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



 
          STATUS OF THE DTV TRANSITION: 252 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

                               __________

                             JUNE 10, 2008

                               __________

                           Serial No. 110-124


      Printed for the use of the Committee on Energy and Commerce

                        energycommerce.house.gov

                              __________

[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]



                    U.S. GOVERNMENT PRINTING OFFICE
55-788 PDF                    WASHINGTON: 2011
                                     _________________________________________________________________________
For sale by the Superintendent of Documents, U.S. Government Printing Office, 
http://bookstore.gpo.gov. For more information, contact the GPO Customer Contact Center, U.S. Government Printing Office. Phone 202-512-1800, or 
866-512-1800 (toll-free). E-mail, [email protected].  






                    COMMITTEE ON ENERGY AND COMMERCE

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

                           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 MACK, 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

                              ----------                              
                                                                   Page
Hon. Edward J. Markey, a Representative in Congress from the 
  Commonwealth of Massachusetts, opening statement...............     1
Hon. Cliff Stearns, a Representative in Congress from the State 
  of Florida, opening statement..................................     3
Hon. Anna G. Eshoo, a Representative in Congress from the State 
  of California, opening statement...............................     4
Hon. John Shimkus, a Representative in Congress from the State of 
  Illinois, opening statement....................................     5
Hon. Bart Stupak, a Representative in Congress from the State of 
  Michigan, opening statement....................................     6
Hon. Fred Upton, a Representative in Congress from the State of 
  Michigan, opening statement....................................     7
Hon. Gene Green, a Representative in Congress from the State of 
  Texas, opening statement.......................................     8
Hon. John D. Dingell, a Representative in Congress from the State 
  of Michigan, opening statement.................................     9
Hon. Jane Harman, a Representative in Congress from the State of 
  California, opening statement..................................    11
Hon. Greg Walden, a Representative in Congress from the State of 
  Oregon, opening statement......................................    12
Hon. Baron P. Hill, a Representative in Congress from the State 
  of Indiana, prepared statement.................................   201
Hon. Edolphus Towns, a Representative in Congress from the State 
  of New York, prepared statement................................   201

                               Witnesses

Kevin J. Martin, Chairman, Federal Communications Commission.....    13
    Prepared statement...........................................    16
    Answers to submitted questions \1\...........................
Bernadette McGuire-Rivera, Ph.D., Associate Administrator, Office 
  of Telecommunications and Information Applications, National 
  Telecommunications and Information Administration, U.S. 
  Department of Commerce.........................................    37
    Prepared statement...........................................    40
    Answers to submitted questions \2\...........................
Mark L. Goldstein, Director, Physical Infrastructure Issues, U.S. 
  Government Accountability Office...............................    60
    Prepared statement...........................................    62
Tom Romeo, Director, Federal Services, Global Business Service, 
  IBM Corporation................................................   107
    Prepared statement...........................................   108
    Answers to submitted questions \3\...........................
Kim Cannon, Vice President, General Manager, Fayetteville/
  Wilmington, North Carolina Markets, Time Warner Cable..........   111
    Prepared statement...........................................   113
Mark Lloyd, Vice President, Strategic Initiatives, Leadership 
  Conference on Civil Rights.....................................   121
    Prepared statement...........................................   124
Paul McTear, President and Chief Executive Officer, Raycom Media, 
  Inc............................................................   135
    Prepared statement...........................................   137
    Answers to submitted questions \4\...........................
John Ripperton, Senior Vice President, Supply Chain Management, 
  RadioShack Corporation.........................................   172
    Prepared statement...........................................   174
Eric Rossi, Senior Product Manager, Media Product Leadership, The 
  Nielsen Company................................................   187
    Prepared statement...........................................   188

                           Submitted Material

National Journal article entitled, ``Static in the Digital TV 
  Revolution,'' by David Hatch, dated June 7, 2008...............   202
Nielsen National Reference Supplement 2007-2008..................   118
Nielsen report entitled, ``The February 2009 Digital Television 
  Transition: Overview of the Digital Readiness of U.S. 
  Households and Analysis of Viewing to Unready Sets,'' dated May 
  2008...........................................................   215

----------
\1\ Mr. Martin did not answer submitted questions for the record.
\2\ Dr. McGuire-Rivera did not answer submitted questions for the 
  record.
\3\ Mr. Romeo did not answer submitted questions for the record.
\4\ Mr. McTear did not answer submitted questions for the record.


          STATUS OF THE DTV TRANSITION: 252 DAYS AND COUNTING

                              ----------                              


                         TUESDAY, JUNE 10, 2008

              House of Representatives,    
         Subcommittee on Telecommunications
                                  and the Internet,
                          Committee on Energy and Commerce,
                                                    Washington, DC.
    The subcommittee met, pursuant to notice, at 9:37 a.m., in 
room 2123, Rayburn House Office Building, Hon. Edward J. Markey 
(chairman of the subcommittee) presiding.
    Present: Representatives Markey, Harman, Gonzalez, Eshoo, 
Stupak, Green, Solis, Dingell, Stearns, Upton, Deal, Shimkus, 
Radanovich, Walden, and Terry.
    Staff Present: Amy Levine, Tim Powderly, Mark Seifert, 
David Vogel, Philip Murphy, Neil Fried, and Garrett Golding.

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

    Mr. Markey. Good morning, and welcome to the Subcommittee 
on Telecommunications and the Internet so that we can have a 
discussion about this critical issue that is going to affect 
every single American family.
    As we all know, more people have television sets in their 
homes than have telephones. The television set is the 
indispensable part of American life, and today our subcommittee 
is having its fifth--count them, five--oversight hearing on the 
digital television transition.
    We are now 252 days away from February 17th, 2009, when all 
full-powered TV stations in the country are required to 
transition to digital broadcasting. While February 17th now 
looms as a momentous date in the history of television, it is a 
date that we are endeavoring to have as unmemorable as possible 
from a consumer standpoint.
    And that brings us to the two excellent panels of witnesses 
who can assist the subcommittee this morning. They will help us 
to gauge current consumer and industry preparedness for this 
transition, as well as provide suggestions for programmatic 
improvements or other ways to minimize consumer disruption.
    Since our last hearing on this important subject, the first 
wave of converter box coupons mailed to requesting households 
has now expired after 90 days. The NTIA reports that some 16 
million coupons have been requested overall, and that of the 
approximately 840,000 coupons that have thus far reached their 
90-day expiration date, roughly 42 percent of these coupons 
have been redeemed. As more coupons reach the 90-day expiration 
date, we will have more and better data on the rate at which 
the coupons are being redeemed. This will shed additional light 
on the potential financial and administrative needs for the 
program.
    Second, the FCC announced recently that on September 8th, a 
pilot test switchover will occur in Wilmington, North Carolina. 
The FCC, NTIA, the DTV Transition Coalition, and local 
authorities are now gearing up for this early shut-off.
    I believe that even if this experiment goes relatively 
smoothly, both the FCC and the NTIA stand to learn something 
from it that can be applied nationally. I applaud the agencies 
for conducting this test and particularly commend the community 
of Wilmington, North Carolina, for its willingness to move 
forward early.
    Finally, this morning we have new, updated information 
being provided to us by the Government Accountability Office. 
The GAO recently completed a report on the technical aspects of 
the transition that highlighted issues confronting broadcasters 
and tower crews as they prepare to switch over from analog to 
full-powered digital broadcasting. Today the GAO supplements 
that information with its first survey results regarding 
consumer awareness of transition.
    The good news is that the overall percentage of consumers 
who know something is about to happen is quite high: 84 
percent. Unfortunately, additional data within the first survey 
results do raise concerns. The GAO results underscore, for 
instance, that many consumers do not yet fully understand the 
ramifications of the transition. For example, some 69 percent 
of the respondents told GAO that they believe the transition 
would not be disruptive or not too disruptive to their ability 
to watch television. Yet 54 percent of the these respondents 
had inadequate or no plans for the transition despite being at 
high or medium risk of leaving TV service.
    With respect to the converter box program, only 55 percent 
of the consumers reported being aware of it. In addition, of 
those consumers who said they intend to purchase a box, only 
one-third were aware of how to actually obtain a coupon.
    The GAO data also indicates some significant consumer 
confusion. For instance, of those consumers considered at risk 
of losing television service, some 45 percent plan inadequate 
or no action to prepare for the transition. Conversely, of 
those consumers in a low-risk category, in other words 
consumers who should not need converter boxes because all their 
TVs are connected to cable or satellite service, some 15 
percent indicated that they would purchase a converter box even 
though they don't need one, and 86 percent of those households 
indicated that they would utilize the NTIA program to do so.
    By age groups the GAO found that people age 45 to 64 have 
the highest awareness of the transition, and the respondents 65 
and over showed slightly lower levels of awareness. The GAO 
also found that ethnic minorities were less likely to have 
awareness of the transition and the rationale behind it.
    All of this early survey data should be closely analyzed 
and monitored and should inform the various consumer education 
campaigns, especially among ethnic minorities and other hard-
to-reach demographics.
    As the GAO conducts additional surveys and analysis, we 
will need to examine how best to calibrate the consumer 
education campaigns to yield not only ever greater consumer 
awareness, but also more accurate knowledge across the country 
about what consumers may need to do or not do and how best to 
prepare the Nation for the future of television.
    I look forward to hearing from our witnesses, and I thank 
you all for your willingness to testify before the 
Telecommunications and Internet Subcommittee today. That 
completes the opening statement of the Chair.
    I now turn to recognize the Ranking Member of the 
subcommittee, the gentleman from the State of Florida, Mr. 
Stearns.

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

    Mr. Stearns. Good morning, and thank you, Mr. Chairman. 
Thank you for holding this hearing. I think it is timely, and 
it is nice to have our witnesses here.
    We are 252 days away from the transition, so our goal today 
is to get a feel for where we are. Perhaps my opening statement 
will be a little more optimistic than the Chairman. He quotes 
the GAO, which makes their information from phone calls. We 
will be using the Nielsen rating system, which actually has 
devices at home and sends people to the houses, much like we do 
for a census. So I will be using, I think, information that is 
perhaps a little more accurate and I think for that reason is 
perhaps a little more optimistic.
    Having said all that, it remains vitally important for this 
subcommittee to exercise stringent oversight of the process so 
that we indeed can ensure that on the day after the transition, 
people will not think their TVs are broken and be calling their 
Congressmen. With this in mind, I look forward to our witnesses 
and this hearing.
    My colleagues, on February 17th, 2009, as the transition 
occurs for full-powered broadcasters to transmit exclusively in 
digital format, the DTV legislation gives industry the needed 
incentives, I think, to prepare for this transition. And the 
results are clear: 91 percent of broadcasters are already 
transmitting in digital; 68 percent are already on their post-
transition channel; and 68 percent are already broadcasting at 
full strength. As of April 30th, 2008, 78 percent of households 
had all their televisions prepared for the transition, and 91 
percent of households had one or more televisions prepared for 
this transition. This means that with more than 9 months still 
to go, only about a little over 9 percent of households were 
relying exclusively on analog over-the-air broadcast and needed 
to take action to receive programing after this transition.
    Now, manufacturers have already designed 87 coupon-eligible 
models of digital-to-analog converter boxes, 87, 21 of which 
can pass through analog low-power signals. The National 
Telecommunications and Information Administration has certified 
over 1,800 retailers with nearly 20,000 store locations to 
accept these coupons. Consumers can also redeem coupons from 19 
online retailers and 7 phone retailers. This is up from the 250 
retailers with 15,000 stores since our last DTV hearing 
occurred this year in February. So obviously progress is being 
made.
    Now, over 8\1/2\ million households have requested coupons, 
suggesting there is awareness, it is not a major problem. NTIA 
has already sent out almost 15 million of the 16 million 
requested coupons, nearly 3 million of which have been 
redeemed. Now, these numbers demonstrate that while we still 
have work to do, we are on the path towards what I believe is a 
smooth transition.
    It is also worth noting that consumer satisfaction with the 
converter boxes is off the charts. Retailers say they have 
never seen electronic devices with such a low return rate.
    Furthermore, there is mounting evidence that the 
educational efforts of government and the private sector are 
indeed working. A recent survey of the Consumer Electronic 
Association found that 74 percent of U.S. adults are aware of 
the DTV transition, which is up from 41 percent in August 2006. 
I just came back from four town meetings over the weekend in 
central Florida, and I spoke to 450 people. Every hand in all 
the town meetings went up; they knew about the digital 
transition.
    Now, this still leaves over a quarter of the people unaware 
of the transition from the statistics I gave you earlier, and I 
would like to hear from our witnesses how to best reach these 
individuals. I think we are on the right track. Among the good 
news is that, according to Nielsen, seniors are the most 
prepared demographically.
    I would also like to commend the FCC for setting up a DTV 
transition test in Wilmington, North Carolina. I have mentioned 
that for some time, and I am very pleased that it will take 
place on September 8th, 2008. I think it is a good idea to have 
a test market so we can see what works and fix the problems 
right at the spot. Most businesses when they start a new 
operation do a test market to see how it works.
    I caution my colleagues, though, that the focus on 
Wilmington and all the attention it gets up to the transition 
perhaps could make the test unrealistic. I hope the test will 
not divert government and industry resources from the rest of 
the country. However, even if the test is not completely 
representative for the rest of the country, obviously we will 
certainly learn some important lessons from this demonstration 
test. So I commend the FCC for this activity.
    These are important issues. I thank you, Mr. Chairman, for 
this hearing, and I look forward to hearing from our witnesses.
    Mr. Markey. The gentleman's time has expired.
    The Chair recognizes the gentleman from Texas, Mr. 
Gonzalez.
    The Chair recognizes the gentlelady from California, Ms. 
Eshoo.

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

    Ms. Eshoo. Thank you, Mr. Chairman, for holding yet another 
hearing on our subcommittee, so that we can make an assessment 
about the progress that we are making on the digital 
transition.
    First I would like to recommend that every member of the 
subcommittee read an article entitled ``The Static in the 
Digital TV Revolution'' that was published in the June 7th 
National Journal. And I would like to ask for unanimous consent 
that the article be submitted into our record.
    Mr. Markey. Without objection, it will be included.
    [The information appears at the conclusion of the hearing.]
    Ms. Eshoo. The thesis of the piece is that broadcasters 
have failed to deliver on the grandiose vision of the DTV 
transition they promised, which were all sorts of new channels 
dedicated to children's programs, sports and news. They 
testified in this very room and made these promises as part of 
their demands for mandatory carriage on cable and satellite 
services.
    Now that we are 250 days from the end of analog television, 
not one commercial broadcaster in my congressional district 
produces additional content on their multicast channels except 
for a few who air the weather radar 24 hours a day.
    There are exceptions to the barren DTV landscape. Public 
television stations across the country are using their 
additional channels for exciting new programs. In the bay area, 
KQED has five new channels they are broadcasting today. They 
are a channel dedicated to children's programing and another 
24-hour Spanish-language channel.
    The article also notes that the Gore Commission recommended 
that broadcasters be mandated to satisfy a minimum threshold 
for news, for public affairs programming and increased election 
coverage. These public-interest obligations were not codified 
in the DTV law. To ensure that broadcasters are fulfilling 
their public-interest obligations, I introduced the Broadcast 
Licensing in the Public Interest Act, H.R. 4221, and this 
legislation attempts to revive the public-interest standards 
that have languished in recent years. It reduces a broadcast 
license term from 8 years to 3. The 3-year term will bring 
greater oversight and accountability to broadcaster renewals.
    Secondly, the bill requires that broadcast licensees 
seeking renewal to demonstrate that they have made a dedication 
to civic affairs of their community and to local news 
gathering. The bill also mandates that broadcasters air locally 
produced programming and make a commitment to provide a public 
presentation of the views of candidates and issues related to 
local, statewide or national election. And finally, it mandates 
that broadcasters provide quality educational programming for 
children.
    I think we owe it to the American public to ensure that 
those utilizing the public broadcast spectrum produce quality 
programming, and one way is to mandate adherence to the public-
interest obligations.
    So thank you again, Mr. Chairman, for holding this hearing, 
and I look forward to the testimony of the outstanding panel 
that you have assembled.
    Mr. Markey. Thank you. Gentlelady's time has expired.
    The Chair recognizes the gentleman from Illinois Mr. 
Shimkus.

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

    Mr. Shimkus. Thank you, Mr. Chairman.
    Keeping things in perspective of the digital transition, 
the importance of it is to make sure that we get spectrum 
available to first-line responders. We are all concerned about 
TV signals and stuff. I am more concerned about our ability for 
our first-time responders to be able to communicate with each 
other, the firefighters, and police officers.
    We have to keep this whole debate in perspective. No matter 
what we do, no matter how many tax dollars we spend, no matter 
how many millions of dollars the industry spends, we are not 
going to be to a point where there are going to be zero defects 
once the transition occurs. In fact, there will be people who 
are really going to miss it. I liken this to the Medicare D 
debate. That is why I have done op-eds, that is why I have done 
newsletters, that is why I have done press conferences, because 
I don't want to be the Member when it comes transition time and 
my constituents say, well, no one told me. So I am trying to do 
my part to help educate my constituents, just like Medicare D.
    Also, Medicare D didn't affect everybody. It affected the 
seniors, and mostly the seniors who couldn't afford it. This 
will affect those 13 million to 10 million over-the-air people 
who are receiving over-the-air signals. And for those who have 
cable, for those who have direct satellite and other types of 
methods, this is not going to affect them.
    I applied for my coupons, I have my coupons. We are going 
to go get our converters. 2.7 million coupons have been 
redeemed, and retailers are saying that the customer 
satisfaction is high, and there are 87 different converter 
boxes. Twenty-seven have analog pass-through features, which is 
something that we have discussed here, that allow low-power 
broadcasters we are concerned about.
    So the process is working. The sky is not falling. I am 
excited about Wilmington, and I applaud them. I think there 
will be lessons learned, I appreciate that, and appreciate 
Chairman Martin and the FCC for pushing that. So when we get to 
the date that we will still be surprised, there will still be 
disappointments and calls, but hopefully a little bit less.
    Thank you for having the hearing, Mr. Chairman. I yield 
back my time.
    Mr. Markey. Thank you. The gentleman's time has expired.
    The Chair recognizes the gentleman from Michigan Mr. 
Stupak.

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

    Mr. Stupak. Thank you, Chairman Markey, for again holding a 
hearing on the status of the digital television transition. We 
are less than a year away from the DTV analog-to-digital 
switch. Unfortunately, I have a growing number of concerns 
about the implementation of the DTV transition.
    At the beginning of this year, U.S. households began 
requesting their DTV coupons. When a DTV coupon is sent, a 
package of information with details on what nearby stores carry 
converter boxes as well as Internet and phone-based ordering 
options is included. However, if you live in Marquette County, 
Michigan, you will find that all of the listed retailers are 
out of stock and can provide no clear date on when a new 
converter box will arrive. This is a significant problem. My 
office has received several calls from those who are worried 
that they won't find a converter box before their coupon 
expires since they are only given 90 days to use it.
    Recently, a constituent of mine from Negaunee, Michigan, 
called a number of area stores over several weekends waiting 
for them to restock their shelves with converter boxes. Nearing 
his last 30 days on the coupons and frustrated with the 
process, he called my office for help. While my staff could not 
locate a store with boxes in stock, they did find that the 
local Radio Shack store would take the coupon and mail him a 
box for free when it does become available.
    Why can't all the retailers process coupons in this same 
fashion? I understand that retailers have joined the DTV 
transition program on a voluntary basis, but consumers need 
some certainty when they will be able to obtain a converter box 
without having to repeatedly check with stores in their area.
    Another constituent of mine from Petoskey, Michigan, has 
run into the exact same problem of stores not being in stock 
and no date certain of when boxes are coming. In fact, when my 
staff assisted him in finding a store, they discovered that one 
of the five nearest stores listed on the DTV2009.gov vendor 
database isn't even open for business, and that the phone 
number listed is out of service.
    With over 7 months remaining, I am concerned that this is 
just the beginning of the problems my district and others will 
face. I encourage the NTIA to lift the 90-day expiration date 
to provide more time to those having difficulty finding 
converter boxes. In addition, the NTIA needs to do a better job 
of making sure that retailers are keeping the stores in stock.
    Mr. Chairman, thank you for holding today's hearing. I look 
forward to the testimony of our witnesses, and I hope they will 
be able to alleviate my concerns about the current status of 
DTV transition.
    Mr. Markey. I thank the gentleman. The gentleman's time has 
expired.
    The Chair recognizes the gentleman from Michigan Mr. Upton.

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

    Mr. Upton. Well, thank you, Mr. Chairman. And I appreciate 
the opportunity to have this hearing as well. I think that it 
is very important we continue to have these snapshots of 
progress or lack thereof in terms of the transition date that 
you and I worked very closely on, along with Chairman Dingell 
and Mr. Barton.
    We need to remember that the 9/11 Commission's top 
recommendation was we need to make the transition from analog 
to digital. It was terrible on that day, on 9/11, when our 
firefighters in New York could not communicate with their 
headquarters folks to get out of those buildings. We learned 
with Katrina that the Coast Guard personnel were not able to 
coordinate efforts with the local sheriffs as well in terms of 
the evacuation. So this transition is a big thing, particularly 
for all of our public safety officers.
    We also knew there would be a slow transition for people to 
make that change from analog to digital, not only to consumers, 
but the broadcasters as well.
    I must say that I have been pleased with the many, many 
announcements that I have seen not only while I have been here 
voting in the Washington area, but back in southwest Michigan 
as well in terms of the information being passed along to 
consumers about what that change means and whether or not they 
need to apply for a coupon so that they can find a retailer to 
make that transition.
    I would note, too, that for those areas that are somewhat 
rural, my district is fairly diverse. I have a city the size of 
Kalamazoo, 100,000 folks, and I have another county in my 
district that has only about a 200-yard stretch of four-lane 
road, the rest being two-lane. But consumers can also redeem 
coupons from some 19 online retailers and 7 phone retailers. I 
think that is a step certainly in the right direction.
    So we have 7 months to go. I think that it is imperative 
among all of us as public servants to help put out that message 
in terms of what that change is going to mean for people that 
are going to require such and provide relief for those that are 
not going to have to make that change.
    Again, Mr. Chairman, I appreciate this hearing and look 
forward to the testimony of all the witnesses, particularly 
Chairman Martin.
    Mr. Markey. The gentleman's time has expired.
    The Chair recognizes the gentleman from Texas, Mr. Green.

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

    Mr. Green. Thank you, Mr. Chairman, for holding this now 
fifth hearing on the DTV transition. Like my colleagues from 
Illinois and quite a lot of Members, we have actually included 
the application on our newsletter both in Spanish and in 
English, and we have actually walked it to our senior citizen 
centers where they have both on-site nutrition and also Meals-
on-Wheels. So there is an effort nationwide.
    It seems like issues and problems continue to rise, so 
continued oversight from our committee is essential. In our 
last DTV hearing, I expressed concern about individuals living 
in nursing homes not being able to apply for coupons. Since 
then I understand that NTIA has taken action, and the comment 
period closed yesterday on an NPRN to address this as well as 
allowing individuals that use P.O. Boxes as well as their 
primary address to apply for coupons. So I would like to thank 
Dr. McGuire-Rivera for NTIA's work on the issue.
    I mention the issues continue to surface, and recently I 
have been hearing from constituents who are concerned about 
battery-powered digital television sets being scarce. I am in 
Houston, and we know with Katrina and Allison and Rita the 
concern we have in our emergency situation. And I have to admit 
I lost power in my house even with Rita, and it wasn't near my 
home, but the power went out, and we used battery-operated 
televisions. The issue is what is going to happen in an 
emergency situation where people either have to use their 
radio, where battery power is not unusual, but to be able to 
get to the television. I hope the NTIA and the FCC would look 
at something like battery-powered converter boxes are just 
nonexistent, but also see what we can do about making sure that 
is available.
    We can get the news through the radio, but a lot of folks 
also like to see the storm on the maps that we have. With the 
hurricane season upon us and the high number of tornadoes we 
have seen across the country, people need to be able to rely on 
storm coverage provided by local television broadcasters. But 
if their power is knocked out, that would not be an option. I 
hope to hear from witnesses today on the problem, and I plan to 
explore it during questioning.
    I would like to continue a concern with the outreach to 
non-English speaking households who have--reports and 
statistics I have seen, broadcasters are prepared and well-
positioned to complete the transition and switch off analog in 
February 2009. The persistent problem seems to remain confusion 
on the part of consumers and lack of understanding about what 
needs to be done to prepare for the transition and who needs to 
take action. The problem seems to be more prevalent in non-
English speaking households, and I hope to hear today what 
additional actions have been taken since our last hearing where 
it generally agreed that this was a problem to address. I 
understand that half the calls taken by NTIA on the converter 
box program are from non-English speaking households, which I 
think highlights the focus on the segment of population. It is 
encouraging I have not heard complaints about NTIA not being 
able to handle these calls, but I think the disproportionate 
number of calls demonstrates that more effort needs to be 
focused on this segment of the population.
    And again, I thank the Chairman for holding the hearing and 
the continuing hearings because all of us want to make sure 
that we do our work up front, because none of us want to wait 
until February of next year and find out from a lot of our 
constituents problems that we should have addressed.
    I yield back my time.
    Mr. Markey. The gentleman's time has expired.
    The Chair recognizes the gentleman from Michigan, the 
Chairman of the Full Committee, Mr. Dingell.

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

    Mr. Dingell. Mr. Chairman, first I thank you for the 
recognition; and second, I commend you for your leadership in 
this matter. I wish to welcome our witnesses to the fifth 
oversight hearing on digital television transition, DTV 
transition, before this subcommittee in the 110th Congress. The 
DTV transition is one of the most important telecommunications 
issues facing this committee this year, and time is running 
out. We need to know whether we are ready for it and how it is 
going to impact upon the people, particularly those who have 
the least.
    In 252 days millions of analog television sets in this 
country will stop receiving full-power broadcast television 
signals. While broadcasters, cable providers, retailers and 
others have undertaken significant efforts to educate 
consumers, far too many remain unaware and are ill-prepared for 
the transition.
    When 54 percent of the households have inadequate or no 
plans whatsoever for the transition, despite being at risk of 
losing service, it demonstrates that there is still much to be 
done before February 17, 2009, and your leadership, Mr. 
Chairman, and the efforts of this subcommittee will be an 
important contributor in finding out what is going on and what 
needs to be done to assure that the American public is properly 
protected.
    Certain recent developments with respect to DTV transition 
are the focus of today's hearings. Last month the Federal 
Communications Commission, the FCC, announced the test market 
for the DTV transition in Wilmington, North Carolina. On 
September 8, 2008, most commercial broadcasters in the 
Wilmington market will go all digital ahead of the national 
transition deadline of February 17, 2009. I hope this test 
market will help identify the issues that may need to be 
addressed before the rest of the Nation undergoes the DTV 
transition next February.
    Next, a recent Government Accountability Office, GAO, 
consumer survey found that 35 percent of the over-the-air homes 
and 52 percent of the homes with at least one unconnected 
analog television set are unprepared for the transition. These 
numbers suggest that much remains to be done to educate 
consumers, including seniors, non-English speaking households, 
as mentioned by my friend Mr. Green, and other vulnerable 
populations.
    Finally, the first DTV converter box coupons have already 
begun to expire, allowing some insight into the redemption 
rates for the converter box coupon program. This should be a 
matter of very great concern to this subcommittee and indeed to 
the public at large. It is my hope that this data will assist 
us in determining whether more money may be needed for this 
program, or whether the FCC will be required to do some 
tweaking of that part of the matter.
    These recent developments raise a number of important 
questions. First, will funding for the TV converter box coupon 
program be sufficient? I have always had doubts about this, and 
I am curious as to whether those fears will be realized. And we 
will need to know whether some consumers will be left without 
assistance.
    Second, how will NTIA and IBM facilitate the changeover 
from the first phase of the TV converter box program in which 
any household can apply for up to two coupons, to the second 
phase in which coupons are restricted to only over-the-air 
households?
    Third, will the FCC and NTIA have sufficient resources to 
educate consumers in every community in the same extent as was 
done in the Wilmington test market? I have to confess I have 
great doubts about that, and I hope that the Chairman this 
morning, whom I welcome, will be able to give us some guidance 
on that matter. If not, how much of the actual indicator will 
be addressed for the national transition to this new test 
market?
    What resources are available to assist consumers who may 
need in-home assistance to set up their converter boxes? If 
consumers hook up their converter box, and it fails to deliver 
digital signals, how will they know whether the converter box 
is broken, or if a new roof-top antenna or other technological 
fix is needed?
    That raises the question, are we seeing to it that proper 
instructions, and warnings, advices are being given to people 
who are applying for the coupons, and are they coming with the 
coupons in a way that would enable the receiver of the coupon 
to act responsibly in his own interest?
    In some viewing areas a broadcaster's digital signal will 
cover different areas than a broadcaster's current analog 
signal. That poses interesting questions and can create some 
significant hardship. How will consumers know if they fall 
inside a broadcaster's analog footprint, but outside the 
digital footprint?
    These are only a few of the many questions that remain 
about the transition, and we need to have answers if the 
transition is to proceed. I urge the witnesses to address these 
and other pending matters in their testimony.
    I want to thank our witnesses for being here today, and I 
look forward to working with them and everyone else to resolve 
the issues that we still confront.
    Thank you, Mr. Chairman.
    Mr. Markey. I thank the Chairman.
    And now we turn and recognize the gentlelady from 
California, Ms. Harman.

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

    Ms. Harman. Thank you, Mr. Chairman.
    I want to take just a moment to bid farewell to a valued 
staffer, Hank Greenberg, who is sitting behind me. He is 
leaving to what you would call Harvard Law School. His 
extraordinary talent has not gone unnoticed by the committee 
staff, the subcommittee staff, or the FCC, and I just want to 
say he will be sorely missed.
    Mr. Markey. He has to learn to park his car in the Harvard 
Yard, though, or else he is going to get in a lot of trouble.
    Ms. Harman. I am sure he will do that, Mr. Chairman.
    Turning to the subject at hand. Like some of the other 
members, I am less worried about converter boxes and coupons 
than I am about achieving the real goal of the DTV transition, 
which is interoperability for first responders. The spectrums 
freed up by the transition is one of the keys to fixing the 
emergency communication problems that, as we know, continue to 
plague our country's public safety users.
    I commend Chairman Martin and his agency for trying for the 
second time to establish a public-private partnership that will 
create a nationwide interoperable broadband network for our 
Nation's first responders and give them technology that 
commercial wireless subscribers enjoy.
    I think we can fix the problems that doomed the first 
auction, the lack of clarity that deterred potential bidders, 
the lack of transparency on the public safety side of the 
partnership. To that end last month I introduced H.R. 6055, 
Public Safety Broadband Authorization Act, which will authorize 
modest interim funding to help the FCC promote a nationwide 
interoperable public safety communications network. It allows 
the FCC, as I am sure Chairman Martin knows, to make very 
modest grants to the public safety broadband licensee to cover 
its operating and administrative costs, and it bars that 
licensee from taking outside funds or using grant money to 
repay outstanding debts, the point of which is to eliminate any 
appearance of conflict of interest. It is a small step. The big 
step is completing finally the transition on time and getting 
this public safety spectrum identified and built out.
    Let me finally say that over the weekend in Los Angeles, I 
met with Haim Saban, whose company owns Univision. He was 
describing major efforts that Univision is making to educate 
consumers and to facilitate the DTV transition. Mr. Chairman, I 
hope that we can arrange a briefing for staffers or members on 
what is happening out there. This is the largest Spanish-
language communications network, and it is impressive to me 
that they are making these efforts. Perhaps others are, too, 
but there is something to celebrate in the private sector in 
connection with the transition.
    I yield back the balance of my time.
    Mr. Markey. Great. The gentlelady's time has expired.
    The Chair recognizes the gentleman from Oregon Mr. Walden.

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

    Mr. Walden. I thank you very much. I want to welcome our 
panelists today.
    Thank you, Mr. Chairman, for continuing these oversight 
hearings. I think they are very important. I learned years ago, 
both as a broadcaster and when we dealt with some of the 
satellite issues, that somewhere buried in the Constitution is 
a provision that guarantees access to television the way I have 
gotten it all along, and I think we are all going to find that 
out in February.
    I will be interested today to hear more about where we are 
in terms of the coupons, how they are being redeemed. I 
understand that there is actually some decent news on that.
    I would like to hear more about the analog pass-through 
boxes and where we stand on that. I think that was an oversight 
perhaps we all missed, that some of these boxes needed to have 
that pass-through capability, and I know there are some now out 
there on the market. I would be curious to see how that is 
being resolved to deal with especially these low-power TV 
stations that have other problems that have to be dealt with. I 
know we tried to reach a consensus in some of the discussions 
about that. It could play into this mix. If there is a big 
fight about February of next year, you wouldn't want to see 
these stations go dark during that process necessarily, and 
maybe there is some opportunity there to discuss how we might 
avoid that, at least a pause time.
    And finally, I would like to hear more about what you are 
hearing from broadcasters themselves. Having, again, been a 
radio broadcaster, I am a little concerned about everybody 
trying to change out their antennas and other transmission 
components all basically the same day, the same time. In many 
of our western States certainly that means hilltops, 
mountaintops, accessible maybe by snowcap only in February, and 
a limited number of engineers. And so I still am concerned 
about whether consumers may have their TVs ready to go, and 
broadcasters may be snowed out literally from being able to 
make the conversion. If our panelists can address those as 
well, that would be appreciated.
    Thank you, Mr. Chairman, again for your oversight hearings. 
I think it is a very important issue for American consumers.
    Mr. Markey. The gentleman's time has expired, and all time 
for opening statements from the members of the subcommittee has 
expired.
    And now we return to our very, very distinguished panel to 
learn about what is happening in the digital transition. Our 
first witness is Kevin Martin, who is the Chairman the Federal 
Communications Commission, and he is here to talk about this 
new test market in Wilmington, North Carolina, that we are all 
looking forward to learning about.
    We welcome you back, Mr. Chairman. Whenever you are ready, 
please begin.

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

    Mr. Martin. Well, thank you and good morning, Chairman 
Markey and all the members of the Committee. I certainly thank 
you for inviting me to be here today and to give me a chance to 
update you on the status of the digital transition.
    As mandated by Congress on February 17th, 2009, all full-
powered television stations in the country will stop 
broadcasting in analog and broadcast exclusively in digital. 
The DTV transition will provide television viewers with movie-
quality picture and sound and potentially new programing 
choices. It will also allow us to significantly improve public 
safety communications and usher in a new era of advanced 
wireless services such as the widespread deployment of 
broadband. A successful DTV transition will depend upon 
minimizing the burdens placed on consumers and maximizing their 
ability to benefit from it.
    Now, I would like to update you on some of the recent 
regulatory actions and education efforts that we have been 
undergoing at the Commission. The broadcasters are making 
significant progress in converting their facilities to all 
digital. Almost 1,000 completed construction and are providing 
full service to their viewers today.
    We have adopted the final DTV table of allotments, which 
provides over 99 percent of the television stations with their 
final digital channel, and we have adopted the technical 
procedures and roles to guide broadcasters through to the end 
of the transition. Thanks to the staff's efficient processing 
of construction permits, last month we were able to begin 
accepting applications to expand the DTV service area 12 weeks 
ahead of schedule.
    The Commission's DTV-related enforcements efforts have 
focused on making sure consumers aren't taken advantage of 
during this transition. The Commission to date has inspected 
3,992 retail stores and 37 Web sites. We have issued 361 
citations for failing to comply with our labeling rules. In the 
last 2 months, we have released NALs against nine retailers, 
totaling nearly $5 million. We released three NALs and seven 
consent decrees for TVs with digital tuners that do not comply 
with the V-chip regulations, and settlements including payments 
totaling over 3\1/2\ million in significant compliance 
measures.
    And finally, our field agents across the country have 
visited almost 935 stores and interviewed 842 store managers in 
over 34 States. To date we have found that the majority of the 
store managers are well-informed of the DTV transition and the 
NTIA converter box program. Our field agents follow up at these 
stores with information and tip sheets and conducting staff 
training sessions as they are needed.
    With a little less than 9 months to go, the industry and 
Commission are actively reaching out to consumers to alert them 
of the coming transition and to inform them about the steps 
they will need to take. I commend the industry for the consumer 
education campaign that they have initiated. The CEA, NAB, and 
APTS have all reported significant increases in the percentage 
of consumers who are aware of the upcoming DTV transition from 
around 40 percent in 2006 and the beginning of 2007 to almost 
80 percent by January of this year.
    That more viewers are aware of the transition is a step in 
the right direction. Now we need to make sure we focus on 
making sure that they know what to do to prepare for that 
transition. A recent Consumers Union survey found that 64 
percent of consumers were aware of the transition, but that 74 
percent had major misconceptions about its impact on them. 
These surveys are useful in helping us identify how we need to 
focus our efforts and resources.
    I will give you just a few statistics on the status of our 
education campaign, and more details are available in my 
written testimony. The Commission has conducted more than 1,000 
DTV awareness sessions around the country, attended more than 
200 conferences and events, had almost 100 partnership 
meetings, and made about 5,750 visits to various organizations 
around the country to disseminate DTV information.
    Almost 4 million pages of our DTV publications have been 
distributed to individual consumers and to consumer agencies 
and organizations. We have distributed 7,700 posters 
nationwide, and by next month we will be displaying DTV 
education posters in all 34,000 post offices across the 
country. The poster we will have in the post offices is on 
display in front of me. We have the billboards that we are 
using across the country on display over here, and these are 
our tip sheets and fact sheets on display in front of me as 
well. We also secured commitments from 36 States to display DTV 
materials in 1,100 Department of Motor Vehicle locations.
    The FCC outreach effort also recognizes that some consumers 
will be disproportionately impacted by the transition or are 
harder to reach than the general population. For instance, we 
have placed special emphasis on reaching seniors. Through the 
work of our field agents, we have distributed information to 
over 4,000 senior centers and almost 1,700 community centers. 
We have given nearly 900 presentations at these centers. We are 
working closely with AARP and other senior organizations, 
presented at their conferences and participated in interviews 
with their media.
    We are also taking extra steps to reach non-English 
speakers and minorities who disproportionately rely on over-
the-air television. Most, if not all, of our DTV publications 
are available in Spanish. We have conducted 15 DTV awareness 
sessions, attended more than 21 conferences or events, had 
numerous partnership meetings, and made about 72 visits to 
various organizations all specifically targeting the Hispanic 
population. We have partnered with Univision to educate the 
Spanish-speaking audiences, as Congresswoman Harman was 
mentioning. There are 200 planned town hall meetings that will 
take place over the next few months, and the FCC will be 
partnering with Univision to attend those. The FCC is planning 
to participate in the upcoming conferences including the 
conference of the United Latin American Citizens, the United 
States Hispanic Chamber of Commerce Annual Expo, and the 
National Council of La Raza conference.
    One step we have taken to target rural viewers has been to 
place DTV transition materials at State and county fairs 
throughout the country. We already have plans to disseminate 
the transition materials to 188 State and county fairs in 25 
States.
    Now, earlier this year my colleague, Commissioner Copps, 
suggested that the Commission engage in a real-world 
experiment, readying broadcasters and consumers in advance of 
the upcoming digital transition.
    Last month I announced that Wilmington, North Carolina, 
would be the first market in the country to make the transition 
to digital television. The commercial broadcasters serving 
Wilmington have agreed to step up to this challenge. This test 
market will provide the FCC and TIA and other key stakeholders 
the opportunity to assess the effectiveness of our outreach and 
technical efforts. We will have ample time to modify these 
efforts based on the lessons learned in advance of the February 
national transition.
    To prepare the Wilmington consumers, we have exhibited at 
over 100 events, we have partnered with 70 local organizations 
to distribute our materials, and over 32,000 publications have 
been distributed to consumers. We have created and distributed 
radio PSAs and displayed four billboards in high-traffic areas. 
And we created a dedicated Web site and tailored posters and 
FCC publications specifically to the Wilmington, North 
Carolina, market.
    Since the FCC made its announcement, household coupon 
demand in Wilmington has increased by 78 percent, and that 
compares to a 22 percent increase for the country as a whole.
    In conclusion, the Commission is devoting significant 
resources to facilitating a smooth transition. Nearly every 
bureau and office at the Commission has been involved in this 
effort, including our field offices throughout the country. We 
intend to take whatever actions are necessary to minimize the 
potential burden the DTV transition could impose on consumers 
and maximize their ability to benefit from it.
    The next 3 months for the Wilmington, North Carolina, and 9 
months for the rest of the country will undoubtedly be 
challenging. Nevertheless it is my hope that through the 
combined efforts of the government, industry and advocacy 
groups, the American consumers will ultimately reap the rewards 
that the digital transition has to offer.
    Thank you, and I look forward to answering questions you 
may have.
    Mr. Markey. Thank you, Mr. Chairman, very much.
    [The prepared statement of Mr. Martin follows:]
    [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
    
    
    Mr. Markey. Now we will hear from Bernadette McGuire-
Rivera, who is the Associate Administrator of the National 
Telecommunications Administration, and she is here to speak 
about the redemption rates of the DTV converter box program. 
Welcome.

   STATEMENT OF BERNADETTE MCGUIRE-RIVERA, PH.D., ASSOCIATE 
  ADMINISTRATOR, OFFICE OF TELECOMMUNICATIONS AND INFORMATION 
   APPLICATIONS, NATIONAL TELECOMMUNICATIONS AND INFORMATION 
          ADMINISTRATION, U.S. DEPARTMENT OF COMMERCE

    Ms. McGuire-Rivera. Thank you, Chairman Markey, Ranking 
Member Stearns. I appreciate the opportunity to testify today 
about the progress of the TV converter box coupon program.
    When Acting Assistant Secretary Baker appeared before the 
subcommittee in February, we were off to a very strong start 
now, and its 6-month interest in the coupon program remains 
very high.
    As many of you have noted, we have received 8\1/2\ million 
requests for 16 million coupons. Requests are now averaging 
approximately 104,000 a day. Half of the requesting households 
say they rely exclusively on over-the-air television. An 
initial backlog due to high demand has been eliminated, and now 
all coupons are processed timely and are mailed within 10 to 15 
days after we receive the request.
    NTIA recognizes the Committee and everyone interested in 
the coupon program was interested in the redemption rates. That 
really was our big news for this week. The first 800,000 
coupons expired, and of those, 42 percent have been used. I 
want to caution everyone, though, that this is a very small 
sample. The first 800 really came in in the first few days, 
many in the wee hours of New Year's Day. And I have a funny 
feeling almost everyone in this room was in that first day's 
order. So these consumers may be a little different. We will be 
updating this data.
    We have estimated that by July 1st, 3-1/2 million coupons 
will have completed the full cycle. By that time we should have 
a robust estimate of what redemption will actually be, but we 
will keep the committee up to date on redemption data as we get 
it, as we begin to analyze it.
    Now, all the progress we have made to date is tied directly 
to the voluntary participation of NTIA partners in private 
industry, in the nonprofit sector and in government. Thanks to 
the consumer electronic manufacturers, certified converter 
boxes are widely available. NTIA has certified 87 models; 21 
have analog pass-through capability. The retailers on the next 
panel will talk to you about we are getting those into the 
stores.
    As of today 3 million boxes have been purchased using a 
coupon, and as you noted, people seem to be very happy with the 
performance of the boxes. Thanks to our 1,800 participating 
electronics retailers, we have 19,000 stores where boxes are 
available. This includes seven of the largest consumer 
electronics chains, hundreds of regional retailers and smaller 
local stores.
    The program has retailers in all 50 States and every DMA as 
well as Guam, Puerto Rico, and the U.S. Virgin Islands. 
Consumers can also order from 19 online retailers or call 7 
telephone retailers. Manufacturing organizations such as CEA 
and CERC continue to be very helpful in providing information 
to consumers about how to use the boxes and helping the 
program.
    Consumer education is our number one priority both for NTIA 
and the Commerce Department. Secretary Gutierrez and Acting 
Secretary Baker regularly make public appearances, give press 
interviews, and work closely with staff in planning and 
execution of the program.
    In this next phase of our program, we want to move from 
just awareness to awareness and action. Our message, which 
should be at the end of this week on the front of the Commerce 
Department, is ``Experience the Benefits.'' We right now want 
people to not only know about the coupon program and order the 
coupon, but go out and buy the box, because right now the 
majority of people can experience a much better television 
picture with the box. But also, our motivation behind that is 
we do not want a rush at the end of the year. It is important 
that people now start to buy the boxes, get them in place so we 
do not have people coming in waiting until February 1st to get 
their boxes.
    The level of consumer participation, I think, is very 
strong evidence in the coupon orders that the program is 
working. We now have 272 nonprofit partners that are very 
helpful in spreading the word about the coupon program. We 
specifically look for partners that have close ties to the 
vulnerable populations; for example, AARP, the Leadership 
Conference on Civil Rights, The American Council of the Blind, 
Goodwill Industry, the National Council of La Raza, the 
National Congress of American Indians, and the National Grange.
    Now, seniors, of course, are a very important audience. We 
are conducting the rulemaking to make residents of nursing 
homes and other senior facilities available, make them eligible 
for coupons. That comment period closed last night, and you 
have our commitment that we will work as quickly as possible to 
complete this rulemaking.
    We are also keenly aware of the need to reach out to 
communities where the primary language may not be English. All 
of our materials are available in both English and Spanish, and 
we have 150 different languages that are available for people 
to order coupons with at the call center. About 40 percent of 
all the calls going into the call center right now are in 
Spanish. We are working very closely with Univision, Telemundo. 
We will be going to La Raza and doing a special event with 
Univision. I reinforce that these groups have done a terrific 
job. And everytime Univision does anything, we know to have 
that call center doubled up, because they really generate the 
calls.
    We also participated in the beginning of the month with the 
congressional tricaucus meeting that was put together by 
Representative Solis, which focused on the needs of Black, 
Latino, and Asian-Pacific Americans.
    NAB, NCTA and the media industries really have been 
outstanding partners. Every day television stations and cable 
channels across the country carry public service announcements 
about the coupon program. We believe they have a lot to do with 
our 104,000 calls a day.
    NTIA has been working with other Federal agencies to 
educate other vulnerable populations. For example, the Veterans 
Administration, the USDA food stamp program, and HHS's Office 
of Community Service are all including information about the 
coupon program in publications and mailings to their 
constituencies. We also are working with the post office to 
place coupon applications in all the post offices.
    Of course, one of our most important government partners is 
the FCC, and we will be collaborating very closely with the 
Commissioner.
    Mr. Markey. If you could summarize.
    Ms. McGuire-Rivera. We will be in Wilmington. We have 
adopted all our materials for Wilmington. In fact, we will be 
going down there tonight to do some special work on the seniors 
and nursing homes.
    In closing, I want to remind you if you want to learn more 
about it, the box and the materials are in the Rayburn 
cafeteria. Thank you very much.
    Mr. Markey. Thank you so much.
    [The prepared statement of Ms. McGuire-Rivera follows:]
    [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
    
    
    Mr. Markey. Our next witness is Mark Goldstein, who is the 
Director of Fiscal Infrastructure Issues from the GAO. He is 
here today to speak about the recent GAO report about broadcast 
preparedness for the DTV transition.
    We welcome, you.

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

    Mr. Goldstein. Thank you, Mr. Chairman and members of the 
subcommittee. I am pleased to be here today to discuss our 
recently issued report on technical issues arising from the 
digital television transition and our work on the extent of the 
consumer awareness about the transition. My comments are based 
on our work on the transition completed for this subcommittee. 
And we are continuing to review public- and private-sector 
efforts under way to implement the transition and plan to 
report on those issues later this year.
    In my testimony today I will discuss, one, the progress 
that full-powered broadcast stations have made in transitioning 
to digital, as well as the technical and coordination issues 
they face; two, issues pertaining to low-power television 
stations and how they affect consumers; and three, the extent 
to which American households are aware of the DTV transition 
and likely to utilize a converter box subsidy program.
    In summary, first, broadcasters have made significant 
progress in preparing for the DTV transition. Many stations are 
already broadcasting their digital signal in full power, with 
the only step remaining to turn off their analog signal.
    Specifically as of the end of February 2008, 91 percent of 
broadcasters responding to our survey reported that they were 
already transmitting a digital signal. Nine percent of stations 
responding to our survey had yet to begin broadcasting a 
digital signal, but almost all of those stations expect to be 
broadcasting digitally by February 17th, 2009.
    In finalizing the transition to digital, some stations must 
still resolve technical coordination and construction issues. 
Technical issues include relocating either digital or analog 
antennas, and in some cases constructing new broadcast towers. 
Some stations are bound by financial constraints related to the 
costs resolving these issues. In fact, at the time of our 
survey, 69 stations indicated they have yet to start 
construction on their final digital facilities due to financial 
constraints.
    In addition, some stations have outstanding coordination 
issues such as the U.S. Government reaching agreements with the 
Canadian-Mexican Governments regarding signal interference 
issues and coordination with cable providers and satellite 
companies.
    Second, since most low-power stations do not plan to 
transition to digital by February 2009, it is possible for some 
viewers to receive programming in analog and digital after the 
transition date. Potentially millions of viewers can receive 
low-power analog transmissions, including programming from the 
major networks, Spanish-language broadcasting and public 
television.
    To have access to both analog and digital television 
signals after the DTV transition, viewers could purchase a 
special kind of converter box that passes through an analog 
signal and a digital signal, often referred to as analog pass-
through, and purchase other equipment. Currently converter 
boxes with analog pass-through are available for purchase on 
line and at two national retailers.
    Public and private stakeholders have taken steps to educate 
the public about the low-power broadcast potentially remaining 
in analog, an option available to consumers. But some advocacy 
groups and others have expressed concerns that the messages 
intending to explain low-powered issues are instead confusing 
the public. Further complicating matters, many consumers do not 
know the difference between full-power and low-power stations 
or whether the signals they receive are full or low power.
    Finally, according to our consumer survey results, most 
households will be unaffected by the DTV transition, and a vast 
majority have heard of the transition. About 84 percent of the 
people heard of the transition. A smaller number of people have 
more specific knowledge of the transition date and why the 
transition is taking place.
    Those at higher risk of being affected by the transition, 
households viewing over-the-air television signals, have higher 
levels of awareness than those who will be unaffected. Over 
half of households have heard of the converter box subsidy 
program and those households at risk of losing television 
service who plan to take action reportedly are likely to 
utilize the program. However, only a third of those indicating 
plans to purchase boxes and utilize the coupons reported 
knowing how to obtain coupons.
    While general awareness of the DTV transition is high, 
there are indications that some consumers are confused or 
unknowledgeable about the transition, as 45 percent of the 
households who are at risk plan no action or inadequate action 
to prepare for the transition. And among those unaffected by 
the transition, 30 percent indicated they have plans to ready 
themselves for the transition despite the fact that no action 
will be required of them to maintain service.
    Thank you, Mr. Chairman. That concludes my statement. I 
will be pleased to answer any questions that you or members of 
the subcommittee have.
    Mr. Markey. Thank you, Mr. Goldstein, very much.
    [The prepared statement of Mr. Goldstein follows:]
    [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
    
    
    Mr. Markey. And we thank the panel, and the Chair now 
recognizes himself for a round of questions. We are going to 
begin with you, Dr. McGuire-Rivera.
    In your testimony you state, ``As distributed but 
unredeemed coupons expire, funds otherwise obligated to those 
coupons will be returned to the coupon program. The program 
currently has limited administrative funds to distribute 
additional numbers of coupons that might be issued for the 
return funds. The program is carefully watching its 
administrative funding limits so that it can distribute as many 
coupons as possible.'' This sounds like money might be returned 
to the pool so that additional eligible consumers apply and 
obtain needed converter boxes, but that a lack of 
administrative funds might prevent the program from mailing 
them out to the people in America that need these converter 
boxes.
    Please explain. This sounds like there could be a big 
problem here.
    Ms. McGuire-Rivera. We asked for the contention funds. One 
of the reasons we asked for it is we thought not so much that 
you would need money for coupons, but we could in fact need 
money for administration due to mid changes that we are going 
to be making in the program from the rulemakings and because 
there is going to be a lot of recycling. And I think when the 
administrative funds were established, there was never enough 
money for endless recycling of the coupons.
    Mr. Markey. Is this potentially a big problem, that you 
won't have the funding?
    Ms. McGuire-Rivera. I would say it would be a midsized 
problem.
    Mr. Markey. A midsized problem might entail having a 
million people not being able to make the commercial--I am 
wondering, how do you define midsized? Do you need more 
administrative funds, in other words? Or does IBM need to do 
something here? Tell us what the solution is.
    Ms. McGuire-Rivera. The funds would go to IBM.
    Mr. Markey. What do you need us to do?
    Ms. McGuire-Rivera. We need you to work with us as we 
figure out what is actually going on with the redemption rates 
and with the demand rates. If demand stays high and redemption 
stays where it is, about 30 to 40 percent, it looks like we 
will be able to redistribute more coupons than we ordinarily 
thought. So we would have to get more money basically to buy 
more stamps to send out coupons.
    Mr. Markey. So you are going to need more money, though? Is 
that what you are saying?
    Ms. McGuire-Rivera. Possibly for stamps.
    Mr. Markey. Possibly stamps. OK. So we won't think of that 
as money. But there is a price on that.
    Ms. McGuire-Rivera. There is a price on that.
    Mr. Markey. And you will pay for those stamps with money 
maybe?
    Ms. McGuire-Rivera. We will need money.
    Mr. Markey. OK. Thank you.
    Mr. Goldstein, what data point in the initial survey 
results would you highlight as particularly concerning to you?
    Mr. Goldstein. I think there are several. We think there is 
a fair amount of confusion still out there as I indicated. 
Number one, of the--roughly 45 percent of households that are 
in the high-risk group do not plan to take action. They seem to 
be unprepared to know what it is they need to do in terms of 
getting a converter box or a coupon. Of those who do understand 
what the program is and that they need to take some action, 100 
percent of them said that they would actually redeem a coupon.
    But there are other confusion points as well. As you 
indicated in your opening statement, 30 percent of households 
that are in the low-risk group that really don't have to take 
any action at all still plan to take action to get a converter 
box and therefore might also get a coupon and therefore be a 
drain on the treasury. There are a number of sort of anomalies 
and a lot of confusion still out there that have----
    Mr. Markey. Let me ask you this. I think we heard from Dr. 
McGuire-Rivera that 40 percent of the calls coming into the 
call center are in Spanish. Can you talk about that issue and 
how well the program is working in terms of addressing that 
community?
    Mr. Goldstein. We didn't specifically look for this 
particular report of those issues. We are doing some ongoing 
work now to continue to look at the consumer----
    Mr. Markey. Could you do me a favor, Mr. Goldstein? Could 
you put aside a special focus on that issue of how the Hispanic 
community is going to ultimately be dealt with with this 
program? If 40 percent of the calls coming in are in Spanish, 
there is obviously an issue here because it only represents 
maybe 10 or 11 percent of our population. So to the extent to 
which something is popping up like that, I would appreciate it 
if GAO would focus on it.
    And in fact if I can go back to you, Chairman Martin, how 
do you respond to these concerns that are being raised here at 
NTIA in terms of its administrative funding and over here with 
regard to the awareness but yet these gaps that exist in terms 
of individuals' response?
    Mr. Martin. I certainly support NTIA if they needed extra 
administrative funding to be able to mail out the coupons, then 
I think that that is a critical thing that we will need to make 
sure everyone gets to take advantage of the coupon program. I 
think that the Hispanic and Spanish speaking homes are twice as 
likely to not subscribe to cable or satellite. So they are a 
particularly at-risk population. The potential problem is 
compounded by the fact that it is even harder to get the 
message out to them. I think that is one of the reasons why 
they have been certainly one of our top target groups. And I 
think that what we need to do is continue to try to work with 
the organizations who understand how to get a message out at a 
grassroots level to them. We have--I think both NTIA and the 
Commission translated all of our information so that it is 
available in Spanish, but we really are trying to work at the 
grassroots level like what we are doing with Univision for town 
hall meetings, like what we are doing with the Hispanic Chamber 
of Commerce for town hall meetings and in cities with high 
Spanish speaking populations. I think it is going to be 
critical to make sure that they understand this transition is 
going to impact them as well.
    Mr. Markey. Thank you. My time has expired. The Chair 
recognizes the gentleman from Florida, Mr. Stearns.
    Mr. Stearns. Thank you, Mr. Chairman. Dr. McGuire-Rivera, I 
just want to clarify a little of what Chairman Markey 
mentioned. If you get access to the second set of funds that in 
fact have been allocated through Congress and made available to 
you, as the statute has stipulated, will you then have enough 
money for the administrative expenses and coupons?
    Ms. McGuire-Rivera. We are being very cautionary about 
that.
    Mr. Stearns. Can you bring your mic a little closer?
    Ms. McGuire-Rivera. We are being very cautious about that 
because we may in fact need a little bit more to continue to 
recycle coupons. And also we won't really have a firm answer on 
that until we get a better sense of what it is going to cost to 
do the rulemaking changes. So we may, we may not. I don't think 
it is a huge alarm at this point. But I also don't want to be 
in a situation where we would come back to you in July and 
surprise you.
    Mr. Stearns. Yeah. But we have allocated $60 million 
additional money for you. Do you think you will need more than 
that in addition--if we give you access to that funding, do you 
suspect you will need more than $60 million?
    Ms. McGuire-Rivera. We could depending on the redemption 
rates and----
    Mr. Stearns. Give me a worst case scenario. How much more 
money will you need?
    Ms. McGuire-Rivera. I really couldn't give you that number 
right now.
    Mr. Stearns. OK.
    Ms. McGuire-Rivera. We will get back to you and provide you 
more detail. We have done studies of how the coupons would 
cycle through, and I would be happy to have the people who 
worked on that sit down with the staff and go through that.
    Mr. Stearns. Is it possible that the administrative charges 
could be more efficiently implemented so that you wouldn't need 
more than the----
    Ms. McGuire-Rivera. We are looking at that, too.
    Mr. Stearns. I think you should look at that, too, at this 
point.
    Ms. McGuire-Rivera. My preference would be not to have to 
ask for money, quite frankly.
    Mr. Stearns. OK. Chairman Martin, thank you for being here 
and let me compliment you again, as I did in the opening 
statement, for this demonstration, just quickly how you feel 
about the demonstration. Do you think there is going to be any 
problem or are you going to take heat for something that is a 
great idea that didn't work perfectly when you were actually 
just--we all suspect there are going to be problems, so that is 
why we are doing a demonstration.
    Mr. Martin. Sure, I am anxious about both the experiment in 
Wilmington and about the ultimate transition. I think both of 
them face the same kind of challenges in making sure that we 
have informed everyone to the maximum extent possible and that 
we have gotten everyone as prepared as possible. So I am 
anxious about both. But I do think that we will be able to take 
and learn some important lessons about what is most effective 
in educating consumers and also some of the technical questions 
that have been asked about things like the antenna reach--I 
mean the power--the reach of the digital broadcast stations and 
whether people need new antennas or not. I think both of those 
will be able to be informed by the experiment that we are 
undergoing.
    So, sure, I am anxious about it, but I think it is an 
important effort.
    Mr. Stearns. Mr. Chairman, if you are looking for another 
city after Wilmington, North Carolina, you can go to 
Jacksonville, Florida. It is a little larger city, but I think 
they would be willing to take that opportunity, too.
    Mr. Martin. We have--I believe there were seven or eight 
markets we identified as being prepared, and we actually 
contacted them and we actually contacted several markets in 
Florida. I would be happy to share that with you. I think 
Jacksonville may have been one of them. But there was actually 
no other market that was willing to at the time. But we would 
be happy to work with you. If we can get them to go through it 
as well, we would be happy to.
    Mr. Stearns. OK. Well, I will contact them. I have a little 
longer question. I am glad you pulled the AWS-3 item from 
tomorrow's FCC open meeting. I think I am concerned that you 
are perhaps moving down a path that is similar to what I talked 
about with the 700 megahertz auction. I think at least the 
people I have talked to acknowledge that by conditioning some 
of the 700 megahertz spectrum largely on a business model, and 
many of us think these business models were implemented or 
proposed by Google or Frontline, and I think you decrease the 
revenue by doing that as much as $10 billion and perhaps hurt 
our goal of finding a private partner to build out a public 
safety network spectrum cleared by the DTV legislation, as we 
predicted in our letter that at that time Chairman Barton--or 
Mr. Barton of Texas, the ranking member on our committee, sent 
to you and which I signed. In the AWS-3 auction, you were once 
again considering conditions largely tailored to one business 
model this time as proposed by M2Z. We don't think this is 
necessarily appropriate. It sets up winners and losers. It will 
reduce revenue. What we need to do is to help build out a 
public safety network, especially if the D-block re-auction 
fails again.
    So I guess the question is, do you agree? If you do, will 
you commit to move on the AWS-3 spectrum until we--will you 
commit not to move, not to move on the AWS-3 spectrum until we 
see what happens in the D-block re-auction?
    Mr. Martin. I think that in the last few years, we have 
made significant strides in broadband deployment. But I do 
think that we should also recognize that there are additional 
things we could end up doing to try to make sure we are 
facilitating the broadband availability and broadband 
affordability to people throughout the country. I think that to 
the extent that there were companies that were willing to bid 
on and off for our broadband service in this spectrum and at 
the same time reserve a piece of that spectrum to offer free 
broadband throughout the country, I think that would have a 
significant public interest benefit and be able to be a 
lifeline broadband service. It would be at slower speeds than 
you might be able to get otherwise. It would be more like the 
dial-up speeds probably of today in comparison to what the 
commercial providers would be offering. But I think if someone 
was willing to make that kind of a commitment as part of their 
going forward, I think that is a significant public interest 
benefit that I don't--I think the Commission should take into 
account.
    I think it is also important to recognize that while the 
people who are proposing that as their--that we should include 
that as a condition. That is being opposed by the traditional 
industry players but the traditional industry players are 
actually wanting us to encumber the spectrum in other ways that 
actually make it conducive to their business model. They want 
us to put certain power limits on it and make it just basically 
available only for one-way distribution of service. So the only 
people that would be able to really take advantage of the AWS 
spectrum would be whoever owned the spectrum right next door in 
that geographic area. So whoever owned the frequency right next 
door. They really want it to be reserved to be able to offer 
mobile video services, the kind of media flow, Qualcomm kind of 
services.
    So I think that you have got the traditional industry 
players who are also advocating that basically we only have one 
business model for this piece of spectrum. I think that the 
business model that we should be advocating is trying to take 
into account some kind of a lifeline broadband service for 
consumers. I think that is important, and I continue to believe 
it is an important policy.
    Mr. Markey. The gentleman's time has expired. The Chair 
recognizes the gentleman from San Antonio, Mr. Gonzalez.
    Mr. Gonzalez. Thank you very much, Mr. Chairman. And again, 
I commend you for keeping on top of this situation because I 
think we really need to be prepared for it. I anticipate there 
will be a real avalanche of activity as we move closer to 
February 17, 2009. And if any of the witnesses disagree with 
me, in a minute I would like your opinion as to why you think 
this situation is not going to get worse before it gets better.
    Dr. McGuire-Rivera, you indicated that 42 percent of the 
first 800,000 or so of the coupons had been redeemed, less than 
half. And so I want you to kind of walk me through this because 
my understanding is we are having difficulty stocking some of 
these converters, especially the pass-through converters, let 
us say in San Antonio where I have one of my local grocery 
store chains, H-E-B, which is a huge, huge presence in Central 
and South Texas. H-E-B alone has sold nearly 19,000 converter 
boxes. This is a quote. About 100 boxes will arrive at the 
store on Sunday afternoon and by Monday afternoon they are 
gone. Now, they are only selling analog pass-through boxes for 
the obvious reasons in our area, and I really do commend them.
    The other thing that I want to also point out to you--and I 
point this out at every hearing--the one thing that all these 
households have in common is electricity. So we have our 
municipally-owned utility company. It is my understanding at 
this point that they will be providing inserts in the monthly 
bills. So we will be getting into those households probably 
like no other communication will be getting to those 
households. And so I am strongly encouraging these 
partnerships. I have no idea if we have other areas that are 
doing this. The avalanche of activity is going to be real 
obvious. If we only have half of those that you have already 
granted the coupons, you can imagine what is going to happen. 
People procrastinate. This is human nature. So even those that 
have applied, have the coupons, aren't acting. Can you imagine 
the activity come November and December and January?
    So you should be prepared and I don't want you to be 
hedging that you are going to utilize additional funds and 
maybe even requesting others. Walk me through this particular 
scenario. We don't have analog pass-through boxes available 
like we should, people are behind, they are waiting for the 
coupons to expire. And I think Mr. Stearns may have referred to 
this. I am not real sure if this is what he was describing. I 
am just looking at the timing of redemption. And so they go to 
the retailer, they don't have the box. They come back, they 
still don't have the box. Can the retailer accept the coupon, 
which I believe is a card or whatever? Do they go ahead and 
swipe that at that point in time, even though they don't have a 
box, but they will in the future deliver the box? And do they 
then get credit and reimbursement for merchandise which has not 
been delivered or do they wait until they have the box, which 
may go beyond the expiration date? What do we do in those 
circumstances? How do you understand it? Let us start off with 
the proposition, when do they swipe the coupon card?
    Ms. McGuire-Rivera. OK. I am glad you asked this question 
because this is an issue and there are some very important 
problems associated with this. At this point, we encourage a 
retailer to create a, quote, waiting list. We would prefer that 
they not swipe the card or ask for their $40 from the 
government until a box is actually available in stock, and I 
will tell you why. As Representative Stupak talked about a 
vendor mysteriously disappearing from the list, we have had to 
pull about a dozen bad apples out of the barrel. And these were 
retailers that were decertified for essentially doing this, 
taking a coupon, swiping it, essentially taking the consumer 
captive. These boxes never appeared as we looked into it. It 
was clear that the boxes are never going to appear.
    Mr. Gonzalez. So your answer is you don't swipe that until 
you have the box in hand and you deliver it?
    Ms. McGuire-Rivera. We prefer that they not swipe until 
they have a box in hand, and certainly we do not want the 
government to give somebody $40 to----
    Mr. Gonzalez. And that makes perfect sense and we would 
probably be all over you if you were doing it otherwise. The 
problem in the practical application is that we don't have the 
boxes available in those locations that are being frequented 
and the redemption is really taking place. It may not be 
RadioShack or Best Buy in San Antonio or in south Texas. That 
is a very real concern. The other thing is those individuals 
whose coupons have expired, they cannot reapply; is that 
correct?
    Ms. McGuire-Rivera. That is correct, yes.
    Mr. Gonzalez. So they have lost their chances. Now, I have 
a sense that that is probably not going to happen throughout. I 
mean, I think if we have 58 percent of 800,000 that did not, 
they are now ineligible for any kind of governmental 
assistance. And I don't--I am not real sure that is going to 
play out all the way through the 17th of February. I think we 
are going to run into some real serious problems.
    Chairman Martin, the other issue. I think we are going to 
have the avalanche of activity. If you all disagree, tell me 
that it is only going to lessen in number and scope as we go 
along the process. There is the other issue. And if I can find 
my newspaper article that I wanted to read--from which I wanted 
to read, and that was regarding the quality of the signal and 
the other problem that we are going to have. And this is from a 
May 20, 2008, Washington Post story by Kim Hart. And you are 
very familiar because I believe that you may be cited--that you 
are cited here. What new digital audiences have to fear is the 
digital cliff or the all or nothing quality of digital 
reception. The picture is excellent until the signal weakens or 
is interrupted, causing the picture to disappear. And it is 
more sensitive to interference from hills, trees, buildings and 
bad weather than traditional analog reception. An analog 
picture degrades gradually. You get more static and snow as 
signals weaken. Then we have a quote--consumer advocates say 
the Federal agencies in charge of the digital transition have 
not informed consumers of potential reception gaps which will 
cause more frustration when the switch happens. What is of 
great concern to me is a quote from Mr. Oded Bendov, who is 
President of TV Transmission Antenna Group, who said that about 
half of the viewers who now receive analog channels will not 
reliably receive all of their digital replacements and that 
viewers more than 40 miles from a broadcast tower would 
probably need new equipment.
    Now, I do want to concentrate on the avalanche of 
activity--don't get me wrong--but then we are going to have 
this secondary issue that is going to be huge once people do 
get the converter boxes and we are trying to respond to these 
complaints. And I would like your views and comments regarding 
this particular story.
    Mr. Martin. Well, first I would say that our engineers 
estimate that there will only be about 5 percent of the 
population that would currently be able to receive the analog 
signals who might be adversely impacted by that digital--by the 
transition to a digital signal. So it is not nearly the 
percentage they are talking about in that article. And that 
even then, of those 5 percent, it would only be that percentage 
of the population that doesn't subscribe to cable or satellite. 
So it would really be somewhere closer to 15 percent of 5 
percent, or less than 1 percent of the people who would be 
adversely impacted.
    The other--when you refer to the Kim Hart article that you 
did, if you actually go back and look at the hard copy of that 
article, the picture that was associated with it, with the--
describing the person who was not able to receive their signal, 
his antenna is covered with tin foil and the reason why their 
antenna is covered with tin foil is probably because they 
really couldn't receive very well the analog signal. When you 
are talking about the impact of the digital transition, you 
have to compare what their analog signal is today to what their 
digital signal will be tomorrow using the same antenna. Many of 
the studies that estimate--for example, the centrist study, 
that estimates it will have a much more significant impact, 
change antennas in the middle of the study. They say if there 
is a rooftop antenna with an--receiving an analog signal and if 
you take a rabbit ear type of antenna and put it on the roof, 
what will be the impact? Well, of course, if you change 
antennas in the middle of the study, a significantly less 
number of viewers will be able to watch the television. But our 
engineers do not estimate that it will be like that. Again, if 
you go back and look at the picture in that article, you can 
see the tin foil covering that antenna.
    Mr. Gonzalez. Thank you, Mr. Chairman.
    Mr. Markey. The gentleman's time has expired. The Chair 
recognizes the gentleman from Michigan, Mr. Upton.
    Mr. Upton. Thank you, Mr. Chairman. Again, I appreciate the 
testimony of all of our witnesses and I would have to say that 
every member on this subcommittee certainly knows something 
about customer relations as we deal with the 650,000 people 
that we represent and as we try to walk them through issues, 
particularly on casework where they might feel wronged and we 
try to lend a helping hand to correct things. And I am just 
interested, Dr. McGuire-Rivera, about how are the consumers 
themselves feeling about the process? What type of feedback 
have you heard from folks that are using the coupons? Are 
things going relatively smoothly? Have you had a number of 
major inquiries from the retailers or the customers saying that 
the system is broken and needs to be fixed? Are folks generally 
happy? Is it working fairly well? What is your--what is the 
happy quotient here?
    Ms. McGuire-Rivera. I think the happy quotient is pretty 
good. When they call us, of course, they are not calling us to 
tell us they are happy. But we really get very few complaints 
and a lot of the consumer problems frankly that get funneled to 
us get funneled through your offices. Thank you very much, 
though. So I would say while we do get some complaints, I think 
we had about 100 complaints called in to us over a 2-month 
period and considering we are getting 104,000 coupon requests a 
day, the happy quotient is pretty good, and we are doing 
everything we can to take care of the consumer complaints.
    Mr. Upton. Those 100 complaints or so that you have gotten, 
are they more on the retailer end, they don't have the right 
box or don't know how to hook it up?
    Ms. McGuire-Rivera. No. Most of them really when they call 
us, they either had some problems with getting their 
application through basically. We do not get a lot of 
complaining about the box.
    Mr. Upton. Now, what happens to someone that applied for 
that coupon early and for whatever reason didn't go to the 
retailer, perhaps the retailer didn't have a box. But let us 
say they didn't go and the coupon is expired and they said, 
well, this is my opportunity now to go and, gosh, maybe I 
wasn't aware that it was going to expire and I wouldn't have 
the chance to reapply for another coupon? Have you received any 
calls or complaints from folks that might be a little angry 
about that?
    Ms. McGuire-Rivera. We get a few, but there is not a ground 
swell of that.
    Mr. Upton. And how many of those are there of the 100 or 
so?
    Ms. McGuire-Rivera. Of the 100 or so? Twenty, probably.
    Mr. Upton. And is there a routine or standard that you go 
through with the folks?
    Ms. McGuire-Rivera. At this point, we are not allowing 
reissues. And a lot of this has to do with the fact that we 
really are pushing for people to buy their boxes now. I think 
if we told people now, oh, if you forgot to use your coupon, 
that doesn't matter because we will get you another coupon. 
First, the cost of reissuing coupons--I can't give you an exact 
dollar figure, but I can guarantee you it is breathtaking 
because we have talked to IBM about that. But it is very 
important that people get out there now and not wait until 
February. And allowing a reissue would have a backup in January 
and February that I think would create probably more problems 
than what we are trying to solve with the reissue. We are 
looking at it, but right now we are holding back on saying 
whether or not we would reissue a coupon.
    Mr. Upton. Mr. Martin and Mr. Goldstein, I don't know if 
you looked at this at all, but of the folks that will require a 
new box or a box to be able to get a signal, do we know what 
percentage of those folks have decided instead of going to look 
for--to make application for the card and go to a retailer, how 
many folks in terms of numbers would actually say, well, maybe 
this is the time to sign up for cable or satellite and just 
forget this rabbit ears thing? Do we have any estimate in terms 
of the migration from folks into those two services?
    Mr. Martin. We don't yet. I mean, we know approximately how 
many households today do not subscribe to cable or satellite. 
It is about 15 percent. But we don't know--we haven't seen any 
change in that, but we will be on the look for it as we go 
forward. But we don't have any estimates of that yet.
    Mr. Upton. And, Mr. Goldstein, when you did your study--I 
know it was done at the end of February. So it was really a 
little bit before the word really got out.
    Mr. Goldstein. That is right. This particular edition of 
the survey, we did not ask that question. It is a very good 
question, though.
    Mr. Markey. The gentleman's time has expired. You just used 
the word ``breathtaking'' in terms of the amount of money it 
would cost.
    Ms. McGuire-Rivera. To reissue, yes, sir.
    Mr. Markey. What is the number next to breathtaking?
    Ms. McGuire-Rivera. Maybe two or three times what it costs 
to do an average coupon, because you have to go in and rebuild 
the system.
    Mr. Markey. Very interesting. The Chair recognizes the 
gentlelady from California, Ms. Eshoo.
    Ms. Eshoo. Thank you, Mr. Chairman. Ms. McGuire-Rivera, 
given the last line of questioning and the number of people 
that have participated and what you said earlier about having 
to request more money, at what point will NTIA make an 
assessment that there is some trigger mechanism to have this 
occur?
    Ms. McGuire-Rivera. My estimate is that we will know--we 
will have firm figures in July. I mean, this is not something 
that we are going to be coming back to you in November.
    Ms. Eshoo. Don't come back in August, because we won't be 
here. Wait until September.
    Ms. McGuire-Rivera. During the summer, I think all of us 
will have worked through this. We are working very closely with 
IBM on what we can do to make changes in the system. I believe 
at the last hearing they said everything is technically 
possible, but there is a cost both in terms of time and money 
at this point in the program. So we are considering everything. 
We will work with you to make sure that we can make as many 
consumers happy as we can.
    Ms. Eshoo. I don't recall the rationale for setting up the 
coupons to expire and some of the downsides that have been 
pointed out to that. What was the rationale for setting it up 
that way?
    Ms. McGuire-Rivera. Well, it is statutory. It was in the 
statute. I don't pretend to speak--but I have a feeling that it 
was set up along with the early start in January to move people 
through the process of getting coupons and getting boxes and 
being ready long before February 17, 2009.
    Ms. Eshoo. Can you remind us how many have applied for a 
coupon and the coupons have expired because they haven't gotten 
the goods? Do you have any sense of that or does----
    Ms. McGuire-Rivera. We have 800,000 that have expired. And 
so there would be what--my math is not so good anymore. 58 
percent of those people decided not to use the coupon for one 
reason or another.
    Ms. Eshoo. I see. Chairman Martin, there has been a lot of 
news on the AWS-3 auction and the rules that are on circulation 
at the Commission and our colleague from Florida made mention 
of it. I would like to point out a couple of things here. And 
that is that 70 percent of the spectrum, the 700 megawatts 
auction went to two companies. Two, not 20. Verizon and AT&T. 
And I think that what it points out is that we need 
competition. We need real competition. In order for broadband 
to be broad and deep and pervasive in the country, I think that 
we need competition. So my only question to you is, when do you 
expect the rules to be voted on at the Commission?
    Mr. Martin. Well, I had originally put them on for the vote 
for tomorrow's meeting. Some of the commissioners continue to 
have some questions about it. So I would like to move forward 
with that in July. I think it is important for us to try to 
move forward and put the spectrum out and available. And I 
would like to try to move forward in July as soon as I can get 
the support of at least a majority of the Commission.
    Ms. Eshoo. Well, I think that is good news for the country. 
To the Chairman again, do you think that broadcasters--I made a 
statement about the--what broadcasters had promised. And in my 
view, the promise that they made is really an overstatement of 
their vision of how broadcasting would change after the digital 
transition. Do you think that they overstated their vision?
    Mr. Martin. Well, I certainly think that our policies 
haven't as a total--and we haven't encouraged the broadcasters 
to take full advantage of the multicasting opportunities. You 
know, if you look at the transition and what has occurred 
abroad in the Berlin example for--that GAO had done a study on 
it originally and that--when we focused on some of the lessons 
learned from there, one of the significant benefits from the 
consumer perspective was broadcasters beginning to do 
multicasting. And that would mean that consumers even without 
buying a new TV, if they just got a converter box, would be 
able to receive multiple channels. I think that that was the 
emphasis or lack of emphasis on trying to facilitate 
multicasting. I think it hasn't achieved all of the benefits 
from the consumer perspective.
    Ms. Eshoo. Are you open to examining public interest 
obligations relative to licenses?
    Mr. Martin. Well, I think that the Commission has taken 
steps on the public interest obligations in general. I mean--so 
I certainly am open to it. We adopted new rules last fall on 
the enhanced disclosure of exactly what they were doing from 
the local public affairs programming. We actually adopted an 
MPRM that said we were going to require them to do more local 
content and a certain significant amount of local public 
affairs content.
    Ms. Eshoo. It is tied to their licenses?
    Mr. Martin. It would be tied to their licenses. That has 
been very controversial. There are many Members of Congress who 
have written to me opposing that. But I have said that I feel 
like we should have some minimum amount of localism that they 
should be required to do. I am concerned that--I would say the 
one area that concerns me is when you talk about getting into 
election law or free time for candidates. That has been very 
controversial. I was at the Commission when the Commission 
actually talked about doing that before. There were many 
Members of Congress very upset about that, including the 
chairman of this committee at the time. So certainly on the 
localism front, I have been open to reopening that issue.
    Ms. Eshoo. Thank you
    Mr. Markey. The gentlelady's time has expired. The Chair 
recognizes the gentleman from Oregon, Mr. Walden.
    Mr. Walden. Thank you very much, Mr. Chairman. I have a 
couple of questions. One following up, Dr. McGuire-Rivera, 
about this notion of retailers swiping the card but not having 
the boxes. Do you have regulatory authority to prohibit that by 
rule?
    Ms. McGuire-Rivera. I don't believe we do.
    Mr. Walden. Would you like that authority? I mean, it is 
kind of a swipe and run.
    Ms. McGuire-Rivera. It wouldn't hurt.
    Mr. Walden. All right. If you could, because that troubles 
me that----
    Ms. McGuire-Rivera. I also want you to know that this is 
not a huge problem. The vast majority of the retailers are 
great citizens, but there are a small number----
    Mr. Walden. That is always the issue. It is that 10 or 5 
percent that cause a bad name for everybody. But it just seems 
like if they are able to hold that constituent--consumer 
hostage and not deliver, that is not fair either. And perhaps 
it is a rule that says if the consumer can go back and unswipe 
or something. I don't know how the technology works. They ought 
to be able to be freed from their bondage from a retailer who 
is not participating properly.
    I want to follow up, too, on the issue of translators. I 
have a very rural district, lots of mountains and hills. And 
Chairman Martin and Mr. Goldstein, perhaps you can talk about 
any issues you are seeing out there. A lot of the viewers of 
television in Oregon--and rural Oregon, especially--rely on 
translators. Can you give me an assurance that on February 17, 
2009, they are still going to be able to get a signal the way 
they are today? And if not, why and what do we need to do about 
it?
    Mr. Martin. As you even mentioned in your opening 
statement, these are low power issues and the translator issues 
were something that--and the fact that there was some of--
initially some of the boxes did not have that capability and 
actually all of the boxes did not have the capability is a 
significant problem. There are certainly about--I think the 
estimate is around 24 boxes or almost 2 dozen boxes that now 
have that pass-through capability. It will be important for 
consumers in your areas to make sure they are getting the pass-
through boxes.
    Mr. Walden. Because they will need that to receive----
    Mr. Martin. They will need it in order to still receive 
those analog signals. Now, we are working with both the 
translators and with the low power community to try to put 
forth rules that say how are they going to make the transition. 
As you know, they are allowed to transition over to digital, 
but they are not required to. The Commission does need to start 
focusing on the rules and the requirements for making sure that 
they move in the digital era as well. But that will take 
several years to ultimately require them to do that. So we are 
making some progress.
    Mr. Walden. So there is going to still be analog 
broadcasting going on via translator signals?
    Mr. Martin. All of the forms of low power television, which 
includes the translators.
    Mr. Walden. And that includes translators. And given the 
concern raised by my colleague from Texas, Mr. Gonzalez, about 
the way digital just drops off, with an analog signal you can 
continue to get it even when it is not good. You get the 
ghosting and the shadowing and everything else. With digital, 
you either have it or you don't, right?
    Mr. Martin. That is right.
    Mr. Walden. So have your certified smart engineers done 
studies to indicate where people are going to have problems and 
where they are not, digital versus analog, especially in this 
environment?
    Mr. Martin. They have. That is why they have come up with 
it should impact less than 1 percent of the people. It is about 
5 percent of the population. But then of course--of those 5 
percent, which ones subscribe to cable? But those are just the 
best engineering estimates from our models. We are--one of the 
benefits of the Wilmington transition is we will be able to 
actually go and make sure we understand the full impact of the 
transaction from analog to digital. We have engineers actually 
down there now. And we will--to be able to study that----
    Mr. Walden. Mr. Chairman, if your engineers have any of 
those sorts of shadowing maps or whatever they call them in the 
digital environment for Oregon, for example, that would be 
really helpful for me to see. I would be curious to know where 
the calls are going to start coming.
    Mr. Martin. I have asked the engineers to try to put 
together those kind of maps. We would be prepared to provide 
them to everyone. So I have already asked them to start trying 
to study that. I do think we want to make sure that we 
understand the exact technical parameters, and I think 
Wilmington will help us do that. But we will provide that 
information.
    Mr. Walden. Doctor, did you----
    Ms. McGuire-Rivera. I just wanted to note we have another 
program, a $65 million upgrade program for low power and 
translator stations which we know--we attended the national 
translator meeting, and many of these operators are very eager 
to make the transition. We have a technical correction that we 
have proposed that would allow us to give money out earlier, 
give it out in 2009 to help these people actually make the 
transition. So we are asking people to----
    Mr. Walden. What is the status of that technical 
correction? Because I think that takes an act of Congress to 
fix.
    Ms. McGuire-Rivera. Yes, it was in the Senate. I don't 
think anyone has offered anything in the House yet.
    Mr. Walden. Mr. Chairman, is there opportunity in this 
community to fix that problem?
    Mr. Markey. Could you state the problem?
    Mr. Walden. Yeah. The problem is in the original bill, 
there was $65 million set aside to help with the transition for 
translators and low power broadcasters. But in a deft budgetary 
move, it takes place in a different year than when it is 
needed. It actually needs to be moved back into a year where it 
will make sense for the transition.
    Mr. Markey. I think that it is important for you and I and 
the other members to work together on that issue. You are 
right. You have put your finger on a problem.
    Mr. Walden. All right. Thank you. Thank you. I guess my 
time has expired.
    Mr. Markey. The gentleman's time has expired. The Chair 
recognizes the gentleman from Michigan, Mr. Stupak.
    Mr. Stupak. Thank you, Mr. Chairman. Dr. McGuire-Rivera, if 
I may, right now, as I said in my opening, I have stores in my 
district that are out of converter boxes, have no idea when 
they will get new ones. This is particularly frustrating 
because the stores don't know when they will get a new 
converter box in. Isn't the NTIA supposed to coordinate the 
distribution of coupons with the inventory in stock to the 
areas that receive them? Do you coordinate at all with the 
stores?
    Ms. McGuire-Rivera. Initially in the initial release of the 
coupons--in fact, we waited until the end of February to make 
sure boxes were available. We have not heard from retailers 
except on an anecdotal and incidental basis. And unfortunately 
in your district, that--boxes are unavailable. We do understand 
that over the summer there may be some problems. And I believe 
some of the retailers will talk about----
    Mr. Stupak. There are problems right now. We don't have to 
wait until summer. They are occurring right now in my district.
    Ms. McGuire-Rivera. And I have a feeling that boxes are 
being sent to Petoskey now.
    Mr. Stupak. To stores that don't exist.
    Ms. McGuire-Rivera. We had talked about that. The stores 
that don't exist and vendors that were on the list, we had 
decertified about a dozen bad apple retailers just for that 
type of action.
    Mr. Stupak. So what are you saying now, you are sending out 
information that has bad apples on it? When you send a 
converter box program--coupon program you list right here on 
the bottom part the stores. And how are these stores making it 
on there if they don't exist?
    Ms. McGuire-Rivera. The stores--when you get on the list, 
you are certified. You certify that you are going to 
participate.
    Mr. Stupak. How do you certify a store that doesn't exit?
    Ms. McGuire-Rivera. When we hear a complaint from someone 
that in fact this retailer no longer exists or this retailer 
took my coupon and no box ever materialized and there is not 
one in sight, the enforcement action that we have is to 
decertify them from the program.
    Mr. Stupak. OK. But it doesn't help the consumer. We wrote 
to you back in February.
    Ms. McGuire-Rivera. The ones we have decertified, we have 
tried to help make the consumers whole because they have been--
they are essentially----
    Mr. Stupak. Why don't you have the retailers do as 
RadioShack was willing to do for the gentleman in my district 
and just accept the coupons and then when they get the 
converter boxes they can send the converter boxes to the 
constituent.
    Ms. McGuire-Rivera. That is why we have recommended that 
they not swipe the cards. Unfortunately, some have been bold 
enough to ask for reimbursement for boxes that never existed.
    Mr. Stupak. We are not asking for reimbursement. We are 
asking for the box which doesn't exist in our district. So why 
can't a store take your little coupon here that you send them 
and hold it until a converter box comes and then the 
constituent can go back instead of getting the run around?
    Ms. McGuire-Rivera. What happens--I mean, there is no 
reason why the merchant cannot put that person on a waiting 
list. The unfortunate problem that we have had is of people 
swiping the boxes and then holding the consumer hostage for a 
box that never appears, which is why we discourage merchants 
from swiping the coupon.
    Mr. Stupak. Why do they have to swipe it? Why can't they 
just hold the coupon----
    Ms. McGuire-Rivera. They can put the consumer's name on a 
list and the consumer can hold the coupon. We still want them--
the consumer--we are seeing instances where people are taking 
the coupons and holding the consumer hostage.
    Mr. Stupak. A coupon is only good for 90 days. So If you 
can't get a box within that 90-day period, what good is this? 
Why don't we just extend the expiration date past that 90 days? 
You certainly--NTIA certainly has discretion underneath the law 
as written.
    Ms. McGuire-Rivera. Well, we have some lawyers who might 
argue that. In fact, we had just discussed that. We right now 
are looking into the issue of reissuing. It is a situation 
that, one, it is----
    Mr. Stupak. Well, I and Mr. Engel and this committee wrote 
to you in February asking you to extend the expiration date 
because we are seeing problems. It is now June, almost 4 months 
later. When are we going to get an answer on extending the 
expiration date so we don't run into trouble, especially since 
we know stores don't have enough converter boxes available?
    Ms. McGuire-Rivera. OK. We will have firm redemption 
rates----
    Mr. Stupak. When will you have that?
    Ms. McGuire-Rivera. In July 1st.
    Mr. Stupak. So this one expires June 30th. So you are going 
to have an order out. So this individual will know on July 1st 
that his coupon has been extended so he can get his box?
    Ms. McGuire-Rivera. But--an order, most likely not.
    Mr. Stupak. No, you are not going to have it ready for July 
1st. When are you going to have it ready?
    Ms. McGuire-Rivera. What I think what we can do is in your 
district is make sure those boxes are there.
    Mr. Stupak. Not just my district, but the rest of the 
country. And I appreciate your willingness to make sure my 
district is taken care of. But if Mr. Markey holds his sixth 
hearing in 90 days from now, I will be back here asking you the 
same question. So when are you going to make a decision on 
extending the coupons past the 90-day period?
    Ms. McGuire-Rivera. When we look at the redemption rates. 
And most likely we will make the decision----
    Mr. Stupak. When will that be? When can we expect that 
decision? We know it won't be July 1st. When can we expect that 
decision to be made?
    Ms. McGuire-Rivera. I would say later in the summer.
    Mr. Stupak. And later in the summer, can you narrow that 
down, August, September, September 20th, last day of summer. 
Can you give me something a little more definite?
    Ms. McGuire-Rivera. Nope. I will get back to Mr. Baker and 
we will give you a date.
    Mr. Stupak. I was just warming up, Mr. Chairman.
    Mr. Markey. Listen, you have got us all warming up here. 
You are hitting on a very sensitive hot point and we thank you 
for that. The gentleman's time has expired.
    The Chair recognizes the gentleman from Nebraska, Mr. 
Terry.
    Mr. Terry. Thank you. I appreciate that. I am going to be 
all over and I have got different questions for different folks 
here. And I will try to use my time wisely. First of all, I 
just want to start off by making an observation that I thought 
was interesting back when Tom Osborne, three national 
championships in Nebraska, decided to run for Congress and he 
did a poll and found out that he had 94 percent name 
recognition. Most of us in the political world would love to 
have 94 percent. But in the State of Nebraska, for 6 percent 
not to know who Tom Osborne is, is really incredible. I mean, 
this is a State where every schoolchild gives the pledge of 
allegiance to start the schoolday and then goes into the pledge 
to Tom Osborne. And----
    Mr. Green. Or at least to the Corn Huskers.
    Mr. Terry. Well, we made it more specific after the second 
national championship. So my point with this analogy is no 
matter how hard we try, we are simply--we could spend billions 
and trillions and we are still not going to get to 100 percent. 
But I would have to say my observation is that at least in my 
area, there are as many DTV commercial--DTV transition PSAs and 
commercials--as there are car ads. Now, if you watch TV, there 
is no way not to know of this DTV transition.
    Now, Dr. McGuire-Rivera and Mr. Goldstein hit on two 
subgroups that I think we really need to focus on. When I 
talked to Rotaries and asked them to raise hands, 100 percent 
raised hands that they know the details of the transition. But 
how about with seniors and minorities? Now, obviously there is 
more going on than just what the FCC is doing. So I am going to 
ask all three of you, starting with the Chairman, are you 
calculating what the local broadcasters are doing by way of 
outreach to the two communities that are most at risk, which is 
the foreign speaking and the elderly? And do you know what they 
are doing on the grassroots local level?
    Mr. Martin. Well, we certainly--we are aware that all of 
the broadcasters have to either opt into the NAB's plan for 
what they are going to be doing at their local level, which 
involves certain kind of requirements or our own specific 
requirements. But neither of those two platforms require 
anything for foreign language--for Spanish speakers or foreign 
languages at the local level. So we know that they have one of 
two options in terms of educating consumers in terms of the 
number of PSAs. And under ours, it increases over time. They 
also have got 100-day countdown under the NAB plan. But we 
don't--and we know that goes on at the grassroots level, but we 
don't know that as far as----
    Mr. Terry. So you don't know that the broadcasters in 
Omaha, Nebraska, have done Spanish town hall meetings, that 
they do advertising in Spanish on the Spanish speaking radio 
and low-power broadcaster?
    Mr. Martin. We know if there are Spanish language 
broadcasters they are required to be doing that, including in 
Spanish. But we don't know if the ones that are broadcasting in 
English have also run a Spanish PSA as opposed to just an 
English PSA.
    Mr. Terry. Well, they are doing a great job. And my guess 
is that--was it you, Dr. McGuire-Rivera, that said that 42 
percent of the calls coming in are Spanish speaking?
    Ms. McGuire-Rivera. Yes. About 40 percent are Spanish 
speaking.
    Mr. Terry. To me that says we were probably making an 
impact into that community, that if 42 percent of the calls--
are you able to gauge the impact that all of these efforts are 
having within a specific community?
    Ms. McGuire-Rivera. Well, we looked within each DMA and we 
can tell when coupon requests will go up. I think I had 
mentioned before, we work very closely with Univision that does 
not just do PSAs, but they do specials. And, in fact, we have 
to know about their specials because the call center volume----
    Mr. Terry. Does that mean no? I don't want to be rude. I 
just asked if you are able to quantify.
    Ms. McGuire-Rivera. Yes, we can look within each DMA and 
see if coupon requests go up. That is sort of the----
    Mr. Terry. So that is your marker. Mr. Goldstein, have you 
guys looked into that specifically?
    Mr. Goldstein. Not this report, but the ongoing work that 
we are still doing for the committee, we are looking at 
consumer awareness and consumer education programs and how 
effective they are, and we are looking at a variety of 
different avenues that----
    Mr. Terry. Any preliminary thoughts then?
    Mr. Goldstein. At this point, I don't. We haven't analyzed 
it sufficiently. But we will get back to the committee 
obviously later--probably early this fall--with that 
information.
    Mr. Terry. OK. I appreciate that.
    Mr. Markey. The gentleman's time has expired.
    The Chair recognizes the gentleman from Texas, Mr. Green.
    Mr. Green. Thank you, Mr. Chairman. Dr. Rivera, you heard 
my opening statement, both the Chair of the FCC and Chairwoman 
Martin, that tropical storm hurricane issue and emergencies, 
has that come up either at the FCC or at NTIA about what we can 
do about battery-operated and digital?
    Ms. McGuire-Rivera. We have talked about that a lot. It is 
a great concern. Right now my understanding is that there is 
not a converter for a battery-operated television. When you 
think about the practicality of hooking a converter--a big 
converter on a little TV--now perhaps by next year there would 
be one, although--I think this is important. FEMA is one of the 
organizations that we work with, because I think the word needs 
to get out that people who are really dependent on these 
battery-operated televisions need to look into getting a 
digital one. I know that sounds--but right now, particularly 
with the hurricane season coming up--and I think this is going 
to be one of the things that we are going to learn a lot about 
in Wilmington, because they will make the transition in 
September and that will be hurricane season.
    Mr. Green. And I appreciate my colleague from Nebraska 
concerning the large percentage of calls that seem to be 
regarding the coupon program are non-English. Do you have 
information on the actual numbers and does NTIA have sufficient 
staff to assist these individuals?
    Ms. McGuire-Rivera. I don't have exact figures on the 
number of calls. I can get those for you. As I noted, we have 
backup call centers. And particularly when Univision does a 
special, we will have additional Spanish speaking callers. In 
the very beginning of the program, we were really surprised at 
how many of them were. And I realized at that time that we did 
not have enough and now we are up to speed and staffed up on 
the Spanish call center.
    Mr. Green. Because I know not only from Nebraska, but 
California and of course in Texas we have the same situation. 
And I know last Saturday there was a huge event in Houston. 
Univision has been doing very well. In fact, Univision, 
Telemundo, and our Spanish stations, along with my English 
stations, are trying to make--get that word out for folks. So I 
am glad to hear that that is happening.
    One other question. Under the bill that passed in Congress 
in 2004, the first 990 million dedicated to the coupon program 
is open enrollment where the final 510 million is dedicated to 
coupons exclusively for broadcast-only households. Would NTIA 
be basing the eligibility cut-off on the 990 million 
applications or the actual redemptions? I guess that is the 
issue, the percentage of nonredemption. I know it is still out 
there for that--what is left of the 90 days for those 
particular cards, but is that going to be an issue and has that 
been contemplated?
    Ms. McGuire-Rivera. We are looking at that very closely. 
Basically it would be when the first $890 million is gone as 
redeemed coupons is when it would start. There will be periods 
we believe--we should get toward the end of the year--where 
there will be enough redeemed and some out in the street that 
we might have to go into that contingent pool while we are 
waiting for some other ones to come back in. And we will get 
back with you as our plans become more final on this. And again 
we are doing this now. We will be back to you soon on exactly 
how--we would like to do it in a way that is seamless so the 
consumer doesn't really know if the redemption rates stay the 
same.
    Mr. Green. And I know you haven't decided yet because the 
public comment period just ended. But on the issue of dealing 
with P.O. boxes and nursing homes or senior citizen centers, 
assisted living locations, things like that that may have one 
address, but is that something that will be dealt with fairly 
quickly?
    Ms. McGuire-Rivera. That will be dealt with absolutely as 
quickly as we can. The rulemaking closed last night.
    Mr. Green. OK. Mr. Chairman, I hate to not address the 
Chair of the FCC, but welcome back before our subcommittee.
    Mr. Martin. Thank you. I appreciate it. I certainly think 
of the issues that you raise. I think the one that relates to 
battery-operated portable televisions is one we have heard 
significant concern about. There are no boxes yet that can be 
battery operated so that the only option for consumers today 
would be able to go buy a new digital portable television. 
Apparently there are some of the boxes that can operate from an 
external car battery, 12-volt car battery. You can plug it in 
the car, but then you have to put the TV in the car and 
working. I think today consumers would have to go get a new 
digital battery-operated television. I think that is one of the 
things we have heard a lot of concern from consumers and 
particularly in Wilmington as well.
    Mr. Green. Mr. Chairman, I would hope at our next hearing 
we could discuss that. Between now and then, we will find out 
from our information what is available in the market for both 
the hopefully lower priced battery-operated DTVs for the next 
hurricane season, not this one. Thank you, Mr. Chairman.
    Mr. Markey. The gentleman's time has expired. The Chair 
recognizes the gentleman from California, Mr. Radanovich.
    Mr. Radanovich. Mr. Chairman, thank you very much for this 
hearing. And to you, panel, welcome to the Committee hearing. I 
do have a question for Dr. McGuire-Rivera. Doctor, can you 
explain--I know you went into this a little bit earlier in your 
opening remarks and such--but what the NTIA is doing to prepare 
for the September 8th Wilmington test?
    Ms. McGuire-Rivera. We are working actively with the FCC to 
get ready for that test and learn all we can about what will 
happen the last 100 days. We have reworked a set of materials 
that is on our Web site and the materials we ordinarily use 
changing the date from February 17th to September 8, 2008. We 
are going to start working the messages down there that we 
would use in the 100 days before February 17th to fine-tune 
those. And we are also using that to get some hands-on 
experience. For example, we are going down this week to meet 
directly with senior groups and visit nursing homes on how to 
handle those situations there.
    Mr. Radanovich. Thank you. And on a national level, just 
let me know if these numbers are correct because I have got a 
list of things that the NTIA has certified. At least according 
to my information, the NTIA has certified 1,800 retailers with 
more than 19,000 store locations to accept your coupons?
    Ms. McGuire-Rivera. That is correct.
    Mr. Radanovich. And the coupons can also--consumers can 
redeem the coupons from 19 online retailers?
    Ms. McGuire-Rivera. Correct.
    Mr. Radanovich. And also 7 telephone retailers as well?
    Ms. McGuire-Rivera. Yes.
    Mr. Radanovich. All right. Thank you very much. I have no 
more questions.
    Mr. Markey. The gentleman's time has expired.
    The Chair recognizes the gentlelady from California, Ms. 
Harman.
    Ms. Harman. Thank you, Mr. Chairman. And thank you to our 
witnesses.
    Mr. Martin, in my opening remarks I mentioned H.R. 6055, 
which is a bill I introduced really to be a marker to talk 
about whether we should set up a fully transparent relationship 
between the public safety broadband licensee and the 
Commission. I just wonder what your reaction is to the 
legislation.
    Mr. Martin. I certainly think it is important that we have 
more transparency in the broadband public safety licensee. And 
I think it was a concern--when I testified before, I was 
concerned about the fact they could end up having private 
sector interests with some of the money that has been focused 
on them and with also some of their potential partners. So I 
think that anything would end up being helpful. I still believe 
that a public/private partnership is the only option the 
Commission has to try to achieve the public safety 
interoperable spectrum build-out that is going to be necessary 
from a public safety standpoint. And as a result, I think that 
that legislation would be helpful.
    Ms. Harman. Well, thank you. I also wonder whether just in 
terms of your own rulemaking you could enact a rule that would 
get us to the same place and perhaps reprogram some money or 
whether this is not possible.
    Mr. Martin. I think that we can adopt rules that would 
restrict and make transparent their relationship with any 
private entity, but I don't think we can directly provide them 
the resources or the money. I don't think that we are allowed 
to do that. We don't have money that we would be able to 
provide to anything like that.
    Ms. Harman. Well, let me say, Mr. Chairman, that I hope our 
subcommittee will look at this. I know there is interest on a 
bipartisan basis. I have talked to Mr. Pickering at some length 
about this point because I think it had a lot to do with why--
or something to do with why the first auction failed. I would 
be happy to yield.
    Mr. Markey. We will do that, yes.
    Ms. Harman. Thank you. Moving along, I encourage you to 
move to a second auction. I know you are thinking about many of 
the things I and others have suggested. I wonder if you agree 
with me that without that second auction and without the 
public/private partnership, we won't get to a place where our 
public safety providers have a true national interoperable 
network. What is your view?
    Mr. Martin. I do agree. I think that without Congress 
appropriating the direct resources to build a public safety 
network, the only other option I believe is to have a public/
private partnership where we auction off this spectrum of the 
requirement that whoever wins this particular piece also be 
required to build out and allow for people to be able to use 
it. I also agree that I think it is important that we try to 
finish the auction by the date of the transition. At the end of 
the date of the transition, that spectrum will become available 
and we should make sure that the entities are in the position 
to begin trying to build on it and be able to take advantage of 
it as quickly as possible.
    Ms. Harman. Well, let me just respond to that. My problem 
with plan B, as you just described it, is I don't think we will 
get to the place we need to get to. I think we need a list of 
technical specifications, hopefully on the front end so people 
know what they are bidding on.
    My question to you is, does the FCC have the in-house 
expertise to work on this list of technical specifications as 
part perhaps of the second auction?
    Mr. Martin. Well, I think that we do have it from a 
technical perspective just understanding technically what is 
required. Many of the proposals that have come in to us the 
last time encouraged us to defer on what the technical 
requirements would end up being.
    One of the commitments I made and am dying to move forward 
in the last notice is that we would reach out and try to hire a 
chief technologist to come on board. We have already been in 
negotiations with trying to end up hiring someone, but I am not 
sure whether we will be successfully able to or not get someone 
on board to take that position. I don't know in the short run.
    Ms. Harman. I hope you are successful. There are other ways 
to do this. Commissioner Copps suggested we set up an outside 
commission, but I worry that all those ideas will delay us. If 
working in partnership we can come up with the right 
specifications, come up with a transparent system, come up with 
clear bidding guidelines, I think we can succeed and I feel 
strongly that we only have one more shot at this to get it 
right. Do you agree with that?
    Mr. Martin. I agree and I also think that if we set up a 
whole separate commission to study I think I could end up 
delaying this for quite too long.
    Ms. Harman. Well, I thank you, Mr. Martin, and I thank you 
to the other witnesses. Mr. Chairman, the set top boxes and 
transition rules are very important for consumers, but the most 
important thing to me and I think many of us is making sure 
that we have one national interoperable communications network, 
so that the next time there is anatural or man-made disaster 
our communities are safer.
    I yield back.
    Mr. Markey. The gentlelady's time has expired.
    The Chair recognizes the gentleman from Georgia, Mr. Deal.
    Mr. Deal. Thank you, Mr. Chairman. One thing is clear. As 
we have had this series of hearings on the digital transition 
we have moved from theoretical to actual, and many of the 
questions that we heard today are actual problems that we are 
now hearing from constituents about. And I would like to follow 
up on a question that Mr. Gonzalez initiated. This relates to 
an actual complaint I received from a constituent of mine. It 
deals with the digital cliff.
    Much of my congressional district is in the mountains of 
north Georgia, most of the over air analog signals are received 
either from Atlanta or Chattanooga. The complaint was an 
individual who received his signal from Atlanta. He got his 
box, he hooked it up and he got nothing. Now, I guess my 
question is similar to some of the ones that have already been 
asked on this issue, but I would like to maybe understand how 
that plays out a little better. He may have been receiving 
marginal over-the-air signals to begin with. I understand that. 
If it was marginal, I understand he may be in that category 
that would receive nothing. But let me ask you about the 
question that you responded to Mr. Walden about the 
translators. Now, as I understand translators, they are 
primarily associated with low power television transmission; is 
that correct?
    Mr. Martin. That's right. Translators are a form of the low 
powered television broadcast.
    Mr. Deal. Do any of the full power over-the-air stations 
use the translators as a booster or an additional way to bump 
up their signal in mountainous areas, for example?
    Mr. Martin. The TV translators themselves are low powered, 
but they oftentimes are maybe affiliated with providing content 
on other full powered stations. They could be, yes.
    Mr. Deal. I am back to Mr. Walden's question about maps. Do 
you have maps that would show areas that might be in those 
situations?
    Mr. Martin. We absolutely do have maps and lists of all of 
the communities that have low powered stations. So we can end 
up providing that. We provided that to the subcommittee staff 
in the past. And we will be happy to provide that specifically 
for you in your district so you can see what low power stations 
are in your district.
    And in reference to the concern that your customer raised 
in the mountain area, in part it may be that the broadcast 
signals that he was receiving from Atlanta in analog, they 
haven't completed their final construction of their antenna or 
gone to maximizing their power on the digital side. In other 
words, between now and the end of the transition, lots of 
broadcasters are going to have to move their digital antenna 
from the side where they send out the signal from the side of 
their antenna to the top where the current analog is, because 
they get a better coverage. In particular, if you are on the 
edge of that coverage you may not be getting what you are going 
to get at the end of the transition in terms of the full 
digital capability.
    So it could be that they bought that box and they hooked it 
up, but if they were on the edge of that signal, the digital 
signal may ultimately replicate that analog signal, but it may 
not have done that just yet. And that could be why. Just 
because they are not receiving it now doesn't mean they 
necessarily won't by the end of the transition.
    Mr. Deal. Do you have any information as to how far along 
that progression has been made by various stations?
    Mr. Martin. Absolutely. We actually know it station by 
station, market by market. When we ask, as I testified before, 
there were about eight markets that were ready to undergo a DTV 
transition test. The rest of the markets all have at least some 
of their broadcast stations that aren't yet technically in a 
position to either have all of their facilities or are capable 
of broadcasting at full power. So we do want a market by 
market, and will be happy to provide that to you.
    Mr. Deal. We will be contacting you to address our 
constituents' concerns. I presume in spite of all our best 
efforts there will probably be some individuals that just fall 
off the edge of that digital cliff, am I correct?
    Mr. Martin. That is right. There will be some percentage of 
them. We estimate it could impact about 5 percent of the people 
and of course only about 15 percent of the people on average 
who subscribe don't subscribe to cable or satellite that would 
be impacted. But yes, there will be some people who will be 
impacted.
    Mr. Deal. Thank you, Mr. Chairman.
    Mr. Markey. The gentleman's time has expired. All time for 
questions of this panel by the subcommittee has been completed. 
We welcome your continued interaction with this subcommittee on 
this issue. You can, I think, sense from the interest level of 
the members that they are now beginning to translate consumer/
voter interest in this issue and the success with which this 
program is going to be implemented. Time is of the essence. We 
will be back again with another hearing. We really do hope that 
you have solved all the problems before the next hearing so 
that we can just give you all a big pat on the back for the 
excellent job which you are doing. But understand that there is 
going to be a direct correlation between the numbers of 
problems solved and the level of intensity which you are going 
to feel from this side of the panel in the next hearing. 
Congress is a stimulus response institution and there is 
nothing more stimulating than the thought that millions of 
their constituents will not have TV. You almost can't imagine 
anything short of nuclear war that would draw the attention of 
the American voter.
    So please make sure that you have done everything you can 
before the next hearing to solve the problems. We thank you all 
so much.
    I now would ask our second panel to come up to the witness 
table. Again, we reconvene the hearing for the purpose of 
hearing from our extremely distinguished second panel. And we 
are going to begin with a return visitor to the subcommittee, 
somebody who has obviously a very, very important job. Mr. Tom 
Romeo is the Director of Federal Services for Global Business 
Service for IBM. We welcome you back Mr. Romeo and whenever you 
are ready, please begin.

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

    Mr. Romeo. Thank you, Mr. Chairman and members of the 
subcommittee. Thank you for the opportunity to testify before 
you today on the progress the IBM team is making implementing 
the NTIA TV Converter Box Coupon Program.
    Earlier this morning you heard from NTIA Associate 
Administrator, Dr. McGuire-Rivera, about the continued high 
level of interest consumers are showing in the coupon program. 
Over 16 million coupons have been ordered as of June 3rd, 
representing an average of 3 million coupons ordered on a 
monthly basis.
    While the statute allows for coupon requests to be taken 
between January 1st, 2008, and March 31st, 2009, at the current 
rate of public demand we expect to have accepted requests for 
the initial round of 22.25 million coupons by early August of 
2008.
    When this milestone is reached a decision needs to be made 
as to whether the program boosts the shipping contingent 
coupons or whether coupons not redeemed during the base funding 
period will be recycled to offer more coupons as part of the 
base funding period.
    We have made great progress recruiting the voluntary 
participation of both large national retailers and smaller 
local retailers, including 19 online retailers and 7 retailers 
offering a phone order option. As of June 3rd there are over 
1,800 retailers representing more than 19,000 stores 
nationwide, currently certified in participating in the 
program.
    Consumer education continues to be a focal point of the 
program. We believe the strong demand for coupons indicates we 
are on the right track. Our partner, Ketchum Public Affairs, 
continues to lead and refine our messaging with particular 
focus on communities with the largest estimated number of over-
the-air reliant households.
    Now I would like to take a moment to talk about some of the 
challenges we have faced and important future steps. The 
accelerated pace of consumer demand has required our team to 
react quickly to pinpoint needed adjustments and implement 
alternative solutions when necessary. For example, when the 
program launched at the start of this year consumers ordered 
2.1 million coupons during the first week of January. By 
February 21st, 2008, when the first coupons were shipped to 
consumers, the program had processed requests for more than 6 
million coupons. These numbers far exceeded initial 
projections. We increased daily and weekly coupon distribution 
capacity to allow for far greater numbers than planned and have 
now issued more than 15.1 million coupons.
    Today a consumer can expect to have their coupons ordered, 
processed, and mailed within 10 to 15 days and to receive the 
coupon within 3 to 4 weeks of placing their order. Continued 
strong consumer interest in the coupon program and the DTV 
transition generally has translated to continued high call 
volumes into the consumer call center. The call center handled 
more than 2 million calls during the month of May, with 
approximately 40 percent of those coming from Spanish speakers.
    The Interactive Voice Response, or IVR, system has been 
able to support between 50 to 60 percent of the callers without 
need for a live agent. A very high IVR resolution rate by 
industry standards.
    Recently, more of the public is calling with questions 
about the program or about the digital transition rather than 
to request a coupon, increasing our need for live operators. We 
continue to adjust messaging in the IVR system to expedite the 
coupon ordering process, answer as many questions as possible, 
offer recorded information while callers wait for an agent, and 
provide a positive experience for the consumers.
    As we plan for the coming months we have identified several 
challenges that need to be addressed. The majority of consumer 
messaging is focused on making sure that consumers understand 
the transition to digital broadcasting will occur on February 
17th, 2009. Consumers who wait until February 17th or later to 
request coupons may not realize that it will take several weeks 
for the coupons to arrive by mail. Further, if even 1 percent 
of the public were to attempt to order their coupons that day, 
our telephone and computer systems would be stretched beyond 
current capacity.
    In light of these sobering scenarios, we are working with 
our partners to adjust public messaging to encourage consumers 
back well in advance of February 17th's transition date. We 
will also work with NTIA to determine what capacity 
enhancements are prudent in anticipation of spikes in demand 
for the first quarter of 2009.
    We are also exploring feasible alternative solutions for 
consumers who request coupons after the transition date. The 
IBM team is pleased to be part of implementing this vital 
program and recognizes that many challenges remain on the way 
to February 17th, 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 will 
be 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 is making implementing the National Telecommunications and 
Information Administration (NTIA) TV Converter Box Coupon 
Program.

                               Background

    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 certified digital-to-analog converter 
boxes from participating retailers. As you know, this act 
allows U.S. households to request one or two coupons, worth $40 
each, to be used toward the purchase of a certified converter 
box.
    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 all of the 22.25 million coupons 
allocated under the initial phase of the program have been 
issued. The program then moves to the ``contingent period'' 
which requires 11.25 million coupons to be available 
exclusively to households that rely on over-the-air 
broadcasting as their sole source of television programming.

                             Program Goals

    NTIA awarded IBM the contract to provide services for the 
TV Converter Box Coupon Program on August, 15, 2007. Working 
within the program 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. 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.
    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 Metrics and Status

    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 are able 
to order coupons using any of four available options. The toll-
free phone number (1-888-DTV-2009) is operational 24x7 with 
live agents available to callers. Operators can accommodate 
requests in more than 150 languages. The toll-free phone option 
also provides a TTY solution in Spanish and English for use by 
the hearing impaired. 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). Coupon 
application forms are also available in Braille for the 
visually impaired.
    As we reported to you in February, consumers continue to 
show great interest in the Coupon Program with over 16,038,539 
coupons ordered as of June 3, representing an average of more 
than 3,000,000 coupons ordered on a monthly basis. To date, 
approximately 88.4% of the requesting households have ordered 
the maximum of two coupons.
    Although the statute allows for coupon requests to be taken 
between January 1, 2008 and March 31, 2009, at the current rate 
of public demand we expect to have accepted requests for the 
initial round of 22,250,000 coupons from the program's base 
funding of $890 million by early August 2008. When this 
milestone is reached, a decision needs to be made as to whether 
the program moves to shipping contingent coupons, or whether 
coupons not redeemed during the base funding period will be 
recycled to offer more than the initial 22,250,000 coupons 
designated for the base funding period.
    In the 118 days since I last came before this committee, I 
am pleased to report that we continued our progress in 
recruiting the voluntary participation of both large national 
retailers and smaller, local retailers. As of June 3, 2008, 
1,819 retailers representing more than 19,440 stores nationwide 
are currently certified and participating in the program. Seven 
of the largest consumer electronics retailers--Best Buy, 
Circuit City, K-mart, Radio Shack, Sears, Target, and Wal-Mart 
are among the retailers participating in the Coupon Program. 
This includes locations in all 50 states, Guam, Puerto Rico, 
and the U.S. Virgin Islands. These stores 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. Consumers are also able to order converter boxes from 
19 online retailers, or from any of the 7 retailers offering a 
phone order option. A list of all participating retail outlets, 
searchable by state and 5-digit zip code, can be found on 
www.DTV2009.gov under ``Locate a Retailer Near You.''
    We believe the strong demand for coupons indicates we are 
on the right track educating consumers about the Coupon 
Program, and we remain focused on intensifying consumer 
education as we head toward February 2009. 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. We continue to build and leverage a network 
of committed partners who already have access to many of the 
population segments we are targeting, and currently work with 
over 300 public and private sector partners with ties to senior 
citizen, rural, and disability communities. The Partnership 
Toolkit, which includes DTV and Coupon Program background 
material, fact sheets, posters, sample public service 
announcements, and presentations, is co-branded for use by 
partners at a variety of events. Also included and used by our 
partners 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.

                      Challenges and Future Steps

    The accelerated pace of consumer demand has required our 
team to react quickly to pinpoint needed adjustments and 
implement alternative solutions when necessary. For example, 
when the program launched at the start of this year, consumers 
ordered 2,144,632 coupons during the first week of January, 
representing 10% of the base funding. By February 21, 2008, 
when the first coupons were shipped to consumers, the program 
had processed requests for more than 6 million coupons. These 
numbers far exceeded initial projections. We increased our 
daily and weekly coupon distribution capacity to allow for far 
greater numbers than planned, and have now issued more than 
14.6 million coupons. Today, a consumer can expect to have 
their coupon order processed and mailed within 10-15 days, and 
to receive their coupon within 3-4 weeks of placing their 
order.
    Continued strong consumer interest in the Coupon Program 
(and the DTV Transition generally) has translated to continued 
high call volumes into the Consumer Support Center. The 
Internet remains the most popular channel, with approximately 
57.5% of the requests received via the Internet, followed by 
40.1% via the telephone, and 2.4% for the mail and fax channels 
combined. This breakdown has remained relatively constant since 
the program launched in January. The Call Center handled more 
than 2 million calls during the month of May, with 
approximately 40% of those coming from Spanish speakers. The 
Interactive Voice Response (IVR) system has been able to 
support between 50 and 60% of the callers without the need for 
a live agent, a very high IVR resolution rate by industry 
standards. Most recently, more of the public is calling with 
questions about the program or about the digital transition 
rather than to request a coupon, increasing our need for live 
operators. We continue to adjust messaging on the automated 
Interactive Voice Response (IVR) system to expedite the coupon 
ordering process, answer as many questions as possible, offer 
recorded information while callers wait for an agent, and 
provide a positive experience for the consumer.
    As we plan for the coming months, we have identified 
several challenges that need to be addressed. The majority of 
consumer messaging is focused on making sure consumers 
understand the transition to digital broadcasting will occur on 
February 17, 2009. Consumers who wait until February 17 or 
after that date to request their coupons may not realize that 
it will take several weeks for their coupons to arrive by mail. 
Further, if even 1% of the public were to attempt to order 
their coupons that day, our telephone and computer systems 
would be stretched beyond current capacity. In light of these 
sobering scenarios, we are working with our partners to adjust 
public messaging to encourage consumers to act well in advance 
of the February 17 transition date. We will also work with NTIA 
to determine what capacity enhancements are prudent in 
anticipation of spikes in demand in the first quarter of 2009. 
We are also exploring feasible alternative solutions for 
consumers who request coupons after the transition date
    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 will 
be happy to answer any questions.

                                Summary

    Consumers continue to show great interest in the Coupon 
Program with over 16,038,539 coupons ordered as of June 3, 
representing an average of more than 3,000,000 coupons ordered 
on a monthly basis. To date, approximately 88.4% of the 
requesting households have ordered the maximum of two coupons.
    Although the statute allows for coupon requests to be taken 
between January 1, 2008 and March 31, 2009, at the current rate 
of public demand we expect to have accepted requests for the 
initial round of 22,250,000 coupons from the Program's base 
funding of $890 million by early August 2008.
    As of June 3, 2008, 1,819 retailers representing more than 
19,440 stores nationwide are currently certified and 
participating in the program. Consumers are also able to order 
converter boxes from 19 online retailers, or from any of the 7 
retailers offering a phone order option.
    We believe the strong demand for coupons indicates we are 
on the right track educating consumers about the Coupon 
Program, and remain focused on intensifying consumer education 
as we head toward February 2009.
    As we plan for the coming months, we have identified 
several challenges that need to be addressed. The majority of 
consumer messaging is focused on making sure consumers 
understand the transition to digital broadcasting will occur on 
February 17, 2009. Consumers who wait until February 17 or 
after that date to request their coupons may not realize that 
it will take several weeks for their coupons to arrive by mail. 
Further, if even 1% of the public were to attempt to order 
their coupons that day, our telephone and computer systems 
would be stretched beyond current capacity. In light of these 
sobering scenarios, we are working with our partners to adjust 
public messaging to encourage consumers to act well in advance 
of the February 17 transition date. We will also work with NTIA 
to determine what capacity enhancements are prudent in 
anticipation of spikes in demand in the first quarter of 2009. 
We are also exploring feasible alternative solutions for 
consumers who request coupons after the transition date.
                              ----------                              

    Mr. Markey. Thank you, sir. The next is Ms. Kim Cannon, who 
is the Vice President and General Manager for Fayetteville and 
Wilmington, North Carolina Markets for Time Warner Cable. 
Welcome.

   STATEMENT OF KIM CANNON, VICE PRESIDENT, GENERAL MANAGER, 
 FAYETTEVILLE/WILMINGTON, NORTH CAROLINA MARKETS, TIME WARNER 
                             CABLE

    Ms. Cannon. Good morning, Mr. Chairman, Ranking Member 
Stearns, and members of the subcommittee. My name is Kim 
Cannon, and I am Vice President and General Manager for Time 
Warner Cable's Wilmington, North Carolina Cable Systems. As you 
know, the FCC has chosen the Wilmington market as a location 
for the early digital transition trial. Time Warner Cable is 
the largest cable operator in the Wilmington area, serving more 
than 96,000 subscribers. I am pleased to have the opportunity 
to describe for you how Time Warner Cable is helping to ensure 
that the digital transition, both nationally and in Wilmington, 
is successful.
    Today's hearing is entitled the ``Status of the DTV 
Transition: 252 Days and Counting.'' Of course, for those of us 
in the Wilmington area it should be only 90 days and counting. 
Being the leading cable operator and the first broadcast 
television market to switch from analog to digital presents 
some challenges, but Time Warner Cable is ready to meet them 
head on.
    The good news is that television viewers who are connected 
to cable are at no risk of losing access to broadcast 
television stations. Some cable homes have additional sets that 
rely on over-the-air reception. For that reason last September 
Time Warner Cable and other cable operators launched a $200 
million advertising campaign to educate the public about the 
upcoming broadcast transition and the NTIA's Converter Box 
Coupon Program.
    Time Warner Cable itself is devoting over $30 million in 
resources to promoting the digital transition by running 
television, radio, and print advertisements, posting 
information on our system Web sites, and participating in 
community events designed to draw attention to the transition. 
Ironically, the success of this information campaign has 
created one of our biggest challenges in the Wilmington area. 
Having spent nearly a year telling people that the transition 
will occur on February 17th, 2009, we now have to make sure 
that everyone in the Wilmington market understands that for 
them the transition will occur 5 months earlier.
    In order to meet this challenge, Time Warner Cable is 
committing additional resources to Wilmington-specific 
educational efforts. The Web site for Wilmington area systems 
has been updated to highlight the new transition date, 
alternate billing inserts, television spots, radio scripts, 
newspaper ads, and in-store displays have been prepared, 
trumpeting the fact that the transition will occur on September 
8th. On-screen crawls directing viewers to our Web site for 
more information about the transition are running on various 
channels, and we have plans to use billboards to inform the 
community as well. In addition, system personnel are 
participating in media interviews and other outreach efforts. 
For example, our Wilmington cable store will be hosting 
workshops specifically targeting the elderly and minority 
communities where local broadcasters are invited to 
participate.
    Time Warner Cable representatives also are running 
information booths at area festivals and events such as the 
health fair at the Wilmington Senior Center. Moreover, because 
most of our customers in the Wilmington area are served by 
upgraded, state-of-the-art facilities, we don't expect any 
technical issues to arise as a result of the transition. 
Nevertheless, to be safe we are coordinating with the local 
broadcasters to make certain everything goes smoothly. We are 
also making sure that the Wilmington area systems have the 
equipment and personnel necessary to hook up new service for 
customers and to connect additional sets for those viewers that 
decide to switch from over-the-air reception.
    In conclusion, I again want to stress that Time Warner 
Cable is dedicated to ensuring, both through its individual 
efforts and through cooperative actions with broadcasters and 
others, that the broadcast television digital transition is a 
good experience for consumers who are up in Wilmington and 
around the Nation. And I would be happy to respond to any 
questions you might have.
    [The prepared statement of Ms. Cannon follows:]
    [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
    
    
    Mr. Markey. Thank you, Ms. Cannon, very much.
    Our next witness is Mark Lloyd. He is the Vice President 
for Strategic Initiatives for the Leadership Conference on 
Civil Rights. Mr. Lloyd is here today to speak about the 
different challenges from affected communities facing this 
transition. We thank you, Mr. Lloyd, and we look forward to 
your testimony.

STATEMENT OF MARK LLOYD, VICE PRESIDENT, STRATEGIC INITIATIVES, 
             LEADERSHIP CONFERENCE ON CIVIL RIGHTS

    Mr. Lloyd. Chairman Markey, great to see you again and 
members of the subcommittee. On behalf of the Leadership 
Conference on Civil Rights and the Leadership Conference on 
Civil Rights Education Fund, again thank you for the 
opportunity to testify at today's hearing on the status of 
digital television.
    LCCR is the Nation's oldest and most diverse coalition of 
organizations working to protect the civil rights of all 
Americans through legislative advocacy. And the LCCR Ed Fund 
works to establish further the goal of equality under laws 
through public education.
    Mr. Chairman, despite the valiant volunteer work of our 
members and the DTV Transition Coalition, the Nation is simply 
not prepared at present for the shut-off of full power analog 
television broadcasting. There is, in brief, too little funding 
for research, education, and outreach to ensure that when 
February 17th, 2009 arrives all Americans will continue to 
receive over-the-air broadcast service.
    We are concerned the disproportionate impact of this 
transition on our constituents will result in a greater divide 
between those who have access to vital information and those 
who do not. Later this month our Leadership Conference will 
complete an extensive report on the challenges regarding the 
transition to digital television. We look forward to submitting 
that report to this committee.
    The serious problems of the transition identified by the 
Leadership Conference include lack of viewer awareness 
regarding significance of the transition, and continuing viewer 
confusion, retailer confusion, unnecessarily retailer 
upselling, TV converter box program problems and complexities, 
confusion over low power community television stations, and the 
continued need for analog pass-through, no rapid response plan 
to deal with the problems after February 17th.
    While the Federal agencies most responsible for managing 
this transition, the NTIA and FCC and a wide range of private 
stakeholders are working hard to address the impact of the 
transition. LCCR believes that the challenges involved in 
preparing Americans for the digital TV transition are of such 
magnitude that while active congressional oversight is 
important, strong congressional response is required.
    We strongly support the subsidy program and the coupon 
program designed to help Americans make this transition to 
digital television. But our work on the ground indicates a 
variety of problems. The coupon program began well before there 
were sufficient converter boxes on the shelves. Many who rushed 
looking at Good Morning America and other programs to get their 
coupons went to the stores to find out the converter boxes 
weren't there or the low cost converter boxes weren't there or 
the analog pass-through converter boxes weren't there. As 
Congressman Stupak noted earlier, converter boxes still are not 
available or are in short supply in many communities.
    Many, we have found, large retail manufacturers, or 
retailers rather, refuse to accept coupons from mail order or 
Internet purchases of converter boxes. Not all boxes eligible 
for the coupon program support video description services so 
needed by members of the our community or provide an easy 
analog pass-through for community broadcasters.
    Again, we applaud NTIA for showing flexibility with some of 
the other problematic provisions of the program, but we hope 
this committee will adopt the recommendations of Senator Inouye 
and Senator Stevens of the Senate Commerce Committee. Consumers 
should be able to use their converter box coupons to preorder 
so they might obtain boxes that are out of stock or in limited 
supply without running up against the expiration date. Also 
consumers should be able to reapply for coupons only if they 
have found that their coupons have expired. Too many Americans, 
as I said, responded earlier before the market was ready.
    First and foremost, we are deeply concerned the $5 million 
that Congress has allocated NTIA to educate consumers about the 
coupons program will be woefully inadequate to support the kind 
of public education effort that the transition process 
requires. I know that you know that other countries are 
spending much more than the United States in preparing their 
citizens for the transition to digital.
    Given the $20 billion raised in the 700 megahertz auction, 
maybe 1 percent of that could be used to actually help American 
consumers make this transition. A public education campaign is 
not merely airing a series of public service announcements that 
digital television is coming; it is much more complicated here, 
as the testimony so far has suggested.
    The important services of low power and other community 
broadcasters will continue to send along signals. Full powered 
television service is not being exchanged simply for digital 
service. Many full powered broadcasters will be sending 
multiple digital signals. Some of those signals will be high 
definition, some will not. The contour of the reach of the 
digital signal will not exactly match the reach of the old 
analog signal. These are not simple messages to convey. And 
that does not even take into account the educational effort 
regarding the complicated coupon program.
    We at the Leadership Conference are working with the 
Southeast Asian Action Resource Center, the National Council of 
La Raza, the NAACP, National Urban League, the National 
Congress of American Indians, the American Association of 
People With Disabilities, and others to reach deep into 
communities and to work with direct service providers to get 
the word out.
    We know that one of our members, AARP, and others of our 
members are also extending themselves to get the word out. We 
have received no financial assistance from the FCC or NTIA to 
prepare our communities for this major transition, and our 
resources are limited.
    Again, we applaud the public service announcements of NAB 
and PBS, but again these efforts are simply not sufficient.
    Mr. Markey. If you could summarize.
    Mr. Lloyd. My final note is simply that we need an 
aggressive ongoing monitor effort, and there must be plans in 
place to respond rapidly to those most vulnerable populations 
who end up losing service.
    Again, thank you very much.
    [The prepared statement of Mr. Lloyd follows:]
    [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
    
    
    Mr. Markey. Thank you, Mr. Lloyd, very, very much.
    Our next witness is Mr. Paul McTear. He is the President 
and Chief Executive Officer of Raycom Media. Welcome, sir.

    STATEMENT OF PAUL MCTEAR, PRESIDENT AND CHIEF EXECUTIVE 
                  OFFICER, RAYCOM MEDIA, INC.

    Mr. McTear. Chairman Markey, Ranking Member Stearns, and 
members of the subcommittee, my name is Paul McTear and I am 
the President and----
    Mr. Markey. If you could use a microphone. It is a new 
technology in the media world. Oh, beautiful, thank you.
    Mr. McTear. Chairman Markey, Ranking Member Stearns, and 
members of the subcommittee, my name is Paul McTear and I am 
the President and Chief Executive Officer of Raycom Media. 
Raycom owns 38 full power television stations serving 
communities across the country, including Station WECT in 
Wilmington, North Carolina. The Wilmington market has been 
chosen for an early cut-over from analog to digital television 
service on September 8th, 2008, while the rest of the country 
will make the transition on February the 17th, 2009.
    The focus of my testimony today is on the efforts of Raycom 
and our government and private sector partners in the five-
county Wilmington area. A cornerstone of Raycom's operation 
philosophy is our commitment to strong local service. We 
believe that this is good for the public and good for our 
business. Our participation in the Wilmington area experiment 
is consistent with this commitment to public service.
    The cut-over to digital only operations that the country 
will undertake on February 17th, 2009, poses various risks and 
challenges. The FCC asked the Wilmington area stations to take 
this step more than 5 months earlier than the rest of the 
country on September 8th, 2008, so that the country can assess 
those risks and challenges on the basis of the Wilmington 
experience and better prepare for the February 17th cut-over. 
Not only does Wilmington have 5 fewer months than the rest of 
the country to prepare for this transition, it also must 
accomplish the transition in an environment where the entire 
rest of the country, including television markets adjacent to 
Wilmington, will be emphasizing the February 17th digital cut-
over date.
    There will be problems and some will continue after 
September 8th. Through intense news coverage, heavy doses of 
PSAs and numerous over-air and off-air activities, WECT and our 
sister stations will be engaged in a vigorous, multi-faceted 
campaign to anticipate and overcome these problems. Many of our 
efforts will be devoted to practical issues, where to obtain 
converter boxes, how to install them, antenna issues, and the 
like.
    We are also working intensely with cable and satellite 
operators, equipment retailers, local government, local civic 
groups, and other groups especially well-suited to outreach to 
an at-risk population like the elderly, rural viewers, seasonal 
residents, and minorities. For example, 3 weeks ago Wilmington 
held a town hall meeting devoted to the digital transition 
experiment and we expect to participate in similar gatherings 
and numerous communities within the market.
    In these efforts we frequently stress the pioneering role 
that the Wilmington area is playing. We are also working with 
the FCC, which is providing exceptional support, and with NTIA 
and the NAB. I am proud of the way our industry has responded 
to the challenges of the transition.
    One attachment to my written statement catalogues the 
industry's strenuous efforts under NAB's leadership. I am also 
proud of Raycom's localized efforts across the 38 markets as 
described in another attachment to my written testimony. As the 
attachment reflects, Raycom stations have broadcast more than 
50,000 transition education announcements since April of last 
year, as well as 1,400 news items related to the transition.
    I am hopeful that with the help of many others the 
Wilmington experiment will succeed and that later the full 
nationwide transition will also succeed. The result will be the 
greatest breakthrough in television since the introduction of 
color--crystal clear pictures, vastly improved sound, and the 
opportunity for more services.
    There is one issue that I am told that only Congress can 
fix. The Satellite Home Viewer Extension and Reauthorization 
Act provides television stations with exclusivity rights for 
their analog signals, but through an oversight it was never 
updated to take into account the cut-over to digital only 
operations. Without a fix to this inadvertent loophole, the 
integrity of local markets could be destroyed and local service 
jeopardized.
    In closing, we would especially like to thank Chairman 
Martin and Commissioner Copps for their leadership in 
connection with this experiment. I also want to acknowledge the 
role of this committee in advancing the transition and 
protecting consumer interests as we make our way through this 
challenging transition.
    Thank you.
    [The prepared statement of Mr. McTear follows:]
    [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
    
    
    Mr. Markey. Thank you, Mr. McTear, very much.
    Our next witness is Mr. John Ripperton. He's the Senior 
Vice President for Supply Chain Management from RadioShack and 
we welcome you, sir. Whenever you are ready.

  STATEMENT OF JOHN RIPPERTON, SENIOR VICE PRESIDENT, SUPPLY 
                  CHAIN MANAGEMENT, RADIOSHACK

    Mr. Ripperton. Good morning, Chairman Markey, Ranking 
Member Stearns, and members of the subcommittee. My name is 
John Ripperton, and I am the Senior Vice President for Supply 
Chain Management and RadioShack. We are grateful for the chance 
to update the subcommittee again on the involvement of 
RadioShack and other members of the Consumer Electronic 
Retailers Coalition on the transition to digital television, 
and NTIA's converter box coupon program.
    As you know, RadioShack is a major consumer electronics 
retailer with over 4,400 corporate stores and another 1,500 
dealer stores located throughout the U.S. We consider ourselves 
to be your neighborhood retailers, an attribute very helpful in 
the digital transition. RadioShack has remained steadfast to 
its commitment to the transition and the coupon program since 
its creation.
    We have heard very positive feedback from our consumers 
about the quality of the television viewing with our converter 
boxes connected. RadioShack is not alone in its efforts in 
commitment. I am going to focus on several issues important to 
the continued success of the program and transition.
    First, as of June 4th, the NTIA Web site indicates 
approximately 15 million coupons have been mailed. That is an 
average of 104,000 requests for coupons being placed daily. The 
statistics demonstrate the extraordinary interest consumers are 
showing in the benefits of digital television and the converter 
box. However, these statistics also indicate there may be 
significant demand being placed on inventory during the next 
few months.
    Retailers also continue to be faced with product 
adjustments to accommodate the many low power broadcasters that 
will not participate in the transition next February. 
Manufacturers have been working with NTIA on the approval of 
boxes with analog pass-through capability. To date 23 such 
models are approved.
    Last week RadioShack announced that it is among the first 
of the national retailers to have analog pass-through boxes 
arriving in our stores. The boxes are also available through 
our Direct-to-You program.
    The pent-up demand for converter boxes, combined with the 
interest in providing analog pass-through boxes may present 
challenges for retailers this summer. It is essential that 
retailers receive as granular information as possible from NTIA 
about the status of coupon distribution and redemption. 
Retailers are doing all they can to provide converter boxes to 
consumers, even when a particular store inventory is low. 
RadioShack has a program called Direct-To-You. This program 
allows our corporate stores to place orders from a central 
fulfillment center in the event the store is out of stock. When 
an order is placed, the consumer will receive the converter box 
free of any delivery charge. As we announced in February, the 
company also created a dedicated, toll free number 1-877-RSD-
TV4U for orders. Other retailers have similar toll free 
numbers.
    I would be remiss if I did not mention our concern about 
consumers who fail to redeem coupons before expiration. There 
are a number of solutions, but they present challenges of their 
own at this time in the program. RadioShack's solution will be 
to continue our aggressive support of our Direct-To-You option 
if we encounter inventory issues within our stores.
    Second, when RadioShack testified in February we mentioned 
that unforeseen cost that results from a 5 percent tariff that 
the U.S. Customs has imposed on the importation of coupon 
eligible boxes. Retailers believe it is inappropriate for the 
government to subsidize the purchase of these converter boxes 
and then tax their importation. This inequity is even more 
apparent and problematic as retailers and manufacturers may 
need to pay premium freight costs to meet consumer demand.
    Recently, Representatives Kind and Brady introduced a bill, 
H.R. 5635, to waive the tariff, and I would hope that members 
of this committee will cosponsor this urgent legislation and 
work for its passage.
    Third, RadioShack and other large retailers are preparing 
to accommodate the September 8th transition in Wilmington. We 
have adjusted in store signage and materials in this market and 
are participating in community and store events managed by the 
FCC. In sum, we believe retailers will be prepared.
    Fourth, we continue to believe that consumer education is 
the most important component of digital transition. RadioShack 
and other members are implementing detailed bilingual education 
plans, including media, signage, training, and outreach 
efforts. Even the packaging of our newly analog pass-through 
box is fully bilingual. RadioShack continues to make 
significant efforts to train its sales associates on the why, 
the when, and the how concerning this critical transition. All 
forms of communication emphasize to our employees the need to 
ask consumers the right questions.
    RadioShack is also participating in a number of community 
outreach efforts. We are very pleased today to announce that 
RadioShack and the American Library Association are partnering 
to conduct joint community outreach sessions throughout the 
country.
    Mr. Markey. It you could summarize, please.
    Mr. Ripperton. RadioShack has also held a number of events 
with NTIA, the Department of Commerce, and the FCC, with more 
events planned this year. On behalf of RadioShack and as a 
member of CERC, I appreciate the opportunity to testify on our 
continued role in the transition to digital television.
    [The prepared statement of Mr. Ripperton follows:]
    [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
    
    
    Mr. Markey. Thank you, Mr. Ripperton, very much.
    Our final witness is Mr. Eric Rossi, who is Senior Product 
Manager from the Nielsen Company. We welcome you.

STATEMENT OF ERIC ROSSI, SENIOR PRODUCT MANAGER, MEDIA PRODUCT 
                LEADERSHIP, THE NIELSEN COMPANY

    Mr. Rossi. Thank you, Chairman Markey, members of the 
subcommittee. As you said, my name is Eric Rossi and my title 
is Senior Product Manager of Media Product Leadership for the 
Nielsen Company. I appreciate your invitation to appear before 
you today.
    As you know, Nielsen provides audience measurement services 
for the television industry in the United States through 
Nielsen Media Research, which produces what is commonly known 
as the Nielsen rating. I am here today in my role as the 
Director of Nielsen's various efforts to prepare for the 2009 
digital transition.
    For more than 2 years Nielsen has undertaken a variety of 
initiatives to ensure that we remain fully capable of providing 
the industry highly accurate audience measurement data and 
analysis as the Nation moves from the analog to the digital 
world of television.
    As part of our efforts, Nielsen has conducted several 
surveys and studies to determine the digital readiness of U.S. 
households, both nationally and at the local level in the 
Nation's 56 largest television markets where we have ongoing 
electronic measurements. Nielsen's information on readiness has 
the advantage of being based on visits by Nielsen staff to our 
existing homes and metered samples throughout the country. This 
allows us to accurately tally the readiness of the equipment in 
the home rather than relying on self reporting as some other 
surveys must do.
    We released the latest of these surveys late last month, 
and the findings in this report is the basis of my testimony 
today. The full report has been submitted to the subcommittee 
as part of my testimony.
    The methodology employed in compiling the report is the 
same as we use in our regular reports on television viewing by 
the American public. Detailed explanations of the methodology 
used are also included in the full report submitted to you. We 
believe our estimates will give you the most accurate picture 
available on the current status of digital readiness. This is 
not a prediction of what Nielsen thinks will happen on February 
18th, 2009, it is a report on the current state. Our tracking 
this data over the current coming months will allow the 
industry to determine the efficacy of the education effort as a 
proportion of unready homes in our sample shrinks.
    Let me give you the highlights of the report. Based on the 
Nielsen estimates, 9.4 percent of all U.S. households are 
completely unready for the transition. That means in these 
households there are no television sets currently capable of 
receiving digital broadcast television signals. We found that 
12.6 percent of all U.S. households are partly unready, which 
means that the household has at least one set that is capable 
of receiving digital broadcast television signals and one set 
that is not. So with a combined number of completely unready 
households and partly unready, we found that 78 percent of all 
households are completely ready for the digital transition.
    In our examination of local markets to determine digital 
readiness we found wide gaps between communities that are 
completely ready for the transition and communities that are 
less prepared for the switch. Among the markets least prepared 
for the transition is Milwaukee, where 18.3 percent of the 
households are completely unready. In Salt Lake City 18 percent 
of households are completely unprepared for the transition, 
while 17.3 percent of Portland, Oregon's households are 
completely unprepared. Other markets where the number of 
completely unprepared households range from 17 to 14.2 percent 
are Houston, Minneapolis, Dallas-Ft. Worth, Cincinnati, St. 
Louis, and Albuquerque.
    At the other end of the spectrum is Hartford-New Haven, 
where 3.1 percent of households are completely unready for the 
transition. That figure is 3.8 percent in New York, 4.1 percent 
in Atlanta, and 4.4 percent in Ft. Myers. In several markets 
the percentage of households range from 4.5 to 5.5 percent, and 
those cities include Boston, West Palm Beach, Charlotte, 
Philadelphia, New Orleans, and Washington, D.C.
    As we do in our regular reporting under the viewing habits 
of television audiences, we looked at demographic data and 
ethnic audiences in our study of digital readiness. With regard 
to age we found that males and females 18 to 24 are the 
demographic group that would be most impacted if the digital 
transition occurred today. While these groups make up 4.9 
percent and 4.6 percent, respectively, of households with 
persons 2 years old and older, these same groups represent 6.2 
and 5.5 percent of households with persons 2 years and older 
who live in completely unready households.
    In terms of ethnicity, Hispanic households would be most 
impacted if the DTV transitioning occurred today. While 
Hispanics comprise 11.3 percent of total U.S. households, 19.9 
percent of completely unready households are Hispanic. It is 
worth noting that 10.3 percent of completely ready households 
speaks Spanish only, a figure that is 5 times the percentage of 
households in the U.S. where only Spanish is spoken. For 
African Americans, who represent 12.1 percent of total U.S. 
households, 16.3 percent of those households are completely 
unready for the transition.
    Finally, we analyzed viewing to unready sets and determine 
that unready sets account for 7.5 percent viewing television 
usage during the day. Television usage to unready sets 
represented 8.1 percent of all television usage during prime 
time and daily tuning within a completely unready household 
averages 6.9 hours, while daily tuning to completely unready 
households averages 8.7 hours.
    Over the next 7 months we plan to release updated reports 
on the digital television transition, and we will share them 
with you, the television industry, and other interested 
parties.
    I look forward to answering any questions to clarify my 
testimony, and again thank you for the opportunity to appear 
today.
    [The prepared statement of Mr. Rossi follows:]

                        Statement of Eric Rossi

    Chairman Markey, members of the subcommittee. My name is 
Eric Rossi and my title is Senior Product Manager, Media 
Product Leadership for the Nielsen Company. I appreciate your 
invitation to appear before you today.
    As you know, Nielsen provides audience measurement services 
for the television industry in the United States through 
Nielsen Media Research, which produces what is commonly known 
as the Nielsen Ratings. I am here today in my role as the 
director of Nielsen's various efforts to prepare for the 2009 
digital television transition. For more than 2 years, Nielsen 
has undertaken a variety of initiatives to ensure that we 
remain fully capable of providing the industry highly accurate 
audience measurement data and analysis as the nation moves from 
the analog to the digital world of television.
    As part of our efforts, Nielsen has conducted several 
surveys and studies to determine the digital readiness of U.S. 
households, both nationally and at the local level in the 
Nation's 56 largest television markets where we have ongoing 
electronic measurement. Nielsen's information on readiness has 
the advantage of being based on visits by Nielsen staff to our 
existing homes in our metered samples throughout the country. 
This allows us to accurately tally the readiness of the 
equipment in the home rather than relying on self-reporting as 
some other surveys must do.
    We released the latest of these surveys late last month and 
the findings in this report are the basis of my testimony 
today. The full report has been submitted to the subcommittee 
as part of my testimony. The methodology employed in compiling 
the report is the same as we use in our regular reports on 
television viewing by the American pubic. Detailed explanations 
of the methodology used are also included in the full report 
submitted to you. We believe our estimates will give you the 
most accurate picture available on the current status of 
digital readiness.
    This is not a prediction of what Nielsen thinks will happen 
on February 18, 2009. It is a report on the current state. Our 
tracking of this data over the coming months will allow the 
industry to determine the efficacy of the education effort as 
the proportion of unready homes in our sample shrinks.
    Let me give you the highlights of our report.
    Based on the Nielsen estimates, 9.4% of all U.S. households 
are completely unready for the digital television transition. 
That means that in these households, there are no television 
sets currently capable of receiving digital broadcast 
television signals.
    We found that 12.6% of all U.S. households are partly 
unready, which means that the household has at least one set 
that is capable of receiving digital broadcast television 
signals and at least one set is not.
    So, with the combined number of completely unready 
households and partly unready household, we found that 78% of 
all households are completely ready for the digital transition.
    In our examination of local markets to determine digital 
readiness, we found wide gaps between communities that are 
completely ready for the transition and communities that are 
less prepared for the switch.
    Among the cities least prepared for the transition is 
Milwaukee, where 18.3% of the households are completely 
unready. In Salt Lake City, 18% of households are completely 
unprepared for the transition while 17.3% of Portland, Oregon's 
households are completely unprepared for the transition.
    Other cities where the number of completely unprepared 
households ranged from 17% to 14.2% are Houston, Minneapolis-
St. Paul, Dallas-Ft. Worth, Cincinnati, St. Louis, Tulsa, and 
Albuquerque-Santa Fe.
    At the other end of the spectrum is Hartford & New Haven, 
where 3.1% of households are completely unready for the 
transition. That figure is 3.8% in New York, 4.1% in Atlanta, 
and 4.4% in Ft. Myers-Naples. In several cities, the percentage 
of households that are completely unready range from 4.5% to 
5.5%. Those cities include Boston, West Palm-Beach-Ft. Pierce, 
Charlotte, Philadelphia, New Orleans, and Washington, DC 
(Hagerstown).
    As we do in our regular reporting on the viewing habits of 
television audiences, we looked at data on demographic groups 
and ethnic audiences in our study of digital readiness.
    With regard to age, we found that males and females ages 
18-24 are the demographic group that would be most impacted if 
the digital transition occurred today. While males and females 
ages 18-24 make up 4.9% and 4.6% respectively of households of 
persons two years old and older, these same groups represent 
6.2% and 5.5% of households of persons 2 years old and older 
who live in completely unready households.
    In terms of ethnicity, Hispanic households would be most 
impacted if the DTV transition occurred today. While Hispanics 
comprise 11.3% of total U.S. households, 19.9% of completely 
unready households are Hispanic. And, it is worth noting that 
10.3% of completely unready households speak Spanish only, a 
figure that is five times the percentage of households in the 
U.S. where only Spanish is spoken. For African Americans, who 
represent 12.1% of the total U.S. households, 16.3% of 
households are completely unready for the transition.
    Finally, we analyzed the viewing to unready sets and 
determined that unready sets accounted for 7.5% of television 
usage during the day. Television usage to unready sets 
represented 8.1% of all television usage during primetime. And, 
daily tuning within a completely unready household averages 6.9 
hours, while daily turning to completely ready households 
averages 8.7 hours.
    It is important to note that the information offered here 
today is a snapshot of what the digital readiness picture looks 
like currently. As we get closer to the DTV transition date, 
households will surely upgrade their television equipment at an 
accelerated rate. And, over the next 7 months, Nielsen will 
continue to monitor the types of television equipment Americans 
are using and purchasing. We plan to release updated reports on 
the digital television transition and we will share them with 
you, the television industry and other interested parties. I 
look forward to answering your questions to clarify my 
testimony and again thank you for the opportunity to appear 
today.

                        Major Testimonial Points

    Highlights of Nielsen's Report on America's Readiness for 
the DTV Transition:

                       Overall DTV Preparedness:

     9.4% of all U.S. households are completely unready 
for the digital television transition;
     12.6% of all U.S. households are partly unready 
for the digital television transition;
     78% of all households are completely ready for the 
digital transition;
     Wide gaps exist between communities that are 
completely ready for the transition and communities that are 
less prepared for the switch.

                       DTV Preparedness By City:

     The least DTV transition prepared cities: 
Milwaukee (18.3% of the households are completely unprepared); 
Salt Lake City (18% unprepared); Portland (17.3%);
     Cities where unprepared range from 17.2%-14%: 
Houston, Minneapolis-St. Paul, Dallas-Ft. Worth, Cincinnati, 
St. Louis, Tulsa and Albuquerque-Santa Fe;
     Better prepared cities include: Hartford & New 
Haven (3.1% of households unready for the transition; New York 
(3.8%), Atlanta (4.1%); Ft. Myers-Naples (4.4%). Cities where 
unready range from 4.5% to 5.5% include Boston, West Palm-
Beach-Ft. Pierce, Charlotte, Philadelphia, New Orleans and 
Washington, DC (Hagerstown).

                    DTV Preparedness By Demography:

     Males and females ages 18-24 are the demographic 
group most impacted if the digital transition occurred today. 
Males and females ages 18-24 are 4.9% and 4.6% respectively of 
households of persons two years old and older, and 6.2% and 
5.5% of households of persons two years old and older who live 
in completely unready households.
     Hispanic households would be most impacted if the 
DTV transition occurred today. Hispanics comprise 11.3% of 
total U.S. households, but 19.9% of completely unready 
households. Note that 10.3% of unready households speak Spanish 
only, five times the percentage of Spanish-only households in 
the U.S.
     African Americans represent 12.1% of the total 
U.S. households, but 16.3% of completely unready households.
     Unready sets accounted for 7.5% of daily 
television usage during the day, 8.1% during primetime. Daily 
tuning within completely unready households averages 6.9 hours, 
8.7 hours in completely ready households.
                              ----------                              

    Mr. Markey. Thank you.
    Did you say the digital ready homes, that it is 8.9 hours 
per day the TV set is on?
    Mr. Rossi. Yes.
    Mr. Markey. And if you slept 8 hours----
    Mr. Rossi. 8.7 percent.
    Mr. Markey. No, you said 8.6 hours.
    Mr. Rossi. Yes, hours, 8.7 hours per day in a ready 
household.
    Mr. Markey. Digital ready household----
    Mr. Rossi. Yes.
    Mr. Markey. Eight hours of sleep.
    Mr. Rossi. Eight hours of work.
    Mr. Markey. Something's got to go there. I don't think it 
is going to be the digital TV. Something is going. I will 
recognize myself and the gentleman from Texas, and it looks 
like we have a panel to ourselves here.
    Let me go back to you, Mr. Romeo. You heard Dr. McGuire-
Rivera on the first panel discuss the issue of administrative 
funds and also the cost should it prove necessary or advisable 
to allow NTIA to reissue coupons to consumers who have seen 
them expire without being able to redeem them. That is people 
who walked into stores in the first 90 days and there were no--
not because of the consumer, but because of the store or 
because of something the converter boxes were not there. And 
now their coupon has expired.
    So could you discuss the issues and the cost here? The 
Administrator, the Acting Administrator really didn't sound 
very optimistic here about the relationship between the cost of 
reissuing and the likelihood that the consumer will ever be 
able to get a converter box.
    Mr. Romeo. Sure, I would be happy to comment. First on the 
reissuance of the coupons. I think in the discussion earlier it 
was talked about eliminating the expiration date. I think that 
is much different than allowing a reissuance of the coupon.
    Mr. Markey. Would you favor that? Doing away with the 
expiration date?
    Mr. Romeo. From a program perspective it would be more 
expensive to handle it than reissuing coupons.
    Mr. Markey. It would be more expensive just to--it is--I am 
sorry, which way is more expensive?
    Mr. Romeo. If you just eliminate the expiration date. The 
problem is that---
    Mr. Markey. Which way is more expensive?
    Mr. Romeo. Elimination of the expiration totally now that 
the coupons are out there. So if you allowed reissuance of 
coupons, what would happen is your coupon would expire, you 
would be allowed to order another set of coupons and I assume 
if funds were available then you would be allowed to get 
additional coupons.
    Mr. Markey. So are you in favor of reissuing coupons?
    Mr. Romeo. We can do whatever the law allows.
    Mr. Markey. No, I understand that, but you are here as the 
expert panel, you see people, you can feel what their problems 
are. You are back here, Mr. Romeo. You're here to tell us what 
makes the most sense, not what does Congress think you should 
do. You are supposed to be telling us what you think we should 
be telling you or telling the Administrator to do. Do you think 
it makes sense to reissue the coupons, yes or no?
    Mr. Romeo. Yes.
    Mr. Markey. Let's go down the panel and we are going to ask 
that question. Do you think it makes sense to reissue the 
coupons, Ms. Cannon?
    Ms. Cannon. Yes.
    Mr. Lloyd. Yes.
    Mr. McTear. Yes.
    Mr. Ripperton. Yes.
    Mr. Rossi. I don't have an opinion on that.
    Mr. Markey. Don't have an opinion, OK. So 7, 0, and 1 
there. What is the cost of that, Mr. Romeo?
    Mr. Romeo. Well, the cost of issuing the coupons. So when 
we were asked to bid on the original contract there were 33 
million coupons to be shipped. Those 33 million coupons will be 
shipped by the end of October. So any additional shipping of 
coupons comes with a cost. So the administrative funds that 
were programmed were for 33 million coupons. I--my estimate now 
given the current burn rate is that at the end of October 33 
million coupons will have been shipped.
    Mr. Markey. OK.
    Mr. Romeo. So that leaves from October to the end of 
February with as far as what we are contracted to do on funded 
shipping of coupons.
    Mr. Markey. On funded. What do you think that cost will be? 
Give us a ball park figure. It doesn't have to be Fenway Park, 
it could be Yellowstone Park, but just give us some range of 
what kind of money we are talking about here. You have the 
program, you're running it.
    Mr. Romeo. The first thing they taught me at IBM is never 
give an unauthorized price quote, but I will give you an idea. 
There was money set aside--I believe the funding for the total 
administrative costs for the first two phases of the program 
was $120 million for 33 million coupons.
    Mr. Markey. Yes.
    Mr. Romeo. If you could give me an estimate of how many 
coupons you think would be shipped for the program you could do 
the math yourself, 120 million----
    Mr. Markey. What is a reasonable number for the shipping? 
What do you think?
    Mr. Romeo. It depends if you allow reordering of coupons. 
So current burn rate says 44 million, that is without a ramp-up 
at the end of the program and without you saying I can reorder. 
If you say that you can reorder coupons----
    Mr. Markey. Could you do the math in your brain there? Or 
anyone else on the panel. Mr. RadioShack is doing it over here. 
He is multiplying right now. Do you have the answer, Mr. 
Ripperton? What does it come out to?
    Mr. Ripperton. Congressman Markey, I think the answer to 
the question at this juncture is if the demand continues to 
grow, we will be able to--unabated, we will be able to 
determine an answer fairly soon. Right now we are not positive 
what is happening in the marketplace. By that I say that there 
may be consumers postponing decisions to acquire LCD TVs, there 
may be consumers that are deciding to not continue with the 
cable services and the like because of the economy. And I think 
that is accelerating the demand for converter boxes that was 
not anticipated. That I believe is one of the dilemmas that all 
of us are experiencing right now.
    Mr. Markey. I understand.
    Mr. Ripperton. We don't know that we can give you a 
definitive answer right now, but it is a growing number.
    Mr. Markey. But you can imagine the tension in this room in 
a few more months.
    Mr. Ripperton. Yes, sir. Yes, sir.
    Mr. Markey. You will be back as a witness.
    You know the old question: Which is a bigger problem, 
ignorance or apathy? And the person says, well, I don't know 
and I don't care. So the problem here is that either way we are 
going to have an explosive situation later on there. So it is 
in your interest all to know what the answer is. I want to say 
to you, Mr. Rossi, how many people did you say? What percent 
are completely unready?
    Mr. Rossi. Completely unready was 9.4 percent.
    Mr. Markey. What percent are only partially ready, what 
percent was that?
    Mr. Rossi. Let me check. I think it was around 12.6 percent 
were partially ready.
    Mr. Markey. So the television I have in my bathroom, that 
is just a regular analog set for the last 23 years. Looking at 
me, am I in the partially unready category?
    Mr. Rossi. If it is not hooked up to cable or satellite, 
yes.
    Mr. Markey. I think Nielsen's numbers are so far off it is 
almost ridiculous that you have them here, to be honest with 
you, because there are a lot more people in that category than 
you think. I don't think you are measuring my TV set looking at 
me in that bathroom. I think people all over the country have 
an extra TV set in some room and your number is so far off and 
GAO is so much closer to it. I just want to say this to you, 
that it is just not an accurate number.
    Mr. Rossi. What I can tell you is that we do in all of our 
sample homes over 30,000 metered homes, we actually send people 
into those homes to go throughout the house and catalogue every 
single set and what devices are hooked up to it, which we feel 
is fairly accurate. We have to do that, as we are entrusted to 
do that by our clients, so we have to do a good job of 
capturing all the viewing of every television set. So we feel 
that we have a good handle on what is actually happening in the 
household.
    Mr. Markey. I do not believe that that is accurate at all. 
I think that a very high percentage of Americans have a TV set 
in some room that is not hooked up to cable. I just think your 
number is really much well within the reality that it would 
bear.
    I turn now to recognize the gentleman from San Antonio, Mr. 
Gonzalez.
    Mr. Gonzalez. Thank you, Mr. Chairman. I think there is 
some agreement with the members of the committee that we have a 
problem. The question is how big a problem it is going to be 
and whether we are doing things to mitigate. Now I don't want 
to put words in the mouths of the previous witnesses, but I 
didn't get a sense that they are really preparing for the 
increased activity, and I will start where I started the first 
question with the other witnesses.
    Is there any disagreement that the greater activity 
regarding the request for the converter boxes is yet to come? 
Because I am not sure I got agreement from the first two 
witnesses on that basic premise. And I mean I can read--I think 
this is Mr. Rossi's testimony. As we get closer to the DTV 
transition date households will surely upgrade their television 
equipment at an accelerated rate. Yes, it is human nature, and 
we should be anticipating that. Now the question is are we 
anticipating it? I am not sure that we are.
    Now we are talking about expiration dates, so that 
coupons--how many of the coupons were actually utilized? I 
think it is a startling statistic that of the 800,000 or 
whatever that were issued, I think maybe 41, 42 out of every 
hundred were actually swiped. If that doesn't tell you 
something, first of all you are going to have a real problem 
with that particular population that will be barred from 
getting the coupon for $40 for a converter box. That is a real 
interesting situation in and of itself.
    The other thing is I believe that Mr. Markey may be on to 
something about how we gauge. I don't want to get into the 
people meter versus diaries and Spanish-speaking households and 
how they are impacted, because I think there may be a 
disconnect there, but we can probably take that up at a 
different time.
    Mr. Romeo, Mr. Lloyd, and Mr. Ripperton, did you hear 
anything from the previous witnesses that addresses the 
concerns that you have expressed about the greater activity 
that will transpire as we get closer to February the 17th?
    Mr. Chairman, I wanted to point out that February 17th will 
probably take place during the Presidents Week recess when we 
are back home. We may reconsider being home during that week. I 
am not real sure you want to be that close to many of the 
constituents who no longer have television service.
    But going back to the question, did you hear anything about 
saying yes, we are going to make the adjustments, resources, 
plans?
    Mr. Romeo. I didn't hear anything in the testimony. I can 
tell you that we are working with NTIA to look at the cost of 
shipping additional coupons.
    Mr. Gonzalez. Mr. Lloyd.
    Mr. Lloyd. No, I didn't hear anything either. While we are 
working with NTIA and FCC and other partners, I think our 
concerns are your concerns. We are simply not prepared for an 
increased demand in coupons or some of the challenges that will 
come when people get these converter boxes and try to connect 
them again.
    Mr. Gonzalez. Mr. Ripperton.
    Mr. Ripperton. Yes, sir, what I did hear is that NTIA was 
looking at the options of taking orders and how that would be 
managed. And what we would advocate strongly is that there be 
an allowance for taking orders, but in--not that that would 
prohibit fraud, because that was one of the major issues that 
was brought up and certainly we are committed to fulfilling 
those orders, but in-store and with our Direct-To-You solution 
as a major retailer. We need to satisfy our consumer demands. 
We need to put some guidance around how you can do that process 
and do it well for the consumers and your constituents.
    Mr. Gonzalez. Thank you. And I am not sure that I was 
hearing it right and of course I don't want to again attribute 
any comment, but I think Dr. McGuire-Rivera may have alluded to 
the additional costs to allow reapplication or reissuance. And 
I forget the exact number, but she said we are just not set up 
to do it. But we are not moving quickly to address it, we 
definitely will not be set up to do it at any point in time. It 
is not for us up here ``the sky is falling'' scenario. That 
doesn't really help. What we would like to do is to avoid the 
sky from falling. I am hoping that as Mr. Markey indicated that 
you give us some guidance. You are there on the ground, you 
understand what is really going on. And we monitor this, and 
that is what this hearing is all about. Many times it is after 
the fact and too late. And I just think--let's hope that time--
can I have one last question, sir?
    This was a question that was actually going to be presented 
by the chairman of the full committee, I believe. That is to 
Mr. Romeo. There was some concern that NTIA may have 
inadvertently issued coupons that had a 60-day expiration 
period. Is that true? Have you heard anything like that?
    Mr. Romeo. No, I haven't heard anything like that.
    Mr. Gonzalez. All right, I yield back.
    Mr. Markey. Great, thank you so much. Mr. Lloyd, let me 
come back to you. We heard Mr. Gonzalez talking about the 
effort that is going on in San Antonio with regard to minority 
stations getting out the word. Give us your overall profile of 
what is going on across the country in the minority community 
in terms of the outreach, in terms of the penetration rate, in 
terms of the redemption rate compared to those who are in the 
white community. Is there a disparity, how big is it, and what 
would you recommend for us to do to close that gap?
    Mr. Lloyd. Well, there is a disparity, I must admit I am 
not comfortable with the research from Nielsen or from the 
Consumers Union or from other sources. I am more comfortable 
with the GAO research than some of the other research that I 
have taken a look at.
    There is a disparity regarding minority populations, 
regarding folks who are poor, on fixed income, regarding 
confusion both about the program and the transition and how its 
going to impact them.
    We have also seen on the ground that folks that really had 
some trouble going into retailers who are trying to sell them 
either boxes or cable service or satellite service that they 
don't need, rather than helping them make the transition with 
the over-the-air boxes that they have got.
    Mr. Markey. Yes.
    Mr. Lloyd. We have seen folks who get the boxes and can't 
connect them, try to talk to retailers, and the manufacturers 
and the retailers don't tell them effectively how to connect 
them. We are also concerned about what happens when people 
actually get the converter boxes. Maybe a box doesn't work, 
maybe they need an additional antenna, or something else. And 
we are not convinced that there is a mechanism in place to 
really help people on the ground make that transition.
    Mr. Markey. And how big of a disparity do you think it is 
between the minority community and the white community?
    Mr. Lloyd. Again, looking at GAO's stats, I think the 
disparity is probably around anywhere between 5 to 10 percent, 
depending on the particular community that we are talking 
about, which may be significant for the African-American and 
for the Latino community especially.
    Mr. Markey. Mr. McTear, could you again quantify the total 
amount of the advertising being done by the broadcasting 
industry?
    Mr. McTear. Not the entire industry, Mr. Chairman, but I 
can tell you that across our 38 television stations, we have 
run over 40,000 spots. We have 275 speakers bureaus so that we 
have sent people out to speak to various community 
organizations. We have around 930 news stories. We did 60 
editorials. We did 6,000 news calls and have done 35 incidents 
of phone banks whereby during our news broadcast, we ask 
viewers to phone in where we had staff members man phones for a 
period of 2 hours doing a lot of one-on-one coaching and 
counseling so that--that is what we have done since last April 
as a company.
    Mr. Markey. Do you know Ms. Cannon?
    Mr. McTear. I introduced myself to her last week.
    Mr. Markey. So you are both in the Wilmington market, but 
you are just getting to know each other right now?
    Mr. McTear. Just for the record, I actually live in 
Montgomery, Alabama, at the corporate office. But we do have 
management in Wilmington that does know Ms. Cannon.
    Mr. Markey. Ms. Cannon, you are working with Raycom in 
Wilmington?
    Ms. Cannon. Yes. And with all the broadcasters.
    Mr. Markey. Excuse me?
    Ms. Cannon. With all the broadcasters.
    Mr. Markey. So do you have meetings together to plot out a 
general plan?
    Ms. Cannon. Yes. Actually we had a meeting with the 
broadcasters and our public affairs folks and our marketing 
folks last week, and we have a----
    Mr. Markey. Was that the first meeting?
    Ms. Cannon. No. That was just with the marketing, to bring 
the marketing folks into it. Then we have cross-functional 
meetings every single week with our entire region and our local 
team to move this forward.
    Mr. Markey. Would you recommend that that happen in every 
television market in America?
    Ms. Cannon. Yes. As a matter of fact, we are taking good 
notes and compiling a list of tactics so when this is over in 
Wilmington, we can spread the word, the dos and don'ts.
    Mr. Markey. Mr. McTear, are you encouraged by the meetings 
that have taken place in Wilmington between the cable and 
broadcast industries and the other industries?
    Mr. McTear. Very much so. I think Raycom has also had 
conversations as we get ready with Comcast, Warner and the 
others, at least the top eight MSOs, to do comarketing, 
coeducation in all of our markets.
    Mr. Markey. So in other words, you are already partnering, 
you are already meeting. Have you met with the top people from 
Comcast yourself?
    Mr. McTear. Yes, sir.
    Mr. Markey. So it is across the entire Raycom footprint 
that you have met with the people in the industry?
    Mr. McTear. Yes, sir.
    Mr. Markey. And, Mr. Ripperton, what are we going to do 
about the non-RadioShacks? What are we going to do about these 
stores that don't have, say, either quite the capacity or the 
ethical standards of RadioShack? What do you recommend that we 
do here as a committee to make sure that they respond to this 
consumer demand in a way that is commensurate with the 
challenge that many of these families are going to be 
confronted with? In other words, we don't need laws for good 
people. We only pass laws for bad people because the bad people 
don't act in a way that is consistent with overall societal 
goals. So what do you recommend that we do to these bad stores?
    Mr. Ripperton. Dr. McGuire-Rivera addressed that they are 
taking those retailers that had been authorized to sell boxes; 
they are eliminating them as being approved by the program. And 
I would think that that would be the first steps that we need 
to go through.
    Mr. Markey. You are there on the ground. These are your 
competitors across the whole country. You have got this big 
job. You know who they are. So give us some other 
recommendations that we could implement.
    Mr. Ripperton. The strongest thing that I could recommend 
is that we speak through our actions. And RadioShack is 
delivering and other retailers are delivering on the consumer 
promise to provide a high-quality digital experience. And if 
other retailers embrace similar programs such as ours on the 
direct-to-you program, the stores that may be out of stock, 
there may be other options for them to deliver a box to a 
customer's home or to their supporting store. That is what we 
would advocate. It is certainly working for us.
    Mr. Markey. For you. But what about stores that are not as 
focused as you are on the problem? What do we do to them?
    Mr. Ripperton. Again, it is hard to address other 
companies, but I would think that there are--especially the 
members of CERC.
    Mr. Markey. The members of----
    Mr. Ripperton. CERC, the Consumer Electronics Retailers 
Coalition, that they follow suit with similar actions that we 
are taking in providing that consumer experience.
    Mr. Markey. What could you give us as a recommendation, 
though, that we should have--what is it called? We don't allow 
acronyms to be used here.
    Mr. Ripperton. I am sorry. It is the Consumer Electronics 
Retailers Coalition.
    Mr. Markey. All the stores like RadioShack, the good stores 
and the bad stores. So what do you recommend the standard 
adopted by the Consumer Electronics Retail--what should be the 
standard that they are imposing upon all of the other companies 
so that the bad ones know that they are going to have a scarlet 
letter, a scarlet D on their corporate foreheads?
    Mr. Ripperton. Again, if they eliminate their ability to--
NTIA----
    Mr. Markey. I understand. What can the association do as 
well to kind of reinforce it from a corporate perspective? This 
the image of the Consumer Electronics Retail--what is the final 
C? Coalition. I am sorry. Coalition. Yes.
    Mr. Ripperton. The key focus would be to remove their 
ability to redeem the coupon. And that would take away their 
ability----
    Mr. Markey. And could the Consumer Electronics Retail 
Coalition actually promulgate that as a standard that you 
recommended that they have taken away from them?
    Mr. Ripperton. I would advocate the elimination of those 
companies to be able to redeem coupons would come from NTIA and 
FCC.
    Mr. Markey. But it also could come from you. It could be a 
recommendation from your organization to the NTIA. And I think 
that would get the attention of the organization if they got a 
letter from your organization saying all the good companies are 
recommending that all you bad companies out there as yet 
unnamed because you have yet to demonstrate a sufficient 
disinterest in the program, but could you do that for us?
    Mr. Ripperton. Sir, I would have to take that under 
advisement and see whether that would be something----
    Mr. Markey. Why wouldn't your organization want to set a 
standard?
    Mr. Ripperton. I would take that under advisement with our 
legal counsel to see if that is something that we could pursue. 
Certainly it sounds theoretically like something we would take 
under consideration.
    Mr. Markey. OK. Could you--I don't know if you will be the 
witness at the next hearing, but could you tell the witness at 
the next hearing that they are going to be answering that 
question? And if your group hasn't done it by then, then I will 
have a different tone of voice with that witness at that time, 
and it will be my entire round of questions. So you should just 
warn whoever that person is that gets the baton from you for 
the next group in the organization as well. We will have his 
printed name out here so we will know whether or not they 
actually took a position.
    Let me turn here and recognize the gentleman from San 
Antonio once again.
    Mr. Gonzalez. Thank you very much, Mr. Chairman. Mr. 
Ripperton, I have a local provider, they are H-E-B, and they 
are saying they are having problems because they are only going 
to carry analog pass-through. And it is my understanding from 
your testimony that RadioShack--I think that is the direction 
that you all will be moving--is that analog pass-through 
capable converters are the only ones you will be stocking. Is 
that true?
    Mr. Ripperton. Yes, sir, that is absolutely true.
    Mr. Gonzalez. And that is going to the Consumers' Choice 
and for good reason.
    Do you acknowledge that there is a problem stocking a 
sufficient number to meet the demand under the present 
circumstances?
    Mr. Ripperton. As I previously testified, the extraordinary 
demand for these converter boxes is certainly challenging 
retailer supply chains. And our solution to that, when and if 
we have stockouts and gaps in our inventory, that we have 
been----
    Mr. Gonzalez. And I want to get to that. But I just wanted 
an acknowledgement from one of the major retailer providers out 
there, RadioShack, because you really are one of the good guys, 
and I commend you and thank you very much for stepping up to 
the plate to help us with this, that there is a problem with 
supply, whether it is a smaller provider such as H-E-B, or it 
is RadioShack, which is nationwide.
    Now, if we continue with an expiration date--I guess what I 
want to get to, we had better leave here today with some 
understanding of what direction we are going to be taking. Mr. 
Stupak suggested, but I believe that Dr. McGuire-Rivera said, 
no, we don't want to do that, and I understand, and that is 
that you would simply hold the card; he goes in with the 
coupon, you don't have the converter box, so you just hold it. 
The problem with that is it has got an expiration date. I am 
not sure I want to hold that thing because you are charged with 
that responsibility. Are you supposed to return it to me before 
the expiration date? And if you don't, do I blame you?
    If I understand Congressman's Stupak's suggestion--so 
really the only answer here is probably to somehow extend or--
the date of expiration, allow the use. I mean, it is incredible 
to think that 58 percent did not redeem the coupon. How many of 
those are households that are analog only? This is incredible 
what we are going to be facing. And I guess I just don't 
understand. But I think we have uniformity here, and we need to 
do something about the expiration date, correct?
    Mr. Ripperton. Yes, sir.
    Mr. Gonzalez. All right. I want to thank each and every one 
of the witnesses.
    I yield back, Mr. Chairman. Thank you for your indulgence.
    Mr. Markey. I thank the gentleman.
    What we are going to do is a series of roll calls on the 
House floor right now. I am going to give each one of you 1 
minute to tell us what we should know at this critical juncture 
as we round the bend here heading for the stretch. I give you 
each 1 minute to tell us what it is that you think our 
committee should know as we really break here for the roll 
calls. We will begin with you, Mr. Rossi.
    Mr. Rossi. I would just say that we are going to be 
providing updates on a regular basis, including looking at not 
just what we have looked at so far, but different areas such as 
socioeconomic indicators and such as far as how readiness goes. 
So we will be doing that over a period time so we can trend it 
over time, and we think it will be very valuable information.
    The other thing I would say is we do have an auditing 
process within our system that goes back and checks on those 
folks who go into the homes to see what is happening in those 
homes, and we have good faith in that information that we get 
from the homes.
    Mr. Markey. But again, they are Nielsen homes, which are 
television-sensitive homes because they know they are a Nielsen 
home.
    Mr. Rossi. Beyond that, we do make an extra effort not to 
influence that home in any way, and we actually don't ask them 
any questions about the digital transition.
    Mr. Markey. But as you know the old saying, to observe 
something is to affect something. So once someone knows the 
Nielsen company is coming to your home, the other two homes on 
the other side----
    Mr. Rossi. We just do our best to make sure we go.
    Mr. Markey. Mr. Ripperton.
    Mr. Ripperton. Thank you, Congressman Markey.
    There are definitely challenges with this remarkable 
program. In my 32 years in logistics, this is one of the most 
challenging products that I have ever seen. We are working 
closely with our suppliers to meet that demand. We have pass-
through boxes, and I want to emphasize pass-through boxes were 
one of the first to be there. We have solutions now to meet our 
consumers' demand. We are in your neighborhoods. We are going 
to ask the questions to solve the problems, unique problems for 
your constituents and our consumers.
    Mr. Markey. Thank you, Mr. Ripperton.
    Mr. McTear.
    Mr. McTear. Mr. Chairman, just to assure you and the 
committee that the broadcasters will work together with the 
cable operators, with the satellites to get the date affirmed 
in everyone's mind; that is, September 8th there is a 
transition. We will use the power of our news for our 
television station, our on-air editorials, and we also have 
reached an agreement with an FM station to simulcast our 
broadcast signal in case there is a hurricane and a disaster. 
And we have just begun the discussions with a brand new 
Spanish-language radio station in the market so that we can 
make sure that message goes to the Spanish-speaking population.
    Mr. Markey. Thank you, Mr. McTear. And we thank you for 
coming forward and being a part of this experiment in 
Wilmington.
    Mr. Lloyd.
    Mr. Lloyd. Thank you, Mr. Chairman.
    I just wanted to assert that the Leadership Conference on 
Civil Rights and our member organizations will work with NTIA, 
the FCC and other organizations to get the word out about the 
coupon program and the transition. We believe in order to reach 
the vulnerable populations you have to reach deep into the 
communities to not only let people know this transition is 
occurring, but to help them physically connect boxes and 
understanding why this is important to them, and we need 
additional support in order to get that done. Thank you again.
    Mr. Markey. Thank you, Mr. Lloyd.
    Ms. Cannon.
    Ms. Cannon. Well, Time Warner Cable and the other operators 
are committed to this program. We are committed to being a 
great community partner, and we understand the message might 
not be enough, and we are here to help get the message across, 
happily.
    Mr. Markey. Thank you, Ms. Cannon.
    Mr. Romeo.
    Mr. Romeo. First, I would just like to say that the 
program, I think, has been a great success to date. The volume 
of orders talks about the communication, the message. The fact 
that 40 percent of the callers are Hispanic-speaking or 
Spanish-speaking says that we were getting to the target 
markets that are most needing of this service. And the fact 
that so many retailers have stepped up and participated in a 
voluntary market I think are all great. Thanks for the program.
    The things that I think need to happen now are prepare for 
the volume. We know that 33 million coupons are what is written 
into the rule, and that 33 million coupons are going to be 
shipped by October. The question around allowing people to 
reorder after expiration has an impact on the volume of coupons 
that will be ordered. So those are decisions I would ask you to 
make because they are in the law. So I would ask for resolution 
of that and help in preparing for the additional volume.
    Mr. Markey. OK. Thank you, Mr. Romeo, very much. We thank 
you for your recommendation.
    We thank all of you for your participation in this process, 
which is going to be continuing and intensifying as we get 
closer to actually the Wilmington date. That will be highly 
illuminating, and then on into the fall. But again, thanks to 
the committee.
    This hearing is adjourned.
    [Whereupon, at 12:53 p.m., the subcommittee was adjourned.]
    [Material submitted for inclusion in the record follows:]

                    Statement of Hon. Baron P. Hill

    Thank you, Chairman Markey, for holding this hearing and 
also to the panel witnesses for the opportunity to discuss the 
progress of the digital television transition. With only 252 
days left before the DTV transition on February 17, 2009, there 
are still many questions left unanswered, new questions to be 
raised, and more solutions to be found.
    As of last week, more than 14 million coupons had been 
mailed to households. I believe this statistic displays the 
effectiveness of the educational efforts made by the Federal 
Government, the industry, and Members of Congress so far. 
However, we all need to continue our efforts to reach all 
pockets of the country.
    I specifically want to commend the efforts made by the 
broadcasters and the cable industry to educate the public on 
their options for the DTV transition through TV commercials and 
consumer-friendly Web sites. These consumer education efforts 
stress the transition date of February 17, 2009, and I 
encourage this Committee to maintain a date certain.
    Additionally, the test market transition in Wilmington, NC 
will provide us with 5 months to find solutions to any 
unforeseen incidents that arise. Again, I encourage all of us 
to continue our outreach efforts through Web sites, mailings, 
and handouts. I yield back the rest of my time.
                              ----------                              


                    Statement of Hon. Edolphus Towns

    Thank you, Chairman Markey and Ranking Member Stearns, for 
holding this hearing. Our continued and vigorous oversight of 
all issues surrounding the DTV transition serves a crucial role 
in making sure that our constituents can enjoy the enhanced 
consumer and public safety benefits that this transition will 
provide. It is important to make sure that the transition date 
does not slip. I commend my colleagues on this subcommittee for 
their attention to this issue.
    I would like to welcome the witnesses and thank them for 
their work. I am particularly interested to hear of the plans 
for a test run in North Carolina. This is an excellent way to 
find and avoid pitfalls as we move forward.
    I remain concerned that seniors, non-English speaking, and 
lower income Americans are underserved by the public education 
campaign about the Coupon Program underway. I am eager to see 
if this is reflected in the data that has been gathered as the 
coupons have started going out.
    I look forward to the witnesses' suggestions about what if 
anything Congress can do to make sure this transition is as 
smooth as possible.
    Thank you and I yield back the balance of my time.
                              ----------                              

[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]



                                 
