee.
    My name is Joe Uva, and I am the chief executive officer of 
Univision Communications, Inc., the largest Spanish-language 
media company in the country and the fifth largest broadcast 
network. Our operations include the Univision Network, the 
most-watched Spanish-language broadcast television network in 
the Nation, reaching 99 percent of U.S. Hispanic households; 
the Telefutura Network, the third most-watched Spanish-language 
network; the Univision Television Group, which owns 63 
television stations in major U.S. Hispanic markets, including 
Puerto Rico; and Univision Radio, the leading Spanish-language 
radio group, which owns 74 radio stations in 16 of the top 25 
U.S. Hispanic markets, including 5 stations in Puerto Rico.
    Hispanic Americans are more than our viewers. They are our 
constituents, and we are privileged to inform and entertain 
them. With that comes responsibility. In these past few months 
you have seen us strive to meet that responsibility as never 
before. You have seen it in our initiative to register Hispanic 
voters in our first-ever Spanish-language Democratic 
presidential forum and with the launch of our weekly public 
affairs program, Al Punto, bringing Hispanic audiences into the 
national Sunday morning conversation.
    I am proud to say that the relationship Univision has with 
its viewers is unique because people who invite this network 
and its programming into their lives give back an incredible 
measure of loyalty, affection and trust. This mutual trust and 
commitment is the essence of the relationship Univision has 
with its audiences. Our viewers consider us to be part of their 
community, and with good reason. From 2004 through 2006 alone, 
Univision contributed nearly $850 million in cash and in-kind 
value to support the U.S. Hispanic community.
    In continuing to earn this trust and meet our 
responsibilities to the community, we take seriously our part 
in ensuring the success of the digital television transition 
and in ensuring that our Hispanic viewers benefit from its 
results rather than suffer the consequences of being left 
behind. The impact of the digital transition on our viewers is 
a particular concern to us because nearly 28 percent of 
Hispanic households and 43 percent of homes where Spanish is 
the primary language watch TV only via over-the-air broadcast, 
and that is according to a 2005 NAB report to the FCC.
    Unfortunately most Hispanics, particularly our non-English-
speaking viewers, are not informed about the digital transition 
and the impending analog cut-off date of February 17, 2009. 
Unless we use the time left to educate and inform viewers on 
how to prepare for the digital transition, a disproportionate 
number of Hispanic viewers will no longer be able to rely on 
over-the-air broadcast for critical news, weather, local 
programming and emergency updates. Hispanics could be uniquely 
affected, and we want to make sure that they are the best 
educated segment of the population about what the analog cut-
off date means and what they can do to prepare for it.
    It is therefore with pride that I can say on October 1 
Univision became the first major network to launch a 
multiplatform public service ad campaign preparing our Hispanic 
television viewers for the analog-to-digital transition. Our 
campaign will use Univision's media assets to raise awareness 
and educate consumers about the digital transition, creating a 
clear and positive message promoted on air and enhanced by 
local community outreach.
    Our efforts go far beyond 30-second public service 
announcements. They will include a Web page, multiple 30-minute 
television specials, local newscasts, radio PSAs, local 
outreach events, and we will promote the Spanish-language toll-
free telephone number that is being set up by the FCC and the 
NTIA.
    Additional components of our campaign include offering our 
viewers general information on digital television and how to 
receive it. We will educate consumers on the NTIA's converter 
coupon program to make sure that our eligible viewers apply for 
and redeem their coupons in a timely manner. We will also 
provide Latinos with information on the resources and services 
available to assist them with the digital transition, and we 
will work with retailers to help ensure that they have 
appropriate Spanish-language signage and in-store materials 
about digital TVs in markets where there is a high-density 
Latino population. Univision will be working with the Hispanic 
Technology and Telecommunications Partnership, NCLR, the 
National Hispanic Council on Aging, and NALEO.
    Sixteen months from now our Nation will take the final step 
in moving from analog and crossing over into the digital era of 
television broadcasting. While we still face many challenges, 
rest assured Univision is dedicated to doing its part to inform 
and prepare its viewers for that transition.
    Chairman Markey, Ranking Member Upton and members of the 
subcommittee, we look forward to working with you to ensure 
that digital transition takes place as planned and that its 
full benefits become a reality for all members of our national 
community. Thank you for inviting me to participate today.
    Mr. Markey. Thank you, Mr. Uva, very much.
    [The prepared statement of Mr. Uva follows:]
    
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    Mr. Markey. Our next witness is Dennis Swanson. He is the 
president for station operations of the Fox Television 
Stations, Incorporated.
    We welcome you, Mr. Swanson.

STATEMENT OF DENNIS SWANSON, PRESIDENT, STATION OPERATIONS, FOX 
            TELEVISION STATIONS, INC., NEW YORK, NY

    Mr. Swanson. Chairman Markey, Ranking Member Upton and 
members of the subcommittee, thank you for this opportunity to 
testify today on the digital television transition.
    From the outset Fox has strongly supported the transition 
and took the mandate to deploy digital broadcasting, especially 
in high-definition, very seriously. Antiquated analog broadcast 
equipment was abandoned, millions of dollars were spent, 
thousands of manhours were expended to build out new digital 
facilities and infrastructure. Fox worked with numerous vendors 
and manufacturers to design and build new digital cameras, 
production trucks, digital recording equipment and satellite 
systems.
    The culmination of those early months of planning and work 
was the realization of an all-digital network broadcast center 
which is fully HD-capable to transmit content and commercial 
traffic to all Fox affiliates. Our viewers will be able to 
receive network and local programming in the new digital world.
    Since the fall of 2004, Fox has produced and distributed 
more than 1,000 hours of sports in high definition. Our 
coverage has included weekly sports programming from the NFL, 
Major League Baseball and NASCAR, as well as major sporting 
events such as the just-completed 2007 World Series.
    Congratulations to the Red Sox and to Chairman Markey on 
his team.
    Being the home of prime-time hits such as House and 
American Idol, we also knew that viewers would not be fully 
satisfied without high-quality entertainment programming, and 
as a consequence Fox has aired approximately 1,300 hours of HD 
programming in prime time from September 2004 through August 
2007, now including 100 percent of our scripted shows.
    In addition to the operational build-out, a significant 
consumer awareness and education effort is necessary to 
facilitate the transition. Once again, we at Fox have pledged 
to commit considerable resources in support of the industry's 
collective effort to alert viewers. In order to make important 
information widely available, we have committed to the airing 
of public service announcements. They are already running in 
prime time on the Fox network and in various day parts on each 
of our 35 Fox-owned television stations.
    We strongly believe that a voluntary industry plan is the 
most effective way to reach the public. But why is that? 
Because it recognizes that getting the message out is about 
more than just PSAs. It is about all the creative things we as 
broadcasters can do to reach our viewers, whether it is through 
our news and public affairs programming, creative campaigns or 
informational links on DTV transition on our Web site, just to 
name a few. Broadcasters are in the business of reaching 
viewers with both entertainment programming and important news 
and information. Therefore, broadcasters are the most qualified 
to determine how to reach viewers with the message about DTV 
transition.
    It bears restating that the transition will be successful 
if benefits to viewers are maximized while disruptions are 
minimized. Two issues have the potential to disrupt the 
transition: an FCC proposal to allow unlicensed devices in so-
called white spaces in the television broadcast band and the 
protection of broadcast content from unauthorized 
redistribution over the Internet.
    With respect to the white space issue, we support the use 
of fixed devices, but we have grave concerns about introducing 
personal and portable unlicensed devices in the television 
broadcast band. We are concerned that interference from these 
devices would disenfranchise millions of consumers who have 
purchased expensive new digital television sets. The converter 
boxes funded by the program authorized by this committee would 
be subject to the same interference.
    The transition could also be negatively impacted if the 
broadcast flag is not adopted to help protect high-quality 
broadcast programming from being illegally redistributed over 
the Internet. Currently DTV stations are legally obligated to 
broadcast content in-the-clear with no protection. As a result 
content providers, networks and broadcasters face a grave 
threat from rampant piracy and theft due to the fact that 
perfect copies of digital programming can be easily captured 
and retransmitted without authorization. Without the protection 
of the broadcast flag, high-value content could move from 
broadcast to cable or satellite, thereby threatening the future 
of free over-the-air television.
    In closing, we will continue to work toward our collective 
goal of a bright future for digital television. Thank you, and 
I will welcome your questions.
    Mr. Markey. Thank you, Mr. Swanson, very much.
    [The prepared statement of Mr. Swanson follows:]
    
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    Mr. Markey. Our next witness, Michael Vitelli, is the 
senior vice president for merchandising for Best Buy Company, 
and he is representing the Consumer Electronics Retailers 
Association.
    We welcome you back, Mr. Vitelli.

STATEMENT OF MICHAEL VITELLI, SENIOR VICE PRESIDENT AND GENERAL 
   MANAGER, HOME SOLUTIONS OPERATING GROUP, BEST BUY, INC., 
                         RICHFIELD, MN

    Mr. Vitelli. Chairman Markey, Ranking Member Upton, thank 
you for inviting me again before your subcommittee on behalf of 
Best Buy and the Consumer Electronics Retail Coalition. I was 
privileged to participate in the first part of this oversight 
hearing on March 28 of this year. The last time I was here, we 
had few specifics because there were few to be had. Today we 
have more to report.
    Two weeks ago I signed a filing in the FCC's DTV consumer 
education docket, and in that filing we were much more specific 
than I could be 7 months ago. We assured the Commission, and I 
confirm today, that Best Buy has made the following 
commitments. First, on October 1 Best Buy stopped selling 
analog tuner TVs and video equipment. We explained this to our 
consumers as an element of the DTV transition. The news 
coverage alone of our decision has already done much to alert 
the public about the transition itself.
    Best Buy announced it will participate in the NTIA 
Converter Box Program. We still have technical issues that we 
are working on with the IBM team. We also have concerns about 
some FCC policy issues and the potential for parallel and 
perhaps conflicting NTIA and FCC enforcement regulations. But 
Best Buy is beyond the point of no return.
    Third, Best Buy will continue to train our staff to help 
prepare our customers for the transition.
    Fourth, we will provide information to our customers 
regularly through material in our ads, video loops shown on the 
TVs in our stores, our version of PSAs, in store signage and 
pamphlets and educational information on our Web site, all in 
English and Spanish. And soon we will have a DTV transition 
notice on the back of all of our sales receipts.
    Other CERC Board members, including Circuit City, Radio 
Shack and Target, have made similar commitments, but there are 
still items requiring attention. First we need to develop a 
tenor or partnership between the public and private sectors 
involved. In the DTV Transition Coalition we have established a 
constructive and effective partnership with the members of 
broadcasting, cable, electronics and entertainment industries 
and with public interest groups such as the Leadership 
Conference on Civil Rights. But in order for the transition to 
be ultimately successful, we need a similar partnership with 
the FCC, the NTIA and with Congress itself.
    The second open item is to provide clarity on the roles of 
those partners. I do have concerns about potential efforts to 
extend the reaching authority of the FCC into areas with which 
they have neither experience nor clear delegated authority. In 
our view, doing so would likely be counterproductive to this 
transition, to our very important FCC partnership, and to the 
vital success of the NTIA program. It is crucial that we have 
one enforcement mechanism related to the coupon program so that 
expectations are clear and customer needs are met.
    The third open item requiring attention is the need to 
provide clarity to the participants and to consumers about the 
coupon programs and the key dates. The central questions are 
when will retailers be prepared to accept coupons and deliver 
converter boxes? How many and when can boxes be produced by 
manufacturers each month? And when should the NTIA mail out the 
coupons? Obviously all these issues are linked.
    We are working frequently and aggressively with the members 
of the IBM team that is assigned to the retailer 
implementation, and as of today, here is my best estimate and 
advice. The date we have estimated to have our point-of-sale 
and payment systems modified and thoroughly tested to satisfy 
the NTIA regulations and to avoid fraud or consumer 
disappointment is closer to April 1 than January 1. And 
accordingly, my recommendation today is for the NTIA to tell 
consumers who send in their coupon applications in early 
January not to expect to receive their coupons before April 1. 
Now, doing so will ensure that the critical systems will work, 
that we will be able to provide early demand information to the 
manufacturers for production to allow early application data to 
help all of the participating retailers match inventory with 
demand and get the product in the right place, and to provide 
clear direction to consumers.
    If Government and industry working together can exceed 
these customer expectations, that is going to be great. What we 
don't want to do is to leave the same customers and 
constituents apprehensive or to set unrealistic expectations 
or, worse yet, open the system up to fraud, failure or consumer 
inconvenience. This would only lessen the public's confidence 
in a very vital program to which we are very committed and we 
think can be very successful.
    In conclusion, Best Buy has become the leading consumer 
electronics retailer by meeting and exceeding our customers' 
expectations and needs. We want them to be Best Buy customers 
for life. We face stiff competition from other retailers who 
also seek their allegiance and loyalty, and this alone is a 
powerful motivator to us.
    We in the private sector have demonstrated that we are 
capable of partnership with each other and with the Government, 
and we are now reaching out to the Government to help forge a 
coherent and effective solution, and in return we need 
partnership, not confrontation.
    I am reminded of an old fable of a contest between the wind 
and the sun, and they spotted a man wearing a very heavy coat 
and made a bet of whether or not they could get this coat off. 
And the wind blew ferociously, and the man hugged his coat 
tighter. The sun's plan worked a little bit better, and we 
believe it is time to let the sun shine in on the DTV 
transition.
    Thank you very much.
    Mr. Markey. Thank you, Mr. Vitelli, very much.
    [The prepared statement of Mr. Vitelli follows:]
    
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    Mr. Markey. And our next witness, Jonathan Abbott, is the 
president and chief executive officer of WGBH in Boston. He is 
here representing the Association of Public Television 
Stations.
    Welcome, Mr. Abbott.

  STATEMENT OF JONATHAN ABBOTT, PRESIDENT AND CHIEF EXECUTIVE 
                   OFFICER, WGBH, BOSTON, MA

    Mr. Abbott. Thank you, Mr. Chairman. Mr. Chairman and Mr. 
Ranking Member, thank you for inviting me to testify about the 
digital television transition. I am honored to be here today 
representing not only my station, WGBH, in Boston, but also the 
Association of Public Television Stations, APTS, and my 
colleagues from the 364 locally owned and operated public 
television stations across the country.
    As the leading producer of programming for PBS, WGBH views 
the digital transition as an extraordinary opportunity to 
enhance our public service mission. We create content that 
makes a difference in the lives of our audiences, whether it is 
science on NOVA, history on American Experience, drama on 
Masterpiece Theater, or literacy with Curious George and 
Arthur. The digital transition will allow WGBH and public 
television to provide greater access to this rich educational 
content, reaching viewers through new services that maximize 
the investment this country makes in public broadcasting.
    My colleagues and I in public television have been strong 
supporters of the digital transition from the very beginning, 
recognizing the promise it holds for audiences. To educate 
consumers, public television has joined with the National 
Association of Broadcasters in a major commitment of airtime to 
inform viewers of the analog shut-off. Across public television 
the value of this in-kind communications contribution exceeds 
$50 million.
    I am pleased to tell you, Mr. Chairman, that WGBH is a key 
participant in these efforts, using our prime-time and weekend 
programming. In combination with our extensive network of 
outreach to families, we will target hard-to-reach populations 
like seniors and ethnically and economically diverse 
households.
    And WGBH is also uniquely suited to help reach people with 
disabilities. As you know from your leadership in this area, 
Mr. Chairman, television is a life-line service for the 
millions of Americans with hearing and vision impairments. WGBH 
has been a pioneer in not only providing captioning and 
description services, but now in advising public and private 
parties on how to do this effectively as the transition nears.
    Still we realize that much more needs to be done in the way 
of public education. The latest survey research from APTS 
indicates that more than 50 percent of Americans have no idea 
that the transition is even occurring. Even fewer have 
awareness of their options to continue their television 
service. Additionally, few people understand why they must make 
a change. The majority of people surveyed said the Federal 
Government is on the wrong track when it comes to the 
transition. That distrust is even greater among people who have 
the least awareness of the switch-off.
    Based on this survey data and other findings, WGBH joins 
with APTS in recommending the following actions by Congress and 
other key players. First, Congress should make a real financial 
investment in consumer education. Congress has set aside only 
$5 million, which is narrowly limited to education about the 
NTIA coupon program, yet the Federal Treasury is expected to 
receive $12.5 billion in revenue at a minimum from the spectrum 
auction. A greater investment in consumer awareness at this 
time is just a sound business decision.
    To fund a true grassroots campaign, we are asking Congress 
to invest at least an additional $20 million towards consumer 
education by public television and its partners in its 
communities, and it is critical that these funds be obligated 
in this appropriation cycle. Thanks to the leadership to 
Congressman Eliot Engel and his introduction of H.R. 2566, the 
National Digital Television Consumer Education Act, we are now 
headed in the right direction. Mr. Chairman and Mr. Ranking 
Member, we ask that you expedite consideration of this 
important legislation.
    Second, Congress and the FCC must ensure that the digital 
signals of local public television stations are carried by 
satellite providers. APTS has reached landmark agreements with 
NCTA, ACA and Verizon to carry the HD and multicast programming 
from all public stations, including the new digital channel 
services, World and Create, which were developed by WGBH and 13 
WNET New York.
    For DBS, however, the situation is far different. Neither 
DirecTV nor EchoStar are carrying the HD signals of WGBH or any 
other public television station in the country, let alone our 
multicasting services. However, both companies are carrying the 
local HD signals of the commercial network affiliates. I admit 
it was nice to watch our Boston Red Sox win the World Series in 
HD, but I can imagine many public television shows that would 
be similarly enhanced.
    While we would prefer a private carriage agreement with 
satellite, time is short. We need Congress to help ensure that 
the American people have access to the public television 
stations they help fund.
    Finally, we urge Congress to continue to support public 
television in creating the new content and services that will 
drive consumer demand and interest in digital television.
    Mr. Chairman and Mr. Ranking Member, in an era when media 
ownership is concentrated in fewer and fewer hands, public 
stations like WGBH are often the last locally owned and 
operated media outlets in their communities. The key policy 
goal of this transition must be the preservation of free over-
the-air television, both commercial and public. It is essential 
to the health of this Nation's media marketplace and, more 
importantly, to our democracy. We appreciate your enduring 
support for public television and radio. We share your desire 
for a successful transition. Our recommendations today are 
delivered in that spirit.
    Thank you. I look forward to your questions.
    Mr. Markey. Thank you, Mr. Abbott, very much.
    [The prepared statement of Mr. Abbott follows:]
    
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    Mr. Markey. And our final witness is John Taylor. He is the 
vice president for government relations and communications for 
LG Electronics.
    Welcome, sir.

STATEMENT OF JOHN TAYLOR, VICE PRESIDENT, GOVERNMENT RELATIONS 
      AND COMMUNICATIONS, LG ELECTRONICS, LINCOLNSHIRE, IL

    Mr. Taylor. Thank you, Chairman Markey, Congressman Upton, 
members of the subcommittee, for the opportunity to testify 
today.
    I would like to touch on three brief issues: the overall 
efforts supporting the digital television transition, the 
converter boxes, and the all-important issue of consumer 
education.
    First, the overall effort. LG Electronics is totally 
committed to the digital television transition. After all, it 
is in our business interest to do so. We plan to build millions 
of converter boxes. We are also committed to joining with 
Government and others in the private sector. We are proud to be 
a founding member of the DTV Transition Coalition, joining with 
our partners in cable, satellite broadcast, and the Leadership 
Conference on Civil Rights, AARP and others to help make sure 
this transition is a success, but making it work will require a 
concerted effort, a joint effort on the part of Government and 
industry. And as you have heard today, the voluntary efforts 
are making progress.
    Second, the converter box. The NTIA set clear standards for 
the converter box. LG designed our product to those standards, 
and I am proud to announce that our box has been certified. And 
beginning next week we will start production for delivery of 
this converter box to retailers starting in early 2008.
     We expect the box to sell for around $60, and it has the 
features--as you know, the NTIA had a series of required 
features and permitted features.
    Perhaps of special interest to this subcommittee, the box 
includes an electronic program guide to help consumers navigate 
through the additional channels they will get with multi-
casting. It, of course, has V-Chip, a remote control, closed 
captioning.
    As an aside, 6 months ago, when we met with the disability 
community and our friends from WGBH, we were doing basically 
black and white captions; and we had a menu button to get to 
the captions. The final implementation, thanks to that input, 
has a closed caption button right on the remote control, full 
digital captions that allow you to choose the colors and fonts 
and size. We think that goes a long way to help improve the 
overall experience of the converter box, and, finally, while 
not required, a permitted Energy Star. And I am happy to report 
that our box exceeds the Energy Star standards of 1-watt 
passive and 8-watt active mode.
    On the converter box, the Consumer Electronics Association 
estimates between 22 and 28 million of these boxes will be 
required. We are planning to build millions, as I said.
    Moving ahead to consumer education, it is essential that 
broadcasters, cable, consumer electronics industry, retailers 
and others all do their part. CEA particularly has been very 
active in producing informative videos, a series of Web sites 
that help consumers with antennas and connections and even 
creating a database that will help consumers understand whether 
they have a digital television set or not and will need a 
converter box.
    From my company's standpoint, we think it is essential that 
we communicate with our consumers as well. We stepped up our 
sales training efforts. Our call center is being enhanced. We 
just added another 150 agents to our call center who speak 
Spanish in preparation for the launch of this product and will 
be including with the product a simple setup guide--this is 
actually the one from CEA; ours will look very similar--to help 
consumers as soon as they open the box just hook up the product 
and begin to enjoy it.
    So what is left to do? Maintain the date, February 17, 
2009, to provide the certainty we need, continue the 
coordination between manufacturers, retailers and the NTIA to 
make sure the coupon program is a success and work together to 
educate consumers about the benefits of digital and the options 
available to them to make a smooth transition.
    Mr. Chairman, thank you again for the opportunity, I look 
forward to answering your questions.
    Mr. Markey. We thank you, Mr. Taylor, very much.
    [The prepared statement of Mr. Taylor follows:]
    
    [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]

    
    
    Mr. Markey. All time for opening statements has expired. 
The Chair will now recognize himself and then the other members 
for a round of questions.
    Let me begin then by ask you quite briefly, Mr. Abbott, you 
mentioned that public broadcasting stations have yet to reach 
an agreement with DirecTV and Echostar on digital carriage of 
public TV. Where are those negotiations right now?
    Mr. Abbott. Mr. Chairman, we do not have an agreement; and, 
actually, around the country there is no carriage of local, 
interlocal, high definition services, much less multi-cast. 
There have been discussions with DirecTV, very little movement 
with Echostar, but as yet even those discussions with DirecTV 
have not produced an agreement.
    Mr. Markey. Thank you for bringing that issue to the 
attention of the committee. We will try to focus on that.
    Mr. Barrett, Mr. Dingell and I wrote to FCC Chairman Martin 
earlier this year to ask him to undertake measures to educate 
consumers about the DTV transition. The NAB, and you mentioned 
it, today has announced a huge voluntary public education 
program.
    Mr. Barrett. Yes, sir.
    Mr. Markey. Nearly $700 million. But you oppose the FCC's 
proposal. How does the NAB expect to mandate stations that 
don't broadcast these public service ads to help people 
understand about the transition to digital, force them to in 
fact educate the public without some club that the FCC would 
have to move those recalcitrant stations in the right 
direction?
    Mr. Barrett. Sir, I believe the most effective business 
course of action here is to enlist the voluntary support of 
this industry, and we have demonstrably done that with 
commitment from all the networks and from over a thousand 
stations.
    It is my view that the makings of this program will 
encourage innovation and will go beyond the notion of just 
doing a minimum threshold campaign mandated by the FCC. This is 
an exercise that is much more important than making Smokey the 
Bear an icon in a PSA-driven campaign. This has to be a multi-
market campaign. It has to be creatively executed in every 
local market in the country.
    I would observe that there is such a large number of 
stations, groups, companies that have already committed, who 
are prepared to deliver a quarterly report to the FCC or to 
this committee and demonstrate the execution of this program 
that I would be concerned about establishing a lower----
    Mr. Markey. I understand. The problem is that the NAB 
always sends in their best broadcaster to testify, and so no 
one is doubting that Hearst-Argyle is going to do it, but we 
need the regulations for the bad guys.
    Mr. Barrett. I don't believe we do, sir. There are 1,100 
stations who are already committed to this; and I would 
observe, based on my business experience, that in every walk of 
life, in every station and every business endeavor there are 
some who perform better than others.
    Mr. Markey. How would you feel about the broadcasters that 
shirk their responsibility?
    Mr. Barrett. I think this is a matter of self-interest for 
the broadcasters.
    Mr. Markey. What if they do shirk it?
    Mr. Barrett. If they shirk it, I think they will 
marginalize their own business prospects in the marketplace.
    I believe, sir, that when you are talking about 98 billion 
advertising impressions that will be delivered by those that 
are participating that the consumers will not be shortchanged 
on this. These messages are going to reach 93 percent of 
American television viewers, and they are going to hear the 
messages that we broadcast some 400 times. This is a staggering 
program.
     Whether people are left behind, whether some bad actors in 
the industry choose not to participate, that will not have a 
bearing on public awareness. And I think again in every walk of 
life there are some people who take a free ride. I think in a 
free enterprise system that is a reality. It is a reality in 
the halls of Congress, and it is a reality in our business.
    Mr. Markey. I understand, Mr. Barrett. But here the 
consequence is if ordinary people don't get the message is that 
they pay the price. So we will have to figure out something 
here to ensure that the shirkers----
    I will have to ask one quick question over here of Mr. 
Abbott and Mr. Uva, and that is on the disabilities aspect of 
this and making sure that closed captioning will be available 
on HD. Can you talk, both of you, quickly about what you are 
doing to make sure that there is closed captioning and services 
for other disableds, Mr. Uva?
    Mr. Uva. Yes, Mr. Chairman. We fully intend to make sure 
that in all of our public service messaging and in all of the 
services that we will be offering over the years to our 
communities there will be not only be closed captioning but 
Univision is tied into a network of over 2,000 local community 
organizations that we will be working with to help support 
people with disabilities.
    Mr. Markey. Mr. Abbott?
    Mr. Abbott. Yes, Mr. Chairman.
    First off, WGBH is very active in the captioning area, as a 
number of those testifying have mentioned. We have actually 
been working with the NAB to caption their on-air messages that 
they have been developing in their toolbox, as well as work on 
accessibility for their online messaging. Public televisions 
messages will all be closed captioning.
    Our challenge with captioning in the digital transition, of 
course, is it is a bit of a perfect storm. Because there needs 
to be the right commitment and coordination, not just from the 
broadcasters but also from the set-top manufacturers and 
others, and you heard that presentation today, to really ensure 
that at the point of transition the interface with those 
devices fully supports and creates real utility and ease of 
access to those captions for all consumers.
    Mr. Markey. Thank you, Mr. Abbott.
    The Chair recognizes the gentleman from Michigan, Mr. 
Upton.
    Mr. Upton. Thank you, Mr. Chairman.
    I just want to say in the last couple of weeks I have 
already seen a number of the PSAs, and even though I have a 
cable system, both the cable industry as well as I have seen 
the NAB--in fact, it might have even been during the Boston Red 
Sox game--reminding people that this program was going to be 
available. So I am anxious to watch that pick up in the months 
ahead before the coupons are ready.
    Mr. Taylor, you made a good closing point about the date 
and the reason that it should not slip. I have to tell you 
that, as one that helped write this legislation with others on 
the panel here in a bipartisan way, we want to make sure that 
date does not slip. We will make every effort to make sure that 
it doesn't, and I don't see any storm clouds that it will. Does 
anyone here disagree with that statement in terms of the panel?
    Mr. Vitelli, you say that the FCC lacks jurisdiction over 
retailers; and I don't know whether you have looked at the bill 
that Mr. Hastert and I have introduced with Mr. Barton, H.R. 
608, but it, in essence, gives the FCC the jurisdiction if the 
voluntary efforts do not go far enough. Do you think that it is 
crucial that we pass that bill or do you think things will 
happen on their own and you will not need it?
    Mr. Vitelli. I have looked at it a bit. It is not what I do 
regularly, but I looked at it before today, and the part that I 
noticed specifically about retailers was about the labeling of 
analog televisions. In Best Buy's case, that is a moot point 
now.
    Mr. Upton. Yes, you have done that.
    Mr. Vitelli. They are actually gone. And I would say it is 
actually a very minuscule part of the business left for the 
rest of retailers. It is almost to the point that almost every 
product being sold today is a digital TV. That is the only 
thing being made. I think that issue will be gone rather 
quickly every place in retail.
    As far as education is concerned, we have in discussions 
with the FCC have taken virtually every voluntary step, all the 
major retailers, to do the things that are being proposed, from 
putting things like this pamphlet in both English and Spanish 
in all of our stores. Our Web site has the same information. We 
run a text and graphics version of the DTV transition and the 
three options that everyone has on our video wall six times a 
day in both languages as well. So I think all the major steps 
that are talked about there are actually in play.
    Mr. Upton. Do you feel that your customer personnel are 
well educated to tell the average consumer of the changes that 
are coming their way as well? I only note that because Mr. 
Barton, who is usually here, our former chairman, has the funny 
tale of going and buying the biggest TV that he ever saw. And I 
want to say I think he went to Best Buy, and he ended up with 
an analog set. But that was about 2 years ago before things 
really began to change.
    Mr. Vitelli. Sure. Again, the first thing that is happening 
right now is, to the point here, is we did in fact say let us 
get rid of those. We don't actually have to have the education 
about a TV in our store. But the bigger point is what about TVs 
that people have? This is precisely what that education is. 
Your three options are a converter box, to subscribe to a 
service----
    Mr. Upton. How many different converter boxes do you think 
Best Buy will offer?
    Mr. Vitelli. That is a great question. There are two that 
are certified, two manufacturers certified today, several in 
the works. It is very likely we will have more than one. It is 
important to have multiple suppliers because the demand 
projections here, both in quantities and timing, have never 
happened. There's never been a product like this before. And 
that is going to be, I think, the biggest challenge for both 
the retailers, the manufacturers, and the NTIA in releasing 
coupons, is both the production availability, when the coupons 
are released, what stores do they go to around the country?
    Best Buy is, on a really good day, 20 to 25 percent of the 
industry. So we are a big part of it, and we are aggressively 
trying to work that out with manufacturers. We need all of us 
to work together.
    Mr. Upton. As a Best Buy customer, I look forward to seeing 
one of those come on sale. I will notice it.
    Mr. Vitelli. You certainly will.
    Mr. Upton. I won't need one, because I have cable, I want 
you to know.
    Just to follow up on Mr. Markey's question, I have to say 
for the broadcasters they have every reason to put out the PSAs 
because, otherwise, they will lose audiences. They don't want 
to lose audiences. Whether it is in a rural or urban area, they 
don't want a single customer not to know of the changes that 
are coming--over-the-air TV.
    Mr. Barrett. We are in a very competitive business. Our 
viewership is measured on a daily basis in top 50 markets and 
more to come, and it is imperative that we not leave any 
viewers behind, no sets behind.
    Mr. Upton. Thank you.
    Mr. Markey. Leave no sets behind, that will be the motto 
for this hearing.
    The Chair recognizes the gentleman from Michigan, the 
chairman of the full committee, Mr. Dingell.
    Mr. Dingell. I thank you for your courtesy. I commend you 
for the hearing.
    These questions are for Mr. Barrett, and I think they are 
mostly yes or no responses.
    Mr. Barrett, I am sure you agree that it is important that 
the maximum should be information made available to consumers 
with regard to how this program for the digital switchover is 
going to be conducted; is that right?
    Mr. Barrett. Yes, sir.
    Mr. Dingell. Now, I want to commend you and the NAB members 
for the campaign that you are putting on to inform consumers, 
and I applaud that.
    Now, I note that, with regard to the DTV transition, 
networks are going to be putting out public service 
announcements, or PSAs. It is possible for local affiliates to 
sell their own ads in lieu of the public service announcement; 
is it not? Yes or no?
    Mr. Barrett. Yes, to the extent of sponsored messages.
    Mr. Dingell. It is possible to do that.
    Mr. Barrett. Yes, sir.
    Mr. Dingell. And that would be, I think, bad public policy 
were that done, is that not so?
    Mr. Barrett. I don't think it would be bad public policy. 
It would be a sponsored message.
    Mr. Dingell. If they are going to sell over. Because we 
want the consumers to get the maximum amount of information, 
and we want those public service announcements from the 
networks to reach the consumers, rather than an advertisement 
for a potato peeler or something like that.
    Mr. Barrett. I think it depends how it is structured, sir. 
If there is a 30-second DTV action spot followed by a 30-second 
spot from Best Buy, I think that that is perfectly acceptable.
    Mr. Dingell. Well, I applaud Best Buy, because they have 
done some good things here, too.
    But I would observe if the PSA is sold over with some kind 
of advertisement for a potato peeler or a kitchen mop or 
something of that kind, the consumer will not receive the 
information that he needs to make the necessary judgment about 
the change from the current practices with regard to television 
to the future after the DTV transition, is that right?
    Mr. Barrett. If there is an irrelevant sponsor attached to 
that PSA, I would agree with you; if there was a relevant 
sponsor, I think that would be acceptable.
    Mr. Dingell. Now, gentlemen, this to you, Mr. Barrett, Mr. 
Swanson, Mr. Abbott. Just yes or no, would you agree that much 
needs to be done to make the transition work from a technical 
standpoint by the Government agencies and everybody else 
involved?
    Mr. Barrett. Yes.
    Mr. Dingell. I assume that indicates yes on the part of all 
three.
    Mr. Swanson. Yes.
    Mr. Abbott. Yes.
    Mr. Dingell. Gentlemen, would you agree that the FCC has 
not completed the rules needed to allow for a smooth transition 
from a technical standpoint?
    Mr. Swanson. Yes.
    Mr. Barrett. Yes.
    Mr. Abbott. Yes.
    Mr. Dingell. Now, gentleman, has each of your companies 
purchased all the necessary equipment to make the move from 
analog to digital broadcasting?
    Mr. Barrett. If I could go first, sir, we have purchased 
most, not all. There is still some antenna pending finalization 
of the FCC proceedings.
    Mr. Swanson. We would have the same answer. We purchased 
virtually everything, but we are waiting for the final 
technical specs from the FCC in the antenna, because some of 
our stations will be changing channel numbers.
    Mr. Dingell. So you are fully ready then for the 
transition?
    Mr. Swanson. We do need the FCC to complete the proceedings 
on some of the technical issues so that we can finalize the 
details, particularly on channels, on our stations that will be 
changing channel numbers.
    Mr. Dingell. Sir?
    Mr. Abbott. We are very close to that. The majority of 
stations are fully converted and broadcasting. We await final 
clarification in a number of----
    Mr. Dingell. Are all three of you in a situation where your 
companies have arranged for the engineers and contractors 
needed to make physical changes to towers to effectuate the 
transition? Yes or no?
    Mr. Barrett. Yes.
    Mr. Swanson. Yes.
    Mr. Abbott. Yes.
    Mr. Dingell. Are you required to report your status in 
completing these tasks to the Federal Communications 
Commission?
    Mr. Barrett. Yes.
    Mr. Swanson. Yes.
    Mr. Abbott. Yes.
    Mr. Dingell. Now, these questions are for Mr. Taylor. In 
view of the time, I have to do this in kind of a discourteous 
way, and I apologize. There will be a series of questions, yes 
or no. Would you disagree that the converter box coupon program 
is a vital part of the smooth DTV transition? Would you 
disagree that consumers should have many choices of converter 
boxes available to them?
    Mr. Taylor. I agree that consumers should have many choices 
available to them, and the converter box convert, the coupon 
program is a key element to the transition.
    Mr. Dingell. Now, I think that your firm or your company 
has certain patent rights, and so it is perhaps almost the sole 
supplier in these matters; is that correct?
    Mr. Taylor. No, sir. We expect that there will be a variety 
of manufacturers on the market. My company does hold some of 
the patents for the digital television transmission system, but 
we are one of many patent holders. And I would add that the 
royalties on this box are comparable to or lower than the 
royalties for a $40 DVD player. The royalties is a minimum 
issue, and we anticipate some healthy competition in the 
marketplace with a variety of manufacturers.
    Mr. Dingell. Now, this question is to Mr. Vitelli. Mr. 
Vitelli, would you disagree that if a retailer chooses to 
become certified to participate in the DTV converter box 
program that the retailer should commit to having an adequate 
supply of converter boxes on its shelves for purchase?
    Mr. Vitelli. Yes.
    Mr. Dingell. Would you agree or disagree that if a 
certified retailer does not have converter boxes on the shelf 
when a customer arrives to purchase one with a coupon, the onus 
is on the retailer to ensure that the consumer or the customer 
can use her or his coupon at the time in order to purchase a 
converter box?
    Mr. Vitelli. Yes.
    Mr. Dingell. Now, by the way, I want to commend you at Best 
Buy for the way you have been proceeding, but I do still have 
some concerns.
    Would you agree that when a consumer wants to use a coupon 
but through no fault of the customer the certified retailer is 
out of converter boxes that the consumer should not be required 
to bear additional costs such as shipping and handling?
    Mr. Vitelli. I think that is going to be up to each 
individual retailer and the practices that they have. Being out 
of stock on products, unfortunately, is a general nature of 
doing business. And I also think it is going to be abnormally 
and possibly prevalent here because of the difficulty in 
predicting demand for this product, because it doesn't model 
with anything else that has been in the consumer electronics 
industry before.
    Mr. Dingell. But it is fair to say that Best Buy is going 
to see to it that if the purchaser can't get it at the time he 
is in the store that he is either going to come back, go to 
another store or to take some other step to procure it and it 
won't be shipped to him at the seller's cost in the case of 
Best Buy; is that a fair statement?
    Mr. Vitelli. What happens typically today, if a product is 
out of stock, the consumer will make an option to come back to 
the store or have it shipped to them. Generally, they are 
paying for that shipping if they decide not to come back, but 
we make those decisions in our stores every day.
    Mr. Dingell. One quick last question, Mr. Chairman. I note 
that Best Buy is not going to accept coupons for converter 
boxes as a part of online transactions, but you do accept gift 
cards for purchases made over the Internet. That is a curious 
difference in practice. Can you explain why?
    Mr. Vitelli. I will, even though I am not technical, but I 
will do the best I can.
    The Best Buy gift card that we accept is, in a sense, 
tendered to ourselves, so the ability to process that to 
ourselves is doable in addition to a credit card that a 
customer uses. To have two different tenders that go to 
different, alternative companies--one would go in this case to 
the Treasury and one going to a credit card company--we are not 
able do it technically in a reasonable period of time or 
financially. And that may not be true for everybody. That is a 
Best Buy systems issue. I don't think it is per se an issue 
with the program.
    Mr. Dingell. Thank you, Mr. Chairman. You have been very 
gracious.
    Mr. Markey. The gentleman's time has expired.
    The Chair recognizes the ranking member of the full 
committee, Mr. Barton.
    Mr. Barton. I am going to pass so I can get spun up on the 
hearing. So I will ask some questions later on.
    Mr. Markey. The Chair recognizes former Speaker Mr. Hastert 
from the State of Illinois.
    Mr. Hastert. I thank the chairman, and I want to 
congratulate him on the stellar performance of his Red Sox.
    Mr. Markey. I thank you very much. Mr. Swanson already 
congratulated me, and he didn't tell us, but I think he is a 
Cubs fan.
    Mr. Hastert. Well, you know that I am a Cubs fan, too.
    Mr. Markey. That's what I was thinking.
    Mr. Hastert. Maybe the 100th year.
    Mr. Markey. It feels great, by the way, when you finally 
win. It is just an incredible----
    Mr. Hastert. Thank you. I wouldn't know.
    I would like to lay this out. The middle of February in the 
year 2009, people's analog TVs go black. Everybody agrees that 
is going to happen. So from that point I think it is a simple 
thing that we start to work backward. The NTIA will start 
issuing certificates in January, 2008, so these certificates 
are going to be available.
    The next issue is how you communicate to people who may or 
may not have but would need, I guess, people who have analog 
TVs. That has to come on the part of the publicity from the 
broadcasters. Mr. Barrett, you talked about that. Do you think 
that is sufficient?
    Mr. Barrett. I think the kind of comprehensive program we 
are talking about will do the trick. There will need to be 
different kinds of messages delivered to different demographic 
groups and different constituencies, and in a well-thought-out 
marketing program I think we will be able to accomplish that.
    Mr. Hastert. You note that somebody who or a broadcaster 
who doesn't adequately do this would probably lose the ability 
for people to get his ads and lose prescribers, right, 
constituents.
    Mr. Barrett. I think to some extent that broadcaster will 
be marginalized in our business.
    Mr. Hastert. Mr. Swanson, do you agree?
    Mr. Swanson. Yes, I do. And I think that the way that 
broadcasters reach people goes well beyond PSAs and crawls. You 
know, we will use newscast, news stories. We will use our 
public affairs programing.
    On your morning shows it might even make sense for us to do 
some sort of a giveaway of a digital television set to 
encourage participation. To reach particularly the young people 
under 30, so much of their information comes from the Internet 
and Web sites, we will have to be aggressive on our Web pages 
in that regard.
    And then I think a thing that would be of primary concern 
is that a lot of the people who receive their signals over the 
air are in the minority communities. It would be high in the 
Hispanic community. It would be high in the African American 
community and also the elderly. And our diversity development 
group will be working actively with community groups to make 
sure that that word is disseminated to them most effectively.
    Mr. Hastert. In my follow-up question I was going to ask 
that of Mr. Uva, the disproportionate share will be elderly and 
minority groups, Hispanic groups, African American groups. 
Primarily, they keep things longer. They use it longer. Old 
people like me, we probably have two or three of those analog 
TV sets sitting around. My wife watches them. I don't.
    But, anyway, do you think with the publicity campaign that 
you can educate people to go out and apply for a certificate? I 
mean, the certificates aren't just going to come to people in 
the mail or come across your computer. A lot of people don't 
have computers, so e-mail--these issues, to start something, is 
not something, especially senior citizens' use, is there an 
adequate campaign to get the reality out there?
    Mr. Uva. We are very committed to not only using our 
airwaves, but, as Mr. Swanson suggested, to really work closely 
with grassroots organizations that we touch every day 
throughout the country in high-density Hispanic markets, and 
that means being able to be there, talk to them. We have even 
considered helping them, educate what is an analog television 
set; and we go look at them in their homes or residences and 
really give a one-to-one instruction.
    Mr. Hastert. Now, Mr. Taylor says that he has a product, 
Mr. Vitelli says that they have a way to sell that product, so 
that is how all these pieces come together. I guess we are 
going to have to watch over the next several months how the 
beginning starts, how we will be able to transcend through 
this, but it seems to me that free market system will work on 
this, and I congratulate all of you.
    Thank you. I yield back my time.
    Mr. Markey. The gentleman's time has expired.
    The Chair recognizes the gentleman from Pennsylvania, Mr. 
Doyle.
    Mr. Doyle. Thank you, Mr. Chairman.
    Mr. Bruno, I am concerned about the really low numbers of 
women and minorities who own our local media, and I know that 
many members on this subcommittee are concerned about that, 
too. Among low-powering class A stations, what percentage are 
owned by women and minorities compared to full-power stations?
    Mr. Bruno. There are 12 percent of low-power television and 
class A television stations that are owned by minorities and 
women. In fact, Bruno-Goodworth Network is 37 percent owned by 
Debra Goodworth.
    Mr. Doyle. Mr. Bruno, if you were available on cable, what 
would your Nielsen rating be? When you were available on cable 
fully, what was your Nielsen rating?
    Mr. Bruno. We had a 10 percent cumulative rating across the 
board; and if you take the 300 channels that are on cable in 
our area, that is in the top 40 stations that were there. So we 
were heavily viewed.
    Mr. Doyle. And if a station like yours were granted 
carriage, how many jobs might be created by that?
    Mr. Bruno. Well, in our area, we will probably start out--
we are at a very limited staff right now, under 10, because of 
the situation that has happened to us. With cable carriage, we 
would immediately go to 50. Over the course of about 36 months, 
we would get up to about 100 employees; and that would happen 
all across the country. I am not an exception. There are 910 
class A stations around the country. We are all in the same 
situation. We would all have that capability to hire those 
people.
    Mr. Doyle. This question is for Mr. Willner and Mr. Knorr. 
I am curious of what you think about Mr. Bruno's proposal that 
they give up their analog carriage and become digital only and 
in return for that they gain digital carriage on the cable 
stations where they are currently available over the air. Many 
systems are already moving from analog stations to digital, and 
you can fit at least four or five digital channels in the one 
analog channel that they would be giving up, so what is wrong 
with granting a local broadcaster digital-only carriage? Mr. 
Willner.
    Mr. Willner. There is nothing wrong with granting it if we 
can determine that the programming that is being produced by 
the low-powered TV station is of interest to our customers. The 
problem is that there is a misconception that a 750 MHz cable 
system is this vast wasteland of bandwidth that has 
availability for just an unlimited use. The fact of the matter 
is, all of our cable systems are either 750 MHz or 860 MHz; and 
we are struggling today to try to maneuver the services that we 
are already offering in order to provide competitive services 
in video, in digital video, in high-speed data, Internet 
service and telephone service so we are competitive in the 
whole telecommunications arena. And to open up a must-carry 
requirement for another thousand TV stations across this 
country will just put tremendous amounts of pressure on the 
limited bandwidth we have available.
    Mr. Doyle. We are not talking about dual carriage. We are 
talking about digital only; and it will free up an analog 
station for you, which you're going to be able to squeeze four 
or five or six digital stations.
    Mr. Willner. Well, I don't understand how it frees an 
analog to add a digital if we're not going to----
    Mr. Doyle. Well, they're going to give up analog. They're 
going to be----
    Mr. Willner. But that doesn't mean they're necessarily--
there is no must-carry requirement now. So they may or not be 
carried on analog.
    We carry a lot of low-powered TV stations, and we do so 
voluntarily. We do so through negotiations, based on the 
programing content that the LP TV station is delivering. And if 
we determine that our customers are going to be interested in 
it, we want to carry it. But to mandate just blanket carriage 
results in things like weather scans that commercial 
broadcasters sometimes use to fill up some of the multi-streams 
that they have right now which are of very little interest to 
consumers.
    Mr. Doyle. So you don't find Mr. Bruno's proposal 
attractive.
    Mr. Willner. I think right now it is impossible for us to 
allocate the bandwidth at the levels that they are requesting 
without breaking something else that is in the system.
    Mr. Doyle. Mr. Knorr?
    Mr. Knorr. I do think capacity is an issue, and I also 
agree that in many cases we are not reclaiming an analog 
channel under that outline. But I think if the programing is 
compelling, it is absolutely something we want to carry. If it 
turns out to be just a forced carriage of another shopping 
network when we have limited capacity, I don't think that does 
serve the public interest.
    But I do think there is legitimate concern which actually 
mirrors the concern of small cable where there is a big 
asymmetry between large companies and small companies. 
Sometimes, even if there is compelling content or a compelling 
case, the free market can work against interest. And we feel 
that as small cable companies working with large broadcasters 
on retrans consent, and this is the inverse of that issue as a 
small broadcaster who is trying to work with a large cable 
operator without Government mandates to back it up. So there 
would be some legitimate challenges there that need to be 
reviewed, but definitely keeping in mind, as Mr. Willner said, 
there is not unlimited capacity on cable systems.
    Mr. Doyle. Mr. Bruno, isn't there law requirements that you 
have to air a certain amount of local content?
    Mr. Bruno. Yes, 3 hours of local content.
    Let me point out that the 910 television stations are small 
television stations. Seventy percent of the country and cable 
operators will not be affected under this. Only 30 percent will 
be affected. We are not that big, even with 910 of us. We are 
not DMA wide. We are small stations.
    Mr. Doyle. Mr. Barrett, I want to get on the record to 
understand NAB's problem with unlicensed devices. This is 
strictly a concern about interference. If it could be proven in 
real-world conditions that unlicensed devices wouldn't 
interfere with broadcast TV signals, then there would be no 
objection to having these devices being sold in Mr. Vitelli's 
store or elsewhere? It is strictly an interference issue?
    Mr. Barrett. Sir, I think it is more than just an 
interference issue, although that is of significance importance 
to us. The notion of license and the notion of fixed are 
important as well. I think if these are unlicensed devices that 
are purported not to interfere and they are mobile to the 
extent that something goes wrong, we have lost the ability to 
find a remedy for the problem. We can't track a device down or 
we can't correct it or shut it down if we are in an unlicensed 
world with these devices. So it is very important but not the 
only component.
    Mr. Doyle. So is there any circumstances under which you 
could not object to these unlicensed devices?
    Mr. Barrett. I think if they are licensed and fixed and 
demonstrably----
    Mr. Doyle. But not mobile.
    Mr. Barrett. I think that is the more appropriate solution.
    Mr. Doyle. With my 30 seconds remaining, I just want to 
comment on the coupon program. Last night, Mr. Chairman, I was 
watching Charlie Brown and the Great Pumpkin. And you know when 
it gets to the part where Lucy and Charlie are playing football 
it made me think of something. Now what made the moment special 
is that Lucy and Charlie Brown signed a contract that she 
wouldn't yank the ball away when he went to kick it. If you've 
seen the show, Charlie Brown rears back, and he comes running 
all he can and spins through the air and lands on his head. And 
then when he looks at Lucy she says to him, well, the contract 
wasn't notarized.
    Well, Mr. Chairman, this reminds me of NTIA. I am worried 
that if a consumer coupon expires because the grandkids aren't 
going to hook up their sets until Thanksgiving or somebody is 
deployed overseas and can't get home to help grandma or grandpa 
before the coupon expires, that they are sort of like Charlie 
Brown. They are just going to be out of luck.
    So, as I said many times before, there should be an 
extension of these coupons if there are circumstances beyond 
the consumer's control, they are out of box at the store, the 
kids can't hook their sets up, and I don't want our grandmoms 
and grandpops to be Charlie Brown.
    And with that, Mr. Chairman, I will yield back.
    Mr. Markey. That would make N-T-I-A L-U-C-Y.
    Let me turn and recognize the gentleman from Texas, Mr. 
Barton.
    Mr. Barton. Thank you, Mr. Chairman.
    If we keep doing these hearings, we won't have to have an 
education program. Everybody in the country will have testified 
before your subcommittee. You are a one-man education program 
in and of yourself, which is a good thing, not necessarily a 
bad thing.
    I want to ask you, Mr. Vitelli and Mr. Taylor, I think you 
represent the retailers and the manufacturers, we have 
allocated enough money to produce up to 33 million of these 
set-top boxes, but my staff informs me that the industry 
doesn't expect to manufacture and sell more than 8 million. Is 
that true, the lower number? And, if so, why so?
    Mr. Taylor. Mr. Chairman, the Consumer Electronics 
Association estimates between 22 and 28 million converter boxes 
will be required in the marketplace.
    Mr. Barton. So the 8 million number is a wrong number, a 
bad number?
    Mr. Taylor. I think that was extrapolated as the possible 
number that would be requiring coupons. I know that CEA has 
done a lot of research. I need to study it some more. I would 
be happy to investigate it more and get back to you.
    Mr. Barton. Mr. Vitelli?
    Mr. Vitelli. The estimate of the number of people that 
would potentially need a box sounds completely accurate to me. 
It will be interesting to see what consumers decide to do. 
Because they do have multiple options. A converter box is one, 
and a large number of people will do that. I think you are 
calling to point the difficulty that I think many of us are in 
the industry are having, which is projecting the demand.
    Mr. Barton. But nobody on the panel expects there to be a 
demand for more than 33 million.
    I see a lot of stares, so I am going to assume that that 
means you don't expect there will be more than a need for 33 
million.
    I am going to ask Mr. Swanson, who is with Fox Television, 
I believe in markets. I believe that people that have an 
incentive, a vested interest to help themselves will help 
others and for trying to help themselves. Do you believe that 
the broadcast industry has an incentive to educate their 
customers, consumers, viewers about the transition or do you 
think that Congress needs to in some way force, encourage, 
incentivize you to do more?
    Mr. Swanson. I think for people in the broadcast industry, 
as Mr. Barrett has already suggested, it is self-preservation 
for us. We want every household to be able to receive a digital 
signal on February 17, 2009.
    Most of us need the ratings and need the revenue that comes 
from that to continue to perform, and so we don't need to be 
goaded or prodded on this. And that is why Fox has been 
aggressive, not just now but clear back to 2004, in helping 
educate the American public to the advantages of HDTV and to 
digital television.
    In this last 15 months, obviously, the efforts will 
intensify, but a broadcaster who failed to participate would 
only be hurting themselves, ultimately, I think. So, yes, it is 
in our best interest to do this. And I think hearings like this 
are beneficial, but I believe that our business is reaching 
people with news and information. That is what we do for a 
living; and I think if we are left to ourselves to do it, I 
think we can do a good and adequate job.
    Mr. Barton. I would assume that in January, in early 
February 2009, as the transition approaches, that there would 
be quite a number of ads on television letting people know 
that. Can you give me any kind of an estimate of how many times 
a day I might see a 15-second or 30-second spot telling me to 
get off my bottom and go down and get my converter box or buy 
my new digital TV set that last month? I would assume it would 
be a lot, but maybe I am wrong. Maybe you will just run it once 
a day at 12:00 p.m., at midnight, or something when nobody is 
watching, but I think you will do a lot.
    Mr. Swanson. Well, I think if you are home in Texas you 
will see our two stations in Dallas running them in various day 
parts, including prime time now; and if you watch here in 
Washington you will see our two television stations here doing 
the same thing. That effort is under way, it has been under way 
and will continue.
    It will be interesting to see as we monitor this process 
over the next 15 months, obviously, a lot of Americans--that is 
why the stores stay open an Christmas Eve because there is 
always somebody shopping at the last minute. So I assume that 
in January, February 2009 there will be stragglers, and we will 
have to have an all-out effort to reach them, but that would be 
the intent, yes.
    Mr. Barton. I will be one of the stragglers, I assure you. 
But I will be watching your ads informing me of the transition 
in between watching the ads of the Dallas Cowboys getting ready 
to beat the New England Patriots in the Super Bowl that year.
    Mr. Markey. What year is that?
    Mr. Barton. 2009.
    Mr. Swanson. I think they already settled that this year.
    Mr. Barton. We will have another crack at them.
    I yield back, Mr. Chairman.
    Mr. Markey. The gentleman's time has expired.
    The Chair recognizes the gentleman from Texas, Mr. 
Gonzalez.
    Mr. Gonzalez. Thank you very much, Mr. Chairman.
    I want to associate what I feel about the Super Bowl with 
my colleague from Texas; and that first game is just a warm-up, 
a scrimmage. It meant nothing in the big picture.
    First of all, I know that there is a time and a place for 
further discussion on white space, dual carriage all of that, 
and it is important. Where I want to go immediately is going to 
be--and even pass over the education part of what we will be 
doing in less than a year, but I want to comment Mr. Barrett, 
Mr. Uva and Mr. Swanson, for what you all are doing on the 
education part. Because I think it has been pointed out by Mr. 
Abbott that the Federal Government is not going to help you 
that much for whatever reason, so thank you for whatever you 
are doing on your own initiative.
    My question focuses on the testimony by Mr. Vitelli and Mr. 
Taylor, the manufacturer and the retailer. We had an 
interesting conversation I guess a couple of weeks ago when we 
had the last hearing, and I believe Mr. Walden is here, and he 
may follow up on it. My question goes to this converter box, 
Mr. Taylor. First of all, you indicated this will sell for 
about $60 retail; is that correct?
    Mr. Taylor. That is correct.
    Mr. Gonzalez. We have been hearing between $50 and $70 and 
were a little concerned. How many of these converter boxes, the 
one that you have before you, do you anticipate manufacturing? 
Because you are going to have competition, and there's been 
different numbers--22 million, 30 million, 8 million--so you 
have got to have some idea how many you plan on manufacturing.
    Mr. Taylor. We do. For competitive reasons, I can't give 
you a specific number, but we anticipate building millions of 
these boxes. And, in fact, production begins next week.
    Mr. Gonzalez. But after, let's say, the first few months or 
the year of the program and such that we have it in place, 
those boxes are pretty well useless as far as merchandise being 
carried and available by the retailers?
    Mr. Taylor. I'm sorry, at the end of the transition?
    Mr. Gonzalez. Sure. The shelf life of this thing is really 
at the outset. Best Buy will not be carrying these in a few 
months, so you have to factor that in. So my next question 
would be how much additional cost would it be for you to 
manufacture to add a feature like the ability for that 
converter to play a DVD? And please excuse me if I am getting 
all the technology confused or whatever, but I am just assuming 
that you can add a feature on there.
    Mr. Taylor. We make those products today, sir, and they are 
not eligible for the coupon because of the way the statute was 
written. That is only for the basic boxes, but we have products 
on the market today that are DVD recorders----
    Mr. Gonzalez. No, no, no, I am very familiar. Do you have 
any plans at present to maybe manufacture something that will 
be priced much lower than what you have with the DVD players 
and recorders that you have out there, which are really 
wonderful machines, but I am talking about something that may 
coincide right at the same time and be priced pretty close to 
the $60 that will have some added feature like--not recording, 
because I know that is expensive, but the playing of DVD.
    Mr. Taylor. If you included a DVD player, it would be 
excluded from the coupon program.
    Mr. Gonzalez. Oh, no, no, no, forget about the coupon. 
We're going to be talking about upselling, and that was--I am 
just wondering where all this is going to end up.
    Mr. Taylor. For now, we anticipate just for this product 
and introducing the basic converter box, but I would add for 
the analog consumer this is a big benefit because they move 
from that scratchy analog picture into the digital world and 
they get new features.
    Mr. Gonzalez. No, no, no, I have no complaints about what 
you have been able to pack into it as far as the quality. We 
had a demonstration yesterday, and I appreciate your effort.
    Mr. Vitelli, I don't believe that Best Buy or any retailer 
is going to be the converter box policeman on the beat, you 
know what I mean? But your testimony reads as follows: If a 
customer has no over-the-air antenna and does not expect to use 
one, the customer likely has no need of CECB; and it would ill 
serve the customer, as well as the NTIA program and Congress 
and the FCC, for us to try to sell one to the customer.
    That is totally out of your hands, though. You can't police 
that. When someone comes in with their little credit card 
voucher and they want one, you are not going to quiz them as to 
whether they really need it or not. You are going to have to 
sell it to them, is that correct?
    Mr. Vitelli. Well, certainly we would sell it to them if we 
had no contact with them.
    My point of that comment is, if someone had a coupon that 
inevitably they don't need and they buy that box, because we 
have had no discussion with them about whether they need one or 
not, they go home and they find out they actually don't need it 
and several weeks or months later they will want to come back 
and return it and then that coupon disappears from the world 
and the box has already been used and now with we have a used 
box that we need to deal with--so it is in our best interest 
and the interest of the program that a person who is getting 
the coupon and a person redeeming a coupon actually has a need 
for the box.
    Mr. Gonzalez. Mr. Vitelli, I understand that, and I 
appreciate that, and I think it is necessary, but then it leads 
to what we have here as far as the testimony of Marc Pearl, 
Consumer Electronic Retailer's Coalition: If a customer is 
interested in obtaining a CECB to service an existing TV, VCR, 
et cetera, this will be the focus on the sales discussion and 
transaction. If the customer is interested in upgrading to the 
new digital TV or an HDTV display to better experience or enjoy 
watching DVDs or high-definition DVD or in receiving digital 
broadcast in a new TV or recording product, this will be the 
focus of the transaction.
    So I assume once you get the threshold question about why 
are you here that you will probably lead into other choices. I 
am not saying that is evil or bad, and I think Mr. Walden and I 
had a discussion after the last hearing, and he may follow up 
on it. All I am saying is that I am not sure that this program 
was ever intentioned to be somewhat of a windfall for retailers 
to be able to upsell. If that happens, I have no idea if that 
is a bad or good thing. Because, on the good side, why 
shouldn't the consumer be advised that there are better choices 
closely associated with the expenditure that they are going to 
make in buying something that is of a basic design? I 
understand that the voucher does not apply, but creative 
merchandising would have something in the way of a rebate or 
something to make up for that $40 that they would be investing 
in the base machine.
    So, one, I don't think you will be the police officer over 
there and you are going to basically restrict people to buying 
the base product. But how do you find this balance? And your 
sales personnel, I don't know how you stop a salesperson. I 
don't know if you pay them by commission or not. That will 
simply be moving in that direction.
    That is going to be an issue, and Mr. Walden may take that 
up. I am just saying I would like to anticipate that situation 
and see how we can address it.
    Mr. Uva, I have got about 47 seconds, but TV stations, 
broadcasters along the southern border of the United States, 
what is the special situation that you find yourselves in?
    Mr. Uva. Congressman, we need to really focus on the 
stations in those communities, more so than any other part of 
the Hispanic world, simply because if they are left behind and 
Mexico not converting to digital, they will be receiving analog 
broadcast from Mexican border stations and will be deprived of 
important emergency service information as well as global news.
    Mr. Gonzalez. As the situation exists now, Mexico will be 
broadcast in analog.
    Mr. Uva. Will remain in analog past our transition in 
February 2009.
    Mr. Gonzalez. Thank you very much, Mr. Chairman.
    Mr. Markey. The gentleman's time has expired.
    The Chair recognizes the gentleman from Oregon, Mr. Walden.
    Mr. Walden. Thank you very much, Mr. Chairman.
    Mr. Barrett, I want to, first of all, thank the NAB and 
others for yesterday's demonstration for Members of the House 
and their staff on the DTV conversion. I understand about 170 
staff turned out and about two or three Members. Do you think 
that Congress should by rule require all Members and staff to 
show up for events like this so that Members of Congress are 
actually fully informed so they can help their constituents?
    Mr. Barrett. I would like to see all the Members of 
Congress be fully informed, but I will stop short of a mandate.
    Mr. Walden. That is good. I just thought I'd ask.
    I do have a serious question--well, I have a lot of them, 
actually; and I will try to move rapidly.
    Translators--I represent a district, 70,000 square miles. A 
lot of our viewers over the air rely on translators to be able 
to see their television, whether they are analog or digital. 
Can you give me some sort of idea of what you see happening 
with translators making this shift from analog to digital in 
terms of timelines?
    Mr. Barrett. I think it will be very challenging. We have 
challenges, the company, with the amount of translators we have 
in the State of New Mexico, and there will be some small 
pockets of that State where it is economically not feasible for 
us to expend the money to build out into a full digital 
facility there, and we are working with the satellite providers 
to see if we can provide a solution for those small number of 
homes.
    Mr. Walden. Are there any remaining issues at the FCC as 
far as frequency allocation goes for those translators to be 
able make the conversion and come up on air on a digital 
channel?
    Mr. Barrett. I believe until the FCC finalizes its table 
that remains an open issue.
    Mr. Walden. Will that table be finalized, do you believe, 
before February 17, 2009?
    Mr. Barrett. I believe it is imperative that it is 
finalized.
    Mr. Walden. I would draw the chairman's attention to this, 
because I think it will be a real issue in rural areas where 
you are not served by the main signal of the broadcast station. 
And, in fact, a lot of communities are served by translators, 
that they may not have the opportunity of a digital box to be 
able to watch over-the-air TV; is that not accurate?
    Mr. Barrett. That is the theoretical potential, yes, sir.
    Mr. Walden. Mr. Vitelli, I want to commend you and what 
your store is doing and that of other retailers.
    I will follow up on Mr. Gonzalez's point about how we 
market products in America, and I don't think you want this 
committee micromanaging every sales transaction with penalty or 
there would be no reason for you to bother to offer these boxes 
to begin with. On the other hand, I don't think we want bait-
and-switch tactics; and on that point I think all of us would 
agree.
    What happens today when a consumer comes into a Best Buy 
and wants to buy a new washer or dryer that has an Energy Star 
rating and perhaps a rebate associated with it versus one that 
doesn't have that sort of rebate and they walk in the store and 
want a washer and dryer? Do your sales clerks also say, gee, 
there is also this model has a rebate with it, it is more 
energy efficient, and you evaluate what the consumer wants or 
needs?
    Mr. Vitelli. Sir, I would like to add to that. I'd like to 
add to Mr. Gonzalez's question. Best Buy is a noncommission 
environment, and our key training that we talk to all of our 
salespeople about is to understand and then meet that 
customer's unique needs. That's what we do.
    Mr. Walden. Right.
    Mr. Vitelli. Asking those questions, contacting the 
customer, asking the lifestyle questions of what they are 
interested in and what is important to them and then 
recommending the right product for that situation and 
encouraging the sale of that little acronym of CARE is how we 
train our sales people everyday.
    So, in your example there, the conversation would be 
aligned--would be, around in the appliance department, OK, you 
came in for this. Are you aware of Energy Star? Are you aware 
of the benefits that it brings to you and indeed to all of us 
by using less water, using less electricity?
    Mr. Walden. My example is an analogy here. If I come in 
saying I need this consumer or the set-top box to do the 
conversion, I would want somebody to say, gee, here are 
alternatives. Now, you don't get the coupon here or the $40 
rebate, but these are also options if you are thinking about 
upgrading your television.
    Mr. Vitelli. That is the explanation we are running on our 
video wall that goes six times an hour. It is already running. 
You have three options: You are going to get a converter box, 
you are going to subscribe to another way, my colleagues are 
here that have another way to do that, or you are going to buy 
a new digital television.
    And it is also important to understand there is a lot of 
talk about the expensive digital televisions. That is because 
of what has been going on with high-definition television and 
flat-panel TVs.There are standard-definition digital 
televisions that are low cost that are in our stores right now.
    So those three options will be presented saying here is 
where you came in and here are your three options. Wherever you 
want to go, we can help you.
    Mr. Walden. Mr. Barrett, I want to go back to follow up on 
a question the chairman raised about sponsored public service 
announcements. Are those not a standard in the industry anyway 
for drunk driving PSAs and Halloween safety public service 
announcements? Isn't that a frequent situation where there are 
industry groups or businesses who want to sponsor a message 
because it is both in the public good and in their own good?
    Mr. Barrett. Yes, sir. That is a widely practiced matter in 
most respects. And I think of in Baltimore, at our station 
there, WBAL, if it is involved in the Susan Coleman Cancer Run, 
Hopkins may want to be a sponsor of that. I believe it enhances 
the message.
    Mr. Walden. And, actually, it may add more messages on the 
air than you are planning to do for free through the public 
service announcement strategy. So it is actually an industry-
wide effort to add to the message, not detract.
    Now, I understand the chairman's comment about potato 
peelers or Pocket Fishermen or something maybe being Ginsu 
knives, I don't know, being not necessarily what you would put 
in place with that. I think the reference was it would be 
irrelevant to have some of those people sponsor it. Do you 
think it would be irrelevant if a Member of Congress's campaign 
sponsored one of those messages? Would we be considered 
irrelevant to that process?
    Mr. Barrett. I would like to take that under advisement.
    Mr. Walden. You may want to consult.
    The final point I want to make--and it is really not 
necessarily to this panel, because we don't have anybody here 
from the satellite companies, but we may later--there are still 
pockets in America where over-the-air broadcasters are having 
difficulty getting local-into-local signals set up on the 
satellite systems. I have that in my district, and Ben Dorigan 
with KTVZ is having a real problem with that. It is a growing 
frustration for them and for viewers I think in these local 
markets.
    That was part of the deal, was to have local into local; 
and some of us are running out of our patience in terms of the 
excuses on why that can't take place in an analog environment, 
let alone in the digital environment. And that is an issue I 
continue to pursue.
    Mr. Abbott.
    Mr. Abbott. If I can second what you are saying.
    Mr. Walden. I also have this problem in public broadcasting 
in southern Oregon, too.
    Mr. Abbott. Absolutely. And we have in that our model of 
supplementing the Federal investment in public television in a 
public-private partnership with significant support from the 
community to support programs. As I was mentioning in my 
testimony, we are greatly concerned in rural areas that local 
into local move forward, high definition move forward and the 
range of new digital services that are available to every 
station to localize in their communities are established 
through satellite carriage, because that creates the service 
that then communities respond to and make an investment in 
public television.
    Mr. Walden. I am going to steal back my last 5 seconds to 
make a point to the chairman that in a future hearing if we 
could address this translator issue vis-a-vis the FCC's 
rulemaking and the allocation of those signals I think it would 
be real important to this conversion success.
    Thank you, Mr. Chairman.
    Mr. Markey. Done. Thank you.
    There are three roll calls that will be held on the House 
floor beginning in about 10 minutes. So I think that gives us 
time to recognize the gentlelady from California, Ms. Solis, 
for her 5 minutes of questions. Then we will recess, and then 
we will return to let other members be recognized.
    The gentlelady from California is recognized.
    Ms. Solis. Thank you, Mr. Chairman.
    I just wanted to get a response from Mr. Vitelli and Mr. 
Taylor. I have information before me where U.S. PIRG did I 
guess kind of a random study here in Washington, DC. And they 
visited several of our local stores, five electronic retailers. 
And in interviewing clerks and supervisors many of them were 
not aware, were giving inaccurate, misleading information, 
didn't know about the converter box program. Some didn't even 
know about the coupon.
    Can you please respond to that, Mr. Vitelli?
    Mr. Vitelli. Yes. As I said earlier in my testimony, there 
was very little information other than--and what our training 
includes today--that there will be a converter box and there 
will be a coupon. That is what is in our training today.
    I think we are at a point now we can begin to take that 
training to the next level of this is the various converter 
boxes that will be available, this is the date that they will 
be available, and this is when the coupon application process 
will all begin to start. And that will happen after the holiday 
when we get into 2008.
    The training that we do today in our stores is generally 
focused on the questions that people are coming in and asking 
about today. And the majority of people that walk into our 
stores right now are talking about high-definition TV, flat-
panel TVs; and that is the preponderance of our training right 
now. That is going to change and ratchet up as we get closer to 
the transition.
    So I would say as we get into the application process, 
which will happen the early part of next year, and certainly as 
we get into January and February of next year with the 
transition, that both the training, the messaging in our store, 
the messaging in our advertising will ratchet to meet the 
response that the customer is going to have.
    Mr. Taylor. We agree. At LG Electronics we have been 
increasing our sales training activities surrounding the 
digital transition generally. We think it is a little too soon 
to be start talking about the boxes, because they aren't yet 
available. But we are preparing and in fact just this week met 
with 800 of our dealers, and a huge module of that was the 
discussion about the transition and the converter box coupon 
program.
    Ms. Solis. But we just heard that there are commercials and 
PSAs that are already going out. So there could be some 
confusion amongst our consumers that is maybe unintended, but 
it is there. So I am just cautioning that maybe we need to have 
some quality control here and maybe know exactly what it is we 
are telling our staffs to tell people. In fact, I understand 
that some people weren't even told that they had to purchase a 
converter box. They were actually trying to sell them higher-
end equipment. So that is something that Mr. Gonzalez brought 
up earlier. So I would be concerned about that, just 
misleading; and it may not be intentional, but it happens.
    One of my questions, too, is I worry about those senior 
citizens that live in convalescent homes, whose children bring 
them their old television set or they bought them when it is 
already old and the fact that many of the convalescent homes 
don't allow them to have digital or their own cable set-up. 
What are we doing to reach those kinds of particular areas? 
Because that is a very different population, and not all of 
them are going to go sit in front of the big plasma TV during 
lunchtime. Some are immobile. How do we handle that?
    Mr. Abbott. If I might comment on that, that is an area of 
great interest and focus, of course, for public television, 
where many of the elderly residents in all of our communities 
care greatly for the range of programming that we provide. It 
is a relationship that has been fostered over time. It is why 
in my testimony I offered the expressed interest in 
supplementing the messaging that we can do on our television 
stations with on-the-ground education and outreach. And in our 
communities and communities across the country, senior centers, 
convalescent homes, in addition to libraries, facilities tied 
to Ready to Learn and Head Start programs, those are the ways 
on the ground we know we can experience some success in having 
people really understand the transition.
    One of our concerns is that a 15-second or a 30-second 
message is the beginnings of awareness. It presents the 
beginning of awareness but not necessarily a way of talking 
through the most productive and prevalent solution.
    Ms. Solis. Mr. Chairman, I don't have a lot of time, so I 
want to submit questions also for the record.
     But I do want to say that one of the greatest concerns I 
have is that, again, the coupon is worth $40. If the converter 
cost $60, how many chances will a family member get to use the 
coupon? Is it just one per set or how does that work?
    Mr. Vitelli. It is one coupon per one converter box.
    Ms. Solis. So it will affect just one?
    Mr. Taylor. And each household can apply for two coupons.
    Ms. Solis. That might be another question to revisit.
    Mr. Markey. The gentlelady's time has expired.
    The gentlelady from California, Mrs. Capps, says that she 
does not mind if she has less than 5 minutes, so we will 
recognize her for that purpose.
    Mrs. Capps. And I am going to presume that I can run really 
fast to the floor and not miss the vote. But I thank the 
chairman for allowing me. I am not able to come back after the 
series of votes, but I wanted to--and I just am going to ask 
very brief questions of two people if I could, Mr. Knorr and 
Mr. Willner. Some of the other concerns I have have been 
addressed, and I am going to assume they are going to be 
followed through.
    Mr. Knorr, parts of my district are serviced by very small 
cable providers. I am concerned about how FTC's dual-carriage 
order will affect cable and broadband service for my 
constituents. Can you tell me--can you give us an idea of how 
many small cable operators are likely to be affected by this? 
Because it will have a direct impact on my constituents, I am 
sure.
    Mr. Knorr. Absolutely. It is very similar to the translator 
issue. We estimate as many as 1,000 communities served by 
analog-only cable operators serving just a few hundred 
customers. And we think that a mandate to deploy digital where 
there is no financial justification similar to translators to 
be able to afford that upgrade to digital, very likely, almost 
with economic certainty, will drive many of these operators out 
of business, in which case there is no one to provide that 
service possibly to a retirement home.
    Mrs. Capps. I hear you. And that is a big concern of mine, 
and we will go further into it another time, I hope.
    Finally, Mr. Willner, I am concerned that as the DTV 
transition nears some consumers may feel they have to switch to 
more expensive digital cable in order to continue viewing 
certain programs because the channel on which the program airs 
has been moved to the digital tier. Does cable have any plans 
to move certain channels or networks to its digital-only tier? 
I want to be assured for my constituents again.
    Mr. Willner. The agreement that we have reached that did 
not make it into the bill but we did a voluntary agreement was 
for carriage of the analog and the digital signals of all 
broadcasters, the must-carry broadcasters.
    Mrs. Capps [presiding]. Now I am supposed to gavel you down 
and run to vote.
    Until after the series of votes, we will be in recess. 
Thank you.
    [Recess.]
    Mr. Markey [presiding]. The hearing is reconvened; and, as 
you can see, there are many members who continue to have an 
interest in this subject. There is just no end to the number of 
hearings that we can have on this issue.
    And the gentleman from Texas, Mr. Green, is recognized.
    Mr. Green. Thank you, Mr. Chairman.
    I would like to thank our panel again for being here.
    Mr. Taylor, I know in your testimony you said that 
converters would be available some time in early 2008 for about 
$60; and I was going to follow it up with Mr. Vitelli from Best 
Buy. Is that pretty well what you expect, that the converters 
will be in Best Buy, for example, or even your competitors? I 
know you are at 25 percent of the market. But if you have them, 
I am sure your competitors want to have them also. Is there a 
broad range of dates? How early in next year? Because if those 
coupons are sent out in January, people will sit there, and 
they will show up at the retail operations.
    And I know you said because of the deadline on those 
coupons they would be able to use that coupon and get one when 
it is delivered, so they wouldn't worry about the date on that. 
Do you know if your other retailers or other competitors are 
using that same scenario or has the FCC said anything about 
that is what they would like to see done?
    Mr. Vitelli. The complexity of the dilemma that you just 
described is why we made the recommendation that, as the 
applications start to come in starting in January to the NTIA, 
that the NTIA should say to consumers, don't expect your coupon 
before April 1. What that is going to allow to happen is the 
multiple--hopefully, multiple approved box manufacturers to be 
able to state what their production capacity is by week and by 
month. And then we will know, OK, here is the production 
capacity. NTIA should then release coupons against weekly and 
monthly production capacity.
    They have also--we have been working with IBM--will be able 
to tell us and other retailers here are the coupons that are 
being issued by Zip Code. So as we try to figure out of the 
10,000 retail locations in the country here is where to put 
them. So that supply chain process that you described is very 
complex. It happens every day, but it happens in a more 
predictable model of how consumer demand for goods are.
    This is very different, and the actual coupon issuance 
needs to match up with the product availability, which is going 
to need--the industry as a whole is going to need to understand 
production capacity by month and then issue coupons against 
that so retailers can order those quantities and all three of 
them match.
    Mr. Green. So they could control the distribution of the 
coupons once they receive the applications to somehow fit with 
the distribution chain for the retail operations.
    Mr. Vitelli. And that will be the best thing to do to avoid 
customer disappoints.
    Mr. Green. Do you think we are going to be that well 
organized to do that?
    Mr. Vitelli. I think--with several key manufacturers and 
several key retailers and IBM at the center with NTIA I think 
it can be done.
    Mr. Green. One of the other concerns I have--and I know it 
was mentioned by some of my colleagues--is the availability of 
those coupons and how broadly they are going to be distributed. 
Are they going to be available to the public, for example, at 
Best Buy or Circuit City or someone else? Or are they just 
going to be Internet based?
    And again in an area that--I have a very urban area in 
Houston that has less cable penetration, but they also have 
less computer access and Internet penetration. So what are the 
suggestions on how those applications would be distributed?
    Mr. Vitelli. We have committed that we will have 
applications in all of our stores. So if someone comes in and 
says I need an application in January, we will have it. I think 
it would be great if all of the consumer electronic retailers 
that are participants in the coupon program have the 
applications available.
    Mr. Green. Mr. Chairman, one of the concerns I have, and I 
think my colleague, Congresswoman Solis, talked about the 
impact on Hispanic cable viewers, because I have the same 
situation, to make sure that we have those. I was thinking, 
because in every newsletter we send out we put a little blurb 
in about the DTV transition, and I don't know what we would 
need to take, but I know some of us over every few years will 
send out a voter registration application bipartisanly. If that 
would be possible for--maybe it comes from our committee--to 
say that Members of Congress could actually put that in their 
newsletters and their application or however we could make it 
available, just like for retail operations. But we could do 
that.
    Mr. Markey. I think that is an excellent idea. I think we 
should pursue that and maybe recommend it to the other Members, 
maybe with your leadership.
    Mr. Green. I will talk with what we call the mayor of 
Capitol Hill, our House Administration Chair, and see if that 
is something we could work with.
    Mr. Markey. Excellent.
    Mr. Green. Thank you. And thank our witnesses.
    Mr. Markey. The gentleman's time has expired.
    The chair recognizes the gentleman from Virginia, Mr. 
Boucher.
    Mr. Boucher. Well, thank you very much, Mr. Chairman; and I 
also want to join with you in welcoming our panel of witnesses 
and thank each of you for your enlightening testimony here 
today.
    For Mr. Willner, Mr. Barrett and Mr. Vitelli, as I 
understand the statute that authorizes the distribution of 
vouchers for these converter boxes, the vouchers will expire 90 
days from the date upon which they are issued; and I am 
wondering if there is any justification for retaining that 
provision. I have heard Mr. Vitelli say that we should make 
sure that we issue vouchers in accordance with the availability 
of converter boxes and that they be issued in that kind of 
parity. But I am wondering if an outright repeal of this 
provision might be preferable. Is there an argument for 
retaining this 90-day limit?
    Mr. Barrett. Mr. Boucher, I would agree with you. I think 
that this is not the right solution, and it is going to pose 
more problems going forward. I don't think there is logic to it 
at this point to stick to a 90-day date.
    Mr. Boucher. The concern, obviously, is that someone will 
get a voucher in January or February of next year and 
potentially delay going to the store in order to get a box 
until the voucher expires. And then that voucher recycles back, 
and I suppose somebody else could have it issued to them at 
some later point in time. But that individual who has been 
disenfranchised, I am not even sure that person is eligible to 
go back and reapply. I don't know the answer to that. So that 
person potentially could be disenfranchised.
    The more common situation might be where the individual 
receives the voucher, goes to a store and the kind of parity of 
voucher issuance and device availability Mr. Vitelli talks 
about somehow fails, and the store simply doesn't have the box. 
He goes back 2 weeks later, the store doesn't have the box, and 
he gives up, and his voucher expires. He is rendered, I guess, 
ineligible from getting another one.
    And in the face of that uncertainty it just seems to me 
that repealing this 90-day provision might be the better course 
to take; and, Mr. Chairman, I would suggest that we consider 
that and possibly put forward legislation in order to do it.
    The reason I am raising the question is just to see if 
anybody has a justification for retaining this 90-day 
expiration, and I am not hearing any.
    Mr. Vitelli.
    Mr. Vitelli. I actually have two thoughts of why it is a 
good idea.
    Mr. Boucher. Why what is a good idea?
    Mr. Vitelli. The 90-day expiration is a good idea. And I 
will try them. Because I understand the dilemma that it is 
creating. One is that there is another scenario that all the 
coupons are issued and everybody waits until February 18 to get 
the box and there is 22 million people lined up outside of all 
the stores and there actually isn't any linear production and 
issuance of these boxes and getting them into homes. That is 
almost untenable for retailers and manufacturers.
    So the perfect scenario would be that 2 million a month of 
these converter boxes, the coupons were issued, they were 
manufactured, they were sold, and people came in in an orderly 
fashion over the course of the 15 months. So that is one reason 
I actually think it is good. As the coupon comes in, you have a 
motivation to go to the retail outlet and get a box. You may 
not install it that day, but now you physically have it.
    Mr. Boucher. Well, I understand the ideal situation, and I 
agree with you. If the world works as nicely and cleanly as you 
suggest that it may, that will solve the problem. But I don't 
have that level of confidence that it will work with quite that 
level of efficiency, and then I think people are going to get 
caught in a crunch.
    But let me move on to another area where I have a question. 
Mr. Willner, I realize it is difficult for you to speak for 
every cable system in the country. But you speak with authority 
on cable issues, and you are here this morning representing the 
industry, so let me pose this question to you.
    I am looking for a level of comfort in terms of what the 
cable subscriber is going to receive in the home when the 
digital transition has been accomplished, and so I am going to 
ask three questions about what that cable subscriber will 
receive.
    Question No. 1, will he get an analog signal delivered on 
the cable system so that he can keep his analog sets in 
operation without having to buy a converter box? Yes or no?
    Mr. Willner. Yes.
    Mr. Boucher. Question No. 2, will he get a full digital 
signal on the cable system so that his new digital set operates 
efficiently with digital feeds coming off the cable system?
    Mr. Willner. Yes.
    Mr. Boucher. Question No. 3, when the local affiliate of a 
network, television network is broadcasting in high definition, 
will the cable system be carrying that full HD signal into the 
home?
    Mr. Willner. Well, are you talking about must-carry?
    Mr. Boucher. For the must-carry stations, that is correct.
    Mr. Willner. Yes.
    Mr. Boucher. So the answer is yes.
    Mr. Willner. Yes.
    Mr. Boucher. So the answer is yes to all three of those.
    Mr. Boucher. Yes.
    Yes, sir. I see your hand being raised, and I can't read 
your sign. I'm sorry.
    Mr. Knorr. Patrick Knorr. I'm chairman of the ACA. We 
represent the smaller cable company.
    Mr. Boucher. And what is your answer to those questions?
    Mr. Knorr. And my answer to those questions, the first one 
is yes. But the next two are a little bit more complicated for 
smaller operators.
    If they are required to carry HD signals for the smallest 
of operators, it is very akin to the translator problem that 
broadcasters have of if you are a mom-and-pop cable company 
with two people running a cable system serving 100 customers in 
a small rural community, 100 customers does not support the 
investment in HD. There is probably not as much demand there, 
and there is alternatives for those people in that community 
that do get HDTV sets.
    But the business model doesn't support it. And if there is 
a Government mandate to provide an HD signal, chances are that 
cable company is going to cease to exist and their customers 
are not going to get the HD signal or the analog signal. And 
that is a really major concern that we think may affect up to 
1,000 communities in this country if that is not very well 
thought out. And the current policy that the FCC has released, 
combined with the must-carry mandates that are already in 
place, really leave grave concerns for what will happen with 
small cable companies.
    Mr. Boucher. Thank you very much. My time has expired. And 
thank you, Mr. Chairman, for your indulgence.
    Mr. Markey. Thank you. I appreciate it.
    The gentleman from Michigan, Mr. Stupak, is recognized.
    Mr. Stupak. Thank you, Mr. Chairman.
    Mr. Knorr, the third answer to Mr. Boucher's question, 
would you care to clarify on that one?
    Mr. Knorr. Clarify which?
    Mr. Stupak. Your answer to his third question there.
    Mr. Knorr. I'm sorry, the HD signals.
    Mr. Stupak. Yes, with regard to high-definition signals.
    Mr. Knorr. Correct. Any member, just like the education 
issue, we all have a huge stake, a market incentive, to be as 
competitive as possible. We want to serve our customers. We 
want to provide our customers with HD signals. It is really a 
matter of economic ability for the very small operators, which 
is really where we are asking for allowances to be made for 
systems that are very small or very limited capacity.
    We used to have 30,000 customers in Lawrence, KS. We are 
going to be providing an HD signal, we are going to be 
providing a digital standard definition signal, we are going to 
be providing an analog signal for every single broadcaster in 
our market. We want to do that for competitive reasons.
    But, again, if you are a 100 subscriber system, even 1,000 
subscriber system, that is a mathematical impossibility to 
finance the equipment required to do that.
    Mr. Stupak. In the last hearing, I asked Mr. Martin about 
it, when the FCC was here, about the dual carriage; and he said 
there was not that obligation, that you can go one way or the 
other, you don't have to have the dual-carriage license.
    Mr. Knorr. Well, there is a definite lack of clarity. For 
one is that written order has not been made available, and it 
doesn't exist. Martin may know that, but he hasn't published to 
the rest of us. We haven't read it. We don't know that to be a 
fact.
    And there are other rules that are also in place besides 
the FCC mandate that require must-carry to carry the native 
signal, and those go back to 2001.
    Mr. Stupak. In your September order, they also allowed you 
to--or not ``you'' but I mean small cable operators have an 
option of asking for an exception to that order they put out in 
September. But you make a point in your testimony that, well, 
look, if we can't afford equipment, what makes you think we are 
going to be able to afford an FCC lawyer? No disrespect to 
lawyers, but what kind of costs are we looking at here?
    Mr. Knorr. Well, the costs are really uncertain. The 
process for the set-top box waivers for the security ban prove 
to be very burdensome where the FCC did not even follow their 
own rules of response where they said they would respond within 
90 days. In many cases, it was 6 months, sometimes as long as a 
year before that response came out.
    So, again, with all due respect to lawyers, something that 
takes a year process can be very costly versus something that 
has a very finite response and that is lived to. We have not 
seen that from the FCC, so there is grave concerns that that 
would take time to navigate.
    And, again, when we are talking about a mom-and-pop system, 
if someone tries to navigate that process on their own, if two 
people are running a small cable system, the phones don't get 
answered, service calls don't get run, they can't operate their 
business.
    Mr. Stupak. Well, I asked them about one with 133 customers 
on there. Anyway, I am following up with Mr. Martin with 
further questions on his testimony last week or so when that 
was, so I am glad to share that with you when I get some 
response.
    Mr. Vitelli, if I may--and to all the witnesses, thank you 
for being here. I was listening in my office in between 
appointments, and Mr. Dingell was asking you about the coupon 
program. And the way I understood your answer was like, well, 
you can come in and purchase it from Best Buy, and Best Buy 
accepts their own coupon or gift card, but yet they won't 
accept by mail or e-mail a coupon from the Federal Government 
for these converter boxes, right?
    Mr. Vitelli. We were talking specifically about 
BestBuy.com, the Web site. Up until very recently, we weren't 
able to even accept our own gift cards. The only option you had 
was a credit card. It was a single tender option. We have been 
able to, as I said just recently, just a few months ago been 
able to add a Best Buy gift card online; and it is because of 
the transactions, if you will, of the Best Buy gift cards stay 
within the Best Buy system. To add a second outside tender is 
economically and technically not feasible within the timeframe 
of the program. So our intention is to have them in all of our 
stores and to be able to take orders over the phone.
    Mr. Stupak. So they have to call Best Buy then.
    Mr. Vitelli. In the store or call Best Buy.
    Mr. Stupak. But then how are you going to accept a coupon 
then? They are going to have to bring the coupon in and an 
extra $20. If it is $60, you get a $40 coupon, you are going to 
have to send in 20 bucks plus the coupon and then you are going 
to ship it to them?
    Mr. Vitelli. That's correct.
    Mr. Stupak. Plus they are going to pay for the cost of 
shipping?
    Mr. Vitelli. Depending how we work that out, yes.
    Mr. Stupak. See, my concern is, in my district, there are 
no Best Buys. Even Radio Shack is probably 100 miles away from 
most of my cities. We are just going to be running back and 
forth. So all this improper testimony, make sure you get the 
right box and all this, it would sure be a lot easier if we 
could go online, redeem online, do that last 20 bucks on the 
credit card and get it shipped to us and ask the questions 
online.
    I find it hard that you just won't accept the Federal 
coupon. You got to have some kind of markings or readings on 
these coupons to allow you to do that.
    Mr. Vitelli. We would love to do it. It is not that we are 
not trying to do it. I have been told by my IS/IT people that 
it is not technically doable in our system. I said I don't 
believe that that is necessarily a broad problem, and hopefully 
out of all the other retailers that are part of the Consumer 
Electronics Retailer Coalition there is going to be more than 
one that will be able to do it online.
    Mr. Stupak. We have done your retail coalition in my 
district. Very few are in my district. So how are we going to 
access it, besides driving a couple hundred miles or, I guess, 
over the telephone?
    Mr. Vitelli. Telephone is one. But I would predict--and I 
don't know this. I would predict there are going to be other 
retailers that will be able to do it. I was talking 
specifically about Best Buy and our inability to do it. I don't 
think that is going to be broadly the case.
    Mr. Stupak. Thank you.
    Mr. Markey. The gentleman's time has expired.
    What we can do, if the members would like this, we could go 
to a 3-minute round if members have additional questions that 
they would like to follow up on; and the Chair will recognize 
himself.
    I want to go back to Mr. Barrett, Mr. Swanson and you, Mr. 
Uva; and that is that earlier question that I was asking about, 
the FCC's PSA minimum and whether it is a minimum or not that 
undermines what the broadcasters are seeking to do voluntarily. 
Could you address that question, each of you?
    Mr. Barrett.
    Mr. Barrett. Perhaps I should have better characterized 
that. Rather than we are in opposition to that, we think there 
is a better solution. And my concern as a broadcaster and a 
business executive is that we not create a standard that 
applies to the lowest common denominator here and in effect 
gives stations a disincentive to do the kind of multi-marketing 
things that will drive the success of this program.
    I think that is just an imperative to understand that this 
can't just be about PSAs. And if we have an environment that 
the Government wants 4, 8 or 12 PSAs a day, if stations believe 
that that is all that needs to be done, we will not be as 
successful as we need to be in this endeavor.
    Mr. Markey. Mr. Swanson.
    Mr. Swanson. Well, I would echo what David Barrett just 
testified. I think the most effective way is to enhance on what 
is discussed with PSAs and crawls; and that is to use our news 
programs, our public affairs programs, our morning shows, our 
Web sites. And I think that--and on Fox we want to use our 
diversity development group to go after the community 
organizations in the African American communities, the Hispanic 
communities, the senior citizens. It is going to take a lot 
more than just PSAs to do that, and we are prepared to do that. 
We are doing that. And I think if we let broadcasters do what 
we do, we broadcast, we know how to reach people, I think we 
can do it effectively.
    Mr. Markey. Mr. Uva, I want to follow up on something the 
GAO highlighted for us in its testimony 2 weeks ago and that is 
the technical operational difficulty of actually getting the 
switch done. Can you and Mr. Swanson and Mr. Barrett say with 
certainty that at midnight on February 17, 2009, that 100 
percent of analog signals will be turned off and digitally 
fully on?
    There are a limited number of construction crews in the 
northern States. In February, there is icy weather. The FCC has 
not acted on all of its construction permits. And aside from 
consumer education programs, how concerned are you about these 
technical challenges?
    Mr. Uva. We are very concerned about some of the technical 
challenges, but we are constantly vigilant of trying to be 
ahead of those dates so that we are able to comply and to fully 
switch over on February 17, 2009.
    Mr. Markey. Mr. Swanson.
    Mr. Swanson. Well, with a transition of this size and 
magnitude, there are going to be outstanding technical issues; 
and we would be hopeful that the FCC would move and move 
quickly on some proceedings that we need in the technical area 
so that we can refine what we need to do in terms of equipment, 
purchase and installation.
    Mr. Markey. Mr. Barrett.
    Mr. Barrett. I would echo what Mr. Swanson said.
    I think there are two proceedings that I believe the 
Commission is close to concluding, the reconsideration on the 
final DTV table and their third periodic review of the DTV 
rules. Absent the wrap-up of those proceedings, there will be 
some stations that will be challenged to order and have 
fabricated antennas and the like to accomplish this to the 
precision of 100 percent delivery on the date in February, 
2009.
    Mr. Markey. Thank you. My time has expired.
    The Chair recognizes the gentleman from Michigan, Mr. 
Upton.
    Mr. Upton. Thanks.
    I just have one additional question I am going to ask Mr. 
Taylor, Mr. Knorr and Mr. Willner. Isn't it true that converter 
boxes will enable the old analog TVs to receive digital multi-
task programming over the air for free? Since that is so, there 
will be some 8 to 24 million TV sets using these converter 
boxes, not to mention the more millions of digital TV 
receivers. Doesn't that indicate that there is more than an 
adequate business model for quality multi-cast programming?
    Mr. Willner. I would think that is an ample amount, and 
that also helps to create the content that gives cable 
operators incentive to carry additional streams as well.
    Mr. Knorr. I would echo that. And just as Mr. Willner said, 
if it is quality content that is being generated in addition to 
those boxes, cable operators want to carry multi-cast signals 
that have valuable programming. So we will increase that 
business spot.
    Mr. Taylor. We agree. In fact, we think it is going to be a 
key selling point for converter boxes to talk about that 
capability.
    Mr. Upton. And the other thing, of course, as many of the 
staff saw yesterday, you actually get a better signal. And for 
many folks when they first--that was the real reason why they 
went to cable in the first place 20 some years ago, because you 
got a better signal. You didn't have the number of programs or 
number of channels that were there, you actually had a better 
picture. And so that will be yet another selling point.
    So with that type of answer then, obviously, it would seem 
that we don't need more regulations to mandate multi-cast must-
carry. Would you come to that conclusion?
    Mr. Knorr. Yes.
    Mr. Willner. I vote in favor of the motion.
    Mr. Upton. And that is for all cable companies, is that 
right, Mr. Willner?
    Mr. Willner. For everybody.
    Mr. Upton. I yield back. Thanks.
    Mr. Markey. The gentleman's time has expired.
    The Chair recognizes the gentleman from Virginia, Mr. 
Boucher.
    Mr. Boucher. Thank you very much, Mr. Chairman.
    I just want to focus for a moment on the public education 
campaign to advise TV set owners that the digital transition is 
coming. I think it is very interesting. In the United Kingdom, 
there are 60 million residents. We have about 300 million 
residents. The United Kingdom is planning to spend on its 
public education campaign 200 million pounds. That is about 
$400 million. We are planning to spend $5 million here. And for 
a country that is one-fifth the size of ours, almost 100 times 
as much will be expended. So who is getting it right? Is the 
United Kingdom right or are we right about this?
    And a second aspect of this question is whether the very 
commendable commitment that has been made by broadcasters and 
cable together, totaling about $800 million for their own 
public education efforts, offsets the positive public funding 
or whether we really need more public funding? And if we do, 
what level would the members of the panel suggest?
    So who would like to respond?
    Mr. Abbott. I appreciate the opportunity to speak to that.
    I think, actually, if you look at the character of the 
questions today and sorting through what that experience in the 
12 months prior to the cut-off is going to be like, where the 
device is, how do I get them, how do I install them, what are 
my choices, clearly, there is a sequence of communications that 
needs to be executed effectively at the retail side, on the 
manufacturer's side.
    But I think in the questions we have had today it is more 
than abundantly clear that a 30-second announcement of the fact 
that the transition looms is just the tip of the iceberg, and I 
think what you see in the Great Britain program is a 
recognition that people who don't live their lives thinking 
about how to connect devices to televisions need more guidance 
than that.
    We just opened a brand new facility, a new home for WGBH, 
just 2 weeks ago; and I had 4,000 contributing families come 
through over the course of a Saturday. And I stood in front of 
our master control operation, and it was fascinating to me, all 
of the questions. Many of the questions were about these new 
digital services and how do I get them and what is this thing I 
am beginning to hear about. Will my old television set work? 
And the thought that I would have had to figure out how to say 
in 30 seconds all they needed to know to have them effectively 
bring the television services into their homes was beyond 
imagining. So I learned a lot that day about what is really 
required to give people a sense on the ground in their homes 
what is going to be required to adequately connect to these 
marvelous digital services.
    Mr. Boucher. So you would agree we should be spending more?
    Mr. Abbott. I think Great Britain has it right. To really 
connect with folks who have questions who are not in the 
industry, a more significant investment is required. That is 
why we spoke to the bill that Congressman Engel has put 
forward.
    Mr. Boucher. Does anyone disagree?
    Mr. Barrett. The reality, sir, is that we are dealing with 
a limited amount of funding that has caused the broadcasters 
and the cable industry to step up in a very aggressive way. And 
I would submit that the kind of comprehensive program that only 
the broadcasters, only the broadcasting piece of this, if it 
delivers 98 billion advertising impressions, if it reaches 94 
percent of the U.S. television viewing viewership and the 
average frequency of those messages is over 400, that we have 
got a saturation program in place.
    Mr. Boucher. Well, I agree that it is impressive; and I 
think you are to be commended for doing it. I am still not sure 
it is enough.
    Thank you, Mr. Chairman.
    Mr. Markey. I thank the gentleman.
    If the people visiting Mr. Abbott's studio don't get it, it 
is about as sophisticated a group of people that we have in the 
country that will be walking through on the first day of the 
opening of the WGBH studio.
    The Chair recognizes the gentleman from Michigan, Mr. 
Stupak. 
    Mr. Stupak. Thank you.
    I want to go back to the coupons again, Mr. Vitelli. Is 
Best Buy or anyone in your Consumer Electronics Retailers 
Coalition working with NTIA to make sure there will be a way we 
can redeem these online? You just said you can't do it, and you 
just recently did it. But is anyone asking NTIA or IBM, I 
guess, really, in this case, how can we make this happen so it 
is convenient for people, especially those of us in sparsely 
populated, rural areas?
    Mr. Vitelli. I don't know that, but I will find out and get 
back to you the answer of what is going on between other 
retailers.
    Mr. Stupak. Thanks.
    Mr. Vitelli. Mr. Abbott, if I may, Chairman Markey started 
off with this question, and I want to explore this a little bit 
more. With the satellite industry being EchoStar and DirecTV 
has not reached an agreement, the carriage agreement there with 
public television after DTV transition, how large an audience 
would be affected if there is no agreement here?
    Mr. Abbott. We are very concerned in that regard. DBS 
services to the American people represents approximately 23 
percent, as many as 30 or 31 million homes. Many of them are in 
rural areas: Oregon, Nebraska, Illinois, Virginia, Michigan. 
And we are very concerned because, while we have reached a very 
effective set of carriage agreements on the cable side, we have 
not yet reached an agreement with either DirecTV or EchoStar. 
There have been conversations with DirecTV. There is not an 
agreement, and there has been even less conversation about the 
potential of digital on the EchoStar side.
    The challenge to us is, as we are watching on the 
commercial side, there are as many as 1,500 local stations 
whose high-definition services already on the commercial side 
are getting carried and yet not a single public station is 
being carried in high definition. Combine that with the fact, 
earlier remarks by one of your colleagues, about the fact that 
public television has made the more substantial commitment to 
multi-cast programming, a larger library of choice and 
convenience for the American people at a time in which public 
television will serve better, will have greater impact across 
our library. We are grateful for the enhanced carriage, the 
full carriage assured us by the cable operators, but we have 
not secured that from satellite.
    Mr. Stupak. Well, public broadcasting is partnered with 
Homeland Security in that digital emergency alert system, so if 
you don't have the digital this won't work then, right?
    Mr. Abbott. That's correct. We aspire to universal service 
to the American people; and if the satellite piece of that 
puzzle isn't there that full range of services, including our 
commitment to Homeland Security, is at risk.
    Mr. Stupak. Thank you.
    I have nothing further, Mr. Chairman.
    Mr. Markey. The gentleman's time has expired, as has all 
time for questions by the panel on this largest panel ever 
assembled in the history of Congress.
    And what we would like to do is to get the final word, 1 
minute from each one of you, what you want us to know about 
what you are going to do between now and the next hearing we 
are going to have with the largest panel in the history of 
Congress so that--because we are going to start getting 
questions asked of each of us who are members of this 
Subcommittee on Telecommunications beginning in January or 
February. So they are going to think that we know all the 
answers out on the floor. So as they are being besieged we will 
in turn get besieged for the answers.
    So could you tell us, each of you, what your plans are, 
what you want us to remember as we conclude this hearing, 
looking forward to the next one? Mr. Taylor.
    Mr. Taylor. Mr. Chairman, when I see you next, we will have 
sold millions of boxes, hopefully. We are in production 
beginning next week. Our commitment to work with the DTV 
Transition Coalition and all of the stakeholders is stronger 
than ever, and we are committed to making this a smooth 
transition for both our retail partners and, ultimately, the 
consumers that need these boxes.
    Mr. Markey. Thank you, Mr. Taylor.
    Mr. Abbott.
    Mr. Abbott. Mr. Chairman, we will be committing to a clear, 
understandable communication program with everyone in our 
communities across the country, mindful of what they will find 
at retail and the boxes available, committing as best we can 
with the resources available to the communications we can offer 
on our air and in our communities. With greater resources, we 
can amplify the reach of those messages and ensure a successful 
transition.
    Additionally, on the 19th of November, we are convening 
here in Washington a digital television closed captioning 
summit with a cross-industry representation of manufacturers, 
programmers, including those from the cable industry, Verizon, 
as well as, as I have said, manufacturers, device manufacturers 
and retailers talking about making closed captioning a reality 
in the digital environment and accelerating the way in which we 
can adequately serve all Americans.
    Mr. Markey. Thank you, Mr. Abbott.
    Mr. Vitelli.
    Mr. Vitelli. Best Buy, along with all the other retailers, 
are going to work very closely with the NTIA and with our 
manufacturing partners to ensure that we have converter boxes 
available and systems to process the coupons with NTIA.
    Additionally, we are going to work with everybody that is 
involved with the DTV Transition Coalition to make sure that 
the messages to our consumers are clear, understandable and 
correct.
    Mr. Markey. Thank you.
    Mr. Swanson.
    Mr. Swanson. A significant consumer awareness and education 
effort is necessary to facilitate the digital TV transition. We 
believe in the voluntary efforts that are already under way. We 
are running PSAs in prime time on the Fox network through 
various day parts on our television stations. But we think that 
it is much more than that that is necessary, and we are 
committed to do that.
    On the technical side, we are hopeful that the FCC will get 
through these next couple of proceedings so that we can get on 
with doing the things technically and on the engineering side 
that we need to do to be ready for February 17, 2009.
    Mr. Markey. Thank you, Mr. Swanson.
    Mr. Uva.
    Mr. Uva. In addition to continuing our accelerated pace 
with the public service announcements across all of our 
television and radio platforms, we will be ramping up our 
community outreach programs; and we will also have completed 
and hopefully aired a program dedicated--a public affairs 
program dedicated to explaining the transition to digital to 
Hispanic consumers.
    Mr. Markey. Thank you.
    Mr. Willner.
    Mr. Willner. Just you hear a lot about the laws of 
unintended consequences here. Having the largest hearing ever 
in the history on digital television also means you feel like 
you are sitting in the middle seat on the Delta shuttle and 
delayed for 3 hours. Do you remember that?
    The cable industry told you 2 years ago we would be ready, 
willing and able to provide seamless transition to digital, 2 
years ago. We continue to be ready, willing and able as well. I 
have stood up voluntarily adding to commitments that we are 
going to carry multiple streams of broadcast signals so that 
the transition is seamless to our customers. They don't have to 
do anything.
    And we are going to step up and have already stepped up 
with an advertising campaign, along with the broadcasters and 
with the retailers, to make sure our customers are fully 
informed as to what they need to and not need to do.
    Mr. Markey. Thank you, Mr. Willner.
    Mr. Barrett.
    Mr. Barrett. The voluntary program I have spoken to is 
under way. I think it will grow exponentially as stations 
activate all of their efforts across all of our platforms. We 
are prepared to report on our performance. We are prepared to 
track and share with you the growth and awareness that we 
create. And I have not properly referenced the effectiveness I 
think of the Transition Coalition that is in place which 
touches today 171 grassroots organizations that I think will 
serve the interest and be responsive to many of the points, 
questions about special constituencies that we need to be in 
touch with. So I think that program is well under way and 
effective, and we look forward to moving ahead with the 
voluntary program.
    Mr. Markey. Thank you. Mr. Barrett.
    Mr. Knorr.
    Mr. Knorr. Small cable operators also will be focused on 
educating both their customers and other small operators on 
what the digital transition will mean.
    More importantly, as Mr. Willner pointed out, we want to 
make sure this is a seamless transition. Right now, we still 
have grave concerns of whether that will be the case for our 
very small cable operators unless the FCC really gets it right 
and absent of that may require congressional intervention.
    Mr. Markey. Mr. Knorr, thank you.
    And you, Mr. Bruno.
    Mr. Bruno. Thank you, Chairman.
    It is important to note that the 910 class A stations in 
America, the 1,600 low-power stations and the 4,000 translator 
stations are not part of this transition. They will remain 
analog. That means that 80 percent of the broadcast stations in 
America will, after the transition, still be broadcasting 
analog.
    Under our proposal in 1999, Congress made class A 
stations--everybody had the chance, all low powers had the 
chance to be class A. We took class A, and we made great 
stations, and those operators took the opportunity to make 
local programming and become good broadcasters in their 
community. We are set to go in the next 60 and 90 days to 
forego our second channel and clog up spectrum and free it up 
and become digital broadcasters to move this transition 
forward.
    I would like to leave you with one quick story, if I may. A 
week ago Monday, the fires were in California; and, in fact, in 
Congresswoman Bono's district there is a station there. It is 
about 100 miles east and south of Los Angeles. You had all the 
helicopters and all the news stations covering all the fires in 
Malibu and Los Angeles, but no one was covering Murrieta and 
Temecula and Escondido.
    What happened is, in the morning, the children went to 
school in Escondido. Somehow, the wind shifted and blew a line 
through houses and started burning houses in a strip through. 
Here is where all the parents live. Here is where all the 
children are. The line goes through. They close down the 
freeway. Parents are frantic. People are running around trying 
to get their children. The only TV station paying attention to 
that little local community was the class A low power, KZSW. 
They were on the air 24 hours telling what was going on.
    Now, the problem with that is that it is 71 percent cable. 
So 71 percent of the people didn't know that this was going on. 
So all of a sudden it became a big problem with first 
responders, because you had parents trying to beat these 
policemen up on the highway trying to get their kid. If they 
could have listened to the local television station, if we 
could have told them, they would have known that their children 
were safe.
    Mr. Markey. Good job, Mr. Bruno. Good story. And we thank 
you for your testimony.
    When I was a kid, my father delivered milk for the Hood 
Milk Company. I didn't know what I wanted to be. And the Perry 
Mason show would come on, and Erle Stanley Gardner actually was 
from Waltham, MA. So I had a special interest in it because he 
was from my hometown. And every time you thought the show was 
done and the case was closed and Perry couldn't win, Della 
Street would show up to say the show is not over yet, Perry; I 
have some new information that can help us before we hit the 
hour and we move on to the next show. And that always made it 
kind of very interesting because you thought the whole thing 
was done.
    And we thought this whole hearing was done, but Mr. Engel 
has now showed up. And Mr. Engel has all new information that, 
by being recognized here for 5 minutes, will make it possible 
to put a spotlight and illuminate a key area.
    So the Chair recognizes the gentleman from New York, Mr. 
Engel.
    Mr. Engel. Thank you, Mr. Chairman.
    With an introduction like that, I better quit when I am 
ahead and say that I will submit my questions. And I want to 
thank all the gentleman for their testimony. Unfortunately, I 
have been in and out because I have a lot of conflicts. But, 
obviously, this is an issue that is very, very important to us 
and to America; and I thank you all for your testimony.
    And I will submit the questions, Mr. Chairman. You 
intimidated me.
    Mr. Markey. No, no. I don't mean to do that. In fact, if I 
think about it, I don't think we ever heard Della Street speak. 
She used to whisper to Perry. So we will submit the questions.
    Mr. Engel. As long as you don't make fun of my New York 
accent, we are fine.
    Mr. Markey. Yes, we hate people with funny accents from 
where I come from.
    Mr. Engel. The Yankees next year.
    Mr. Markey. It is Red Sox domination now. It is a whole new 
word we have.
    So we very much appreciate all of your help in moving this 
forward. We are anticipating a tsunami of congressional 
interest in this subject as we hit the beginning of next year. 
As Members are asking questions about it, we become digital 
transition ombudsmen out on the House floor. And the fewer 
questions we get is the happier we are going to be. So to the 
extent to which all of you working together can help to ease 
this transition, it would be greatly appreciated.
    This has been an excellent hearing. It is now adjourned. 
Thank you.
    [Whereupon, at 1:00 p.m., the subcommittee was adjourned.]
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