[House Hearing, 110 Congress]
[From the U.S. Government Publishing Office]
STATUS OF THE DTV TRANSITION: 370 DAYS AND COUNTING
=======================================================================
HEARING
BEFORE THE
SUBCOMMITTEE ON TELECOMMUNICATIONS AND THE INTERNET
OF THE
COMMITTEE ON ENERGY AND COMMERCE
HOUSE OF REPRESENTATIVES
ONE HUNDRED TENTH CONGRESS
SECOND SESSION
----------
FEBRUARY 13, 2008
----------
Serial No. 110-88
Printed for the use of the Committee on Energy and Commerce
energycommerce.house.gov
STATUS OF THE DTV TRANSITION: 370 DAYS AND COUNTING
STATUS OF THE DTV TRANSITION: 370 DAYS AND COUNTING
=======================================================================
HEARING
BEFORE THE
SUBCOMMITTEE ON TELECOMMUNICATIONS AND THE INTERNET
OF THE
COMMITTEE ON ENERGY AND COMMERCE
HOUSE OF REPRESENTATIVES
ONE HUNDRED TENTH CONGRESS
SECOND SESSION
__________
FEBRUARY 13, 2008
__________
Serial No. 110-88
Printed for the use of the Committee on Energy and Commerce
energycommerce.house.gov
----------
U.S. GOVERNMENT PRINTING OFFICE
55-219 PDF WASHINGTON : 2010
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Washington, DC 20402-0001
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 L. 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 FOSELLA, 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, Texas (ex officio)
JOHN D. DINGELL, Michigan (ex
officio)
C O N T E N T S
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Page
Hon. Edward J. Markey, a Representative in Congress from the
State of Massachusetts, opening statement...................... 1
Hon. Cliff Stearns, a Representative in Congress from the State
of Florida, opening statement.................................. 3
Hon. Jane Harman, a Representative in Congress from the State of
California, opening statement.................................. 4
Hon. Bart Stupak, a Representative in Congress from the State of
Michigan, opening statement.................................... 5
Hon. Lois Capps, a Representative in Congress from the State of
California, opening statement.................................. 6
Hon. Hilda Solis, a Representative in Congress from the State of
California, opening statement.................................. 7
Hon. John D. Dingell, a Representative in Congress from the State
of Michigan, opening statement................................. 8
Prepared statement........................................... 9
Hon. Anna G. Eshoo, a Representative in Congress from the State
of California, opening statement............................... 10
Prepared statement........................................... 11
Hon. Gene Green, a Representative in Congress from the State of
Texas, opening statement....................................... 11
Witnesses
Kevin J. Martin, Chairman, Federal Communications Commission,
Washington, DC................................................. 13
Prepared statement........................................... 17
Answers to submitted questions............................... 198
Meredith Baker, Acting Assistant Secretary for Communications and
Information, Department of Commerce, Washington, DC............ 37
Prepared statement........................................... 39
Answers to submitted questions............................... 191
Ronald J. Bruno, President, Community Broadcasters Association,
President, Bruno-Goodworth Network, Inc., Pittsburgh,
Pennsylvania................................................... 68
Prepared statement........................................... 70
Answers to submitted questions............................... 194
Kyle McSlarrow, President and CEO, National Cable &
Telecommunications Association, Washington, DC................. 71
Prepared statement........................................... 73
Answers to submitted questions............................... 316
David K. Rehr, President and CEO, National Association of
Broadcasters, Washington, DC................................... 79
Prepared statement........................................... 81
Answers to submitted questions............................... 320
Chris Murray, Senior Counsel, Consumers Union, Washington, DC.... 113
Prepared statement........................................... 115
Tom Romeo, Director, Federal Services, Global Business Service,
IBM Corporation, Bethesda, Maryland............................ 119
Prepared statement........................................... 120
Laurance Harris, Vice President of Merchandising, RadioShack,
Fort Worth, Texas.............................................. 122
Prepared statement........................................... 124
Mark Jackson, President, Echostar Technologies Corporation,
Englewood, Colorado............................................ 134
Prepared statement........................................... 135
Answers to submitted questions............................... 318
Submitted Material
Graph entitled ``Coupon Statistics''............................. 146
LPTV station list................................................ 152
Coupon Eligible Converter Boxes (CECB), list of.................. 189
STATUS OF THE DTV TRANSITION: 370 DAYS AND COUNTING
WEDNESDAY, FEBRUARY 13, 2008
House of Representatives,
Subcommittee on Telecommunications
and the Internet,
Committee on Energy and Commerce,
Washington, DC.
The subcommittee met, pursuant to call, at 9:30 a.m., in
room 2123 of the Rayburn House Office Building, Hon. Edward J.
Markey (chairman) presiding.
Members present: Representatives Markey, Harman, Gonzalez,
Inslee, Boucher, Eshoo, Stupak, Green, Capps, Solis, Dingell
(ex officio), Stearns, Upton, Deal, Shimkus, Walden, Terry,
Barton (ex officio), and Blackburn.
Staff present: Amy Levine, Mark Seifert,Tim Powderly,
Maureen Flood, Colin Crowell, David Vogel, Philip Murphy, Neil
Fried, Courtney Reinhard, and Garrett Golding.
OPENING STATEMENT OF HON. EDWARD J. MARKEY, A REPRESENTATIVE IN
CONGRESS FROM THE STATE OF MASSACHUSETTS
Mr. Markey. Good morning, ladies and gentleman, and before
I start I just want to note for the members that last night
Congressman Pickering and I introduced legislation to preserve
Internet freedom for consumers and innovators. It is a bill
which enshrines the broad principles of openness and
safeguarding the Internet's vital role in our economy. It tasks
the FCC with conducting an assessment of broadband practices
and consumer rights including public hearings and a report back
to Congress. We would welcome members who wish to co-sponsor to
join us in this bipartisan initiative.
Today we are 370 days away from a significant milestone in
the history of television. This morning's hearing will give us
an important status check on our progress towards a successful
consumer friendly transition. The government's coupon program
has begun and already this year some 2.5 million consumers have
requested coupons toward the purchase of converter boxes valued
at roughly $190 million. Retailers are stocking such converter
boxes on shelves for coupon redemption imminently. The
broadcasting cable industries have stepped up to air public
service announcements and engage in consumer outreach as well.
The details of the national plan to effectuate this transition
were embodied in a budget act in the last Congress and were not
endorsed by many members on the Democratic side of the aisle,
including myself and Chairman Dingell.
Nevertheless, we are committed to trying to make this plan
work. Toward that goal, this subcommittee intends to continue
vigorous oversight of the DTV transition and to work closely
with our Republican colleagues to insure success. Today there
are several issues at the moment that merit our attention.
First, we are eager to be reassured that the converter box
program and redemption process is working smoothly. Second,
because the signal characteristics of digital transmission and
the anticipated geographic coverage area for individual
broadcasters are different than for analog television many
consumers may not receive the digital version of channels they
currently receive after the switch.
It is important to know how many such households will be
affected by this and the extent to which households may need to
adjust or acquire antennas to receive digital signals. Third,
there are hundreds of low power television stations and
thousands of translators that will not be converting to digital
in February of next year. It is still unclear how many
communities and how many television households will be affected
by this. In addition, only a small percentage of the approved
converter boxes permit the so-called pass through of the analog
signals so that consumers can easily see both digital and
analog television in markets where some broadcasters will
convert and others won't. It is vital to insure that steps are
taken by the FCC and the NTIA to coordinate on these matters
with the affected industries so that the consumer education and
outreach efforts effectively guards against widespread consumer
confusion in these communities.
And finally I want to commend several major retailers for
taking action to limit consumer confusion. It has been my
concern that analog only televisions remains on the shelves of
major retailers and could result in consumers unwittingly
purchasing a TV set due to need additional equipment in little
over one year. Best Buy has already voluntarily removed its
analog inventory from the shelves, and RadioShack is poised to
do so by March 1. In addition, I have this announcement to read
from Wal-Mart today. ``Although retailers are not prohibited
from selling TVs with an analog tuner, Wal-Mart believes it is
important consistent with congressional concern and counsel
from Chairman Markey to remove the very small number of TVs
with an analog tuner from our inventory. This is consistent
with Wal-Mart's early commitment to the NTIA converter box
program and to otherwise facilitating transition to all digital
television broadcasting. We are currently working with return
centers and the Wal-Mart Foundation to determine the best way
to handle the remaining inventory, which was extremely small,
approximately 1/10th of 1 percent of existing television
inventory.'' This statement is effective as of yesterday, so I
want to commend Wal-Mart, Best Buy, RadioShack, and other
retailers who are taking this welcome step.
And I urge all retailers to take the same step and to take
it immediately so the consumers are not misled that the
television set, the analog television set, that they may be
buying will work next year without additional help. Again, we
have many issues to discuss and examine, and I want to thank
all of our witnesses for their willingness to attend this
hearing, and I look forward to their testimony. And now I will
turn and recognize the ranking member of the Telecommunications
and the Internet Subcommittee, the gentleman from Florida, my
good friend, Mr. Stearns.
OPENING STATEMENT OF HON. CLIFF STEARNS, A REPRESENTATIVE IN
CONGRESS FROM THE STATE OF FLORIDA
Mr. Stearns. Thank you, Mr. Chairman, and I am pleased to
be here as the ranking member and I always look forward to
working with you. I hope with this net neutrality bill that you
adopted will have many hearings to vet the language so we can
all understand how it is enshrined. So we will look forward to
that. I think by setting the date of February 17, 2009, as the
date for full power broadcasters to transmit exclusively the
digital format, the DTV legislation gave industry I think the
needed incentives to prepare for the transition. And I think
the results, as you briefly mentioned, are working well. With
over a year to go manufacturers have already designed 37
coupon-eligible converter boxes. The NTIA has certified 250
retailers with a total of 15,000 stores ready to accept these
coupons.
Consumers have requested almost 5 million coupons
suggesting awareness is not necessarily a big problem. The
National Telecommunication and Information Administration will
start sending coupons to consumers next week, and RadioShack,
Best Buy, Circuit City, and Wal-Mart have already announced
they are ready to accept them. A Consumer Electronics
Association survey of 2,000 U.S. adults indicates consumer
awareness of the transition has grown 80 percent since the year
2006. According to the CEA survey, the joint educational
efforts of government and the private sector are working, and
the digital television transition will be a success. CEA's
research revealed that the top sources consumers are using to
learn about the transition includes television, about 72
percent, family and friends, about 40 percent, and the Internet
about 25 percent. This shows that the educational campaigns by
the industry and the government are working indeed.
The National Association of Broadcasters has spent more
than $1 billion on a comprehensive consumer education drive.
Included in their campaign are public service announcement in
both English and Spanish, DTV messages running across
programming on local stations, and a media blitz to promote the
DTV transition. Cable operators have launched a $200 million
public education campaign and committed to carrying both the
analog and digital signals of both a full power commercial must
carry broadcasters for 3 years to help smooth the DTV
transition. My colleagues, these examples demonstrate that a
market based approach works. All these groups and many others
should be commended for their efforts. The benefits of the DTV
transition extends far beyond that of clearer pictures and more
choices about what program to watch.
The real benefits will come from what is done with the
radio spectrum once the TV broadcasters are cleared including
providing public safety with the resources they need to insure
reliable, interoperable communications now and into the future.
Although the number of people using over the air signal is
decreasing there still needs to be in place a system to help
consumers who may wish to use analog television with over the
air antennas after the transition. The DTV legislation gives
the NTIA up to $1.5 billion for a digital to analog converter
box program. The statute directs DTIA to use $990 million to
enable U.S. households to request up to 2 $40 coupons for use
towards purchase of converter boxes. If the NTIA certifies to
Congress as the program progresses that it needs more money
there is available another $510 million.
So it is important that we don't make any rash changes
today. Doing so will only recreate the uncertainty that was
delaying the transition in the first place and preventing us
from clearing spectrum for public safety in advance wireless
service, the third generation. For example, low power
broadcasters are now demanding that NTIA require all converter
boxes to include an analog pass through and that the FCC give
them must carry rights. Neither is necessary. There are already
4 coupon-eligible converter box with low power pass through
features and there is more on the way. The market is taking
care of this. Changing the box requirements now by contrast
could lead retailers and manufacturers to withdraw from the
program altogether, and expanding must carry could force
programming off of cable system right as we are going through
this very delicate transition.
We are much better off keeping the current course and
assessing as we move along. Wholesale changes could put the
transition in jeopardy, and I don't think any one of us want
that. These are important issues, Mr. Chairman. We thank you
for this hearing, and I look forward to hearing from our
witnesses.
Mr. Markey. I thank the gentleman. The chair recognizes the
gentlelady from California, Ms. Harman.
Ms. Harman. Thank you, Mr. Chairman. I see a former
colleague of ours, Ron Klink, in the audience, and I thought I
would acknowledge him. And I thank you for holding this hearing
on what I believe is a critical subject. I would like to
address a few comments to Chairman Martin. Good morning.
Mr. Martin. Good morning.
OPENING STATEMENT OF HON. JANE HARMAN, A REPRESENTATIVE IN
CONGRESS FROM THE STATE OF CALIFORNIA
Ms. Harman. Chairman Martin, your appearances before this
subcommittee give many of us the chance on a regular basis to
tell you what you are doing wrong but today I thought we might
acknowledge or I would like to acknowledge what you are doing
right. This 700 megahertz auction began on time. It has largely
succeeded. And the open access conditions that many of us
argued for have stuck. Congratulations. Though the D block,
which the commission set aside for a nationwide public safety
network has not yet sold and likely will not, something that
troubles me greatly, I still think we should applaud you for
your boldness in pursuing a multi-faceted plan and that
applause obviously extends to the other members of the
commission. But as the ranking member just said, and as you
know I agree, the point of the DTV transition is not converter
boxes. The point of it is to satisfy a 6-year quest for a
nationwide public safety broadband network that gives us true
interoperable communications for emergency responders.
That need has been apparent since 9/11, maybe even before
9/11, and we are not much closer to meeting that need now than
we were six years ago. As I often say, we have a regional
operability but we do not have national interoperability, and
we won't have it until this spectrum becomes available. I think
a public-private partnership using 700 megahertz spectrum is
still our best hope. I think that the failure of the D block
auction if it has failed or if it does fail does not signal the
failure of the public-private partnership concept. If the
auction ends without a D block winner, I hope that you and we
will not only meet informally but then we will have a series of
hearings which the chairman has said he will hold to review
next steps and to come up quickly with a new plan D. Do I have
that right? Not a plan B, a plan D.
Mr. Markey. D for do over.
Ms. Harman. That is the chairman's humor. D for do over.
OK. Whatever we come up with, a new plan to reach true
interoperability by the appropriate deadline. The goal should
be a new option with a new set of rules that addresses the
faults of the current auction but protects public safety's
needs. I think we should, as I said, get on with this quickly
once we determine for certain what the future, if any, is of
the D block part of the auction. The DTV transition must yield
a solution to first responders emergency communications needs,
not just the budget converter boxes. A nationwide solution is
long overdue. We still have time to get it right, and I urge us
to get it right. Thank you, Mr. Chairman, I yield back.
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 gentleman from
Virginia, Mr. Boucher. 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, for holding this
hearing, and thank you for attending the O&I hearing yesterday
afternoon. You added to it. Thank you. 370 days from now
America will officially stop all of its analog broadcasts for
full power television stations but approximately 2,100 low
power television stations and 4,700 translator stations will
still be broadcast in analog. Many parts of America will be
receiving their over the air signals in both analog and
digital. This information has not been clearly provided to the
American public. Many don't even know that there will be
stations that still broadcast in analog, let alone that they
need to purchase a specific converter box with an analog pass
through or they will lose channels.
Out of the 35 converter boxes available on the market only
3 carry this essential component so this makes effective
consumer education even more important. Until the morning of
this hearing if you want to the National Telecommunications and
Information Administration's DTV coupon web site and clicked on
the link entitled questions about low power translator stations
you viewed a 1-page with 1 sentence stating that ``information
about the impact of the digital transition on low power
stations coming soon.'' Conveniently thought I checked and now
it has some low power TV information and several options for
consumers. This is unacceptable. 1.6 million Americans have
already signed up for coupons on this web site, and a valuable
opportunity to provide them with key information was missed.
Ms. Baker, as head of the NTIA I want to know what you will
do in order to improve consumer education. Many of those who
will be affected will come from rural districts like mine but
many will also come from urban districts. I look forward to
learning how you plan to inform my constituents that many of
them will need an analog pass through converter box, not just a
converter box but a pass through converter box. Chairman
Martin, you recently circulated some proposals to be addressed
by the FCC later this month regarding satellite providers, and
I wanted to focus on one of them, Liberty Media's acquisition
of News Corp's stake in DirecTV.
In 2004 News Corp acquired DirecTV and pledged to provide
local into local carriage in all 210 designated market areas by
2008. Commissioner Adelstein at the time called News Corp
pledge to provide universal local to local a sham. Sadly
enough, the News Corp efforts to sell their share of DirecTV we
are seeing his prediction come true. Satellite subscribers in
rural America are tired of being ignored. I urge the FCC to
work towards insuring rural television markets are created
equally to their urban counterparts. It is time for Congress
and the FCC to look at a hard date for mandatory local to local
carriage in all 210 designated market areas.
I am quite tired of hearing pledges that go unfulfilled.
Mr. Chairman, thank you again for holding this hearing. I look
forward to the testimony of the witnesses as there are some
very important issues we must discuss. Thank you, Mr. Chairman.
Mr. Markey. The gentleman's time has expired. The chair
recognizes the gentlelady from California, Ms. Capps.
OPENING STATEMENT OF HON. LOIS CAPPS, A REPRESENTATIVE IN
CONGRESS FROM THE STATE OF CALIFORNIA
Ms. Capps. I will be brief, Mr. Chairman. I want to thank
you for holding this hearing, and thank you also for your
vigilant oversight of the DTV transition which has resulted in
a greater focus on consumer concerns and a greater
understanding of the challenges we face as we move ahead.
Today's hearing promises to be a bit more technical in nature.
We will talk about class C television stations, analog pass
through, and the technical specs of converter boxes. And I look
forward to the testimony of our witnesses and our conversation
with them. During this discussion it is my hope we keep sight
of the reason we are transitioning to digital television and
the reason we are all here today in the interest of the
American people. Even as we move toward a single digital signal
over our public air waves, we are sending mixed signals to
consumers about how they can continue to receive the same local
and cultural content.
I am particularly concerned about my Spanish-speaking
constituents, many of whom enjoy Spanish language channels
brought to them via translator or low power stations. These
folks may be completely shut out during this transition so I
look forward to this testimony, as I said, and the proposals
that Chairman Martin and Acting Assistant Secretary Baker will
bring us to further discussion about how we can avoid this kind
of break down, how will we streamline this transition for low
power television stations. I want to also hear more about how
and where converter boxes will be made available, some of which
had already come from our chairman, what labeling procedures
make the best sense for all kinds of consumers. So thank you,
Chairman Markey, and to our witnesses today. I yield back.
Mr. Markey. The gentlelady's time has expired. The chair
recognizes the gentlelady from California, Ms. Solis.
OPENING STATEMENT OF HON. HILDA SOLIS, A REPRESENTATIVE IN
CONGRESS FROM THE STATE OF CALIFORNIA
Ms. Solis. Thank you, Mr. Chairman, and good morning. Thank
you also for being here, Commissioner Martin, and Ms. Baker. I
want to thank the witnesses for being here that will also be
testifying. With just more than a year left before our full
power broadcast television stations transition to digital we
are learning about the new challenges and must work very hard
to address all of these issues. I am particularly concerned, as
you know, about the DTV transition along the U.S.-Mexican
border. With ample analog Spanish language programming
originating in Mexico it is still available. After the
transition along the border low cable and satellite penetration
and language barriers could leave thousands and thousands of
households behind in DTV transition.
That is why I am introducing the DTV Border Fix Act to
provide full power broadcasters within 50 miles of the U.S.-
Mexican border the opportunity to continue analog broadcasts
for 5 years after the DTV transition. The bill insures that
border area viewers will continue to receive emergency
information and use over the U.S. television broadcast system.
The bill is limited in scope and would work in cooperation with
the FCC so that such broadcasts do not interfere with the
public interest or spectrum auctions.
I also have concerns about the challenges facing low power
TV and how the need for analog pass through boxes can be met
for both low power TV and the border region. We need to work
together, both the government and the private sector, to make
sure that the right boxes are stocked in appropriate areas. In
addition, I am concerned about potential problems existing over
the air antennas receiving digital television signals. If
consumers are to receive fewer channels in digital and even if
the picture quality is superior as compared to analog services
because of inadequate antennas consumers may be less inclined
to transition to DTV and feel they need to subscribe to cable
or satellite service.
We must make sure that all consumers regardless of their
income level continue to receive expected services, so I look
forward to hearing your testimony, and again want to hear
comments regarding the transition that will occur along the
U.S.-Mexican border because I really do believe that we are
going to disenfranchise a very large population. And with that,
I yield back the balance of my time.
Mr. Markey. The gentlelady's time has expired. The chair
recognizes the chairman of the full committee, the gentleman
from Michigan, 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 kindness. I
commend you for holding this meeting, which is an important
one, on a very important subject, and I commend you for the
vigor with which you are going into this matter. I want to
begin by welcoming Meredith Baker, who is the new acting head
of NTIA. I want to say that I appreciate her willingness to
work with the Congress and her leadership and her effort to
help achieve a successful transition on digital TV service.
This is very important, and quite frankly it represents
something of a welcome change in some of the policies we have
seen from this Administration, so congratulations and welcome.
Mr. Chairman, today we address an issue that is soon going
to affect millions of American households, and I commend you
for your leadership and vigorousness in this matter. I refer to
the digital TV, or DTV, transition. We are just a little over a
year away from the end of the transition, at which time a lot
of television sets around the country are going to go dark, and
much remains to be done. Consumers must be properly educated,
and they are not. Both the Federal Communications Commission
and a number of industries stand to benefit handsomely from
this matter and they all have responsibilities of the most
serious sort with regard to these matters. As February 17, 2009
nears, we must learn of new steps that must be taken, and I
note that time is running short and the American consuming
public has little appreciation of what lies before them.
The FCC has recently requested $20 million for DTV consumer
education in fiscal year 2009. I still find this amount,
however, woefully short and inadequate for an educational
campaign that is to reach some 300 million Americans. Chairman
Martin has also circulated an order regarding consumer
education in response to a letter sent by you, Mr. Chairman,
and by me. I commend you for moving forward on this important
matter, and I look forward to the cooperation and assistance of
Chairman Martin and to hearing from and seeing vigorous agency
action on this question. This week, Mr. Chairman, you and I,
joined by 19 of our colleagues, sent a letter to NTIA
concerning reissuing converter box coupons to consumers whose
original coupons have expired.
This 90-day coupon expiration date is cause for concern
because consumers might not be able to find stores with boxes
in stock before the coupons expire. I understand, Ms. Baker,
NTIA, along with their vendor, IBM, are working to resolve this
problem, and I thank them for their efforts.
We must be mindful of the situation confronting low power
broadcasters. Only full power broadcasters are required to
transition to digital next year. Low power and translator
stations may take more time. This means that in some markets
some stations will be broadcasting only in digital after
February 17, 2009, while other stations will continue to
broadcast in analog. This could lead to some very serious
complications and complexities.
The potential for confusion here appears high for those
consumers that acquire a digital converter box and then are not
able to receive analog channels. This has the potential for
more mischief and confusion. I want to applaud those
manufacturers who have included an analog pass through feature
in their converter boxes to address this problem, as well as
those who are in the process of adding this feature. I urge
NTIA to quickly approve these boxes. I also expect low power
and translator stations to do their part to educate their
viewers about the need to purchase a converter box with analog
pass through capabilities, and of course we need those kinds of
boxes at an early time. Finally, some of the biggest
beneficiaries of the DTV transition are the nation's retailers.
The converter box coupon campaign and program will plow more
than $1 billion into the stores of eligible retailers.
Some consumers will choose to buy new televisions instead
of converter boxes and many will purchase other items, such as
CDs or video games, while they are in the store using coupons.
For retailers, the DTV transition will certainly be profitable.
I therefore urge the industry to be vigorous in its efforts to
properly educate consumers. I am told as of yesterday that Wal-
Mart no longer has analog only televisions on its shelves, and
last year Best Buy pulled all analog stock from its stores.
RadioShack has agreed to ship converter boxes to consumers free
of charge and remove all analog sets from its stores by March
1. I applaud these decisions. They are pro-consumer. I thank
you, Mr. Chairman, for your leadership in this matter, and I
look forward to the testimony today. Thank you. I yield back
the balance of my time.
[The prepared statement of Mr. Dingell follows:]
Statement of Hon. John D. Dingell
Today we again address an issue that will soon affect
millions of American households--the digital TV (DTV)
transition. We are just over a year away from the end of the
transition, and much remains to be done. Consumers must be
properly educated. Both the Federal Communications Commission
(FCC) and the several industries that stand to benefit
handsomely have responsibilities in this regard. As February
17, 2009, nears, we learn of new steps that must be taken, and
time is running short.
The FCC has recently requested $20 million for DTV consumer
education in fiscal year 2009. I still find this amount,
however, woefully inadequate for an educational campaign that
must reach more than 300 million Americans.
Chairman Martin has also circulated an Order regarding
consumer education in response to a letter sent by Chairman
Markey and me. I commend the Chairman for moving forward on
this important matter and look forward to agency action on this
question.
This week, Chairman Markey and I, joined by 19 of our
colleagues, sent a letter to the National Telecommunications
and Information Administration (NTIA) concerning reissuing
converter box coupons to consumers whose original coupons have
expired. The 90-day coupon expiration date is a cause for
concern because consumers might be unable to find stores with
boxes in stock before their coupons expire. I understand that
Ms. Baker and the NTIA, along with their vendor IBM, are
working to solve this problem, and I thank them for their
efforts.
We must be mindful of the situation confronting low power
broadcasters. Only full power broadcasters are required to
transition to digital next year - low power and translator
stations may take more time. This means that in some markets,
some stations will be broadcasting only in digital after
February 17, 2009, while other stations will continue to
broadcast in analog. The potential for confusion appears high
for those consumers that acquire a digital converter box and
then are not able to receive analog channels.
I applaud those manufacturers who have included an analog
pass-through feature in their converter boxes to address this
problem, as well as those who are in the process of adding this
feature. I urge NTIA to quickly approve these boxes. I also
expect low power and translator stations to do their part to
educate their viewers about the need to purchase a converter
box with analog pass-through capabilities.
Finally, some of the biggest beneficiaries of the DTV
transition are the Nation's retailers. The converter box coupon
program will plow more than one billion dollars into the stores
of eligible retailers. Some consumers will choose to buy new
televisions instead of converter boxes, and many will purchase
other items, such as CDs or video games, while they are in a
store using their coupons. For retailers, the DTV transition
will certainly be profitable. I therefore urge the industry to
be vigorous in its efforts to properly educate consumers. I am
told that as of yesterday, Wal-Mart no longer has analog-only
televisions on its shelves, and last year Best Buy pulled all
analog stock from its stores. Radio Shack has agreed to ship
converter boxes to consumers free of charge and will remove all
analog sets from its stores by March 1. I applaud these pro-
consumer decisions.
Thank you again Mr. Chairman, and I look forward to the
testimony.
----------
Mr. Markey. Thank you, Mr. Chairman. 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 creating another
excellent opportunity for our subcommittee to assess the
progress on the digital transition. There are many issues. Of
course members have raised them, and we know that there are
still some that are left unresolved as we approach the 2009
deadline. It is nice to see you, Mr. Klink. I wish you were
still up here. Today many members are going to be visited by
their constituent public television stations, and the stations
are going to express their concern that access to local public
television stations digital programming is denied to almost
half of all direct broadcast satellite households. Now that
represents nearly 12 million households because one major DBS
provider has failed to negotiate a long-term deal with public
television.
Last November I introduced a bill, H.R. 4121, to require
DBS carriage of public television digital signals, and I am
pleased that a little more than a month ago DirecTV, the
Association for Public Television stations, and PBS announced
that they had reached an agreement whereby DirecTV would carry
public television stations digital signals. As we move closer
to February 17, 2009, I think it is unacceptable for any
household in the country to be denied access to public
television's digital programming. The American people love PBS,
and we have done a lot of battles here over the years to help
protect it so I don't think this is a small item on the agenda.
I am anxious to hear from Mr. Jackson, who is going to testify
why EchoStar carries HD programming for all the major
commercial networks but doesn't provide HD programming produced
by public television stations.
And I will have more questions to ask in this particular
area as well as other questions, so we are moving along. I
think that there is some progress. I am disturbed most frankly,
Mr. Chairman, not Chairman Markey but Chairman Martin, about
the treatment of cable by you. I don't know what cable has done
to so enrage you but I think we need to have a conversation
about that because we have important providers throughout the
country and I think the relationships are really very important
and I want to hear more about what is so troubling you about
them. So thank you, Chairman Markey, and I look forward to the
testimony today.
[The prepared statement of Ms. Eshoo follows:]
Statement of Hon. Anna G. Eshoo
Mr. Chairman today is another excellent opportunity for
this Subcommittee to assess our progress on the digital
transition. There are several issues that are still left
unresolved as we approach the 2009 deadline.
Today many Members will be visited by their constituent
public television stations. The stations will express their
concern that access to local public television stations'
digital programming is denied to almost half of all Direct
Broadcast Satellite (DBS) households - that's nearly 12 million
households because one major DBS provider has failed to
negotiate a long term deal with public television.
Last November, I introduced H.R. 4121 to require DBS
carriage of public television stations' digital signals. I'm
very pleased that, a little more than a month later, DlRECTV,
Association for Public Television Stations (APTS) and PBS
announced they reached an agreement whereby DIRECTV would carry
public television stations' digital signals. As we move closer
to February 17, 2009, it is unacceptable for any household to
be denied access to public television's digital programming.
I'm anxious to hear from Mr. Jackson why Echostar carries
HD programming for all the major commercial networks but does
not provide HD programming produced by public television
stations. I'd also like to know the status of the negotiations
between Echostar and public television stations on signing a
long term agreement for the carriage of public television's HD
programming.
I'm also interested to hear from Mr. Rehr of NAB about what
commercial11 broadcasters are planning for their multicast
stations. Right now in my District not one commercial
broadcaster produces additional content on these extra
channels, except some who ai the weather radar 24 hours a day,
but public television stations across the country are using
their additional channels. In my District KQED has five new
channels they are broadcasting today. KQED has a channel
dedicated to children's programming, and another 24 hour
Spanish language channel.
I'd like Mr. Rehr to explain why commercial broadcasters
are not producing content for these extra channels. Why is
public television able to produce and air this content while
commercial broadcasters are leaving these channels fallow?
----------
Mr. Markey. I thank the gentlelady. The chair recognizes
the gentleman from Washington State, Mr. Inslee.
Mr. Inslee. I will waive, Mr. Chair. Thank you.
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. Chair, for having this hearing,
and I hope over the next year we will continue to have these
hearings and hopefully bring attention to the transition. In
fact, maybe the folks who are responsible whether it be the
news media or anyone else maybe we ought to treat the
transition to DTV like we are seeing the presidential
primaries. So much coverage on them, a lot more interest than
in the past, and so for the next year I would hope we would do
that because none of us want our constituents or your customers
not to be able to watch TV. We are just over a year away from
the transition date and there are still many questions and
preparations and outreach efforts made by various government
entities involved in the transition.
Last week Wired News and Technology web site magazine ran
an article to point out many of the same concerns that the
subcommittee has been raising over the last year, lack of
coordinated consumer education program, having consumers apply
for coupons before converter boxes were on the shelves. The 90-
day expiration date of the coupons are major problems the
article said, as well as members of the subcommittee have
raised. Yesterday I joined Chairman Dingell and Chairman Markey
and several members of our committee in sending a letter to
Assistant Secretary Baker asking her to address one of these
issues.
Currently without boxes widely available it is unclear how
readily consumers will be able to find an affordable coupon-
eligible box. The 90-day expiration date could be a major
complication for consumers if there is a disruption in
production, shipping or stocking these boxes. Additionally, the
article stated the Best Buy spokesman said their stores are
only planning to carry one model converter box that sells for
$59.99. Up selling has been a serious concern. I am afraid
consumers will not be as prepared as they need to be or as many
as the government thinks they will when they walk into the
store looking for a converter box. The letter sent yesterday
clarifies and under the statute creating these coupon programs
NTIA can allow households to apply to have expired coupons
reissued if there are sufficient funds. This would allow
consumers more flexibility in finding converter boxes and
address many supply problems that are out of their hands.
I am concerned, however, that many consumers do not know
about the program and how to apply for these coupons. Most
estimates indicate 14 million to 20 million households allowing
over the air broadcasts, yet according to NTIA stats earlier
this week only 2.8 million households have applied for the
coupons. Some households may go ahead and purchase a new set
with the digital tuner whether than applying for converter box
coupons but the number of the applications still seem low given
that the program has been up and running for a month and a
half, and I think more needs to be done to raise the awareness
of the program.
After the hearing last November Congressman Gonzalez and I
sent a letter to the House Administration Committee, and we
received certification that as members we can include coupon
applications in our newsletters to our constituents, which I
plan to do in one this spring. As far as I am concerned, public
education is the most critical and least coordinated component
of the transition, and we are relying too heavily on the
private sector to address that component along with the 800
help lines need to be staffed so operators can help consumers
when they call in. I understand there were problems with the
Spanish language help line at the FCC earlier this year and I
hope to hear Chairman Martin explain to us what you have done
to correct that problem, and I will have some questions later
on that issue. I thank you and 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 think I feel like Groundhog
Day, our fourth or fifth DTV hearing, so I think I will just
yield back and wait for the testimony. I was just being a
little jovial, Mr. Chairman.
Mr. Markey. No, it is Groundhog Day, and we are going to
have Groundhog Day over and over again on this transition
because the consequences of not getting it right are
catastrophic. So all time for opening statements from members
has expired. So we turn to our panel, and we welcome them to
the subcommittee. We welcome you back, Chairman Martin. You
have been a frequent guest before us over the last year. We
thank you for that. And we congratulate you, Ms. Baker, for
your promotion, and congratulations to you and thank you for
joining this team to insure that this transition occurs on time
and without a glitch, so we thank you both. Chairman Martin,
the last time you were here I said that you were the Tom Brady
of the transition. I would like to now say I would like you to
be the Eli Manning of the transition, and my hope is that we
can put a plan in place that will work. Whenever you are
comfortable, please begin.
STATEMENT OF KEVIN J. MARTIN, CHAIRMAN, FEDERAL COMMUNICATIONS
COMMISSION, WASHINGTON, D.C.
Mr. Martin. Thank you. Good morning, Chairman Markey, and
Ranking Member Stearns, and all the members of the committee.
Thank you for once again inviting me to be here today to update
you on the status of the digital transition. A little over one
year from today all television stations will stop broadcasting
in analog and only broadcast in digital. This transition will
be a historic moment in the evolution of television. Television
viewers will be able to enjoy movie quality picture and sound
and potentially a wealth of new programming choices. It will
also allow us to significantly improve public safety
communications and will usher in a new era of advanced wireless
services such as widespread deployment of wireless broadband.
As I have testified previously successful digital
transition will depend upon minimizing the burdens placed on
consumers and maximizing their ability to benefit from it.
Today's hearing is a welcome opportunity to discuss the
commission's work both in terms of consumer outreach and
education and the necessary regulatory steps, which we are
taking so that all Americans can enjoy the benefits of this
historic digital transition. The commission is working to put
in place the rules and policies to enable broadcasters to
technically complete the conversion from analog to digital.
Last August we adopted the final DTV table of allotments based
on the channel elections made by all the full power broadcast
stations. This order provides virtually all, over 99 percent of
television stations across the country with their final digital
channel assignments.
At the end of last year we also concluded our third DTV
periodic review. In that order the commission established the
procedures and rules that will guide the broadcasters through
the end of the transition. We adopted procedures that will
allow broadcasters to adjust their build out according to their
needs and the needs of their viewers. Currently more than 95
percent of full power television stations are broadcasting a
digital signal. Nearly two-thirds of the full power stations
will remain on the same channel they are currently using for
the digital services and most of these stations have already
completed the construction and already providing full service
to their viewers.
We recognize it is important for the commission to
continually monitor the broadcaster's progress towards the
transition, and accordingly we required each station to file
periodic updates on the status of the construction of the post-
transition facility and in fact the first of such updates is
due next week. The commission has before it an item that would
enable satellite subscribers to receive digital broadcast
signals. The pending item clarifies that when broadcasters make
the transition it is the digital signal that their satellite
operator must carry. Last fall the commission adopted an order
that guarantees that all cable customers will be able to watch
all broadcast stations after the digital transition.
Specifically, the commission took action to insure that cable
operators continue to make signals of all broadcast stations
viewable after the transition as the statute requires.
These items should help reduce the burden on consumers and
thereby fostering a smooth transition. The commission's DTV
related enforcement efforts have focused on protecting
consumers from unknowingly buying televisions that won't
receive broadcast stations following the transition. With
respect to the commission's labeling requirements, the
commission has as of February 11, today, 2008, inspected 1,829
retail stores and web sites and issued 316 citations notifying
those retailers of violations for failing to comply with our
requirements. We also have 14 NALs with $4 million total
aggregate pending before the commission.
In addition to our labeling investigations, we are
continuing to insure that no manufacturers are importing and
shipping analog only television receivers. We are also insuring
that the digital tuners comply with the V-Chip regulations.
Thanks to information referred to us by you, Mr. Chairman, we
began investigating allegations that some manufacturers were
not complying with these V-Chip rules. As a result of these
investigations, we released an NAL against Funai Corporation
for $7.7 million and NALs against 9 other manufacturers for
over $6.5 million are also on circulation.
The swift enforcement of all these DTV-relates rules is
critical to protecting consumers and reducing potential
confusion. Our activities in this area will continue to be a
priority during the next 12 months. According to data from the
Consumer Electronics Association and the National Association
of Broadcasters there has been some success in making consumers
aware of the transition. Recent surveys published by the NAB
and Consumers Union found that 79 percent and 64 percent of
consumers were aware of the transition, respectively.
While this increased awareness is a step in the right
direction too many Americans remain confused about what they
need to do to prepare for it. For instance, the Consumers Union
reported that 74 percent of consumers have major misconceptions
about the impact that this conversion will have on them. Now
that many consumers are aware of the transition, we need to
focus our efforts and our outreach on sending them a clear and
consistent message about how to get prepared. At the suggestion
of Chairman Dingell and Chairman Markey the commission is
considering a proposal to require the industry to use public
service announcements, bill inserts, and other techniques to
educate consumers about the transition. Just last Friday we
received a proposal from the National Association of
Broadcasters setting forth alternative actions as a safe harbor
that broadcasters could take to educate consumers about the
transition.
We are currently in the process of evaluating this new
proposal and hope to finalize this item quickly. In addition to
our DTV consumer education item, the commission is actively and
directly promoting consumer awareness of the upcoming
transition. Nearly every bureau and office of the commission
has been involved in this effort including our field offices
around the country. At the suggestion of several other
commissioners, I have asked the Media Bureau Chief Monica Desai
and Consumer and Government Affairs Bureau Chief Cathy Seidel
to jointly lead an intra-agency task force of staff from the
various bureaus and offices who are primarily working to
facilitate the DTV transition over the next year.
We are also utilizing commission staff located around the
country. FCC field offices and FCC field agents are continuing
to distribute information at senior centers, libraries, and
other local venues. They have already distributed information
to over 3,100 senior and community seniors, made 385
presentations, and have 106 scheduled in just the days ahead.
We have also been forging new partnerships and participated in
media events, attending conferences, and continuing to do
whatever we can to get the word out. For example, DTV education
posters will be displayed in all 34,000 post offices around the
country. The United States Postal Service estimates that an
average of 9 million people pass through their retail lobbies
each day.
We have also secured commitments from 24 states, the
District of Columbia, and Puerto Rico to display DTV materials
in 1,100 Department of Motor Vehicle locations. The FCC's
consumer efforts and outreach continue to place emphasis on
consumers that receive their television signals over the air on
those who are hard to reach including senior citizens, non-
English speaking and minority communities, people with
disabilities, and low income individuals and people living in
rural areas. We have been taking several specific steps to
reach each of these groups. For example, the AARP has agreed to
disseminate digital transition information through its tax aid
program that makes volunteers available to assist AARP members
in preparing their taxes. We also know that the Hispanic
community disproportionately relies on over the air television.
Of the 15 million broadcast only homes one-third is occupied by
primarily Spanish-speaking homes.
The Hispanic Chamber of Commerce and Univision have agreed
to join the commission in conducting DTV awareness sessions at
the Hispanic Chamber of Commerce and member chambers in the 10
biggest cities nationwide which are home to 80 percent of the
Hispanic population. The first of these sessions will be held
later this month in Chicago. The commission is also taking
steps to inform low income consumers about the transition to
all digital broadcasting. For example, the Department of Health
and Human Services has made a commitment to assist the FCC in
disseminating DTV materials through at least 6 of their
agencies to target populations including low income consumers.
For example, through their administration for children and
families they will distribute information through their
approximately 1,500 Head Start grantees covering more than
6,000 locations throughout the country.
And their Health Resources and Services Administration will
distribute flyers and information through their 4,000 community
health centers. This morning I am also pleased to announce that
today the commission's contract and purchasing center were
awarded a contract at Ketchum. Under this contract Ketchum is
going to be responsible for assisting the FCC's efforts to
promote consumer awareness of the DTV transition. Specifically
in the area of media services Ketchum provides full service
production of multiple versions of TV and radio PSAs, web
videos, educational videos, podcasts, and satellite media
tours. The material developed will be produced in multiple
languages and formats.
In addition, Ketchum is planning to support advertising on
transit systems in 18 cities in over 300 locations. Having
awarded this contract, we are working with Ketchum to jump
start our efforts by arranging a satellite media tour next week
to highlight the switch to digital one year before the
deadline. We are also asking Ketchum to develop specific plans
for using grocery stores and other retail outlets frequented by
our target audiences. Although I believe that a lot of progress
has been made to facilitate a smooth transition there is
obviously still more work to be done. For example, one of the
areas that the commission has recently been spending a lot of
time on is how to best insure that consumers will continue to
be able to view low power television stations which are not
required in transition to digital next year.
I have proposed a goal of 2012 for all low power stations
to transition to digital. In the mean time I have asked that
the leaders of several industry organizations to take voluntary
steps to help consumers continue to watch all broadcast
television programming after the transition.
Mr. Markey. Mr. Chairman, right now you are 4 minutes over
so if you could reach that summary.
Mr. Martin. Sure. Certainly the next 12 months will be
challenging. Nevertheless, it is my hope that through all the
combined efforts of the government, industry, and consumer
groups we will reap the rewards of the digital transition and
the benefits it has to offer, and I look forward to continuing
to work with this committee and all the members of Congress to
answer their questions and work to make this a successful
transition next year.
[The prepared statement of Mr. Martin follows:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Mr. Markey. Thank you so much. I remember when I was a kid,
Dick Tracey was my favorite comic strip and he hired this guy,
Sam Ketchum, to be his assistant and we hope that your hiring
of Ketchum will help you as well to solve this problem. So our
next witness in her first appearance before the committee, the
Honorable Meredith Baker, Acting Assistant Secretary for
Communications and Information from the Department of Commerce.
We welcome you, and whenever you feel comfortable please begin.
STATEMENT OF MEREDITH BAKER, ACTING ASSISTANT SECRETARY FOR
COMMUNICATIONS AND INFORMATION, DEPARTMENT OF COMMERCE,
WASHINGTON, D.C.
Ms. Baker. Good morning, Mr. Chairman, and members of the
subcommittee. Thank you for the opportunity to be here before
you today and to discuss NTIA's successful launch of the TV
converter box coupon program and our strong commitment to
continued public education and outreach efforts so that this
historic and important transition can take place and no
American television viewer is unprepared on February 18, 2009.
On January 1 consumers across the nation successfully and
efficiently began to order coupons by phone, mail, fax, and on
line. Consumers from every state in the nation applied on the
first day. By the end of the first week NTIA had received over
1.1 million requests for 2.1 million coupons. While this
initial volume was high all systems continued to handle
requests.
To date, NTIA has accepted more than 2.4 million household
requests for more than 4.8 million coupons. Approximately 47
percent of these households have identified themselves as
reliant on over the air television. On the average, 64.5
percent are applying on the web, 34.9 percent by phone, only
0.5 percent by mail, and .1 percent by fax. The overwhelming
majority have been able to complete the application process in
minutes with ease. We have made some adjustments and
improvements as we learn about consumer experiences. For
example, we have added more Spanish language operators and a
Spanish language IBR. Those Spanish and English languages now
have a wait time of less than 20 seconds for a live operator.
Interest in the TV converter box program and demand for coupons
indicate that consumers are becoming increasingly aware of the
DTV transition and the program.
Thanks go to NAB, CTA, CEA, and other members of the DTV
coalition. By our estimate our consumer education efforts have
attracted upwards of 350 million print and broadcast media
impressions related to the program since September of last
year. While we at NTIA have done over 60 interviews since the
beginning of this year Secretary Gutierrez himself has done 25,
actually over 25, because he did Good Morning America this
morning, interviews on the transition in both Spanish and in
English since January 1. NTIA's consumer education campaign
focuses on the role of the coupon program during the transition
and leverages opportunities for partnership, We, with Ketchum,
which is a good choice by the FCC, have developed a
comprehensive took kit which is information to make
participation of partners easy such as flyers, enclosures, and
sample PSAs.
NTIA's consumer education partners currently include over
130 social service and community organizations which serve our
vulnerable communities, the low income, the seniors, the rural
residents, the minorities, and the disabled Americans. More
than 15 Federal agencies have committed to use their existing
channels to get the word out about the coupon program. Chairman
Martin outlined some of these. Some other examples are the VA.
The VA is leveraging their incredible network that touches 24
million veterans. The Department of Agriculture will distribute
information with their food stamps program and their school
lunch program, and HHS will be activating the Administration on
Aging.
NTIA has been greatly encouraged by the robust
participation of manufacturers and retailers in the coupon
program. As of yesterday we had certified 37 converter boxes
that meet our specifications. These boxes are priced between
$40 and $70. We are continuing to review and certify boxes as
manufacturers come into this program, and we have offered
expedited recertification for the version 2.0 boxes that are
submitted with added analog pass through feature. We received
notices of intent from more than half a dozen manufacturers
with approved converters that claim to produce a converter box
with an analog pass through. NTIA will begin mailing coupons to
consumers next week. They look like this.
NTIA and IBM have been working closely with participating
consumer electronics to calibrate the release of the coupon
with the supply of the converter boxes. The agency has
certified more than 615 retailers at this point to participate
in the program which represents 16,000 outlets nationwide. To
assist these retailers in ordering their inventory NTIA has
made available on the web as well as to the retailers a number
of coupons requested by each state within their 3 digit zip
code. We have also made employee training materials available
and tested the process in a limited 2 market pilot program.
When the coupons are mailed next week, we will have 9,000
retailer locations that will be participating in the program
throughout all 50 states, Puerto Rico, and the U.S. Virgin
Islands.
I would like to thank Wal-Mart, Best Buy, RadioShack, and
Circuit City for their leadership and participation. These
stores have completed the certification program. Their
employees are trained. The converter boxes are in their stores
and their systems are ready to redeem coupons. More retailers
will be activated and more boxes will be available in the
coming weeks. We will carefully monitor and assess the process
as it rolls out and will take any further necessary actions to
insure the consumer experience remains favorable with the
coupon program. I received your letter, Chairman Markey, and
others of the committee on the issue of the 90-day expiration
of coupons, and I will be happy to work with you and your staff
to address this issue. NTIA is aware of concerns that have been
raised about the impact of the DTV transition of low power and
translator stations and on residents of nursing homes, and we
are taking steps to address these matters.
I would like to than NTIA's staff for their hard work in
getting this program off to such a successful start. Thank you
again for the opportunity to testify before you today. I have
enjoyed working with your staffs and the DTV caucus, and I look
forward to more collaboration as we work together to make this
transition successful. I will be happy to answer your
questions.
[The prepared statement of Ms. Baker follows:]
Statement of Meredith A. Baker
Mr. Chairman and Members of the Subcommittee, thank you for
the opportunity to appear before you today to discuss the
progress made by the National Telecommunications and
Information Administration (NTIA), Department of Commerce, in
assisting Americans to prepare for the digital television (DTV)
transition. In particular, I am pleased to report to you on
NTIA's successful launch six weeks ago of the Television
Converter Box Coupon Program (Coupon Program). Although the
Program is off to a good start, this is only the beginning. In
this statement, I will share with you the additional steps NTIA
is taking to implement the Coupon Program and the agency's
ongoing efforts to expand public education and outreach on the
DTV transition and the Coupon Program.
As I indicated, NTIA successfully launched the Coupon
Program on January 1, 2008. Across the Nation, consumers have
begun ordering their coupons through one of four convenient
channels: via a toll-free number (1-888-DTV-2009), online at
www.DTV2009.gov, by mail or by fax (1-888-DTV-4ME2). The phone
line is available to consumers 24 hours a day, seven days a
week, with live agents available at all times and an
Interactive Voice Response system available for English and
Spanish-speaking callers. The phone line can accommodate
requests in more than 150 different languages. There is also a
special assistance line for the hearing impaired in English and
Spanish. Braille application forms are also available. To date,
approximately 65 percent of the requests have been received
through our Web site, 34 percent through our telephone channel,
and less than 1 percent of the requests by mail and fax.
Approximately 89 percent of the household requests are for the
maximum number of two coupons.
On January 1, NTIA with its partner IBM took requests from
over 249,000 applicants requesting 475,000 coupons. Consumers
from every state in the nation applied on that first day. By
the end of the first week, NTIA had received over one million
requests for two million coupons. To date, NTIA has accepted
more than 2.4 million household requests for more than 4.7
million coupons, representing 20 percent of the program's base
funding. Approximately 47 percent of these households
identified themselves as fully reliant on over-the-air
television. During this first six weeks, the Coupon Program
obtained more than 83 million print and broadcast media
impressions. NTIA's daily efforts working with the media has
helped generate awareness of the DTV transition and Coupon
Program. This initial surge of interest in the Program and the
correspondingly high application rate indicate that consumers
are becoming increasingly aware of the DTV transition and are
ready to take action.
One of the keys to the success of this program is its
voluntary nature, which has fostered strong public-private
partnerships. As I have discussed this issue with other federal
officials, non-profit leaders, and private sector partners, I
have witnessed their willingness to work together to make the
transition a success. The industries most directly affected by
the transition have initiated significant educational efforts
with real financial commitments to ensure that no household is
caught unprepared on February 18, 2009. The DTV Coalition is
also making great strides in educating the American public
about their options for making the transition.
As a complement to these efforts, NTIA has instituted a
proactive consumer education campaign about the role of the
Coupon Program in the DTV transition, leveraging opportunities
to partner with consumer groups, community organizations,
federal agencies, and industry to inform consumers of their
options. To date, NTIA's consumer education partners include
over 130 social service and community organizations with ties
to the senior citizens, rural,, minority, and disabled
communities as well as a variety of federal agencies with
direct communications with other constituent groups. NTIA is
reaching out to trusted institutions, such as the NAACP, AARP,
and the Native American Journalists Association to reach
populations most likely to be affected by the transition.
In addition, information about the Coupon Program is being
made available in numerous foreign languages - - Spanish,
French, Chinese, Vietnamese, Korean, Filipino, and Tagalog. On
December 1, 2007, Secretary of Commerce Carlos M. Gutierrez was
featured in the first of a series of public service programs
entitled, "TV Digital...Que Tal?" aired throughout the United
States and Puerto Rico by the Spanish-language Univision
Television Network. The program discussed the benefits of
digital television broadcasting and provided detailed
information about the need for viewers that rely on over-the-
air broadcasting to obtain digital-to-analog converter boxes to
continue to use their analog television sets, and how to access
the Coupon Program to obtain coupons for the purchase of boxes.
In addition, NTIA hosted a meeting on January 24, 2008 with
more than 15 other federal agencies, including the Federal
Communications Commission, the Departments of Veterans Affairs,
Health and Human Services, Agriculture, and Homeland Security,
the Administration on Aging, and the Federal Emergency
Management Agency, to further coordinate federal efforts to
educate the nation about the February 17, 2009 deadline to
transition to digital television. During the meeting, NTIA
outlined its current and upcoming consumer education efforts
and the agencies discussed their strategies and existing
communications efforts to raise consumer awareness of the DTV
transition and the Coupon Program.
In collaboration with IBM and Ketchum, NTIA has developed a
comprehensive toolkit of information to provide guidance to its
partners that are playing a critical role in educating their
members, constituents and customers about the Coupon Program.
Available for use by partners since January 1, 2008 and
continuing through early July 2009, the Toolkit attempts to
offer simple tips and recommendations to help each organization
reach its members with information about the Coupon Program in
a way that will resonate best with them. The Toolkit includes a
set of materials, including fact sheets, a poster, a mailer,
sample presentations and other materials that can be co-branded
for use by partners. The Toolkit also contains specific tools
and strategies that can be used to reach the media to
effectively deliver the Coupon Program message, and ideas and
resources for informing consumers through community and in-
store events or other activities.
The Toolkit includes four sections, each of which can be
used on its own, or in conjunction with other parts of the
Toolkit:
Program Background. This section includes background
information on the DTV transition and the TV Converter Box
Coupon Program. Partners are strongly encouraged to familiarize
themselves with the Coupon Program and with what consumers told
us they want to know.
Development and Dissemination of Messages and Materials.
This section includes a series of tailored messages about the
Coupon Program that partners can incorporate into their own
materials to explain how to apply for and redeem coupons. The
messages have been tested in consumer focus groups to ensure
that they are easily understood and have been reviewed by NTIA
for accuracy and consistency. This section also outlines the
ready-made materials available for downloading, co-branding and
use by all partners.
Communicating Through the Media. This section provides
guidance and ideas for generating "earned media" coverage
through television, radio, print or online information sources.
The information in this section ranges from ideas for
conducting proactive media outreach, to placing public service
announcements and tips on conducting a solid media interview.
Conducting Outreach Activities. The Toolkit includes
creative ideas for communicating about the Coupon Program
through existing organizational resources, as well as
developing events and activities that focus specifically on the
TV Converter Box Coupon Program.
NTIA has been greatly encouraged by the robust
participation of manufacturers and consumer electronic
retailers in the Coupon Program. As part of this effort, NTIA
has been working with manufacturers to ensure that converter
boxes are timely available for viewers and contain the
necessary functions and features. Voluntary industry efforts by
consumer electronics manufacturers to educate consumers about
the DTV transition and the Coupon Program are clearly having an
impact as demonstrated by the number of requests for coupons
NTIA has received to date.
As of February 1, 2008, NTIA had certified over 34
converter boxes containing the required minimum features as
well as permitted features, including three boxes which include
the capability to pass through an analog broadcast signal. A
complete list of converter boxes certified to date is available
on NTIA's website. These boxes demonstrate a range of consumer
options and are priced between $40 and $70. We are continuing
to review and certify boxes as manufacturers come into this
Program.
NTIA continues to work on one issue with the Federal
Communications Commission (FCC), consumer electronics
manufacturers, and the broadcasting community to ensure that
there are converter boxes that will serve the needs of viewers
of Class A, low-power television, and television translator
stations. As you know, these stations are not subject to the
February 17, 2009 analog broadcasting cutoff deadline. Viewers
of these stations who wish to continue receiving these analog
broadcasts as well as the new digital signals after the
February 17, 2009 deadline may want a converter box that
includes an analog signal pass through feature. When the Coupon
Program regulations were issued, NTIA asked manufacturers to
take this into consideration in the development of certified
converter boxes. At the same time, NTIA asked manufacturers
interested in including this feature to investigate options
that would provide an acceptable analog signal pass through
with minimal signal loss. On February 5, 2008, I sent a letter
to each of the manufacturers involved in the certification
process to once again encourage them to consider the needs of
all viewers, including the viewers of Class A, low-power
television, and television translator stations, in the
development of converter boxes for the Coupon Program. NTIA is
committed to an expedited review and recertification process
for any box to which a manufacturer adds an analog signal pass
through feature.
I was very pleased by the recent announcement of the
National Association of Broadcasters (NAB) that it will be
taking steps to help resolve this issue. NAB has said that it
will also request that manufacturers incorporate the pass-
through feature. In addition, it will urge broadcasters to let
their viewers know that low-power stations and translators will
not necessarily discontinue broadcasting in analog at the
deadline, will help to identify locations where large numbers
of viewers might still be getting analog signals after the
transition, and will produce television spots that directly
address the issue and what viewers need to do to still receive
the signals.
In addition, NTIA began accepting grant applications in
October 2007 from eligible Class A, low-power television, and
television translator stations to enable them to continue
analog broadcasts. This grant program will provide $1,000 to
eligible stations that must purchase a digital-to-analog
conversion device to convert the incoming digital signal of a
full-power television station to analog for transmission on the
station's analog channel. Applications will be accepted until
February 17, 2009.
Of course, stations that operate at less than full power
will also eventually convert to digital broadcasts, and by
statute NTIA is directed to assist this effort through a
program that provides $65 million for necessary equipment
upgrades in eligible rural communities. To implement this
program, a technical correction to the program authorization is
required to permit the agency to begin making funds available
during fiscal year 2009. S. 2607, recently introduced in the
Senate, provides the correction necessary to enable NTIA to
implement the program. NTIA will continue to work with the FCC,
industry and the broadcast community to assist low-power
television stations and their viewers during the transition to
digital broadcasting.
NTIA will begin mailing coupons to consumers at the
beginning of next week - - one year from the date of the
transition. NTIA and IBM have been working closely with
retailers in anticipation of this day. The agency has certified
more than 615 retailers, representing more than 16,475 outlets
nationwide, to participate in the program. Eight of the largest
consumer electronics retailers -- Best Buy, Circuit City,
Kmart, RadioShack, Sam's Club, Sears, Target, and Wal-Mart - as
well as many smaller retailers are among the 615 retailers
certified by NTIA to participate in the Coupon Program.
At the request of many of these retailers that have
reported the need for assistance in ordering stock, NTIA has
made information available about the number of coupons
requested on a per State basis as well as with greater
granularity (by first 3-zip code digits). NTIA and IBM have
made employee training materials available to all participating
retailers so that they will be ready to answer consumers'
questions about certified boxes and the use of the coupon for
payment. NTIA and IBM have tested the coupon application and
redemption process in a limited pilot program in two markets to
identify and correct any issues prior to full scale deployment
of the coupons to consumers. When the Coupons are mailed next
week, over 9,000 retailer locations will be participating in
the program, including locations in all 50 states, Puerto Rico,
and the U.S. Virgin Islands. Participating stores will have
completed certification in the Coupon Program and will have
indicated that their employees are trained, they have converter
box inventory in their stores and their systems are prepared to
redeem coupons. Participating retailers can be found on
www.DTV2009.gov.
Thank you again for this opportunity to testify before you
today. I will be happy to answer your questions.
----------
Mr. Markey. The gentlelady's time has expired, and we will
now turn to members of the subcommittee for questions of the
panel. And the chair will recognize himself for a round of
questions. Chairman Martin, I want to talk to you about the
fact that the geographic coverage area for broadcasters may not
be exactly the same in digital as it is in analog. In other
words, some customers may find themselves newly outside the
reception area of a channel they currently receive or they may
need to adjust or to put up antennas to get the digital signal.
What is your estimate of the number of households that may find
themselves outside the reception area for channels they have
historically received and what is your estimate of the number
of households that will need new antennas as a result of this
transition?
Mr. Martin. Let me say first that our estimate is that all
of the viewers within their predicted contour of the broadcast
stations will continue to receive the broadcast signals after
the transition just as they do today so there is going to be a
change potentially for some consumers who are outside that
predicted contour. Those are consumers today who are not within
where we expect the broadcasters to be able to serve but maybe
on the rural areas or in other communities who still pick up
some of those other broadcast signals, and there could be some
change on that. I asked our engineers that question in response
to this interest survey that was released earlier this week
which they had some questions about and think there are some
flaws in. But they estimate that that will be 5 percent or less
change, and this would only be on consumers who are outside
where we say broadcasters must serve today.
Mr. Markey. We are in situation where people may receive
the signal in those areas and perhaps they are not expected to
but they do today, and beginning next year they won't any
longer, so I think it is important for us to deal with how
people actually do relate to these signals in the analog era.
Mr. Martin. We don't have any way to know for sure because
those would be people that are receiving broadcast signals and
they are not expected to be, and the broadcasters are not
expected to be serving those. They are picking up signals
beyond where the broadcasters----
Mr. Markey. It is just important for us to know how many of
those people will need antennas so that there is an
understanding of what will happen on that day in terms of the
number of people who will be complaining that they have always
received a signal during the analog era and they are now not
even though under our historical guidelines perhaps they
weren't expected to receive it but they did receive it and now
they won't receive it any longer.
Mr. Martin. And as I said the only estimate I have from our
engineers is they think it will be less than 5 percent of the
consumers who would be impacted because again everyone who is
in the predicted contour will continue to be.
Mr. Markey. So do you think antennas will be a big problem?
In other words, in that area do you think that we might be
talking about millions of people who will have to purchase
antennas that today would not necessarily need to use an
antenna in order to receive a signal?
Mr. Martin. Well, let me try to explain the way the
engineers explained to me the concerns. For example, with the
Centra survey that was released this week that said that, they
said that the Centra survey, the flaw in that study as it
compared the analog broadcasting today to digital broadcasting
tomorrow and it assumed analog consumers today have an antenna
on their roof as our model assumes, and it has for years, and
then compared that to digital signals tomorrow and assumed that
consumers did not have an antenna on the roof and only had
rabbit ears, so you are comparing and contrasting different
consumers with different antenna structures so what we would
say is consumers should be all except for that 5 percent should
be continued to be able to receive broadcasting tomorrow as
they do today with no change in the antenna as they do today so
there shouldn't be any difference between a roof top or a new
antenna.
Mr. Markey. Congress is a stimulus response institution and
there is nothing more stimulating than millions of people on
February 17, 2009, calling to say they no longer can get
Channel 4, and I have had it since 1949 in our households so we
don't have to worry about the successful part of it. We have to
worry about the part that is going to cause disruption. One
final question. Hundreds of low power stations and thousands of
translators will remain in analog form and just 4 converter
boxes reportedly possess the so-called analog pass through
capability. How are the two of you coordination consumer
education efforts in affected communities, and are you working
with retailers to insure that appropriate boxes are stocked in
stores in those communities, and if you could give me a brief
answer that would be very helpful.
Mr. Martin. We are certainly trying to work to coordinate
to make sure that the message is communicated effectively to
consumers about the concern. We are taking a variety of other
steps including trying to encourage LPTV stations with a hard
deadline to transition to digital, working with consumer--I
sent letters to the Consumers Electronic Association and the
Consumers Electronics Retailers Association asking them to make
sure each manufacturer produces at least one box that has a
pass through and that each retail outlet contain and sell at
least one box with a pass through. And we have also proposed
that we try to provide some additional assistance to the class
A low power stations and provide them the opportunity to become
full power stations and be at the front of the line, so to
speak, after the digital transition, which I think will be
essential to the low power community.
And they have indicated to me that that would be a very
important opportunity for them to ease their transition, and so
I have taken a variety of steps and will continue.
Mr. Markey. Ms. Baker, very quickly.
Ms. Baker. We are working with the FCC obviously on the
education program with the CBA. On our coupon mail out we will
identify the boxes. We will asterisk which boxes have low power
pass through and send them to the web site with coordinated
fact sheets. We also want to make sure that everyone knows that
they don't all need it so we want to clarify that and work with
again the education effort, the joint industry education
effort.
Mr. Markey. OK, great. This is going to be a big issue. We
have to make sure that this part of it works. The chair
recognizes the gentleman from Florida, Mr. Stearns.
Mr. Stearns. Thank you, Mr. Chairman, and I welcome the
opportunity to work with Chairman Martin. He has always been a
good friend, and I look forward to working with him. Secretary
Baker, in your opening statement and mine we both talked about
the huge number of people that are requesting these coupons,
and flat out wouldn't you say that this program is working,
that industry and government and consumer education is working,
would you say so?
Ms. Baker. I think the word is definitely getting out.
Mr. Stearns. Definitely. Would you say it is working?
Ms. Baker. Yes.
Mr. Stearns. OK. Some people are asking to require all
converter boxes to include a low power pass through. Are you
concerned that the manufacturers and retailers suddenly might
drop out of the program altogether if we change the
requirements at this late date?
Ms. Baker. Yes. I think it is a voluntary program and as I
mentioned not all people need this pass through so I think it
would stifle the retailer participation and the manufacturers
if this were required.
Mr. Stearns. Thank you. And with that, Chairman Martin, it
seems that you are talking about low power issue, and I guess a
lot of us are wondering what all the facts are. I believe you
have already started providing some data. It needs to be cross
referenced staff tells me before we can take action. Can you
obviously work with the committee, particularly our staff, to
create a list of all low power stations and their location
breaking out those that are class A or translators, those that
will be digital by February 17, 2009, whether they are an
affiliate of one of the top 4 networks, whether all the
stations in their market are analog, low power, and how many
people are actually watching them. I say this as an overlay
because as I talked to Secretary Baker there is a perception
that this low power--to include a low power pass through it is
going to create some kind of detriment so towards the end if we
had all those facts and we could cross reference them that
would be helpful. So if you would be so kind as to address some
of the items that I have requested that you provide our staff.
Mr. Martin. Of course we will work with your staff to
provide any of the information that you end up needing and that
we have and have available. I think we have already tried to
provide some of those numbers. I can give you a brief overview
if you would like. And the only problem, the only issue that I
see with any of the requests you have made is Nielsen doesn't
actually keep track of the number of people that are watching
the low power television stations. They focus on the full power
television stations. So we may not be able to get you--we will
provide you whatever we can obtain.
Mr. Stearns. Can you provide us a list of all the low power
stations and their locations?
Mr. Martin. Absolutely.
Mr. Stearns. That is no problem.
Mr. Martin. Yes.
Mr. Stearns. Breaking out those that are class A or
translators, can you provide that?
Mr. Martin. Yes. That is no problem.
Mr. Stearns. Those that will be digital by February 17,
2009?
Mr. Martin. All the information we have about anybody who
will be digital, absolutely.
Mr. Stearns. Whether they are an affiliate of one of the
top 4 networks, can you provide that?
Mr. Martin. Yes.
Mr. Stearns. And whether all the stations in the market are
analog, low power.
Mr. Martin. Yes.
Mr. Stearns. And how many people is the one you say you
can't provide?
Mr. Martin. We will provide whatever we can gather but I am
not sure we will be able to provide that.
Mr. Stearns. Thank you, Mr. Chairman.
Mr. Markey. The gentleman's time has expired. The chair
recognizes the gentleman from Michigan, Mr. Stupak.
Mr. Stupak. Thank you, Mr. Chairman. Chairman Martin, in
2004 as I said in my opening News Corp acquired DirecTV and
pledged to provide local carriage in all 210 DMAs, yet here we
are in February, 2008, and DirecTV only covers 142 DMAs and
EchoStar 170 DMAs. You testified at this committee that it
would be a win for consumers' perspective and policy
perspective. Later this month you are urging the commission to
approve Liberty Media's request to acquire News Corp stake in
DirecTV without a similar pledge of working to provide
universal local to local. Why not?
Mr. Martin. First, let me say I do continue to think it
would end up being a win from a consumer perspective, and I
support trying to make sure that we move forward. I think you
asked it in your opening statement to have the commission work
with Congress to have a deadline that we would insure that all
local to local actually occurs. I went back after the last
hearing and looked at the commitment that was made in 2004 and
it was a commitment that was made not to deliver all those
local to local using satellite but to use a hybrid system in
which they delivered local to local, and some communities via
satellite and some using an over the air signal that would be
obtained and then integrated in.
Mr. Stupak. And that hasn't worked either?
Mr. Martin. No, but we have required--they committed to do
that by 2008 and 2004, and we are requiring them again in this
order that I circulated to the commissioners that they do have
to integrate all of those in all 210 by the end of this year.
Mr. Stupak. How many have they integrated thus far if you
have 10 months left this year? Very few, if any.
Mr. Martin. Very few. Absolutely.
Mr. Stupak. So they are not realistically going to get done
by the end of 2008, are they? If this merger goes through they
are no longer required to do it, right?
Mr. Martin. No, no, no. We are making if the merger goes
through they are still required to. We are not eliminating that
obligation of being required to.
Mr. Stupak. So realistically are they going to get it done
even if the merger goes through?
Mr. Martin. They are saying that they will be able to roll
that out to offer that to consumers in all 210 markets this
year using this integrated solution, not using the satellite
into satellite solution, which is an imperfect solution but
that is----
Mr. Markey. The gentleman from Michigan, just so that he
knows, there are 3 minutes left to vote on the floor. We could
suspend here and come back and then I will recognize the
gentleman.
Mr. Stupak. Why don't we do that, why don't we suspend, and
get back my time.
Mr. Markey. There is only one roll call, a Republican
motion to adjourn the Congress for the day, which we are going
to go over and oppose. I think we will be successful and that
will allow for the continuation of the hearing. We will take a
brief recess. Thank you.
[Recess.]
Mr. Markey. The committee will reassemble and we will once
again recognize the gentleman from Michigan with an extra 30
seconds on the clock because of the disruptive time at which we
suspended the hearing, and the gentleman is recognized once
again for that purpose.
Mr. Stupak. Thank you, Mr. Chairman, and thank you for your
courtesy. Mr. Martin, we were talking about local to local, and
I still want to ask you about that. Why don't we just, FCC just
put a hard date much like we do with DirecTV. Why don't we just
say by February 17, 2009, this will be done, the last remaining
40 areas will be covered because this hybrid system that you
are speaking of still would not work in areas like Marquette,
Michigan, Alpena, Michigan because of topography.
Mr. Martin. And I was able to confirm during the break the
hybrid system that they are offering to do is what they had
committed to do in 2004 they are saying they will have done by
October of this year.
Mr. Stupak. And I am telling you the hybrid system won't
work because of the topography of some areas especially in
Minnesota, northern Michigan, so that still doesn't solve our
problem. Why not just put a hard date and say, OK, by February
17, 2009, we got to go to DirecTV. Let us make sure we have all
local to local and all the DMAs.
Mr. Martin. The reason why is because actually Congress
made the decision to require instead of requiring all the
satellite operators----
Mr. Stupak. Congress did not say it had to be done. We
encouraged it to be done. We had hoped the FCC would follow
through so I am urging the FCC to do it. So if we introduce
legislation saying local to local must be completed by February
19, 2009, would you be supportive of that?
Mr. Martin. I would. I mean I have been very supportive of
carriage in every context, and so I would and I would continue
to say that I think that is a good thing and would be
supportive of it, yes. I would be happy to work with you on it.
Mr. Stupak. OK. So why don't you just do it as part of this
merger here, require it to be done? If you are looking at this
merger later today.
Mr. Martin. I believe the fact that Congress was very
specific in saying that the satellite operators didn't have to
do it they were going to do it market by market. If they did it
for one station in the market they would do it everywhere, but
they did not require it to be done nationally and so I think
that them coming forward saying that they would assume it
through other technology is probably the extent to which that I
think is reflective of what I understood Congress' intention on
that. I certainly support is as a policy matter and would
support legislation if it was introduced.
Mr. Stupak. So why don't you have the commission do it as
part of the merger. If DirecTV covers 142 now they would have
about 60, 80, almost 70 more to go so why not just make it part
of that agreement you are looking at later this month?
Mr. Martin. I think what is important is if we required
that that way it would take away the capacity to provide the
carriage for other signals because of the one limited nature of
their capacity.
Mr. Stupak. Well, that is the argument but has the FCC ever
inquired, done a feasibility study or looked at the cost due to
local to local? What is the cost? We hear that excuse all the
time but yet we see new channels coming on all the time.
Mr. Martin. No, what I was saying is I agree. I think it is
probably a higher priority to carry the broadcast signals. I
support that. I was meaning that I deferred to Congress'
decision if they weren't going to require that of the satellite
operators unlike the cable operators, and so it was out of that
deference that I was concerned about whether we should do that,
but I support it and would support the legislation if that was
introduced. And I think I would support working with you on
anything else we can come up with to try to solve the problem.
Mr. Stupak. It will be introduced, hopefully soon. We are
looking at it right now. Thank you, Mr. Chairman. Thank you,
Mr. Martin.
Mr. Markey. The gentleman's time has expired. The chair
recognizes the gentleman from Michigan, Mr. Upton.
Mr. Upton. Thank you, Mr. Chairman. Welcome, both of you.
Chairman Martin, one year to go before the transition my
understanding is that the broadcasters are still waiting on the
FCC's seventh reconsideration order and some other items so
that they can finish constructing their digital facilities. It
seems to me that in terms of media issues the FCC should be
focusing its attention on that rather than other TV related
items. Would you be able to send us a list of all the pending
and planned media related rulemakings that you anticipate that
the commission might address between now and February 17 of
next year?
Mr. Martin. I would be happy to, and I believe the seventh
DTV order we did at the end of the year and the only thing that
I know from a technical standpoint there is individual
petitions for recon that were filed that said I don't want the
channel you gave me, I want a different one, and that is
actually on circulation already at the commission. But I will
be happy to give you a list of the remaining technical items
that would need to be done but I believe all of them are
already on circulation and we anticipate being able to move
through all of them. Several of them are on the agenda for this
month and all of them are in circulation before the commission
now.
Mr. Upton. Great. Thank you. Secretary Baker, will you be
able to track and share the coupon requests and redemption date
rate data to help the manufacturers and retailers allocate
their resources in proportion to levels of demand across the
country?
Ms. Baker. Absolutely. IBM has designed a system that will
electronically track as we have already shared with the
retailers the applications down to the zip code where they have
been asked for. We will also give that information both to the
Congress as well as to the retailers as to where these coupons
are redeemed.
Mr. Upton. Great. And I know that you recently received a
letter from Chairman Dingell and others asking to let you get
people that get back in line after their coupons expire. The
letter asked you to do so. However, only if it won't cause us
to run out of coupons. But my sense is that we are going to
have to wait a couple of months to see if the redemption and
the expiration rates occur before. We will know whether there
in fact is going to be a risk so I am not necessarily against
that at all but I think that we are going to need to see some
data before we get there.
Ms. Baker. I agree with you. I think as we move from the
theoretical design of this program to when it is more real and
we have real people and real constituents we start to get a
little bit more sympathetic, and I think this is one of those
things that we can be very sympathetic on. I do think that we
need to wait and see the redemption rates but I have gone ahead
and asked IBM to price out what the cost of this would be, what
would the cost of the application, fielding another
application, making another card, mailing it out to another
constituent so we have the data as to how much it cost and so
we can compare that with the redemption rates and see if there
is money to do such a thing.
Mr. Upton. Thank you. I yield back.
Mr. Markey. The gentleman's time has expired. We have
another--Mr. Shimkus earlier made reference to the movie
Groundhog Day, and there is now another motion to adjourn on
the House floor. If it goes on all day there will be a more
contemporary movie, There Will Be Blood will be what happens by
the end of the day. But at this point we are all still in good
humor and I think we have enough time actually for 5 minutes to
recognize one member, and that would be the gentlelady from
California, Ms. Eshoo.
Ms. Eshoo. Thank you, Mr. Chairman. What I want to do is
just put my questions out there and then give you time to
respond to them. My first question is directed to Ms. Baker.
Thank you for being here. Congratulations on your position. On
August 3 of last year the President signed the 9/11 Commission
Implementation Act into law, and contained in that was a grant
program for the PSAPS. I along with Mr. Shimkus co-chaired the
E-911 caucus in the House and so we are very interested in the
capabilities relative to E-911. So I would like to know what
the status of the funding is for those grants and how the
dollars are going to be distributed. To Chairman Martin, I
would like to know if you have decided if you are going to
auction the advanced wireless services spectrum, and if so when
you plan to do so. That is fallow as you well know, and I think
that this auction, the auction of this spectrum, should be as
soon as possible but I would like to know where you are on
that.
I would also like to query on the whole issue of cable.
When one looks at the decisions that you have taken, it kind
of--it says to me that there is a deep chasm between you and
cable, the manipulation of the data in the 7070 proceeding, and
I use the word manipulation because I think the data was
manipulated. I don't think in that re-regulation that the
consumers win. The franchising regime should allow it to work,
and I don't think that that is consumer friendly. The multicast
must carry, I think that that raises rates. I don't know where
you are coming from on that. The slashing of the rates cable
can charge for leased access. Now I understand that people can
fall on either side of that issue but I think that that is on
the list as well.
The eradication of existing contracts with the multi-
dwelling units, the continued pressure to implement ala carte
which I think raises rates, and there is a lot that seems to
drive you on that. I don't see broad support for that but you
seem to stay on it, and then the 30 percent cap. I am not happy
with the--that is one of them but I don't know whether I
disagree with you on that or not. But that is a long list and I
think that the commission really needs to be working better
with cable. I think that the consumers are hurt in some of
these decisions but I don't want the decisions to just stand on
their own. I mean it is a long list and I think it is troubling
to me and I think that it is to others. So those are my
questions, and maybe we can start with Ms. Baker on the PSAPS
and the funding and the grants.
Ms. Baker. Right. Well, we are glad that the E-911 program
has finally been funded. We have had a joint program office
with NITSA now for I think over a year, and we have just
received a draft joint work program. I am happy to share it
with you and your staff.
Ms. Eshoo. What does that mean, how you are going to
distribute the funding?
Ms. Baker. Yes. And so we are working with them, and I am
happy to share the draft with you.
Ms. Eshoo. Do you have a date by which the funding will be
out?
Ms. Baker. I think that that is still in development.
Ms. Eshoo. OK. Chairman Martin.
Mr. Martin. Sure. I am happy to end up answering your
concerns about the--my concerns with cable, and I would say
that first just very briefly in direct response to some of the
concerns, multicast must carry doesn't raise rates. It is the
carriage of free programming so it can't raise rates. Leased
access, decreasing rates for leased access can't again raise
rates. We were decreasing rates for leased access. On the
apartment building issue and the franchise reform, I continue
to believe everyone deserves to have the benefit of
competition, not just people that don't live in apartments. An
overwhelming number of minorities in this country do--more
minorities live in apartment buildings than others and I think
they deserve to have the benefits of competition.
Ms. Eshoo. Do you think minorities are hurt by your overall
media consolidation? I mean it seems you support minorities on
one thing and then on one of the largest things that the
commission could ever take up minorities are, well, I don't
want to use the term, but they are hurt by it.
Mr. Martin. Well, I was glad that maybe you agreed with the
30 percent cap but overall when you talk about the list, I
think this is the reason why, the list, and if I can have this
entered into the record, Mr. Chairman, I would appreciate it.
What we have seen is a dramatic increase in cable rates
compared to every other sector the commission regulates. Cable
rates have dramatically increased. In 1996 when the
Telecommunications Act was passed cable rates were $22 a month
for expanded basic. Today they are over $50 a month. The reason
why I am concerned about cable is because I believe consumers
are concerned about cable. Eighty percent of consumers say they
think they are paying too much, and I believe we need to do
something about the ever expanding cable rates.
Mr. Markey. There is only 3 minutes left on the roll call
on the floor.
Ms. Eshoo. Can he answer on the auction?
Mr. Martin. We have been very busy with the 700 megahertz
auction. As soon as we finish that, I plan to move forward on
the----
Ms. Eshoo. When do you anticipate that to be?
Mr. Martin. The 700 megahertz auction could close when
people stop bidding on it and so I am waiting for that to
conclude, and I can't give you an exact time frame but that
will be the next priority for the commission as soon as we
finish the 700 megahertz auction.
Ms. Eshoo. Thank you. Thank you, Mr. Chairman.
Mr. Markey. Again, the committee will stand in recess, and
we will reconvene in another 6 to 10 minutes.
[Recess.]
Mr. Markey. The committee will please reassemble, and once
people are settled down a little bit the chair will recognize
the gentleman from Illinois, Mr. Shimkus.
Mr. Shimkus. Thank you, Mr. Chairman. I finally got lucky
on a hearing for a change so let me go with Secretary Baker.
According to Nielsen only 11.7 percent of the households
representing 13 million homes rely exclusively on the over the
air television as of January, 2008. What percent of coupon
requests have come from such homes?
Ms. Baker. Right now we are at 47 percent have been over
the air only.
Mr. Shimkus. When we have had other of these hearings what
I have always focused on is the amount of consumers out there,
and I focused on how many have cable, how many have satellite
TV, try to address the cost, do we have enough money budgeted
and the issue, so that is kind of where my line of questionings
have continued to focus on. And this is for both Chairman
Martin and you, Secretary Baker. I know there has been an
overwhelming interest in the converter box coupon since the
public was able to start requesting them. Over 3.4 million
converter box coupons will be mailed out starting next week. If
the public has requested such an overwhelming number of coupons
over a year before the transition date doesn't that demonstrate
that the consumer education plan is working, and a follow-up
question, how should consumer education change as we get closer
to February 17, 2009? We will go first with Chairman Martin.
Mr. Martin. I certainly think that is evidence that the
education campaign is beginning to work, and I think the most
important thing that we need to recognize as some of the recent
surveys have been done about consumers by Consumers Union that
as more and more people become aware of the transition our
education focus needs to change to not only just saying the
transition is coming but what they need to do to prepare for
it, and more and more the focus on what actions they need to
take as opposed to just the transition is coming.
Mr. Shimkus. Secretary Baker.
Ms. Baker. I do. I think the fact that we had such a large
demand the first week means that the consumer education
campaign is working. The spike really is it goes up the first
week and then it kind of levels off. I think we are at an
average of 61,000 coupons now a day being asked for. I think
that we will have spikes. We will probably have a spike at the
year out as we have all this great interest in a year out and
the events of the year out. I think we will have different
spikes throughout the summer. I think we are looking for spikes
so that we can get the consumer education campaign out there
particularly to the elderly, the disabled, the rural, the low
income, and the minorities.
I also think what will be more telling is not the demand
for the coupons but how they are redeemed and I think we will
start seeing those. Obviously since we are mailing the coupons
out starting next week, we will start seeing redemption rates
shortly and we will see what the redemption rate is on the
coupons and that will be more telling.
Mr. Shimkus. Great. And since I have you here, Chairman
Martin, let me just focus briefly on the WARN Act and the FCC
has pending before it a rulemaking to implement the voluntary
alert warning system on commercial mobile networks. This is
part of your execution of the act which also detailed a process
based on industry recommendations for its implementation. You
have raised questions about the industry's detailed
recommendations especially with respect to the alerting
geographic granularity. That is tough. I usually don't try to
go into multi-syllable words. Granularity is one of the
toughest ones I have had to use today but since the involved
parties worked to provide a consensus and set of
recommendations that can be implemented broadly across
commercial networks, can you speak to what concerns you may
have? As you know, Congress worked its will and permitted
carrier participation to be voluntary and for the FCC rules to
be consensus driven.
We obviously want carriers to participate or consumers
won't have access to the alerts. Do you worry that your process
underway may prove a disincentive for carriers to participate
and thus reduce the availability of alerts to consumers as
outlined in the recommendations presented by the WARN Act
advisory committee?
Mr. Martin. No. I think the process has actually been very
conducive. Out of all the recommendations made by the joint
committee that contained both consumer interest, public safety
interest, and the wireless industry's interest there was only
one concern that I raised on the recommendation and it was on
the geographic area. I didn't think that we should require
anything smaller in terms of geographic area but I was
contacted by several public safety agencies and by the mayor of
New York about concerns that if we require--the geographic area
that was being discussed would not be conducive to extremely
dense urban areas like New York City, and trying to find a way
that we would make sure that the residents of New York were
also able to get the benefits of the WARN Act and try to either
get some of the industry players to participate in something on
a smaller geographic area or to try to make sure that we
allowed individual public safety entities and/or local
communities to come forward and say we need it on a smaller
area because it is so densely populated in our urban areas I
think was important.
I am still trying to work with the industry on trying to
figure out a way to voluntarily try to address this issue, and
obviously I am going to be very sensitive to what concerns the
Congress members may have about this one focus. I think that
some Congress members had raised a concern with me about this
but some of their offices have but I think more of them are
comfortable with it now, and so we will continue going forward
and work on this, but I think it is a voluntary program. I
think we need to be very sensitive to all the issues that are
raised by the whole organization. And as I said except for this
one issue that was really raised predominantly by New York
City, I think everything else has all been worked out.
Mr. Shimkus. Thank you, Mr. Chairman. And just for me to
close, this is kind of tied in to digital transition because
the whole debate of date certain and getting the spectrum freed
up for the first line responders is something that a lot of us
have worked very diligently to--the last thing we want, Mr.
Chairman, is another major catastrophe where we have people not
able to communicate with each other. The public broadcasters
are on the Hill today, and the ones I talked to have been very
strongly in support of the date certain based upon their plans
and procedures and what they are trying to do. And I hope we
can continue to move in that direction for what has been my
focus, and I know my colleague, Congresswoman Eshoo's, is the
first line responders and the public safety communities. So
with that, thank you very much, Mr. Chairman, and I yield back
the balance of my time.
Mr. Markey. The gentleman's time has expired. To the
gentleman from Texas, we were going to recognize Mr. Boucher
before the last roll call but he decided to pass so that we
could go so if you don't mind we will recognize Mr. Boucher out
of order and then we will come back to you. The gentleman from
Virginia, Mr. Boucher, is recognized for 8 minutes.
Mr. Boucher. Well, thank you very much, Mr. Chairman, and
Mr. Martin and Ms. Baker, welcome to the committee. We
appreciate your advice this morning. In November of last year I
had the opportunity to visit White Haven in the United Kingdom.
That is the community where the digital television transition
was first completed in the UK. And I was very interested to
learn about that experience. It was a good experience for them.
They had no surprises. On the day of the transition everyone
was aware of it. They had taken the steps to prepare
themselves. That of course is the goal we hope to achieve in
the U.S.
They did, however, encounter some issues that I don't think
we have given much consideration to with regard to our
transition, and I would welcome your thoughts about these
issues. There were two in particular. They discovered that 10
percent of the external antennas had to be replaced in order to
accommodate the digital signal. These were outdoor antennas
that were adequate to get an analog signal, probably a snowy
one, not a very good one, but at least these outdoor antennas
could get analog signals. They were not sufficient, however, to
get a digital signal at all, and so 10 percent of the antennas
had to be replaced.
Now in putting together a program for converter boxes and
the subsidy program for that, we really thought that would be
the only hardware need. We were not aware that possibly outdoor
antennas would also have to be replaced. And I don't know how
many that will be but there are about 70 million analog sets in
the U.S. that are over the air dependent. If you took 10
percent of that figure, we would be talking about 7 million
homes. It probably won't be that many but that is the outer
edge of the potential problem. So my first question to you, and
I have a second one and I will just have you answer both at
once, my first question to you is what thought have we given to
this, and how are we going to address that concern when it
arises here in the U.S.? Is this just going to have to be a
cost that the TV viewer has to bear or alternately should we
consider legislation in order to provide the funding necessary
to accommodate this just as we have accommodated the need for
converter boxes.
The second challenge was this. They found that a very large
percentage of the people had to have technical assistance. They
got their converter boxes but they didn't know to install them.
They had a need to replace outdoor antennas in some places but
didn't know how to replace them or even really what the problem
was. They might have had their converter box properly installed
but still couldn't get a signal. Their problem was that their
outdoor antenna wasn't adequate but they really had no way to
know what that problem was. So in the UK their help program
actually financed a broad range of technical assistance, and
people employed through this program were made available to
help with the converter box installation at the home and to
assess other technical difficulties, including possibly the
need to replace an outdoor antenna.
Now we do not have as I understand our program a technical
assistance component. I guess we are thinking that the retail
store that sells a converter box for $50 or $60 is going to
provide that advice. Somehow I don't have confidence that is
really going to work. I don't think that store, Wal-Mart
perhaps, is going to have an ongoing interest in perhaps
sending somebody to the person's home in order to solve these
problems. And so I am wondering if we don't need to rethink our
program in light of also providing some financing for technical
assistance. So I have a couple other questions but those are
the two main ones, and I just welcome your advice about to what
extent we thought about this and how we might meet these needs.
Mr. Martin.
Mr. Martin. In response to the first question you have got
about the replacement of outdoor antennas, I think that our
engineers would say because of what they call the cliff effect
of digital broadcasting in which the people that are able to
get it receive a better picture but those that are on the edges
there will be a point at which you used to be able to get not a
very good picture or a snowy picture outside of the contours of
where the broadcaster is supposed to be operating but that you
would no longer be able to, our engineers estimate it is
probably closer to around 5 percent of those outdoor antennas
would end up needing to potentially be replaced in those
situations.
Mr. Boucher. So your estimate is about 5 percent of our
outdoor antennas?
Mr. Martin. This is what our engineers were saying, and
that was what I referenced earlier in response to a question
from Chairman Markey. And whether Congress decides to provide
any additional support for that or not, I obviously would leave
up to Congress to decide about the use of its resources, but we
do estimate that it will be small but about 5 percent of those
people using outdoor antennas would be what we would estimate,
not as high as 10. In response to the second question about the
technical assistance, I would say obviously there is already
some response in the marketplace to these kinds of issues. Best
Buy, for example, has their D squad that comes out, and we were
at Best Buy last week for an event and they offered technical
assistance in setting up any of the products that you can
purchase there.
But we have also in response to some of the concerns that
have been raised by this technical assistance have contacted
some groups and some organizations that target particular
groups that I think might need that technical assistance like
the elderly or the disabled. We have been in contact with Meals
on Wheels and have asked them, for example, to help distribute
information about the upcoming transition. One of the concerns
they raised, initially they said yes, and then they raised a
concern that they then thought they would be asked to
participate and do provide that technical assistance if they
start telling people about the transition. So we have actually
gone back to them and said, well, that will be positive, not
negative.
And they said that they would need resources, and we said
how much would you need to be able to participate. We have
gotten some estimates on that. I probably should share that
privately with folks, but they said that potentially they would
be willing to help participate, and that would be targeting the
kind of audiences that I think--targeting some of the consumers
that might be most in need of assistance, and that would be one
of the things that assuming Congress provides us additional
resources that we have asked for this year in our budget that I
have asked my staff to take into account to try to provide for
the ability to try to target some of these consumers who we
know will be needing some assistance.
Mr. Boucher. Are you asking for the resources that your
evaluations suggest would be necessary in order to provide that
technical assistance?
Mr. Martin. The only organization that I have been able to
identify that could provide that directly would be the kind of,
as I said, Meals on Wheels, which is we talked----
Mr. Boucher. Well, but they said they would need some
funding to do it. Are you going to be asking us to provide the
funding?
Mr. Martin. I have discussed--we have asked for additional
appropriations this year of $20 million, and I have talked to
my staff about making sure we include the estimates for that
program in our estimates of what we would do with that $20
million.
Mr. Boucher. Well, the $20 million leads me to the second
question, and, Ms. Baker, I don't mean to exclude you. My time
is running out, however. And that is that in the United Kingdom
about $1.2 billion in total was made available for their
assistance program and their public education. They have got 1/
5 of the population of the United States. Until now we have
allocated $5 million for our public education campaign. Just
splitting their total appropriation in half, let us say that
$500 million went to public education there. You know, we are
at 1 percent of that here. $20 million doesn't really fill the
gap very well. I remain deeply concerned that we still have not
allocated enough for that, and now you are suggesting part of
that $20 million might even get diverted into a help scheme of
some sort for technical assistance perhaps.
So, Mr. Chairman, my time is up. Let me just leave the
thought that I think we need to do something on this subject.
We are clearly going to need resources beyond the $20 million
that has been requested, and I hope that we can respond to that
and do so, so we can prevent serious problems from occurring.
Thank you. I yield back.
Mr. Markey. The gentleman's time has expired. The chair
recognizes the gentleman from Texas, the ranking member of the
full committee, Mr. Barton.
Mr. Barton. Thank you, Mr. Chairman. I was a little bit
late because I had to go use the hotline to call for my
coupons. I wanted to make sure that there wasn't a shortage,
you know, since they are going to start mailing them out next
week, so I had to do that little errand. It is good to have our
commissioner here. It is good to have Ms. Baker here. I know
her and several members of her family very well. We got
Commissioner Adelstein here. We are glad to have him here, and
former Congressman Klink. The front row is just kind of an all
star group of people. It is our, I guess, biweekly DTV
transition update hearing so things are moving along pretty
well.
I am always tempted when we have our chairman of the FCC to
ask a totally extraneous issue but I won't do that today. On
the good side, it looks to me like the coupon program is moving
along pretty well. Over 4 million have been requested. You are
going to start mailing them out next week. Not you, but the
agency that is responsible for it. Do you see any problems in
the coupon program as it currently exists, and I am asking that
to Chairman Martin. And if Ms. Baker wants to answer, she can
too.
Mr. Martin. No. I think the coupon program seems to be on
track. There seems to be a high demand for it, and I think that
we are moving forward in a positive way on that. I think as I
said before it seems like there are a lot of consumers who are
aware of the transition. We need to target our message to make
sure we are telling them what they need to do but it seems like
we are on track.
Mr. Barton. OK. Ms. Baker.
Ms. Baker. I would say that I am very happy with the
retailers that are participating as we roll this out. We are
going to be tracking very carefully as the coupons go out what
the redemption is. There will be more retailers who are
actually participating. We have certified a bunch more than
those that are participating. Participating means they have
boxes on the shelves. There will be more and more in the coming
weeks. There will be more boxes with more features in the
coming weeks, so I think things look good. We will be
monitoring it closely and sharing all that information with
your staff.
Mr. Barton. OK. Very good. Mr. Chairman, on the D block
auction part of the reason we are doing the DTV transition is
to clear up the spectrum so it can be used for other purposes,
and one of the real supposed stars in the auction was supposed
to be the D block, and so far the reserve price has not been
met. There are many people, and I am one of those people, that
thinks the commission has put so many encumbrances on it that
the private sector is not really comfortable proposing a bid.
If you don't make the reserve price, and it doesn't appear that
you are going to, what is the commission's plan B on that D
block spectrum?
Mr. Martin. Well, I think that the most important thing to
put in context for all the encumbrances on the D block were
that they were all done at the urging and the request of public
safety to try to resolve the problems they have on
interoperability, trying to find a way that the local police
and local fire department are going to be able to communicate
using the next generation of wireless services. And I think
that we need to continue to end up having their concerns at the
forefront of these issues going forward, but obviously the
encumbrances and the expectations that they work with public
safety if no one ends up bidding on that piece of spectrum were
too great the commission will have to continue to go back and
re-evaluate what we should put in place to try to resolve these
public safety concerns.
I am pleased that the rest of the auction all went forward
and we were able to meet the reserve price and all the other
pieces. I think there were concerns that were raised about some
of those encumbrances in terms of build out or openness on the
C block. All of those have been met, and we have been able to
successfully raise despite the fact that the D block has not
met the reserve price, successfully raise significantly more
revenue than anyone had anticipated, almost twice, and more
revenue than we have ever raised in the auction in the past for
even less spectrum than we have auctioned off in the past. So I
think in general it has been very successful, but I do
recognize the concerns that public safety raised seem like they
are too great for at this point anyone being willing to put in
place a bid that would be able to work with public safety.
I would hope that someone would come forward and be willing
to work with public safety but if no one is then we are going
to have to go back to the drawing board and consider how to----
Mr. Barton. Well, I am going to encourage Chairman Markey
and Chairman Dingell to squeeze in a hearing outside of the DTV
transition on that issue because that spectrum, A, is valuable,
and, B, is very important for public safety and first
responders, and we need to figure out a way to get it sold in a
way that meets the goals of the legislation that we all
supported. And with that, Mr. Chairman, I yield back, and thank
you for your courtesy.
Mr. Markey. I thank the gentleman, and I would say to the
gentleman that when this auction is completed assuming that the
D block does not have any bidders our intention is to have a
hearing and then to do a top to bottom evaluation of what we
should do going forward. The chair recognizes the chairman of
the full committee, the gentleman from Michigan, Mr. Dingell.
Mr. Dingell. Mr. Chairman, I thank you for that courtesy. I
ask unanimous consent that I be permitted to insert into the
record a letter which we will be sending to the Chairman of the
Commission and the Secretary and their responses.
Mr. Markey. Without objection.
Mr. Dingell. Madam Secretary and Chairman Martin, are you
concerned that there will be sufficient funds to meet the
demand for converter box coupons, yes or no?
Mr. Martin. When I testified last October I said that I was
obviously concerned and if Congress provided more I am sure the
program would make sure that that had been implemented but that
I would defer to NTIA on their expectations with what is going
on with the program.
Mr. Dingell. Does that mean you are concerned or not
concerned?
Mr. Martin. I am always concerned to make sure that enough
people have the opportunity to take advantage of the program.
Mr. Dingell. Madam Secretary.
Ms. Baker. Would you like to hear my calculations? Using
the first phase of the money which is $890 million for coupons,
we have 152 days at the average base. Now that includes the
first spike, and that is 5 months and that would be July 13. We
have 286 days at the last 3 weeks pace, which is an average of
61,000 coupons a day, and that puts us--that 260 days puts us
at November 24. We have 571 days at the lowest pace. So we are
tracking it very closely. I would expect that you would receive
a request for additional funds, not that I think that we are
necessarily going to get to it but because I think that there
should be no disruption between phase 1 and phase 2 of this
program.
Mr. Dingell. Would you each, please, for the record submit
calculations indicating whether the committee should be
concerned, including whatever calculations you have already
made and such further calculations as you deem appropriate to
inform the committee? Now, Madam Secretary and Mr. Chairman,
will you commit to giving the Congress all the notice you can
when and as soon as you come to believe that the converter box
program will run out of funds?
Mr. Martin. Yes.
Ms. Baker. Yes, absolutely.
Mr. Dingell. Now these questions are to Chairman Martin. I
am very much troubled by the discussions now going on with
regard to allowing some low power stations to upgrage to full
power status. My first question, has the Commission conducted
any sort of background analysis to ensure that a transition
would not cause harmful interference to full power
broadcasters?
Mr. Martin. The proposal that I have put forth would say
that they have to meet the same interference standards that are
required now of anyone else who wants a full power station.
There could be no interference caused----
Mr. Dingell. I understand that, but can you give us the
assurance that there will be no interference?
Mr. Martin. We can give you an assurance because we would
not grant any that created an interference, so, yes, we can
give you that assurance.
Mr. Dingell. Now will this create problems with regard to
theavailability of channels and space on both satellite and on
cable?
Mr. Martin. I would say that I am not sure what it would
end up having on the implications for cable and/or satellite. I
can say that I think that some of those cable and satellite
companies carry low power, more cable does than satellite,
satellite doesn't even carry all the full power stations. So I
think it would be more of a problem on satellite than on cable.
Mr. Dingell. All right. But these are matters of concern to
the committee, and I would appreciate in the communication
which I will send you if you would respond as fully as you can
to the concerns that I have and I think the committee has with
regard to the potential for mischief here if this becomes a
problem, which I think it is very liable to do. Now, Chairman
Martin, you have requested $20 million for consumer education
in the 2009 budget. Did you request more money for that or is
that the number that was your request to the Office of
Management and Budget?
Mr. Martin. That was the number that was requested at the
Office of Management and Budget.
Mr. Dingell. So you got every cent that you asked for, is
that right?
Mr. Martin. In this budget request, yes, and that was a
number that actually I consulted with all my colleagues and it
was one the commission unanimously asked of O&B.
Mr. Dingell. Now do you have plans on how you will spend
that money?
Mr. Martin. We do have some tentative plans on how we would
end up spending the money in terms of additional PSAs that
would be broadcast and created, additional information that
would be distributed, and we have also been trying to work--we
have just announced utilizing the resources that were just
provided to us at the end of last year, we have just announced
the contracting with the public relations firm, Ketchum, who
will help us put together the plan, not only for the money that
Congress has already provided to us but how we would best
utilize that money going forward but we do have tentative plans
that I can provide.
Mr. Dingell. In my letter, Mr. Chairman, I will be
submitting 2 questions as to this matter. Would you please give
us in that response as full answers as you can as to the plans
with regard to spending that money?
Mr. Martin. Sure.
Mr. Dingell. Is this going to be sufficient money to insure
that there is adequate awareness on the part of the consuming
public of these coupons and of the impending problems with
regard to the changeover from analog to digital?
Mr. Martin. I think that you have to put in context this
money alone would not be enough but you have to put in context
with the education efforts that are ongoing both by NTIA about
the converter box program and the industry. Both the
broadcasters and the cable operators and the Consumer
Electronics Association have all put forth additional
educational efforts, and I think in that context I think that
it could be enough. If Congress thinks that we need more, we
would obviously welcome additional resources.
Mr. Dingell. Madam Secretary, have you requested any funds
in the budget for consumer education, or are you relying on the
budget of the FCC on this matter?
Ms. Baker. We are relying on the FCC's budget as well as
the public-private partnerships of which we already have. We
had $5 million for consumer education. We have hired Ketchum
and we have done a pretty outstanding reach at this point. We
have 15 Federal partners and 130 social organization partners,
and we are part of the DTV coalition which is over 200 members
strong, so we have not requested any additional funds.
Mr. Dingell. Do you regard that $5 million as being
sufficient?
Ms. Baker. At this point we are very encouraged with the
consumer education program and we are not requesting any
further money.
Mr. Dingell. Very well. Mr. Chairman, I thank you for your
courtesy.
Mr. Markey. Thank you, Mr. Chairman. The chair recognizes
the gentleman from Georgia, Mr. Deal.
Mr. Deal. Thank you, Mr. Chairman. Chairman Martin, I have
just a few questions for you as it relates to the white space
technology as that issue of technology pertains to the DTV
transition. Is it your opinion that continued testing of these
devices by the FCC will interfere with the DTV transition?
Mr. Martin. I don't think any testing of the devices will
interfere, no. Whether or not the devices will demonstrate that
they can operate or not operate, we will have to wait and see.
The testing is ongoing now. The engineers and the labs are
doing it. It is open so that any broadcaster and/or any
technology company can come watch but the testing alone won't
interfere. The question is whether the devices themselves
would, and we will have to wait and see.
Mr. Deal. And that is the purpose of the testing obviously.
Mr. Martin. That is right.
Mr. Deal. And if you were to issue a rulemaking allowing
these devices to be used is it true that these devices could
not even come to the marketplace until after the DTV transition
date has passed and therefore could not interfere with DTV
transition?
Mr. Martin. At this point I think practically that is
correct. Originally, I had committed to Congress based on the
testing of the devices we had already received, we would try to
put them in place and allow for them to come into the
marketplace by the end of this year, but because the first
round of testing was not successful to show that it wouldn't
interfere we asked for additional devices and we are undergoing
testing now, and I think practically that is the case.
Mr. Deal. And of course if the FCC determines that these
devices can operate without interference, do you see that this
is a new marketplace from which consumers would benefit?
Mr. Martin. Oh, absolutely. I think so.
Mr. Deal. Thank you, Mr. Chairman. I will yield back my
time.
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, and I have
to comment on your announcement that you have introduced the
Markey-Pickering bill, and I hoping that we are going to have a
full discussion, a good faith debate in it because of course I
have some concerns, and I am going to ask Chairman Martin for
his assistance to this committee that all the members fully
understand the implications or the need for the legislation.
Again, I really mean this in good faith that we understand what
the Internet really represents and what it is, the difference
between the network and ISP, content aggregators, search
engines, operating software applications, device manufacturers.
We also, I think, need a good education on delivery systems
whether it is going to be copper, coaxial, fiber optic, power
line, and of course wireless.
I think we need to understand the relationships among all
of the different participants in providing this access to the
Internet because I think we all have the same goal at the end
of the day, and that is to make sure that we have a robust
build out, maintenance and improvement of our broadband
capacity, so when is broadband capacity management legitimate
or illegitimate, appropriate or inappropriate, necessary and
sometimes unnecessary, so I am hoping in the search for truth
that we end up evaluating and analyzing again the need and of
course the implications for the proposed legislation. I am
going to ask Secretary Baker a question so I can sort of
understand what is going on. Starting January 1, 2008, was when
the request for coupons took place. It is going to end on March
31, 2009, correct? They will be mailed on February 17 in about
4 days or so, right?
Ms. Baker. We are going to start mailing.
Mr. Gonzalez. You are going to start mailing them in about
4 days.
Ms. Baker. Correct.
Mr. Gonzalez. And they will be able to be redeemed
obviously, and there is going to be an expiration date, and I
am going to ask you about the expiration date. My concern is,
and I think as much as we prepare for it and work for it and so
on, that you are still going to have a tremendous demand after
February 17, 2009, when the television sets go dark. Do you
anticipate at that point a tremendous spike in the demand, and
you are only going to have a window of about 90 days, I guess,
or less, about a month and a half, I am sorry, from the time
that the coupons will no longer be available. Do you anticipate
a demand at that point when we reach a crisis state and people
obviously are made aware because they can't watch their
television sets, and if you do anticipate a tremendous demand
how does the expiration of the coupons play into that but more
so do you have a contingency plan in case demand will out pace
the resources that are available to you?
Ms. Baker. Well, first of all, the way the coupon program
is set up, Congress set it up so we started accepting coupons
on January 1, 2008. We have been testing our systems to make
sure that they work, and we thought clarity was important so we
set the date of February 17 to start mailing out the coupons or
to start the processing of the coupons. February 17 is a
Sunday. That is probably why we are not having this hearing on
February 17. So the first batch of coupons will go out that
week. We are going to monitor it carefully. We are going to
send out probably not as many as we could the first week so
that we can make sure the systems are up and running. I think
you are right. As we work through this, as there are more
coupons out there, as there are more boxes and manufacturers,
particularly as we get towards the end of this program,
February 17, 2009, at midnight when all full power broadcasting
is turned off, and people go on February 18, February 19, maybe
February 22 because they don't watch much TV and they turn on
their television and it doesn't work, I think that we will see
a spike there. I think we will see--we had always anticipated
the largest number of coupon applications would be towards the
end of the year, the Christmas season, and also in the January-
February range of next year.
We were able to allow accepting coupons until March 31,
2009, so there is a window there of about a month and a half
for people who turn on their television and it doesn't work,
that they can still apply for a coupon. As far as the 90-day
expiration goes, I think I have mentioned that we are
interested in looking into that after all of the coupons have
been--after we see the redemption rate on the coupons we will
be getting back to you in Congress and consulting with you as
to what the redemption rate is and how much it would cost to
put people back in the line at the end of the line.
Mr. Gonzalez. When these coupons are sent out, this first
wave which I know is almost like a test wave of the coupons
then we will actually know how it is really working with the
retailers and such. My understanding, you have about 34
different converter boxes that have been approved that would
have the added feature, the analog pass through feature, is
that correct?
Ms. Baker. Yes. There are 37 that are approved at this
point and 4 of them which have the analog pass through.
Mr. Gonzalez. And I guess when we have our next hearing you
will be reporting the results of this initial mailing of the
coupons and the redemption rates, and I think we will start
hearing maybe from our constituents as to again the
application, the installation, and the problems with that. I do
want to point one thing out that I think is very important as
you go through your list of qualified or certified retailers.
In the San Antonio area they are not listed on here because
their appeal was actually granted, and that is going to be ATB,
which is a very prominent, prominent grocery store chain in all
of South Texas. It is a huge endeavor. But I assure you that
you probably will have more consumers in those impacted
neighborhoods that feel more comfortable and will be obviously
visiting the ATB store much more so than many of the large
electronic outlets which I appreciate their contribution.
The last question, I have 2 minutes. The coupons can be for
$40. I think your testimony was that the converter boxes are
going to be selling anywhere from $50 to $70?
Ms. Baker. Correct. $40 to $70. Actually I think Consumer
Electronics, one of the manufacturers, announced a $39.99 box.
Mr. Gonzalez. OK. But we are not going to know that until
after they go to redeem these particular coupons. There is no
definite price that we could say that is what is going to
happen on February 18-19 when people receive their coupons. We
will have to wait, is that correct?
Ms. Baker. That is right. There are certain permissive
features in the boxes such as smart antennas, BTSC audio
output, enhanced program guide, Energy Star. Some of them are
Energy Star qualified. So I think that boxes are not all the
same so that they were priced differently.
Mr. Gonzalez. And, forgive me, what is part of the
criteria? Do you have any on price when you--when you certified
a converter box manufacturer what is the parameters, I guess,
of pricing?
Ms. Baker. We don't have any parameters on pricing. The
pricing is up to the market.
Mr. Gonzalez. OK. Is there any other criteria that you
would have?
Ms. Baker. Well, we are testing for 24 features in the
testing of the boxes. We want to make sure the boxes work when
they plug them in so we have had in conjunction with the FCC
labs we have been testing these boxes to make sure that they
work. There are closed captioning requirements. There are
parental control requirements that are written into the
statute. We want to make sure those things work so we have had
pretty rigid testing going on at the FCC labs.
Mr. Gonzalez. And the converter box that will meet the
minimum requirements for certification whether it had
additional features, will people still be able to use their
vouchers?
Ms. Baker. As I mentioned, there are several permissive
features but there are also disqualifying features. I think if
it had a DVD in it, it would not be qualified. The parameters
that Congress gave us is for a very simple box that has a
remote control.
Mr. Gonzalez. Thank you very much, and I yield back my 10
seconds, Mr. Chairman.
Mr. Markey. The gentleman's time has expired. The gentleman
from Oregon, Mr. Walden, is recognized.
Mr. Walden. Thank you very much, Mr. Chairman. In Oregon we
are running about 2-1/2 times the national rate for filing for
the coupons. We appreciate the updates we get from NTIA.
Realizing we also have a lot of translators in low power but
especially translators given the mountainous areas of the
state. I know realizing it was going to take some extra time to
get these translators upgraded to digital the DRA--we created a
fund and reimbursed low power TV and translator station
licensees in rural communities was set up to provide them
reimbursement. I am concerned about the timing of that
reimbursement. This isn't your issue. It is our issue because
we wrote the statute and set the time lines but now in
retrospect it looks like to me there is a problem in the
disconnect there in that you were originally supposed to make
the payments during fiscal year 2009, but not actually put the
checks in the mail until, this will shock you, the next fiscal
year, October 1, 2010.
I know Senator Snow has put a bill 2607 aimed at moving up
the date that NTIA is permitted to put the checks in the mail
and allow for you to disburse the reimbursement sooner, in
fact, fiscal year 2009 through 2012. Do you think this is
needed? Are you hearing from low power folks?
Ms. Baker. I think it is--we strongly support the bill that
Senator Snow as well as Senator Stevens have introduced, and I
think it is $65 million which I think the goal is the digital
transition so it would be helpful to assist these low power
stations to actually go digital, and I think that was the
intention of this.
Mr. Walden. Thank you. That is good to know. Chairman
Martin, a couple of things. First, as an old broadcaster, I am
now out of the business, I am concerned about your rulemaking
related to mandating that broadcasters have to air public
service, so-called public service announcements on a fairly
regimented schedule, and the effect that can have. I don't know
that you have ever done that before at the FCC. Has the FCC
ever mandated other than perhaps on the emergency alert system
requirements and on relicensing issues, I think, we had to run
announcements.
Mr. Martin. Yeah. Yeah.
Mr. Walden. Have you ever taken this step before?
Mr. Martin. No, there has never been another step that we
have taken to mandate these kind of public service
announcements.
Mr. Walden. It seems a rather slippery slope, frankly, to
me.
Mr. Martin. Well, I think it reflected the gravity and the
concern that many people had to make sure that broadcasters
were doing all they could to educate consumers. Chairman Markey
and Chairman Dingell had sent us letters last summer
encouraging us to open the rulemaking and consider that
requirement to make sure that broadcasters and all the
industries the commission regulates were taking all the steps
they could to inform consumers. As I said in my opening
statement the broadcasters have recently filed an alternative
plan where they would have some more flexibility but make some
voluntary commitments of what they would end up doing as a safe
harbor potentially and so the commission is currently
evaluating that, and I hope that the commission will act on
that soon.
Mr. Walden. I hope you will take the voluntary effort into
consideration. Let me move on to a different topic and that is
the timing issue. Having been not in the TV business but the
radio business, I know during certain times of the year it is
easy to send engineers up and down your tower and at other
times it is not, and at certain times you can't push to a
certain date and have an engineer available at every station
necessarily. A lot of these are consulting engineers that get
brought in.
Given that the statute calls for a specific one-day change,
do you anticipate any problems with stations being able to
accommodate that change on a given day in the winter?
Mr. Martin. What we do anticipate is that will require, as
you said, some of the broadcasters to begin to work people
earlier in the year to make sure that they are capable of
making that change, and that may require some temporary
disruptions of service. One of the things that the commission
did in the order we adopted at the end of last year was put in
place that kind of flexibility for the broadcasters and which
we allowed them to come forward and say that I can only
schedule a construction crew on a certain date prior to that
date so I need to be able to move my antenna at that time so I
need to have flexibility.
Mr. Walden. So you got that built into your----
Mr. Martin. We have got a streamlined process for approval
for any kind of flexibility that is needed to make sure that
they can make that transition on that day.
Mr. Walden. And I think that is important for the committee
and for the consumers to know that in some markets the date may
actually be different than February 17, '09.
Mr. Martin. That is right, and one of the aspects of
providing them that flexibility is we said that they would have
to inform their viewers in those markets to make sure that
viewers understood that they could have this implication. At
times it could be a temporary change as they are going through
the construction but at times it could be more permanent but
either way we have different flexibility for those two
circumstances, but either way we have required them to inform
their viewers.
Mr. Walden. Secretary Baker, quickly as I am running out of
time here, we heard from Mr. Boucher about the transition
funding and all in England and the way that worked. Do you
believe that given the voluntary contributions by various
industry groups, cable and others, that there is sufficient
resource there coupled with the taxpayer money? Very quickly,
please.
Ms. Baker. Given the outstanding public-private
partnerships that we have seen, I think people are stepping up.
I think the funding is sufficient.
Mr. Markey. Thank you. The gentleman's time has expired.
The chair recognizes the gentlelady from California, Ms. Solis.
Ms. Solis. Thank you, Mr. Chairman.
Mr. Markey. There are 12 minutes left to go until the vote
on the floor.
Ms. Solis. I have basically two questions. My first
question is for Administrator Baker, and it is regarding the
challenges that I think we are going to be foreseeing here
along the U.S. and Mexican border, particularly the low power
TV stations and DTV transition, and I understand that the NTIA
has only certified 4 converter boxes thus far analog pass
through technology out of 37, and we know that right now there
are communities that are going to be disadvantaged, so is the
NTIA able to pinpoint where these geographical areas are in the
U.S.? Do we have any of that data?
Ms. Baker. We are able to tell--are you asking where the
low power stations are? Yes, absolutely. And I do know that
your district in particular is higher--it is 17.5 percent over
the air viewers so I do think it is particularly important for
education. You are right, we only have 4 certified boxes at
this point. In our final rule, we encouraged the permissive
feature of the analog pass through. I sent out a letter to all
of the manufacturers and asked them again to consider this
important audience. In response we have visited with several of
the major manufacturers, and we have notices of intent from
more than half a dozen for more boxes that will be analog pass
through so I think there will be sufficient boxes on the market
to serve these markets that need these boxes.
Ms. Solis. Are you also willing to work with retailers
along the U.S.-Mexican border because I am up in Los Angeles
but obviously in Texas and other important states that is where
I think we are really not seeing a lot of involvement with the
retail industry there, and I would ask what outreach is
happening if you could give us that information, and would
encourage you to do that.
Ms. Baker. We will be glad to do so.
Ms. Solis. And then my next question is for both of you.
Can the FCC or NTIA require appropriate labeling for analog
pass through technology in the form of some information like a
sticker that could be placed on the product. One of the
questions or concerns I have is that so many people in our
communities don't even know what that means. And I think that
it can be very misleading in terms of what they have to
purchase or what they should be purchasing, and I think we have
to do a better job at providing not just relying on the
retailers to give that information but having something that is
certified from the FCC or NTIA that can do that. Is that
something that we can maybe plan on?
Ms. Baker. We do not have the labeling authority.
Originally we thought it might be a bad idea just because we
thought we might have all sorts of boxes that might claim it
when the didn't have it but we have since changed our position
on that and we think that the manufacturers should label their
boxes and I think that many of them are labeling their boxes
for the analog pass through and we are encouraging that now.
Mr. Martin. I think that certainly trying to encourage both
the manufacturers of the boxes and the retailers to be
identifying the boxes that have the pass through is going to be
important. I have encouraged both the manufacturers that tried
to put this capability in all their boxes but certainly in some
of them, and I have encouraged the retailers to make sure that
they carry at least one that has an analog pass through but I
think labeling is a good idea. I hope the commission has
complimentary role with the converter box program, but I am not
sure that we would have the authority to require labeling of
those but certainly we can do all we can to encourage that.
Ms. Solis. And just going back to concerns that members of
the committee have had about giving information publicly and
the broadcasters providing PSAs to give information to our
communities, I think that is great. However, just in the last
2-month cycle, I have been getting a lot of phone calls in my
office and many Spanish speakers are not fully aware of what
this means. Congresswoman, do I have to buy a converter box? I
have cable, do I need to do this? So I think there still has to
be a lot more clarification in detail so it isn't just enough
to say that in February, 2009 this is what is going to happen
to you. People are getting worried and scared and they are
calling our offices. I don't know if other members are picking
that up but I certainly am especially with the senior
community, Spanish language senior community, so I think there
still has to be some testing that goes on out there about what
and how we phrase these words and technology.
So many people still are thinking what do I need to
purchase to make sure that we don't go black, that we are out,
and I really think that we have a responsibility and maybe we
do need to beef up your budgets to do that, and I would like to
just get a response.
Ms. Baker. I think you are right. It is a very important
outreach. Secretary Gutierrez himself has done several Spanish
language. He has done CNN Espanol, Washington Hispanic, La
Penun, Radio Hispanica----
Ms. Solis. But they are very short. They are 30 seconds. In
that sound bite you don't get the full gist of what has to
happen here and what takes place. People have to have things
explained to them in more detail so that is what I am asking
for.
Mr. Martin. I agree. The Consumers Union survey recently
indicated that we need to do more in educating people, not just
that it is coming but what they have to do, and I think that
will be the challenge of the consumer education efforts from us
and the industry.
Mr. Markey. The gentlelady's time has expired. There are 6
minutes and 42 seconds left to go on the roll call on the House
floor. If I recognize the gentleman from Texas for 5 minutes
that will leave us all a minute and a half to make it over to
the House floor. The gentleman is recognized to ask a round of
questions.
Mr. Green. Thank you, Mr. Chairman, and after I am finished
you all get to leave and we go vote, so this will be quick.
Chairman Martin, I learned earlier this year, I learned the
problems that the Spanish language DTV help line at the FCC.
Can you tell us what has been done to correct that, someone
calling in to the help line in Spanish?
Mr. Martin. We do end up having an opportunity for someone
calling in and asking for direction in Spanish and provide that
assistance. I am not sure what the problem was that was
identified but I will look into it, and we will certainly work
to correct it if there was a problem with our Spanish help line
at the time.
Mr. Green. Well, generally they couldn't get through the
line, and when they did the people on the line were not Spanish
speakers.
Mr. Martin. Well, then that would be a problem so I
didn't--I wasn't aware of that, but we will certainly correct
it. I think it has already been corrected but I will certainly
make sure it has been corrected.
Mr. Green. We will follow up with you, and I know our chair
will continue to have hearings and we will follow up with the
members who are interested. Secretary Baker, I mentioned in my
opening statement about the expiration date of 90 days, and
also that some of our retailers are only carrying the higher
end cost. I know there will be converter boxes as low as $39.99
coming out, but they may not be here until June or July. If
someone gets something next month are they going to have to
come and get another coupon to be able to get the cheaper one
that they might be able to afford in low income areas instead
of paying 20 bucks more?
Ms. Baker. I think we are seeing the market do different
things with the prices of the boxes so I think that we will
still be watching that. As far as the 90 days, I am committed
to look at that with the Congress as soon as we see the
redemption rates on these coupons.
Mr. Green. OK. Is there a way that that could be extended
much easier than having them send it back and go through that
mechanism again?
Ms. Baker. It really is a valuable tracking mechanism at
this point so we can see which coupons are being redeemed.
Mr. Green. Well, that gets me to my next question. I know
the stats show that NTIA sends out--that 9 percent of the total
applications have been denied. What are some of the common
reasons for being denied aside from being duplicates, and I
have also noticed a number of phone applications being denied
labeled as invalid. And you know why that is, and I guess
looking at information Senator Nelson sent yesterday that there
was a decision not to send coupons to multi-family locations.
Now I have to admit my area of Houston may not have as many as
South Florida but we do have folks who live in senior citizen
centers, assisted living centers, and they all have their own
TV. It may not be attached to cable to that facility. Is that
part of the reason that we are seeing some of the denials?
Ms. Baker. That is part of the--the largest amount of
denials are from duplicate submissions. Second to that are PO
boxes. I think we made PO boxes not eligible if you were not in
a rural or tribal Alaskan situation because of some of the
fraud that had gone on with the FEMA Katrina cards.
Mr. Green. So you are requiring a fixed address but they
may only get their mail at a PO box, is that----
Ms. Baker. You have to have a physical U.S. household
address to get a----
Mr. Green. OK. Does it have to be mailed at that address?
Ms. Baker. The box needs to be mailed to that address at
this point, yes, or the coupons.
Mr. Green. The problem we have though is that I have
seniors that I suggest not to get any mail at home because of
the theft of mail in some neighborhoods. You know, you might
revisit that and look at it, and if they put a physical address
on there that is able to be audited then you might want to
check on that and see if their mailing address, maybe a PO box.
Ms. Baker. I agree. Congress gave us a definition of
household and we just looked down the hall and used the census
definition of household which does exclude group quarters, and
we realized this problem and we are looking into fixing it,
particularly as far as the nursing home situation goes, and
possibly dealing with exceptions on a case by case basis.
Mr. Green. Mr. Chairman, my last question is I noticed in
an article in CQ yesterday that patent holders, for example,
for the ATSE technology part of the cost of this is there is a
large percentage, in fact, 20 percent of the cost may be paying
for patent. Believe me, if I had invented something, I would
want 20 percent but is that a high percentage cost say for
$69.99 or $59.99 that converter boxes available at Best Buy
that patent holders are being reimbursed much more than normal?
Ms. Baker. Well, coming from the Commerce Department we are
big fans of IP, intellectual properties, and patents so I
understand that that is a high--it is the same as a DVD that
costs about $59.95 so it is in line with other consumer
electronics--those prices.
Mr. Green. OK. What about something that may be needed? I
don't need a DVD but if I am going to be able to see TV over
the air something that is actually more mandated like a TV set,
what would be the patent cost or percentage cost for that? I
assume it would be very low because of the mass production.
Ms. Baker. Unfortunately, I don't have that figure. I would
be happy to get back to you on that.
Mr. Green. Well, that is one of the concerns, I think, when
people are realizing that they might be paying much more
percentage wise for something that is mandated or something
that they have to have instead of something if I don't--that
$59.95 for DVD, I don't want it, I don't need it. Thank you,
Mr. Chairman.
Mr. Markey. The gentleman's time has expired. There is a
minute and 11 seconds left to get over to the House floor.
There are 2 votes that are pending. We will probably take a 15-
minute break at this time at least. It could go a little bit
longer, so we will then hear from the second panel. And with
the thanks of the subcommittee the first panel has completed
its testimony.
[Recess.]
Mr. Markey. Ladies and gentlemen, thank you so much. I
apologize for the extended break. There were several
unanticipated roll calls. We continue to have a highly
contentious atmosphere out on the House floor. Here, however,
we are working together in harmony to find a solution to the
problems which are raised by the transition from analog to
digital television by February 17, 2009. And we have for our
second panel a very, very distinguished group of people, who
reflect just about every perspective that needs to be heard
from in the resolution of the remaining issues.
We are going to begin, and I am going to ask each of you to
keep your opening statement to 5 minutes, no more than 5
minutes. We are already deep into the afternoon, but I promise
you that there will be much interest on the part of the members
of the subcommittee to probe more deeply into your testimony.
So with that, I am going to recognize Ron Bruno, who is the
President of Community Broadcasters Association. Mike Doyle,
who is the congressman from western Pennsylvania on this
subcommittee, cannot be here at this moment. I think there is
an ice storm which has affected travel from Pittsburgh to come
down here. But he wanted me to extend his best to you, sir, and
whenever you are ready, you are recognized to address the
Subcommittee on Telecommunications for 5 minutes.
STATEMENT OF RONALD J. BRUNO, PRESIDENT, COMMUNITY BROADCASTERS
ASSOCIATION, PRESIDENT, BRUNO-GOODWORTH NETWORK, INC.,
PITTSBURGH, PA
Mr. Bruno. Thank you, Mr. Chairman, Mr. Ranking Member and
distinguished members of the subcommittee. I am honored to be
here today to discuss how the converter digital box program and
the transition generally will affect our industry. I applaud
and appreciate your opening remarks, Mr. Chairman, and Chairman
Dingell's comments, as well as the other ladies and gentlemen
that have commented positively on our issue and seem to
understand it. More than 10 years ago, Congress and the FCC
gave full power stations second channels on which to operate
their digital stations. Low power stations were not given a
second channel. Our industry has been told for the last 10
years that we would get digital channel assignments when all
the full power stations were ``taken care of.''
Only 6 months ago LPTV stations started to get their
digital channels granted. To date, only 35 percent of LPTV
stations have been granted a digital station, a second channel.
To put this into perspective there are 567 class A stations,
2,227 low power stations, and 4,418 translators that will not
be making the transition in February of next year. To be clear,
that is 80 percent of the stations in the country will continue
to be broadcasting in analog after February, 2009. Our industry
was under the impression that adequate time would be provided
for our stations to make the transition once our second
channels were received. Unfortunately, the digital converter
box program currently in use funded by taxpayer dollars and
administered by a government agency cuts our conversion time to
zero to the point where bankruptcy is the only logical result
for most of our stations.
Not long ago, Congress mandated NTIA to develop rules for
manufacturers to follow to build these boxes. Despite the CBA
and the translator stations commenting to NTIA about the
continued analog operations of our stations, NTIA determined
that including an analog tuner in a box was in violation of the
congressional mandate. Therefore, all boxes that have been
certified by the NTIA and manufactured do not have an analog
tuner. And as we heard today, only 4 of 37 certified boxes,
even pass through analog signals, in a manner that we call user
hostile that will lead to consumer confusion in its
installation and use. In a few days the public will start to
receive $40 coupons from NTIA for a DTV conversion box.
These people will go out to buy a box. If they have
purchased one of the vast majority of boxes certified by the
NTIA once they get home and plug it in they will realize that
they will lose their ability to receive the analog broadcast
continuing to be transmitted from 80 percent of the nation's TV
transmitter facilities. This will cause confusion and anger
among the general public when they can no longer watch the
local programming that they have previously enjoyed and relied
upon, and with each block sold that is one less viewer for
class A and low power stations. With the expectation of sales
being in the vicinity of 30 million boxes without a speedy and
effective remedy our industry is simply out of business, Mr.
Chairman.
With the extinction of class A stations goes the only
mandated locally produced programming on television. The CBA
believes that the manner in which NTIA implemented this program
is in violation of the longstanding requirements mandated in
the All Channel Receiver Act, and while we have filed a
Petition for Declaratory Ruling to this effect at the FCC, we
indeed may have no choice but to take our case to the courts.
We remain cautiously optimistic that Congress, the NTIA, and
the FCC will do the right thing for our industry. We understand
that Chairman Martin and his staff have a comprehensive
proposal to help our stations. We applaud Chairman Martin and
all his staff for working so hard with us on this issue. We
also applaud other industry groups like the NAB for their help
to get educational efforts out to consumers that they will not
get stuck with these bad TV converter boxes.
And while we look forward to the actions of the commission
and others, the steps needed to take to insure the survival of
these 7,212 stations will need your help. First, the CBA
requests that Congress mandate the NTIA going forward to only
authorize boxes that are equipment with both an analog and
digital tuner. We also request that the 90-day expiration date
on the coupon is overly burdensome to our consumers and should
be changed to 180 days. In stores where boxes with analog and
digital tuners are not available consumers should be allowed to
use coupons for other devices that have analog and digital
tuners. And because our industry is being effectively forced
into the transition significantly faster than anticipated and
much faster than the full power transition took, we accordingly
respect and request that the NTIA be provided additional funds
to assist class A and low power stations with the transition
and any said funding should be made available to the station
this year.
In closing, Mr. Chairman, I just want to say that we have
had for 3 years our proposal here for very limited class A must
carry where we would convert to digital on channel and forego
our analog channels, and that has not gone anywhere. Mr.
Chairman, I look forward to working with you. Thank you.
[The prepared statement of Mr. Bruno follows:]
Statement of Ron Bruno
Mr. Chairman, Mr. Ranking Member and distinguished Members
of the Subcommittee:
My name is Ron Bruno, and I am President of the Community
Broadcasters Association (CBA), the trade association of the
nation's Class A and low power television stations (LPTV). Our
stations provide important programming to audiences throughout
the country, including local news, sports and public affairs to
underserved communities, as well as religious, Spanish language
and other ethnic programming. I am honored to be here today to
discuss how the digital converter box program, and the
transition generally, will affect our industry.
More than 10 years ago, Congress and the FCC gave full
power stations second channels on which to operate their
digital stations. Low power stations were not given a second
channel at that time because LPTV stations are a secondary
service. Our industry has been told for the last 10 years that
we would get our digital channel assignments when all of the
full power stations were "taken care of". Only 6 months ago,
LPTV stations started to get their digital channels granted by
the FCC. To date, only 35% of LPTV stations have been granted a
second channel.
To put this in perspective, there are 567 Class A Stations,
2227 Low Power stations and 4,418 translator stations that will
not be making the transition in February of next year. To be
clear, that is 80% of the stations in the country will continue
to broadcast in analog after February of 2009. Our industry was
under the impression that adequate time would be provided to
our stations to make the transition once our second channels
were received. Unfortunately, the digital converter box program
currently in use, funded by tax payer dollars and administered
by a government agency, cuts our industry's conversion time to
zero and to the point where bankruptcy is the logical result
for most of our stations.
Not that long ago, Congress mandated NTIA to develop rules
for manufacturers to follow to build these boxes. Despite the
CBA and the translator stations commenting to NTIA about the
continued analog operation of our stations, NTIA determined
that including an analog tuner in the box was a violation of
the mandate. Therefore all boxes that have been certified by
the NTIA and manufactured do not have an analog tuner. Only
three of the over 30 boxes certified by the NTIA even "pass
through" analog signals, albeit in a manner that will likely
lead to consumer confusion in installation and use.
In a few days the public will start to receive $40 coupons
from NTIA for a DTV conversion box. These people will go and
buy a box. If they have purchased one of the vast majority of
the boxes certified by the NTIA, once they get home and plug it
in they will realize that they will lose their ability to
receive analog broadcasts continuing to be transmitted from
about 80% of the nation's TV transmitter facilities. Local
programming, religious services, high school sports, foreign
language channels and political debates carried locally will
not be able to be seen in these homes with the bad converter
box. This will cause confusion and anger among the general
public when they can no longer watch the local programming that
they have previously enjoyed and relied upon.
And with each such box sold, that is one less viewer for a
Class A, low power or translator station. With the expectation
of sales being in the vicinity of 30 million boxes, without a
speedy and effective remedy, our industry is simply out of
business Mr. Chairman. And with the extinction of Class A
television stations goes the only mandated locally produced
programming on television.
The CBA believes that the manner in which NTIA implemented
this program is in violation of long standing requirements
mandated by Congress in the All Channel Receiver Act; and while
we have filed a Petition for Declaratory Ruling to this effect
at the FCC and may indeed have no choice but to take our case
to the courts, we remain cautiously optimistic that Congress,
the NTIA and the FCC will do the right thing for our industry.
We understand that FCC Chairman Martin and his staff have a
comprehensive proposal to help our stations. We applaud
Chairman Martin and all of his staff for working so hard with
us on this issue. We also applaud other industry groups like
the NAB for their help to get educational efforts out to
consumers so that they will not get stuck with the bad DTV
Converter boxes that only receives digital signals. And while
we look forward to the actions of the Commission on issues
relating to our industry, other steps need to be taken to
ensure the survival of these 7,212 stations and the important
service they provide to the public.
First, the CBA requests that the Congress mandate the NTIA,
going forward, to only authorize converter boxes that are
equipped with both analog and digital tuners. We also suggest
that the 90 day expiration date on the coupon is overly
burdensome to consumers and should be changed to 180 days. In
stores where boxes with analog and digital tuners are not
available consumers should be allowed to use coupons for other
devices that do have analog and digital tuners. Because our
industry is being effectively forced into the transition
significantly faster than anticipated, and much faster than
full power stations, which had 10 years and much greater
resources than we do to make this transition, we respectfully
request that the NTIA be provided additional funds to assist
Class A, low power and translator stations with the transition
and any such funding should be made available to stations this
year.
Lastly, and I can't stress this enough, the CBA has put
forth a proposal to the Congress for the last three years that
would have expedited and will expedite our industry's
transition to digital. Specifically, our proposal calls for
Class A stations to be given limited cable carriage rights on
the basic digital tier in exchange for foregoing the second
channel to which we are entitled, thus freeing up spectrum and
avoiding interference issues. The proposal is reasonable and it
is fair, and I only hope that this Committee will seriously
consider this proposal in the very near future. Our industry's
existence may very well depend on it.
Mr. Chairman I appreciate your time today and look forward
to answering all of your questions.
----------
Mr. Markey. Thank you, Mr. Bruno, very much. Our second
witness, Kyle McSlarrow, is the President and CEO of the
National Cable & Telecommunications Association. Welcome, sir.
Whenever you are ready, please begin.
STATEMENT OF KYLE MCSLARROW, PRESIDENT AND CEO, NATIONAL CABLE
& TELECOMMUNICATIONS ASSOCIATION, WASHINGTON, D.C.
Mr. McSlarrow. Thank you, Mr. Chairman, Ranking Member
Stearns. I am pleased to be here. Earlier today Chairman Martin
had a chart on cable prices with a few data points, which I
think is his version of the American Express card because he
never leaves home without it. In the narrowest sense the data
points he used were accurate but uses to which they are put are
false and deceptive, and rather than take time now with your
permission, Mr. Chairman, I will send you a letter and explain
why. On the digital transition first let me just compliment all
my colleagues in the industry and at the FCC and NTIA for
working together so well. I think that has actually been a real
success story.
The issue that Mr. Bruno raises is a legitimate one. This
morning I received, as I am sure some of my colleagues did, a
letter from Chairman Martin addressed to us urging us to work
in voluntary ways to address--to insure that low power stations
are still seen by the viewers after the transition. And as
regards cable what was put in the letter were voluntary ideas
that I wouldn't quibble with. We in fact carry hundreds of low
power stations voluntarily today. We will do so in the future
and I am certainly happy to work with that community to see if
we can do even more of that and we are certainly supportive of
making sure the analog pass through feature is in as many boxes
as possible and participating in education campaign for
consumers so that they know about them, know where they can get
them, and actually get them.
What is a little dismaying is that both in Chairman
Martin's testimony and in this letter there was no mention of
an item that has been reported as circulating at the FCC which
would go further and actually inject must carry for low power
stations into this process, and I am troubled by it in two
respects. One, just process once again. There is an item that
no one has ever seen. So far as I could tell no one actually
asked for it and so I don't know exactly what is in it. Number
2, as you know, Mr. Chairman, you and others, Commissioner
Adelstein and others on the commission urged the cable industry
several years ago to reach a deal, a voluntary agreement with
the public broadcasting stations to help them with their
business plans after the digital transition, and we did. This
committee, and I testified before you and made this commitment,
asked us to step up and engage in a consumer education campaign
which we launched last year, and we took many of the ideas if
not all of the ideas that you suggested as part of that
campaign, and this committee, and we worked with you and your
staff and we appreciate it, urged us even though the
legislation didn't cross the finish line in 2005 because it was
put in reconciliation to voluntarily figure out a plan to make
the transition seamless for our customers and so working with
you we came up with a 3-year dual carriage plan, which has now
been incorporated into an FCC rulemaking.
We are happy to do all that, but we are now a year out, and
I would suggest, Mr. Chairman, and urge you to use your good
offices to send a message to the FCC that this is a time for
all of us to be working together to solve real problems and not
raise red herrings that are probably just going to engender
more confusion and greater possibility of litigation. Thank
you, Mr. Chairman.
[The prepared statement of Mr. McSlarrow follows:]
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Mr. Markey. Thank you, Mr. McSlarrow. Our next witness,
David Rehr, is the President and Chief Executive Officer of the
National Association of Broadcasters. Welcome back, Mr. Rehr.
Whenever you are ready, please begin.
STATEMENT OF DAVID K. REHR, PRESIDENT AND CEO, NATIONAL
ASSOCIATION OF BROADCASTERS, WASHINGTON, D.C.
Mr. Rehr. OK. Thank you, Chairman Markey, and Ranking
Member Stearns. Thank you for inviting me to testify on behalf
of the National Association of Broadcasters on our number 1
television priority, a successful digital television
transition. I would like to make 4 points today. One, NAB
aggressively constructed a comprehensive and empirically based
DTV education effort. Broadcasters are committed to insuring
that no viewer anywhere is left uninformed. After all, over the
air viewers are our life blood. In constructing our campaign,
we have turned to experts in advertising, marketing, and
consumer research to develop a program designed to reach every
corner of America, and to determine the best way to educate
consumers, particularly those most impacted such as senior
citizens and minority in rural populations.
This explains why every broadcast network in nearly 1,500
television stations nationwide have chosen to participate in
NAB's massive, multi-faceted, multi-platform campaign. NAB is
committed to a comprehensive program of DTV action spots, 30-
minute education programs, informational messages through
crawls, snipes, and/or news tickers and other features such as
a 100-day count down. All told the value of this campaign is
estimated at more than $1 billion and will generate 132 billion
audience impressions. We anticipate each household will either
hear, see, or be exposed to this message some 642 times before
February 17, 2009.
Two, broadcasters have turned to the air waves to educate
America about the transition. NAB is executing a disciplined
and focused campaign. The first phase launched last fall drove
the fact home that the transition was happening. Results of our
January survey showed that consumer awareness has jumped
dramatically to 79 percent up from 38 percent just one year
ago. We anticipate continued forward momentum. The second phase
of our effort will be to focus on the converter box coupon
program. NAB has produced 4 new action spots and we would like
to take the opportunity to show one now. Please play the spot.
[Video.]
Three, NAB and broadcasters have unleashed their creative
talents which go beyond the air waves. A speaker's bureau, we
are on track to deliver more than 8,000 plus speeches to
community groups nationwide. DTV trekkers, these customized
trucks designed to look like giant televisions on wheels are
crisscrossing America making more than 600 stops at local
events. Today the trekkers are in Noel, Missouri and Orlando,
Florida. Retailer outreach, we are teaming up with Wal-Mart and
other retailers to air the DTV action spots on their in-store
channels to educate shoppers to take action. Community
outreach, NAB is partnered with a variety of organizations,
including the leadership conference on civil rights, the
National Black Church Initiative, and Univision to name just a
few to amplify our outreach efforts.
And, finally, point 4. We must continue to build on our
public-private partnership. Clearly this is not a project
broadcasters can tackle alone. From the beginning we knew this
effort would require everyone's cooperation and involvement.
The DTV coalition, a broad-based group of 207 organizations,
including the FCC and NTIA, is taking the lead to insure a
smooth transition. We look forward to working with all of our
partners, including cable, electronics manufacturers,
retailers, community broadcasters, consumer advocates, and the
government as we go forward. The upcoming transition is a
historic event for America. Crystal clear pictures, phenomenal
sound, more programs and services, and it is free. I pledge
that NAB and our broadcasters will do all we can to make the
switch successful.
We welcome the committee's input. We thank you for your
leadership. Thank you for inviting me here today, and I am
happy to answer any questions.
[The prepared statement of Mr. Rehr follows:]
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Mr. Markey. Thank you, Mr. Rehr, very much. Our next
witness, Chris Murray, is Senior Counsel for the Consumers
Union. We welcome you today, sir. Whenever you are ready,
please begin.
STATEMENT OF CHRIS MURRAY, SENIOR COUNSEL, CONSUMERS UNION,
WASHINGTON, D.C.
Mr. Murray. Thanks again for having me, Chairman Markey,
and Ranking Member Stearns. I appreciate your attention in
sitting through a long hearing today. So February 17 is more
than just Paris Hilton's birthday, we have learned today. It is
the day at which in Mr. Barton's district more than a half a
million households without some sort of intervention or
education between now and then those TVs will go blank. That is
nearly 1 in 4 households in his district. In Mr. Green's
district we got nearly half a million households, about 23
percent. In the Los Angeles DMA, we have got nearly a million
over the air households. It is my firm hope that the DTV
transition is going to go absolutely swimmingly but it is my
job to worry, and today I am here to express the fear that a
few consumers are going to be left in the dark when the analog
switch off occurs.
There is good news and bad news for consumers today. Our
Consumer Reports National Research Center conducted a survey
which had some troubling findings. They found that 3 in 4
consumers who are aware of the transition actually have major
misconceptions about it. Half of them, nearly half of them,
believe that every TV needs to be digital and those consumers
are probably more likely to go out and buy a new TV set, not
the worst thing in the world but it is important that they know
what the least cost migration path to digital transition is for
them. One in 4 consumers aware believe that they have to throw
all their analog sets in the trash. Obviously, this generates
concern from electronics waste perspective.
And of those aware, nearly 3 in 4 don't know about NTIA's
program for converter box coupons. One finding that I actually
omitted in my written testimony is that 42 percent of consumers
who have no functioning TV set after February 17, 2009, have no
plans to do anything about it. Let me underscore that, 42
percent, nearly half of people, who will have no over the air
signals, have no plans to do anything about it yet. I really
hope this is going to change but right now I think there is
cause for concern, 370 days and counting. Awareness is good but
it is accurate information that we actually care about. We can
be aware that a city bus is barreling towards us but it is a
lot more important to know where that sidewalk is and to know
how to side step that bus.
Citizens and consumers didn't ask for the digital
transition and I believe since it is the result of a federal
mandate it is the obligation of the Federal government to
provide consumers good information to help them sort through
some of the noise and find out what the least cost path is to
switch to digital. So the FCC and NTIA who were in charge of
the transition have consumer education budgets of $2.5 million
and $5 million, respectively, at the moment. FCC has requested
an additional $20. Just as a base line, I will note as
Congressman Boucher did earlier, that in the UK, which has
about 1/5 the population of the U.S., they are spending $400
million educating consumers on a per capita basis. That is
about 265 times more than we are presently planning to spend.
Perhaps that is too big a number. Perhaps they are spending too
much money. Perhaps we don't need to go and knock on doors like
they did, but should we be concerned that we are not doing
these things that perhaps there will be consumers who might not
get reached. I believe that is the case.
It is great that industry is spending a lot of money. I
think the campaigns that are out there are excellent. I think
the NAB's commercials are informative. But in the end everybody
does have a bias. Somebody is always looking to sell a product
or service. Consumer electronics industry would like you to buy
a new television set. Cable would like you to buy cable
service. These are all good things but I do believe the
government has an obligation to help consumers sort through the
noise and find that least cost transition path.
I will leave you with a couple of quick recommendations.
First for consumers who want to get their converter boxes, they
should apply early. Don't wait to buy the box since it will
expire 90 days from the date that that coupon gets put in the
mail. And test your signal as early as you can because these
digital signals are already out there, and you don't need to
wait until February 17 to run a test. Second, NTIA and the FCC,
the agencies in charge of this program, need to keep their
hands on the steering wheel, and as I said help consumers find
that least cost path to make the switch. I wish we had perhaps
run the clock back and find some test markets to do this. You
see in other countries where they have done it in the UK and
Italy, in Germany especially. They have done this in a phase-in
basis. They haven't done one flash cut switchover, and I
believe that we need to find some test markets so that we know
what is going to come.
Finally, community leaders can't exclusively rely on
government, and we need a localized action plan. I do think
that is a place where Congress can have a role in helping make
their community leaders aware and helping them find some plans.
So again on February 17 we are going to make the switch to
digital, and unless adequate public education takes place
millions of consumers will wake up that morning and find a
blank TV screen, and it is my hope that this will all go
swimmingly.
[The prepared statement of Mr. Murray follows:]
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Mr. Markey. Thanks, Mr. Murray, very much. Our next
witness, Tom Romeo, is the Director for Federal Services,
Global Business Service or IBM Corporation, a very important
person in this whole project, and we welcome him and please
begin.
STATEMENT OF TOM ROMEO, DIRECTOR, FEDERAL SERVICES, GLOBAL
BUSINESS SERVICE, IBM CORPORATION, BETHESDA, MARYLAND
Mr. Romeo. Chairman Markey and Ranking Member Stearns,
thank you for the opportunity to testify before you today, and
to provide you an update on the progress the IBM team has made
in implementing the NTIA TV converter box coupon program. As
Assistant Secretary Baker mentioned earlier on January 1 the
consumer support center officially opened for business. It
started taking orders from consumers across the nation for TV
converter box coupons. On that first day over 249,000
applications came in from consumers in all 50 states. Over
475,000 coupons were requested on day one. While initial volume
was higher than expected, all systems continued to handle
requests and our team reacted quickly to pinpoint needed
adjustments and implement solutions.
For example, the volume of Spanish language callers to the
consumer support center exceeded our initial projections. We
moved quickly on two fronts to accommodate this fact. First, we
added additional Spanish language agents to match the volume
and minimize wait times for those needing assistance in
Spanish. Second, we added an automated, interactive voice
response system for Spanish language callers. Our experience
with the English language IVR system shows that approximately
78 percent of the calls are successfully completed within the
IVR system. We expect similar results for the Spanish language
IVR. The high percentage of calls which are fully handled with
the IVR system speaks to the ease of applying for coupons over
the phone. Our experience with high demand during those first
few weeks in January underscores the unique nature of this
program.
The IBM team has been able to react quickly and make
adjustments to the system as unanticipated developments arise.
The flexibility built into the system architecture will allow
for continued rapid response and adjustments going forward. The
next step is to begin mailing coupons to consumers. That will
get underway next week starting February 17. Our roll out plan
includes continuing to work closely with our retail partners to
confirm sufficient inventory of converter boxes to meet
consumer demand. If necessary we can adjust the rate of coupon
distribution to match as closely as possible projected retail
inventory so consumers are able to purchase a converter box
within the 90-day expiration period for the coupons.
In 118 days since I last came before this committee, we
have made great progress in recruiting the voluntary
participation of both large national retailers and smaller
local retailers. Over 615 retailers representing more than
16,475 stores nationwide are currently certified to participate
in the program. Eight of the largest consumer electronic
retailers, Best Buy, Circuit City, K-Mart, RadioShack, Sam's
Club, Sears, Target, and Wal-Mart are among the 615 retailers
certified to participate in the coupon program. Retail
recruitment efforts will continue until the March 31, 2008
deadline. In preparation for coupon distribution to consumers,
we completed a pilot program in two markets. This pilot program
conducted during January and early February allowed for testing
of all components of the system and their integration.
Based on the results from the pilot program, we have made
some updates to the system in the process, including the use of
secret shoppers to validate the readiness of individual retail
stores and revising language that appears on the coupon card to
make for a consistent consumer experience. Although we are
entering the operational phase of the coupon program, we remain
focused on the driving force of consumer education. Our
partner, Ketchum Public Affairs, continues to lead the consumer
education effort focused on the 5 communities who most likely
rely more heavily on over the air broadcasting than the general
population. They are senior and older Americans, the
economically disadvantaged, rural residents, people with
disabilities, and minorities.
We continue to build and leverage a network of committed
partners who already have access to many of the population
segments we are targeting. The NTIA TV converter box coupon
program requires innovative thinking, leading technology, and
flexibility. The IBM team is pleased to be part of this vital
program and recognizes that many challenges remain along the
way to February 17, 2009. Our team is ready to continue to meet
those challenges and work to insure 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:]
Statement of Tom Romeo
Mr. Chairman and Members of the Subcommittee, thank you for
this opportunity to testify before you again on the status of
the DTV Transition. My name is Tom Romeo and I am Director of
Federal Services for IBM's Global Business Services, Public
Sector. I am here today to update you on the progress the IBM
Team has made implementing the National Telecommunications and
Information Administration (NTIA) TV Converter Box Coupon
Program.
NTIA awarded IBM the contract to provide services for the
TV Converter Box Coupon Program on August, 15, 2007. IBM and
its business partners, Ketchum Public Affairs, Epiq Systems and
Corporate Lodging Consultants are providing services in four
areas:
Consumer education
Coupon distribution to consumers and redemption
Support for retail store participation
Financial processing to reimburse retailers, and to
maintain records.
The Coupon Program, authorized by the Digital Television
Transition and Public Safety Act of 2005, provides for
distribution and redemption of coupons that consumers may apply
toward the purchase of digital-to-analog converter boxes.
Households using analog televisions will not be able to receive
digital broadcasts after February 17, 2009, unless the analog
television is connected to a converter box that switches the
digital signal to an analog format, or the analog television is
connected to cable or satellite service.
Between January 1, 2008 and March 31, 2009, all U.S.
households may request up to two coupons, worth $40 each to be
used toward the purchase of up to two digital-to-analog
converter boxes until the initial $990 million allocated for
the program has been exhausted. After this initial phase of the
program, NTIA may request an additional $510 million already
authorized by Congress. During this "contingent period",
coupons will be available exclusively to households that rely
on over-the-air broadcasting as their sole source of television
programming.
Program Goals
With these parameters, IBM designed the NTIA TV Converter
Box Coupon Program to be consumer-focused, easy to use, and
provide maximum choice and access for both consumers and
retailers. Ensuring high retailer participation and
satisfaction are essential elements to the overall success of
the program. Our goal continues to be to successfully
communicate the details of the TV Converter Box Coupon Program
to targeted consumers, distribute coupons, and complete the
redemption process efficiently.
Program Launch
On January 1, 2008 the Consumer Support Center opened for
business and began to take orders from consumers across the
nation for their TV Converter Box Coupons. Consumers were able
to order coupons using any of the four available options. The
toll-free phone number (1-888-DTV-2009) is operational 24x7
with live agents available to callers at all times. Operators
can accommodate requests in more than 150 languages. The toll-
free phone option also provides a TTY solution for use by the
hearing impaired community. Other options to apply for coupons
include online at www.DTV2009.gov, by mail (P.O. Box 2000,
Portland, OR 97208-2000), and via fax (1-888-DTV-4ME2). To
date, approximately 65% of the requests received have come in
via the Internet, 35% via the telephone, and less than 1% for
the mail and fax channels combined.
On January 1, 2008, over 249,670 applications came in from
consumers in all 50 states for a total of 475,652 coupons
requested. High demand continued through the first week of the
program resulting in over 1,131,795 application requests for
2,144,632 coupons by week's end. While this initial volume was
higher than expected, all systems continued to handle requests,
and our team reacted quickly to pinpoint needed adjustments and
implement solutions quickly. For example, the volume of
Spanish-language callers to the Consumer Support Center
exceeded our initial projections. We moved quickly on two
fronts to accommodate this fact. First, we added additional
Spanish-language agents to match the volume and minimize wait
times for those needing assistance in Spanish during times of
peak call volume. Second, we expedited implementation of an
automated Interactive Voice Response (IVR) system for Spanish-
language callers to assist in handling the high volumes of
Spanish-language requests in a timely manner. Our experience
with the English-language IVR system shows that approximately
78% of calls are successfully completed within the IVR system.
We expect similar results for the Spanish language IVR. The
high percentage of calls which are fully handled within the IVR
system speaks to the ease of applying for coupons over the
phone.
As the Coupon Program moves into the next phase, we will
continue to closely monitor all aspects of the system and make
adjustments as needed in a timely fashion.
Coupon Distribution
As of February 12, 2008, 4,801,777 coupons have been
requested via 2,767,519 applications from consumers across the
country. We will begin mailing these coupons out to consumers
the week of February 17, 2008 distributing them in the order in
which they were received. This roll out plan also includes
continuing to work closely with our retail partners to confirm
a sufficient number of converter boxes available at retail
outlets to meet consumer demand. If necessary, we will adjust
the rate of coupon distribution to match as closely as possible
projected retail inventory so consumers are able to purchase a
converter box within the 90-day expiration period for the
coupons.
Included in the coupon mailing to consumers is information
about where they can purchase a coupon-eligible converter box
in their local area, and what they need to do to use the
coupon. Consumers can also search for participating retailers
near their address using a "Retailers Near You" feature on the
Coupon Program website (https://www.dtv2009.gov/
VendorSearch.aspx).
Retailer Participation
In the 118 days since I last came before this Committee, I
am pleased to report that we have made great progress in
recruiting the voluntary participation of both large national
retailers and smaller, local retailers. We project that when
coupons are mailed starting the week of February 17, 2008, over
9,000 retail locations will be ready to fully participate in
the program. This includes locations in all 50 states, Puerto
Rico, and the U.S. Virgin Islands. These stores will have
completed certification in the Coupon Program, indicated that
their employees are trained, have converter box inventory in
their stores, and have their point-of-sale systems prepared to
redeem coupons.
Test Phase
In preparation for coupon distribution to consumers, we
have completed the Open Operational Capabilities Demonstration
(OCD) phase of the program. This pilot program, conducted
during January and early February, allowed for testing of all
components of the system and their integration - coupon
ordering, distribution, redemption at a participating retailer,
and reimbursement to the retailer. The pilot program provided
valuable insight into how well our technical systems are
performing and identified necessary adjustments. Based on the
results from the pilot program, we have made some updates to
the system and the process, including the use of "secret
shoppers" to validate the readiness of individual retail
stores, and revising language that appears on the coupon card
to make for a consistent consumer experience.
Consumer Education
Although we are entering the operational phase of the
Coupon Program, we remain focused on the driving force of
Consumer Education. Our partner, Ketchum Public Affairs,
continues to lead the consumer education effort focused on the
five communities who most likely rely more heavily on over-the-
air broadcasting than the general population: 1) senior and
older Americans; 2) the economically disadvantaged; 3) rural
residents; 4) people with disabilities; and 5) minorities.
Focus groups, which included significant representation from
these groups, were used to develop the branding and key
messages for the Coupon Program. We continue to build and
leverage a network of committed partners who already have
access to many of the population segments we are targeting. A
Partnership Toolkit was developed and includes DTV and Coupon
Program background material, fact sheets, posters, sample
public service announcements, and presentations. The materials
can be co-branded for use by partners. Also included are
specific strategies on how to reach the media to effectively
deliver the Coupon Program message, and ideas and resources for
informing consumers through community and in-store events. In
addition, our work with the media to place stories about the
Coupon Program is heavily focused not only on national media,
but also the television markets that have the largest estimated
number and percentage of over-the-air reliant households. We
believe the strong demand for coupons indicates we are on the
right track educating consumers about the Coupon Program.
Conclusion
The IBM Team is pleased to be part of implementing this
vital program and recognizes that many challenges remain on the
way to February 17, 2009. Our team continues to be ready to
meet those challenges and 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 today and I am
happy to answer any questions.
----------
Mr. Markey. Thank you, Mr. Romeo, very much. Our next
witness, Laurance Harris, is the Vice President for
Merchandising for RadioShack. Welcome, sir.
STATEMENT OF LAURANCE HARRIS, VICE PRESIDENT MERCHANDISING,
RADIOSHACK, FORT WORTH, TX
Mr. Harris. Good afternoon, Chairman Markey, and Ranking
Member Stearns. I am Vice President of Merchandising at
RadioShack Corporation. I am pleased to be here even more so
when I saw the equipment we are using for recording is
RadioShack equipment, so it was good news. I am here on the
opportunity to speak on behalf of RadioShack and the Consumer
Electronics Retailers Coalition to discuss the essential role
of RadioShack and the retail industry are playing in NTIA's
converter box program. RadioShack has 4,400 owned and operated
stores, an additional 1,500 dealer stores throughout the
country. Even with our long experience, the digital transition
presents unique challenges to RadioShack and other retailers
and the consumer. We worked diligently over the last 3 years to
help make this transition as smooth as possible for consumers.
More recently retailers have worked closely with NTIA and
its vendors. RadioShack is pleased to announce it will have
converter boxes available in all of its corporate stores and
through Direct-to-You program by February 22, in time for the
initial distribution of the converter box coupons. We believe
that RadioShack and CERC's other brick and mortar members are
prepared for the start of the program. Let me outline specific
steps taken and planned by RadioShack and other retailers
regarding the implementation. Retailers appreciate the steps
taken by the NTIA to insure use of electronic coupons that work
in a manner similar to plastic pre-paid, private label cards,
so each retailer participating in the converter box program
must in some manner adopt its core point of sale systems.
CERC members are proud that several of us were able to
initiate work on the necessary changes during the 4th quarter
which is of course our busiest sales period. We are on
scheduled to complete the modifications in time for the coupon
distribution. The adoption of a hard date for the DTV
transition has provided certainty for retailers. They know when
consumers will need to buy any necessary equipment.
Nevertheless, no one knows how many households will need a
converter box. Indeed, no one anticipated the request to exceed
$4.8 million within the first month of the program. In reality,
we anticipate that some of the coupons requested will not be
redeemed for some customers will just simply not need a box.
Even so RadioShack and other participating CERC members are
creating distribution systems that will handle millions of
converter boxes over the next 18 months.
We are all working to insure we have inventory in the right
place at the right time. We are pleased that the NTIA is
providing us timely information regarding where consumer demand
for coupons exist. We hope to receive even more granular detail
on data and coupon redemption rates once the coupons are
distributed. This information is critical so we can target
inventory exactly where it is needed. We believe the retailers
will be prepared to respond with initial coupon demand. As I
mentioned, RadioShack will have stock ready when consumers
receive their coupons. In the event that a RadioShack's own
store's inventory is temporarily depleted, our sales associate
can order the product from stock located in our Fort Worth
distribution center.
The converter box will then be shipped to the customer's
home at no additional shipping charge through our Direct-to-You
program. We are also pleased to announce today for the first
time we will be taking coupon orders by phone at RadioShack,
877-RSD-TV4U beginning March 1.
Mr. Markey. What was that number again?
Mr. Harris. Do you want to order a box? 877-RSD-TV4U.
Again, it is our first announcement. That will be ready by
around March 1. The boxes will be shipped to the customer's
home, again free of shipping charges. Pricing the converter box
even with its simple features presented challenges. We only
recently became aware of one issue in December, 2007, as orders
were being placed retailers learned that U.S. Customs had
imposed a 5 percent import tax on these boxes. Retailers feel
this duty on a product that the government has subsidized will
serve to impede distribution and burden the consumers. We hope
this committee will join in seeking a legislative waiver on
this import duty as surely as Congress could not have intended
this result.
Regarding low power television, we think NTIA was right not
to require the inclusion of a signal pass through feature in
the converter box. In our own decision we focused in providing
the price, quality, and features that the vast majority of
customers would need. We decided not to include a pass through
feature for all boxes for the same reasons because we know the
private sector prepared solutions already for this issue for
the households that need them. Perhaps the most important
success is the private sector's planning to educate customers
about the digital transition. CERC applauds the efforts of our
industry partners. We know these efforts are working. CA just
announced last week that consumer awareness of the digital
transition has grown 80 percent since 2006.
We also recognize that retailers have the most direct role
in consumer education. We are the end game. We are the place
where customers go to ask the questions. RadioShack's consumer
education plans are the following, an updated RadioShack web
site, notifications in tens of millions of RadioShack direct
mail flyers, on February 19 any receipt printed by a RadioShack
store will alert the customer of the digital transition, in
store window signs and banners, national advertising, radio
advertising in both English and Spanish, and various public
relations practices.
RadioShack and all CERC members also recognize the critical
importance of having trained sales associates to answer
questions regarding the transition. RadioShack headquarters----
Mr. Markey. If you could please summarize your statement,
sir.
Mr. Harris. In conclusion, as we embark on this program, we
want the committee to understand the extraordinary efforts
retailers have undertaken. RadioShack, along with 4,400 stores
and more than 30,000 retail employees and support staff will
insure training throughout the program. We are confident we
have the necessary training systems in place. Our employees
will be ready for transition. Thank you again for the
opportunity to testify. I look forward to answering any
questions.
[The prepared statement of Mr. Harris follows:]
Statement of Laurance Harris
Good morning. My name is Larry Harris. I am Vice President
of Merchandising at RadioShack Corporation. With the DTV
transition date just over one year away, I appreciate the
opportunity to appear today at this important hearing to
discuss the essential role that RadioShack and the retail
industry are playing in the National Telecommunications and
Information Administration's (NTIA) converter box program. I am
here this morning to speak on behalf of both RadioShack and the
Consumer Electronics Retailers Coalition (CERC), which in
addition to RadioShack, includes as its members, Amazon.com,
Best Buy, Circuit City, Sears, Target, and WalMart, as well as
three major retail associations - the North American Retail
Dealers Association (NARDA), the National Retail Federation
(NRF) and the Retail Industry Leaders Association (RILA).
Background on RadioShack and Retail Involvement in the Transition to
Date
RadioShack sells a wide variety of consumer electronics
products and is one of the largest retailers of consumer
electronics equipment in the United States, with 4,400 owned
and operated stores and an additional 1,500 dealer stores
throughout the country. RadioShack is a primary resource to
consumers for devices and accessories that assist in household
connectivity and networking. Even with significant experience
in the consumer electronics retail business, the transition to
digital transition presents unique challenges to RadioShack,
other retailers and to the consumer.
RadioShack and the other members of CERC have understood
for years the unique role retailers play in the transition to
digital television. This role, of course, includes having the
right products available at the right time for consumers. But
equally important is the critical role retailers play in
educating and assisting consumers in making purchasing
decisions that best satisfy their needs. We have worked
diligently over the last few years to help make this transition
as smooth as possible for all consumers. At this time, there
are approximately 250 certified retailers in the converter box
coupon program. Each of the retailers participating in the
coupon program is working closely with NTIA and its vendors,
IBM and CLC, on the program's implementation. RadioShack is
pleased to announce that it will have converter boxes available
in all of its corporate stores by February 22nd, to coincide
with the initial distribution and receipt of coupons. In
addition, all stores will be able to accept coupons beginning
on February 19th, through our Direct-to-You program which I
will discuss later. Several other CERC members have similarly
announced their intentions to have stock in stores by the time
coupons are received by consumers.
The converter box program as created by Congress presents
unique challenges to retailers, but we believe that RadioShack
and CERC's other brick-and-mortar members are prepared for the
start of the program. And like the other industry groups
involved - the broadcast, cable and manufacturing companies -
the retail industry is investing millions of its own dollars
and, equally important, significant human resources to
facilitate a smooth transition. This public-private sector
balance is purposeful and is proving to be an effective means
by which to make the digital transition.
During the rest of my testimony, I outline specific steps
taken and planned by RadioShack and other retailers regarding
the implementation of the coupon program, including the
implementation of new point-of-sale (POS) functionality,
inventory plans, pricing issues and consumer education. In
addition to discussing these steps, I also highlight some
specific challenges presented as we embark on the distribution
of converter boxes.
Modification of POS Systems
Each retailer participating in the converter box coupon
program must in some manner adapt its core POS functionality if
it elects to electronically authorize the government issued
coupon. Retailers appreciate the steps taken by NTIA to ensure
use of electronic coupons that authorize in a manner similar to
plastic pre-paid private label cards. NTIA's contractor, IBM,
and its sub-contractor CLC have also provided options that
address the requirements of the automated systems used by
larger retailers, as well as systems solutions to accommodate
smaller retailers. Still, even with the flexibility provided,
each retailer has its own unique POS systems and implementing
the ability to process government issued coupons has presented
each retailer with its own challenges. The cost of changing POS
systems to support NTIA requirements in this manner is being
incurred by each retailer - the government has not provided
funding for any part of this process. In addition, CERC members
are proud that several of us were able to initiate project work
on these system changes during the 4th quarter of the year, our
busiest sales period. Prior to roll-out of the systems later
this month, a number of participating retailers are currently
participating in NTIA's pilot programs in Kansas and D.C.
Distribution and Maintenance of Converter Box Inventory
The creation of a hard date for the DTV transition has
provided certainty for retailers as to when they needed to be
ready to offer consumers any necessary equipment. However, even
with the hard date, some uncertainty remains as to how many
households will need or want a converter box and at what point
those households will request and redeem the coupons. Indeed,
no one anticipated that requests for coupons would exceed 4.4
million within the first month of the program!
In reality, we anticipate that a portion of the coupons
requested will not be redeemed as some consumers decide that
they do not need a converter box. For example, according to the
Consumer Electronics Association (CEA), 50 percent of U.S.
households currently have a digital television and it forecasts
that another 32 million digital televisions will be sold in
2008. Many consumers making a digital television purchase may
do so after they requested a coupon. We also know that many
households will decide to connect their televisions, or any
sets that weren't connected already, to cable or satellite
which will also reduce demand for converter boxes. There are
also indications from NTIA data that many consumers who have
applied for coupons may be cable or satellite customers,
meaning that they may not actually need a converter box. Part
of our role in educating consumers will be to make sure that
subsidized converters are obtained by consumers who actually
have a use for them.
Regardless of these uncertainties, RadioShack and the other
participating CERC members are creating distribution systems
that collectively will handle the distribution of millions of
converter boxes over the next 18 months. Each retailer's plan
is of course different and is tailored to its own business
model and the customer base, but collectively the retail
industry is confident that the demand for converter boxes will
be met.
With 4,400 owned and operated stores and another 1,500
dealer stores throughout the 50 states, D.C. and Puerto Rico,
RadioShack will play an essential role in the distribution of
converter boxes. To that end, we and other retailers are
working closely with NTIA, IBM and CLC to help ensure that we
have inventory in the right place at the right time. We are
pleased that NTIA is working with retailers to provide us
timely information regarding where consumer demand for coupons
exists. We encourage NTIA to provide this information in as
granular detail as possible and with the rates of returns for
these same areas once the coupons are distributed. This
information is critical in helping ensure all retailers are
able to use their distribution systems to target inventory
where it is needed. As the only major consumer electronics
retailer with thousands of both its own stores and dealer
stores, this is perhaps uniquely challenging for RadioShack.
Despite the challenge, we are committed to having each of our
stores prepared to respond to consumer interest. Under the
regulations and our existing contractual arrangements, our
dealer stores must each seek their own certification from NTIA
for participation. However, RadioShack understands the
importance of having these stores, most of which are small
businesses in rural settings, involved in the transition.
Therefore, in addition to preparing our own stores, we have
worked closely with NTIA to promote dealer participation and to
educate dealers about the program and the digital transition
generally.
With the initial demand of 4.4 million coupons, I am sure
the Subcommittee is interested in knowing whether retailers
will be prepared over the next few months to respond to this
initial demand. We believe that through the combined efforts of
all participating retailers and with full cooperation from NTIA
and CLC, the answer will be yes. As I mentioned, RadioShack
intends to have stock in all of its stores by February 22. With
4,400 stores, we cannot guarantee that each store will have
stock at all times due to the ebb and flow of customer demand.
However, in the event that a RadioShack-owned store's inventory
is temporarily depleted, our sales associates are being trained
to offer to order the product for the customer from stock
located in our Fort Worth Distribution Center. The converter
box will then be shipped to the customer's home at no
additional charge through our Direct-to-You (D2U) program. This
D2U program will be available for coupon-eligible converter box
purchases in all of our stores beginning February 19th and
RadioShack plans to hold some stock in our Fort Worth
Distribution Center for the length of the program for D2U
purposes. Other retailers will also provide solutions when
store locations are out of stock or for those coupon-holders
who are infirm or otherwise unable to come to a store. For
example, retailers, like EchoStar here with us today, will be
able to offer the converter boxes for sale online. Other
retailers will have 1-800 numbers to respond to these requests.
Issues Affecting Price of the Converter Box
I know that this Subcommittee is hopeful that the
consumer's contribution to the purchase of the converter box
will be as low as possible. RadioShack understands this concern
and recognizes the need for an affordable solution to all
consumers. I would like to spend a few minutes addressing
issues affecting the price of the converter box to the
consumer. This is an area in which, of course, each retailer
has worked through its own issues and considerations. My
comments here reflect RadioShack's experience regarding price
considerations.
Although the coupon-eligible converter box has simple
features and its sole function is to convert a digital
television signal to analog format, keeping the price low still
presents challenges. First, as mentioned above, the level of
demand is unclear so that it is difficult to take full
advantage of quantity-dependent pricing from manufacturers.
Second, its shelf life - 18 months - is uniquely short. For
these reasons, manufacturers are not able to amortize the
upfront price of production over a long period of time.
Normally, the price of a consumer electronics product would
drop steadily over its market life of potentially several
years; the coupon-eligible converter box product will not
benefit from this effect.
In addition, any single technology rich consumer
electronics product may be covered by literally hundreds or
even thousands of patents, and the converter box is no
different. Whether it is the manufacturer or retailer who
actually pays the patent license royalties for such essential
patents, this dynamic may also add cost to the box.
Each retailer (and manufacturer) also has had to make
difficult choices about which permissible optional features, if
any, to include in the box. The added cost that results must be
balanced against the likelihood that such features will be
required by a broad number of consumers. For example,
manufacturers and retailers each confront this issue with
regard to the inclusion of signal pass-through technology which
would benefit those households who receive low-power television
signals or wish to receive analog signals across international
borders. NTIA made an appropriate decision to permit the signal
pass-through feature as an optional, but not mandated feature.
A reason for this decision related to concerns over the loss of
signal strength in the converter box that might occur and
affect the reception of the digital signal. Based on this and
other information RadioShack had when making our initial
orders, we prioritized the cost, quality and features that the
vast majority of our customers would need and did not include
the pass-through feature in those orders.
Given manufacturing and distribution lead times, we believe
that any decision at this late date to mandate such a
requirement would jeopardize the coupon program and is
unnecessary. There will be solutions to this problem in the
marketplace. There are currently three approved converter boxes
that include the pass through technology, including EchoStar's.
While the products that RadioShack plans to sell at this time
do not include pass-through technology, we are exploring
solutions for LPTV viewers. At a minimum, RadioShack and others
intend to offer LPTV consumers a discount on the external
devices (such as an A/B switch and splitter) necessary to
provide an external pass-through to connect their converter box
and television. As one of the largest national retailers and
manufacturer of antennas, we will also carry a variety of
outdoor antennas. And, of course, the viewer could also
purchase a dual tuner television if this makes economic sense.
In its role as a retailer, RadioShack intends to help its
LPTV customers with the transition and we will explore all
possible solutions. However, it is critical that the Community
Broadcasters educate their LPTV viewers on the problem and
inform them of their options. In addition, RadioShack
encourages the Community Broadcasters to provide retailers with
specific information about the number of households affected
and their locations. Such information will be particularly
helpful in ensuring the delivery of appropriate solutions to
the degree they are needed.
Before leaving the issue of cost, I would like to raise an
issue that only recently came to retailers' attention, but that
has a significant effect on the price of the box. In December
2007 as orders were being placed for converter boxes, retailers
learned that U.S. Customs has imposed a five percent import tax
on converter boxes. Retailers fear that this duty on a product
that the government has subsidized through the coupon program
for the purposes of helping U.S. households will serve to
impede distribution and may needlessly burden consumers. We
hope that this Committee will join us in seeking a legislative
waiver of this import duty, as surely the Congress could not
have intended this result.
Consumer Education
Perhaps most important to the success of the transition is
the role that the private sector is playing to educate
consumers about the digital transition. CERC applauds the
efforts of NAB, NCTA, CEA, the consumer groups and our
government partners for their efforts to alert consumers. We
know that these efforts are working. CEA just announced last
week that consumer awareness of the transition to digital
television grew 80 percent since 2006.
But, we recognize that retailers have perhaps the most
direct private sector role in consumer education. We are the
end game - we are the place where consumers will go to ask
questions to learn more about the transition and its effect on
their household. Like each of the private sector industries
involved, retailers are investing significant funds to
communicate information about the transition through print and
other media. However, retailers are also making significant
investments in human capital - training hundreds of thousands
of sales people to assist consumers. For a transition that is
short term and product that is not relevant to everyone in the
same manner, this is a challenging task. Let me provide some
perspective on what RadioShack and other CERC members are doing
regarding our media communications efforts and our sales
associates' training.
Consumer Education through Advertising, the Internet and Signage
RadioShack, and other CERC members, are implementing
detailed public education plans to notify consumers of the
digital transition generally and to inform them of the possible
need to purchase a converter box. RadioShack's plan includes
the following activities during just the first quarter of this
year:
We are updating RadioShack's website by February 17th to
include dedicated space at www.radioshack.com/dtv to explain
the transition, the coupon program and to answer frequently
asked questions (including information for LPTV viewers). It
will also include links to the relevant government websites and
CERC/CEA/FCC's DTV tip sheet. This site highlights the
information we have provided on RadioShack.com for many months
already.
We are including notifications about both the transition
and the coupon program in tens of millions RadioShack's direct
mail flyers and newspaper inserts throughout the year.
By February 19th, all stores will print notifications on
every receipt printed in a RadioShack store on any purchase
alerting customers about the digital transition, the
availability of converter boxes at RadioShack and both websites
www.radioshack.com/dtv and www.dtv2009.gov.
We are placing window signage in each store in March
announcing the availability of coupon eligible converter boxes
once stock is in place. There will be window signs on the
transition, at times, throughout the program. We will also have
bilingual educational brochures in our stores.
The packaging on most of our converter boxes will
indicate that they are coupon eligible; and,
We will be placing advertising in national print media to
notify consumers, as well as radio advertising on both English
and Spanish language stations.
We will use various public relations tactics to ensure
the conversion is effectively communicated to news media and
customers alike. This includes the use of audio and video
podcasts, news releases and staged store events throughout the
year announcing news and milestones relating to our
participation in the transition process. RadioShack is also the
focal point for many local market media outlets looking to
explain technical issues to their viewers and readers, and the
digital transition process is a perfect example. We will
continue to actively promote and facilitate news media requests
to visit local stores and interview our knowledgeable sales
staff.
Similar efforts by several other CERC members have been
outlined in recent filings with the Federal Communications
Commission (FCC). In addition, CERC has updated its Consumer
Guide on its website and the Converter Box Coupon Program's
site includes a prominent link to CERC's site as well.
Training of Sales Associates
RadioShack and all CERC members recognize the critical
importance of having trained sales associates who can answer
specific questions regarding the digital transition and the
coupon program. While media efforts will call consumers to
action, our sales associates may be the only face-to-face
opportunity that a consumer will have to ask specific questions
and to solve their particular needs relating to the transition.
Training our sales associates on the specifics of the
transition and the converter box program is a Herculean task.
Each retailer is making significant efforts to accomplish this
task effectively - these efforts are underway at RadioShack and
will continue throughout the next 12-18 months.
RadioShack headquarters trains and communicates with its
store managers and employees through several different means.
Let me provide you some specifics. First, RadioShack provides
online training for all employees on many different product
lines and technologies. We have a number of training sites
dedicated to the digital transition, digital television
products, and the coupon eligible converter box. At the end of
the online training course for the converter box, our employees
are required to take a test. We monitor the test completion
rate for each store and each store employee must pass with a 90
percent or higher in order to be considered a completion.
Second, in addition to our online training program, RadioShack
conducts RadioShack TV broadcasts with its store managers and
sales associates. We have already completed a number of
segments on the transition and coupon program with our store
managers and have additional segments scheduled for both store
managers and sales associates to coincide with the appearance
of coupons in the marketplace.
Third, RadioShack distributes articles on issues of
importance directly to its stores on a daily and/or weekly
basis. This includes our daily store bulletin, RadioShack
Today, as well as our store intranet site that stores use daily
to access news, information and required tasks. Again, we have
already provided significant information to our stores through
these communications channels and will continue to do so
throughout the transition.
All of these forms of communication emphasize to the store
managers and sales associates the complexities of the
transition and the coupon program. We emphasize to our
employees the need to ask customers the right questions in
order to make sure the consumer makes the best purchase
decision for their particular television viewing needs. I would
also like to mention that RadioShack also provides all of its
training and educational materials to its dealer stores. Each
dealer then makes its own determination as to how they are
used.
As we embark on the introduction of coupons and converter
box sales, we want the Committee to understand the
extraordinary level of the retailers' undertaking. RadioShack
alone has 4,400 stores and more than 30,000 retail employees
and support staff who must be trained. This is in addition to
our independent dealer base with thousands of their own
employees who they must separately train as well. In addition,
no retailers' employee base is static. This means that
RadioShack and other retailers must have a continuous loop of
training for all new employees throughout the coupon program
period and provide refresher courses for current employees.
RadioShack is confident that we have the necessary systems in
place. We will monitor our efforts, and continue to proactively
educate our retail employee base.
Conclusion:
For several years, RadioShack has committed significant
energy to the digital transition. This year and into next,
RadioShack's commitment will remain strong and we look forward
to playing our part in the effort to make the transition as
smooth as possible for all consumers. Thank you again for the
opportunity to testify and I look forward to answering your
questions.
----------
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Mr. Markey. Thank you, Mr. Harris. And our final witness is
Mark Jackson, who is the President of EchoStar Technologies
Corporation. We welcome you, sir.
STATEMENT OF MARK JACKSON, PRESIDENT, ECHOSTAR TECHNOLOGIES
CORPORATION, ENGLEWOOD, CO
Mr. Jackson. Thank you, Chairman Markey and Mr. Stearns. As
you mentioned, I am the President of EchoStar Technology
Corporation, a company that designs and markets what we believe
are the best set top boxes and video equipment in the world. On
behalf of EchoStar and our sister company, DISH Network, thanks
for inviting me to discuss the digital television transition,
and in particular our low-cost digital-to-analog converter box.
EchoStar and DISH Network are committed to doing our part to
make next year's digital transition a big success. DISH
Network, as many others here, has an ongoing education campaign
aimed at current subscribers to explain what the digital
transition will mean to them. Among our many initiatives, we
have aired public service announcements to DISH Network's
roughly 14 million subscribers as part of that awareness
campaign, so they can try to get the word out to their friends
and neighbors and family who may not have digital equipment.
On the equipment side of the business, EchoStar
Technologies has developed the lowest priced coupon eligible
converter box, the TR-40. We think that making the TR-40
available to the public will have a very positive impact on the
digital transition. Earlier this year, to get the word out, we
made an announcement at the consumer electronics show that we
would make our basic converter box available to consumers for
about $39.99. That is one penny less than the $40 Congress
authorized for each converter box coupon. In other words, not
counting sales tax a consumer who obtains a government----
Mr. Markey. Did you say your box is $39.99?
Mr. Jackson. $39.99 retail price.
Mr. Markey. And you get a $40 coupon?
Mr. Jackson. So it is a penny less.
Mr. Markey. I would go to EchoStar Technologies Corporation
if I could to be honest with you.
Mr. Jackson. We hope that a lot of people decide to do
that.
Mr. Markey. I am sorry, but that sounds like that is the
right price.
Mr. Jackson. So Congress made it clear its intent not to
leave anyone behind when broadcasters go digital in February,
2009, especially families of lesser means who rely on free,
over the air TV for their news and information. By providing a
digital-analog converter box at no cost to the consumer
fundamentally, EchoStar is doing its part to bring this policy
goal to fruition. Our announcement has generated a lot of
excitement in the government and consumer communities, along
with many questions. I will address one of the major questions
now, and, of course, will answer any additional questions you
may have after the opening statements.
We have been asked, how is EchoStar able to offer a device
at such a low price point and still make a good business out of
it? Well, first of all, we specialize in low cost equipment. As
mass producers of set top boxes with over 65 million EchoStar
boxes sold worldwide, we bring economies of scale to this
project. We can draw on our volume-based deals with suppliers
and order the product at the lowest possible cost. We also know
something about how to build converter boxes for the digital
transition, as our British division has gone through this
process in the U.K. This group has helped us come up with many
useful feature, like the pass through of analog signals from
broadcasters who might not yet have gone digital.
Second, we are willing to subsidize the cost of the box
where necessary to drive brand awareness for our core DISH
business. Many of these boxes will be used in households that
do not subscribe to DISH Network today. If people have a good
experience with our box, they are more likely to think of us
when they want to become a satellite TV subscriber. Finally,
with the split of EchoStar into two separately traded public
companies, the company I head, EchoStar Technologies, will not
just sell DISH Network but to any and all companies and
consumers who would like to get out technology and products.
Therefore, we have a big incentive to get our brand name into
as many households as possible. So these attributes, a devotion
to low cost products, a pay TV service, and a technology
company working in tandem make us very unique in the
marketplace for converter boxes and allow us to offer the low
cost product that you see today.
We know that the Federal government is working on educating
the public on the digital transition, and we are participating
in this effort with respect to DISH subscribers, as I mentioned
earlier. But when it comes to the population at large, I think
we can all agree that nothing gets the word out in America like
a company with something to sell, and we intend to use our
marketing expertise to get the word out about our TR-40.
Finally, I want to make the subcommittee aware that we have
notified the NTIA of our intent to submit other converter boxes
for approval. For example, we have devised means of lowering
the cost even further so we are hopeful that the NTIA and the
FCC will test the devices and approve them quickly as there is
no time to lose. So in closing I look forward to your questions
and thanks for your time.
[The prepared statement of Mr. Jackson follows:]
Statement of Mark Jackson
Summary
EchoStar is committed to a successful digital transition.
EchoStar's digital-to-analog converter box (TR-40) is
priced at $39.99, once cent less than the $40 coupon value, and
is the lowest-cost converter box on the market.
EchoStar specializes in low-cost video equipment and
leverages its vendor relationships and expertise to reduce the
cost of the TR-40.
The TR-40 contains analog pass-through, allowing
reception of stations that have not yet gone digital-a feature
we included based on our experience with the digital transition
in the U.K.
EchoStar sees the digital converter box initiative as an
opportunity to build our brand and perhaps add new customers;
we are willing to subsidize the cost of converters if
necessary.
We will be submitting improved, lower-cost converter
models to NTIA soon and are hopeful for a rapid approval.
Testimony
Chairman Markey and members of the Subcommittee, my name is
Mark Jackson and I am the President of EchoStar Technologies
Corporation, a company that designs and markets what we believe
are the highest quality, best value digital set top boxes and
video equipment in the world. On behalf of EchoStar
Technologies and our sister company, DISH Network, thank you
for inviting me to discuss the digital television transition,
and in particular our low-cost digital-to-analog converter box.
EchoStar and DISH Network are committed to doing our part
to make next year's digital transition a success.
DISH Network has an ongoing education campaign aimed at
current subscribers to explain what the digital transition will
mean to them. Among our many initiatives, we have aired public
service announcements to DISH Network's roughly 14 million
subscribers as part of that awareness campaign.
On the equipment side of the business, EchoStar
Technologies has developed the lowest-priced coupon eligible
converter box, the TR-40. We think that making the TR-40
available to the public will have a very positive impact on the
digital transition.
Earlier this year, at the Consumer Electronics Show,
EchoStar announced that it would make our basic converter box
available to consumers for $39.99. That's one penny less than
the $40 Congress authorized for each converter box coupon.
In other words, not counting sales taxes, a consumer who
obtains a government coupon will be able to get a converter box
free of charge.
Congress made clear its intent to not leave anyone behind
when broadcasters go digital on February 19, 2009, especially
families of lesser means who rely on free, over-the-air TV for
their news and information. By providing digital-to-analog
converter boxes at no cost to the consumer, EchoStar is doing
its part to bring that policy goal to fruition.
Our announcement has generated a lot of excitement in the
government and consumer communities, along with many questions.
I will address one of the major questions now and, of course,
will answer any additional questions you might have after
opening statements.
We have been asked, how is EchoStar able to offer a device
at such a low price point and still make a good business out of
it?
First, we specialize in low-cost equipment.
As mass producers of set-top boxes, with over 65 million
EchoStar boxes sold worldwide, we bring economies of scale to
this project. We can draw on our volume-based deals with
suppliers in order to produce a low-cost converter box.
We also know something about how to build converters for a
digital transition, as our British division is going through
this process in the U.K. Those employees helped us come up with
useful features, like the pass-through of analog signals from
broadcasters who might not yet have gone digital.
Second, we are willing to subsidize the cost of the box
where necessary to drive brand awareness for our core
businesses.
Many of these boxes will be used in households that do not
subscribe to DISH Network today. If people have a good
experience with our box, they are more likely to think of us if
and when they want to become satellite TV subscribers.
Finally, with the recent split of EchoStar into two
separately traded public companies, the company I head--
EchoStar Technologies Corporation--will sell not just to DISH
Network but to any and all companies and consumers. Therefore,
we have an incentive to get our brand name into as many
households as possible.
These attributes--a devotion to low-cost products, a pay-TV
and a technology company working in tandem--make us unique in
the marketplace for converter boxes and allow us to offer the
low-cost product you see before you today.
We know that the federal government is working on educating
the public on the digital transition. We are participating in
that effort with respect to DISH subscribers, as I mentioned
earlier.
But when it comes to the population at large, I think we
can all agree that nothing gets the word out in America like a
company with something to sell. And we intend to use our
marketing expertise to get the word out about the TR-40.
Finally, I want to make the Subcommittee aware that we have
notified NTIA of our intent to submit other converter boxes for
approval. For example, we have devised a means of lowering the
cost even further by separating out the power components. We
are hopeful that NTIA and the FCC will test the devices and
approve them quickly. There is no time to lose.
I look forward to your questions.
Thank you.
----------
Mr. Markey. Thank you. Thank you, Mr. Jackson. The chair
will recognize himself for a round of questions. So you are
saying, Mr. Jackson, that you might even have one below $39.99?
Mr. Jackson. We are working very hard on getting one below
$39.99.
Mr. Markey. That would be so great, and I can see you
actually on TV like it was a vegematic or something, you know,
selling it to people. If someone could come up with like the
vegematic version of why you need to switch over and why you
need a converter box, I think we wouldn't have a problem at
all. I haven't seen those types of ads yet but I imagine if you
get make a buck doing it that ad will be made. That will be the
break through moment. I am going to go to you, Mr. Murray. You
seem a little bit pessimistic about where we are right now just
to be honest with you. You had a fairly high percentage of
people who have misconceptions and confusion about what the
digital revolution means for them and their television sets and
whether or not----
Mr. Murray. Mr. Chairman, it is my job to be a pessimist.
Mr. Markey. And you are very good at it. And I want to say
of all the witnesses you capture our attention because
obviously our names are on the ballot and so pessimism is
something we have to identify early so it is not manifested in
another kind of a box, a secret ballot box, that no one knows
how anyone voted. So my question to you is Chairman Martin said
he had a $20 million fund for public education. If you were
going to spend it, Mr. Murray, where would you spend that $20
million in order to insure that the most vulnerable population
was given the information they need to avoid a catastrophic
February 17, 2009.
Mr. Murray. Well, sir, we have got pretty good demographic
information from Nielsen about who is affected here. It does
seem to be disproportionately elderly, disproportionately
Latino, and so that is a good place to start is find those
communities, find a way to reach nursing homes with some scale,
find a way to help people with a sort of geek squad kind of
outfit that can actually--I think part of the problem here is
people may be aware of it, they may even know where to go get
their boxes but they get home, they get that box in their
hands, they start messing around with their television set, and
they are a little bit clueless about how to put the thing
together. So I think part of it would go into materials to
actually effectively educate people about, OK, you got a box in
your hands, how do you actually hook it up.
But I think really localized action plans tailored to the
demographic information that we have from the excellent people
at Nielsen is a good place to start. And as to whether or not I
am overly pessimistic, I would be happy to take wagers for
anyone who wants to bet on how this is going to go February 17.
Mr. Markey. And you would be betting on?
Mr. Murray. I am going to bet on there is going to be
enough displaced consumers to light up the switchboard on both
the House and Senate side.
Mr. Markey. Thank you. Thank you for saying that. That is
important testimony to hear. Let me ask you, Mr. Romeo, there
is a letter that Mr. Dingell and I and other members of the
subcommittee sent to the NTIA asking that consumers could
reapply after 90 days for a coupon, and my question to you is,
is there a technical reason why that wouldn't be possible, and
for IBM to insure that people who do reapply in fact can
receive the coupon and as a result of the converter box they
would need in order for their TV set to work?
Mr. Romeo. There is no technical reason that we couldn't
implement the policy change if that were decided.
Mr. Markey. OK. That is great because the NTIA agrees that
there is no technical problem so I think we should begin to
work towards dealing with that issue. I just heard from Mr.
Murray, so why don't I give all the rest of you an opportunity.
We will begin with you, Mr. Jackson, over here. What do you lie
awake at night worrying about that could go wrong on February
17, 2009? What is the nightmare scenario from your perspective?
Mr. Jackson. Well, I found with great interest on session
one a lot of the members' concerns that they have. I think they
are well-founded. I think we share Mr. Murray's concern that
there are a lot of issues that we have to work through. The
biggest thing I would recommend for the government to implement
is that perhaps a test nationwide is warranted 4 months before
the program comes out like I would ask the broadcasters to go
digital from one day or a few hours. I think that would
generate a lot of awareness of what is going to happen, and
that would be my biggest recommendation for you. I think some
of the members' concerns about antennas not working are well
founded, so much so I think you will see us at EchoStar set up
a service that consumers could pay for and we will go out and
set them up because we will have a lot of issues there.
So I think those are our two biggest concerns but I think
the test and get the awareness out will make consumers go to
the retail stores. I think it will make the broadcasters be
prepared. I think it would force a lot of people to wake up.
Mr. Markey. Thank you, Mr. Jackson. Mr. Harris.
Mr. Harris. Our concerns when you are really dedicated to
customer service is what level the customer understands what
they need, and that is the role that RadioShack fills, but we
don't know when you ask a customer a question are you watching
low power, they won't know so we would ask the community
broadcasters to inform their viewing public that they are
watching low power because that is one of our concerns. The
other concern that I think we have covered is spikes in demand.
No one expected 4 million coupons so we moved up a lot of
orders. Also, when the program ends as far as merchants and
retailers, we are concerned about inventory residue because we
want to have the inventory covered as it is needed but after
the program ceased how much more demand is there.
We at RadioShack always carry legacy products so we will
have the product quite a bit after the coupons end but we are
just worried about residue inventory as well because that is
substantial.
Mr. Markey. Mr. Romeo, what is your greatest fear?
Mr. Romeo. As someone who cares about the program's success
obviously not leaving people outside the sphere of educating
them so that they know that they need to act is a major concern
for me. From a technical and parochial view having 20 million
orders on February 16, 2009, would be a concern that it all
comes late.
Mr. Markey. Mr. Murray, do you think you have already
expressed your deepest pessimistic fears for that day or do you
have additions that you would like to make to the list?
Mr. Murray. I do think I have fully expressed myself, Mr.
Chairman.
Mr. Markey. Thank you. I appreciate it. Mr. Rehr, how about
you at the broadcasters, what is your nightmare scenario?
Mr. Rehr. I scribbled down 5. Number 1, if our program
works the way we envision it, we could run out of coupons and
we will need to come back to Congress and the FCC and the NTIA
for additional funds. Number 2, that senior citizens who are
difficult to reach, we somehow won't be able to touch them and
we will miss some of them. Number 3, we will have some isolated
antenna issues although we will be announcing soon a
partnership with the Consumer Electronics Association to insure
that people understand the antennas that they will need to make
the digital transition successful, and we want to applaud CEA
for all their great work on that end.
Number 4, technical issues, snow, heavy rain, sleet, fog,
maybe a lack of engineers to do the final conversions the day
before. And then number 5----
Mr. Markey. Does that go over to Mr. Jackson's
recommendation that we have like a 1-day trial 4 months in
advance just so everyone can experience in some form what might
happen 4 months later permanently?
Mr. Rehr. Well, we actually have a thousand plus stations
that are running analog and digital systems today. These are
stations that are going to just make the switch over, and I am
not quite sure how many they are that has to do with channel
selection and getting to a different channel, but if we can
minimize those through the FCC allocation of channels that
would be good. And then finally number 5, since my cell phone
is on all my business cards, I personally worry that I will be
held responsible by you and every other member of the
committee. I am just kidding.
Mr. Markey. No, you are actually dead on that. That is a
given. Bipartisanship at its best.
Mr. Rehr. That is right. We at the NAB take this extremely
seriously and I take this extremely personal.
Mr. Markey. Mr. McSlarrow.
Mr. McSlarrow. Well, I have now decided to put David's cell
phone on my card so I have taken care of my biggest problem. I
think it is the same thing that we have been talking about
before. I worry that despite great efforts across the board
that the most sophisticated, wide ranging consumer education
campaign in the world is still going to miss people, and it
just is. And obviously we need to narrow that pool to the
smallest possible pool we can but there is going to be some
disruption.
And the second point that has been made earlier even if--
and I think we are well on our way to get the coupon program to
get the boxes out there, even if all that works seamlessly we
are basically talking about a universe of people who either
don't or chose not to have boxes in their home, and this is a
new thing and hooking them up, and someone mentioned the geek
squad, but somehow there is that last little step to actually
making the box work that I am not sure we are completely on top
of and we will have to think through.
Mr. Markey. Would you recommend for February 17 that like
on election day we all have these get out the vote operations
that every one of the entities that is here on quadruple alert
and that everyone is ready to go because as you are saying, Mr.
McSlarrow, perhaps there are inevitable problems that are going
to be there and that we should have almost like a D day like
operation ready to go to deal with what is left over. Do you
think that is advisable?
Mr. McSlarrow. I do. It is a lot like a political campaign
with the advantage you don't actually have somebody on the
other side pushing back. If we are all rowing in the same
direction we should be able to do it. I think we ought to treat
it with the seriousness with which it deserves, and I think we
can do it and we are off to a good start, but particularly when
you think through the elections coming up here there is going
to be a 3- or 4-month period of time where no one is focused on
the DTV transition. It is all about the election, and after
that period to February is sort of the forced march.
Mr. Markey. And, Mr. Bruno, your nightmare scenario?
Mr. Bruno. Yes, sir. Mr. Chairman, our nightmare is not
going to start on February 17 of '09. Our nightmare will start
5 days from now when those coupons are passed out. I want to
try to explain something as easily as I can. There are 3 types
of boxes. There is the bad box that is digital only. When you
buy that box and you bring it home and you plug it in, you will
lose 80 percent of your transmission, and you will say, well,
gee, I don't get this channel anymore, I don't get that
channel. So you go back to the retailer, you turn it in, big
mess. It is confusing. It is very, very confusing for the
consumer. The other box that we have heard about--both of these
boxes, by the way, are not compliant with the All Channel
Receiver Act. The other box we call a user hostile box, and
that is because----
Mr. Markey. The user----
Mr. Bruno. User hostile is what we call it, and here is
why. You take this box home with what we have been hearing all
day today with a pass through. You plug the box in and
hopefully you can get it right because there are a lot of
wires.
Mr. Markey. Which is worse, bad or user hostile?
Mr. Bruno. The bad box blocks out all analog. The user
hostile box passed through analog. Both are not compliant with
the All Channel Receiver Act. Now when you use the user hostile
box and you plug you in, you flick through your channels and
you get analog but you go to Channel 3 typically on these
boxes, and then you get another remote that came with the box
and now you have to flick around and try to see all your
digital channels on Channel 3, and if you want to plug in a VCR
or a DVD recorder or something else, I don't think you can. I
haven't tried it yet. I am fairly technical but I don't think
you can do this.
Now the boxes that aren't approved, the good boxes, the
user friendly boxes, pass analog and digital, and that is why
we need these boxes available to the consumer. They are not
that expensive. For around $100 you can buy a user friendly box
with analog and digital that has a DVD recorder in it, so we
are not talking about the manufacturers----
Mr. Markey. Do you think RadioShack is going to be selling
bad boxes and user hostile boxes?
Mr. Bruno. Sir, they are bad to us because we lose our
viewers. We don't have cable carriage rights for the most part,
and we have heard today that Nielsen says there is 11 percent
of the population that watches over the air signals. Every time
one of these non-compliant boxes are being sold, and remember
37 of them have been approved and only 4 have the user hostile
analog pass through. Every time one of these boxes are plugged
in, we lose a viewer. We are out of business over this program,
7,212 television stations. Mr. Chairman, we need help.
Mr. Markey. Help is on the way. So my time has expired, and
I will recognize the ranking member for as much time as he may
consume.
Mr. Stearns. Thank you, Mr. Chairman. Mr. Bruno, I
understand what you are saying but I think let me just ask Mr.
Harris and Mr. Jackson, don't viewers using over the air
antennas have several options regarding how to continue
watching analog low power stations, and do you think
manufacturers and retailers will simply respond to the demands
that they were talking about?
Mr. Jackson. Well, we have a couple of conflicts here.
First of all, one of the things that is talked about is that we
don't have the feature that we would like. Just so you
understand, the rules to be coupon eligible prohibit us from
having that functionality. If we added that functionality it
would not pass the FCC's testing to make us coupon eligible. So
the other thing is that in the user hostile method, we will
call it, we try to make it as easy as possible for consumers to
be able to look at these low power stations, you basically just
turn off the box and the signal gets passed through. You pick
up your TV remote. You would have to do that, and channel up or
down to get those channels, but we have tried to make it so
that they can't be able to participate and not get left behind.
Mr. Stearns. Mr. Harris, anything you want to add?
Mr. Harris. Yeah, I agree with Mr. Jackson, and the note
that even if a box does not have a pass through it is a pretty
simple device of just using a splitter and a coaxial cable to
split the signal before it gets to the box. We have on our web
site several diagrams that are really consumer friendly plus
some very good tools that are on their web site as well as
retailers web sites to explain how to do this. So besides a
pass through it is a simple splitter and if someone doesn't
have the proper hookups in the box----
Mr. Stearns. What is a splitter? What is a simple splitter?
Mr. Harris. A simple splitter--in fact, I think we have one
here. We happen to have a sample here.
Mr. Rehr. I am sorry. This is a whole kit that we had----
Mr. Stearns. Well, that is more than a splitter though. I
mean that is a little bit more----
Mr. Harris. The splitter is just right here.
Mr. Stearns. And we all go to RadioShack to buy the
splitter. We understand that.
Mr. Harris. So it is a splitter that splits the signal
before it gets to the box and lets it really pass through the
box so it is like a pass through but it is a simple about that
big. It is all you need. Now if a customer doesn't have a box
that has composite inputs and RF, if their TV is over 15 years
old, they may not have both inputs so if they don't have that
they can use a splitter, the coax, and a B switch. It is still
a very low price situation, pretty easy to install. We intend
to explain it as other retailers can.
Mr. Stearns. Mr. Murray indicates there are going to be
lots of people that will not be able to follow these directions
but isn't it simply if you are not dealing with low power you
are just putting together your box on your analog TV. Isn't it
pretty much like you just hook one end of the box up to the
antenna and the other up to the television?
Mr. Harris. Yeah, a very simple hook up.
Mr. Stearns. It is just like hooking a toaster up.
Mr. Harris. It is very simple.
Mr. Stearns. So Mr. Murray has created this impression that
when they get this box it is going to be very difficult for
them to figure out how to do that. I assume most people
understand that. You just put the box between the antenna and
the television. It is that simple.
Mr. Harris. It is very simple.
Mr. Stearns. That is pretty much simple.
Mr. Harris. Yes, it is.
Mr. Stearns. Let me ask a quick question. We have heard,
and I think Chairman Markey has made a good point in asking
what the down side, what is your biggest fear, so to speak, but
I guess the question is, I will ask all of you, do you have all
the incentives that we provided to you and all the resources to
take care of those problems you mentioned, and I will just
start to my right down. Just yes or no, and if you don't have
them just very briefly say what you want.
Mr. Jackson. I don't know what we are missing. I think we
are going to see things that we just don't anticipate when it
comes----
Mr. Stearns. But right now you say you have the resources
and the incentives to do it?
Mr. Jackson. Under the plan that is there, we can get the
job done.
Mr. Stearns. OK. Mr. Harris.
Mr. Harris. Yes, I would have to concur with that. Also, I
will have to say that the NTIA, IBM, and CLC have been
extremely accessible and available even on an hour notice to
us. We have been very happy with that. Also, it wasn't
mentioned before, NTIA put out a very good welcome dealer kit
that is extremely strong. It has video and has brochures, so I
have all the tools that we need to make this successful.
Mr. Stearns. Mr. Romeo.
Mr. Romeo. Yes, I believe we have everything we need to
implement the program successfully.
Mr. Stearns. Mr. Murray, you hear all these people saying
they have all the incentives and resources so what do you
think? Do you think there is----
Mr. Murray. Well, at Consumer Reports we have actually
spent a lot of time trying to figure out how can we provide
real information, not just at the high level but how can you
actually get into the back of your television set and hook this
stuff up for most consumers. And I will tell you it is
difficult to do.
Mr. Stearns. I don't think it is that complicated. You
don't have to get into the back of the TV.
Mr. Murray. Sir, that is why you are a member of Congress
and----
Mr. Stearns. Even my son knows how to hook up a cable to
the television, and he knows how to just screw it on.
Mr. Murray. Right, but I mean if you look at how many
millions of consumers in the United States VCRs are still
flashing 12:00. Mine is. I don't know about yours.
Mr. Stearns. Yeah, but I am capable of stopping it. I am
just not interested in stopping it.
Mr. Murray. So the materials that we have tried to produce,
we have got some good things on line at hearusnow.org. Consumer
Reports is doing more materials but it is really difficult to
do this in a drill down fashion that actually tells people here
is how you are going to meet the complications of your
individual television set, and I understand it seems like it is
just this wire to that wire, but for a lot of people who aren't
accustomed to this wire to that wire it is a little more drama
than this. And they didn't ask for it. That is the problem.
Mr. Stearns. You keep saying this is sort of a government
mandate and no one asked for it, and you say it is a bus coming
down the road and they are getting ready to see it and they
don't know what to do. I think that is a pretty dramatic
draconian example of what we have. I mean this is like your son
saying I don't want to go to high school, it is a mandate, Dad.
And I say, well, if you go to high school you are going to make
a lot more money, you will be able to go to college and all the
benefits. And if we sat here without this February 17, '09 the
benefits would not occur, not just dealing with third
generation and first responders. Under the old law broadcasters
are required to convert to digital under this formula, and it
turns out that there are 50 markets that would not actually be
able to conform and ultimately would not be able to move ever
in this position.
So to use it as a mandate it is really like my son who said
why do I have to go to high school and if you go to high school
because then you get more money and a satisfying life, and I
say to the constituents this is not a mandate, this is an
opportunity to get and auction off more of the spectrum and so
much benefits, a cornucopia of benefits.
Mr. Murray. But do you think those benefits were clear to
consumers? I am not so sure that those benefits are clear to
most consumers. I think most people, this will come down the
pike at them and maybe they will get a better television set
but most people know, they get TV today, they are pretty happy
with it, and they don't really want to have to go to the store
to do anything else to continue to receive television tomorrow.
Mr. Stearns. Dr. Rehr, let me just ask you, do you have all
the incentives and research to make this successful?
Mr. Rehr. Yes, however, it would be nice if we could fully
use the government's resources to insure we are educating
people. What do I mean by that? We are glad that we are
putting--that the FCC is going to put posters up in post
offices. If we are sending checks to senior citizens, veterans,
if there is a way that we could do additional piece of
information in there about the DTV transition so we don't miss
anybody. If we could have the President or the presidency's
bulley pulpit on the DTV transition, that could be huge in
order to make sure Americans understand this.
The one area of need I think going down the pike is perhaps
having a phone center which people could call and talk to a
real live human being about a problem either in English or
Spanish. That is immensely costly. We at the NAB have committed
tens of millions of dollars of our trade association resources
towards this but that would be--you know, if I had a wish list
that would be an additional wish list. Let me also say that
unlike my colleague, I think when people see the crystal clear
picture, the amazing audio quality, the fact that there will be
multi-cast channels and more programs and more services they go
wow.
Mr. Stearns. Yeah, I agree. Mr. McSlarrow, resources and
incentives you have in place?
Mr. McSlarrow. I think largely yes. One exception, that is
the FCC has before proceeding to do what this committee
actually did which is have a small system exemption for very
small operators to the dual carriage requirement. They need to
get on with that, get it done, and I think what we need most
now is certainty. We have a plan. We don't have much time. Let
us just go execute.
Mr. Stearns. Mr. Bruno.
Mr. Bruno. Yes. Thank you for asking that question. I
appreciate that. The NTIA has set aside $65 million for
translators in towns less than 20,000 people. Full powers as we
all know spent 10 years on this transition. Believe it or not,
class A stations and low power stations are a progressive group
of folks. We actually want to transition to digital but we find
ourselves being squeezed by this time line so what we need for
the class A and the low power industry, we need the NTIA to be
provided with additional funds so we can quickly build out our
digital signals.
Mr. Stearns. $65 million is not a help, enough help?
Mr. Bruno. It doesn't go to us, sir. It is for the
translators with less than 20,000 people in their coverage
area.
Mr. Stearns. But isn't it true that we exempted low power
from the transition originally because you folks requested it?
Mr. Bruno. No, I don't recall that, sir. No.
Mr. Stearns. OK. OK. I would just conclude, Mr. Chairman,
and say all of us went through the Y2K discussion in which we
were worried, immensely worried, about everything possibly
happening, and some of this discussion was very helpful. We did
have a presidential task force for that. You folks are the
presidential task force. And we think based upon the incentives
and the resources that are available we should be successful.
And I am optimistic and I think the benefits to the consumer
are so immense that members of Congress and others have to
explain that to them so that they realize it takes a little
effort to get good things in life. You can't get them for free
and you have to learn to be able to hook up your box from Echo
and save a penny and do it. So I thank you, Mr. Chairman.
Mr. Markey. I thank the gentleman, and I will recognize
myself for some additional questions. I first wanted to let you
each know that we are going to have each one of you back here
on February 17, 2009. There is a hearing that I am announcing
is scheduled for that date, and we are going to ask you all to
come back and sit here as we are on the transition day, and so
I just want you to clear the--a lot of times you don't get
enough notice so I just want you all to know that on that day
we will see quite clearly what the holes are in the system.
So let me thank you. It was I think a highly illuminating
hearing. I remember back years ago my old buddy, Mark Fowler,
when he was the chairman of the Federal Communications
Commission back in the 1980's, he used to say that really a
television is nothing more than a toaster with pictures. And as
the public tries to figure out how to attach with splitters
this converter box to their TV it will very much be like trying
to attach a toaster to a TV set turning it into a toaster with
pictures. And I don't know who will be toast that day. That
still remains to be seen, but I do know that the most
vulnerable part of the American population are the minorities,
are the senior citizens, and are poor people, and there is a
very heavy responsibility which all of us share to insure that
there is the minimal amount humanly possible of disruption to
their lives that occurs on that day.
And if there are holes that there is a program in place on
that day that will insure that everything is rectified in a
very brief period of time after February 17. But our goal is,
as it is at RadioShack, zero defects. So we want to put in
place the best plan that we can and execute it. Life is 20
percent concept, 80 percent execution. So the execution of this
plan will ultimately determine how effective respectively all
of the planning is viewed. And I just want to finish just by
again thanking you, Mr. Harris, and RadioShack for removing the
remaining analog inventory from your store shelves.
Mr. Harris. You are very welcome.
Mr. Markey. And I would urge all of the other retail stores
across the country to do the same. I think it would be in the
public interest if they did so, and we are going to be
continuing to monitor that situation. So with the thanks of the
committee this hearing is adjourned. Thank you.
[Whereupon, at 2:30 p.m., the subcommittee was adjourned.]
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