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


.
          STATUS OF THE DTV TRANSITION: 154 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

                               __________

                           SEPTEMBER 16, 2008

                               __________

                           Serial No. 110-148


      Printed for the use of the Committee on Energy and Commerce

                        energycommerce.house.gov



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                    COMMITTEE ON ENERGY AND COMMERCE

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

                           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             CLIFF STEARNS, Florida
    Vice Chairman                        Ranking Member
JANE HARMAN, California              FRED UPTON, Michigan
CHARLES A. GONZALEZ, Texas           NATHAN DEAL, Georgia
JAY INSLEE, Washington               BARBARA CUBIN, Wyoming
BARON P. HILL, Indiana               JOHN SHIMKUS, Illinois
RICK BOUCHER, Virginia               HEATHER WILSON, New Mexico
EDOLPHUS TOWNS, New York             CHARLES W. ``CHIP'' PICKERING, 
FRANK PALLONE, Jr., New Jersey           Mississippi
BART GORDON, Tennessee               VITO FOSELLA, New York
BOBBY L. RUSH, Illinois              STEVE BUYER, Indiana
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. Lee Terry, a Representative in Congress from the State of 
  Nebraska, opening statement....................................     2
Hon. Baron P. Hill, a Representative in Congress from the State 
  of Indiana, opening statement..................................     3
Hon. Anna G. Eshoo, a Representative in Congress from the State 
  of California, opening statement...............................     5
Hon. John D. Dingell, a Representative in Congress from the State 
  of Michigan, opening statement.................................     6
Hon. Greg Walden, a Representative in Congress from the State of 
  Oregon, opening statement......................................     8
Hon. Jay Inslee, a Representative in Congress from the State of 
  Washington, opening statement..................................     9
Hon. Heather Wilson, a Representative in Congress from the State 
  of New Mexico, opening statement...............................    10
Hon. Hilda L. Solis, a Representative in Congress from the State 
  of California, opening statement...............................    11
Hon. Lois Capps, a Representative in Congress from the State of 
  California, opening statement..................................    12
Hon. Gene Green, a Representative in Congress from the State of 
  Texas, opening statement.......................................    12
Hon. John Shimkus, a Representative in Congress from the State of 
  Illinois, opening statement....................................    14
Hon. Edolphus Towns, a Representative in Congress from the State 
  of New York, opening statement.................................   211

                               Witnesses

Kevin J. Martin, Chairman, Federal Communications Commission.....    15
    Prepared statement...........................................    18
Meredith Baker, Acting Assistant Secretary for Communications and 
  Information, Department of Commerce............................    46
    Prepared statement...........................................    48
Mark L. Goldstein, Director, Physical Infrastructure Issues, U.S. 
  Government Accountability Office...............................    67
    Prepared statement...........................................    69
Tom Romeo, Director, Federal Services, Global Business Service, 
  IBM Corporation................................................   102
    Prepared statement...........................................   104
Christopher A. McLean, Executive Director, Consumer Electronics 
  Retailers Coalition............................................   106
    Prepared statement...........................................   108
David K. Rehr, President and CEO, National Association of 
  Broadcasters...................................................   124
    Prepared statement...........................................   126
Kyle McSlarrow, President and CEO, National Cable and 
  Telecommunications Association.................................   149
    Prepared statement...........................................   151
David Candelaria, Vice President and General Manager, Entravision 
  Communications Corporation.....................................   159
    Prepared statement...........................................   161
John Kittleman, General Manager, KRGV-TV Newschannel 5, KRGV-DT 
  5.2 LATV.......................................................   168
    Prepared statement...........................................   170
Andrew G. Setos, President, Engineering, Fox Group...............   181
    Prepared statement...........................................   183
Chris Murray, Senior Counsel, Consumers Union....................   188
    Prepared statement...........................................   190
Connie Ledoux Book, Ph.D., Associate Dean, Associate Professor, 
  Elon University................................................   194
    Prepared statement...........................................   196

                           Submitted Material

``What Consumers Need To Know About the `DTV Transition' and the 
  NTIA `TV Convertor Box Coupon Program,'' press release, 
  Consumer Electronics Retailers Coalition.......................   213
Letter of September 15, 2008, from Federal Communications 
  Commission to Consumer Electronics Retailers Coalition.........   219
Letter of September 12, 2008, from Michael J. Copps to Federal 
  Communications Commission......................................   221
``Congressional Insiders' Explanation of the Retransmission 
  Consent/Must-Carry Negotiation Between Broadcasters and Cable/
  Satellite Operators,'' brochure, National Association of 
  Broadcasters...................................................   228
Letter of September 10, 2008, from the American Association of 
  Retired Persons to Ms. Solis...................................   231
Letter of July 11, 2008, from the League of United Latin American 
  Citizens to the Committee......................................   233
Letter of July 9, 2008, from the Mexican American Legal Defense 
  and Educational Fund to the Committee..........................   235
Letter of July 9, 2008, from the National Association of Latino 
  Elected and Appointed Officials to Ms. Pelosi and Senator Byrd.   236
Letter of August 17, 2008, from the National Council of La Raza 
  to Ms. Pelosi..................................................   238


          STATUS OF THE DTV TRANSITION: 154 DAYS AND COUNTING

                              ----------                              


                      TUESDAY, SEPTEMBER 16, 2008

              House of Representatives,    
         Subcommittee on Telecommunications
                                  and the Internet,
                          Committee on Energy and Commerce,
                                                    Washington, DC.
    The subcommittee met, pursuant to call, at 9:33 a.m., in 
room 2123 of the Rayburn House Office Building, Hon. Edward J. 
Markey (chairman) presiding.
    Members present: Representatives Markey, Doyle, Harman, 
Gonzalez, Inslee, Hill, Eshoo, Green, Capps, Solis, Dingell (ex 
officio), Stearns, Deal, Shimkus, Wilson, Walden, Terry, and 
Barton (ex officio).
    Staff present: Amy Levine, Tim Powderly, Mark Seifert, 
Colin Crowell, Philip Murphy, Neil Fried, Courtney Reinhard, 
Ian Pillner, and Garrett Golding.

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

    Mr. Markey. Good morning. Today we hold yet another 
oversight hearing on the status of the digital television 
transition. The goal of today's hearing is to extract lessons 
from the recent test in Wilmington, North Carolina to assess 
ongoing governmental efforts towards a successful transition, 
to examine consumer education initiatives and ways to improve 
them, as well as to raise other policy issues affecting the 
future of digital television. This subcommittee has held 
several hearings, this Congress, on the transition to focus 
attention on the preparations and policies necessary to ensure 
success.
    In addition, I tasked the Government Accountability Office 
over 2 years ago with the job of examining this transition and 
all of it has been done in a very, very excellent way by the 
GAO, and this top notch job has delved into the governance, 
technical, and consumer education aspects of the transition. 
This morning we received a fresh report from the GAO on the 
status of transition efforts. With 154 days left until the shut 
off, we need to gauge current consumer and industry 
preparedness for this transition. We are also eager to provide 
and receive suggestions for additional outreach or policy 
improvements to minimize consumer disruption, particularly for 
the elderly, individuals with disabilities, minority households 
and Latino households along the border with Mexico.
    Since our last hearing on this important subject, we have 
had the pilot test in Wilmington. This isolated test was a 
valuable experience. It demonstrated that with focused efforts, 
general awareness of the transition in a relatively small 
market can be raised to fairly high levels. However, just below 
the general awareness detailed consumer knowledge about how to 
properly hook up converter boxes, put up antennas or take other 
similar steps necessary to receive the new digital channels was 
apparently deficit. In addition, other North Carolina 
households suffered from loss in the coverage areas of 
particular broadcast stations where the digital signal failed 
to reach historically served households.
    These in-home implementation issues and for many consumers 
unexpected signal loss caused understandable confusion and 
frustration. Chairman Martin, in my view, correctly stated 
after the test that the measure of success isn't Wilmington per 
se, but rather how we learn from Wilmington to ensure success 
next February. I want to commend the Commission, the NTIA, and 
non-governmental stakeholders for their efforts in Wilmington. 
To address the specific problems identified in the Wilmington 
test, however, will undoubtedly prove challenging on a national 
scale. To extrapolate what might happen nationally from this 
test may be difficult but it is clear that a fairly significant 
number of consumers in Wilmington called stations or the FCC 
with implementation problems at home.
    Moreover, if coverage areas of broadcasters purposely 
shrink or are otherwise diminished in more densely populated 
markets than Wilmington consumer ire from both of these issues 
could come from hundreds of thousands or millions of consumers 
nationally next February. We must also be cognizant of the fact 
that Wilmington received extraordinary attention and resources 
for this test. Such a focused effort will be difficult to 
replicate on a national scale. The good news is that we have 
154 days left prior to the national analog shut off. The bad 
news is that we have only 154 days left prior to the shut off. 
That leaves us precious little time for the FCC, the NTIA and 
the industry to make final preparations and contingency plans 
for several key aspects of the transition.
    I look forward to hearing from our witnesses, and I thank 
them for joining us this morning. The ranking member of the 
committee will be here momentarily. He has been delayed with an 
important matter, but perhaps at this point I could recognize 
the gentleman from Nebraska, Mr. Terry, for his opening 
statement.

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

    Mr. Terry. I appreciate that, Mr. Chairman, and thank you 
for your due diligence in tracking the roll-out and the 
preparedness, and frankly I have been very pleased in our 
community, the Omaha area. All of our over-the-air TV stations 
including the NETV station, Nebraska Educational Television 
stations, as well as all the networks, it seems like you can't 
go an hour or two without them running a PSA. Our community has 
been very involved. We have United Way advertising their 211 
number if anyone has any questions. Also, the teleservices in 
our community, some of our teleservices corporations have been 
contracted by NTIA to be able to accept the telephone calls 
from the consumers, the same entities that work with other 
government agencies when we are going to receive volumes of 
calls.
    So I think we are getting the message out. We are becoming 
prepared, and most people understand. There are some issues 
that arise. First of all, we want to make sure that our 
teleservices that are going to be the first line of 
communication between the government and the consumers are 
adequately funded and the contracts are in place. Secondly, 
with some of our NETV already switching over to digital only, 
we are learning some of the same lessons of Wilmington in that 
the distance of the signal seems to be different than the 
analog where the cliff where they would receive some picture, 
before they were receiving no digital picture. And we are 
receiving calls, and of course we are working with them to try 
and get the power booster antennas up. Again, that is just an 
additional cost to the consumer.
    The other issue that we seem to have, and I would like to 
hear this from Secretary Baker, is the coupons. We are getting 
calls from people that have lost or misplaced or even had 
purses stolen with their coupons in it, and they are finding it 
difficult. They are being told, no, once we send them to you, 
you don't get a replacement. And I think those are rare, but I 
think we need to be flexible in our responsibility to make sure 
that the people who need a coupon if it has been lost or stolen 
can be replaced. With that, one last part in reaching out to 
our Hispanic community, I am pleased that the FCC and TIA have 
been sending people around to see how the roll-out is going.
    You came to Omaha and we walked the Mercado handing out 
flyers and posters to make sure that we got the penetration 
within our Spanish-speaking Hispanic community so I do think 
that we understand what the issues are and are doing an 
adequate job of addressing those. I yield back.
    Mr. Markey. The gentleman's time has expired. The chair 
recognizes the gentleman from Texas, Mr. Gonzalez.
    Mr. Gonzalez. Waive opening statement.
    Mr. Markey. The chair recognizes the gentleman from 
Indiana, Mr. Hill.

 OPENING STATEMENT OF HON. BARON P. HILL, A REPRESENTATIVE IN 
               CONGRESS FROM THE STATE OF INDIANA

    Mr. Hill. Thank you, Mr. Chairman, and thank you for 
holding this hearing and also to the panel of witnesses for the 
opportunity to discuss the progress of digital television. 
First I would like to congratulate both Wilmington, North 
Carolina and community leaders and Chairman Martin for the 
successful transition to digital television. There were 
concerted efforts by broadcasters, Federal agencies, grassroots 
organizations, service providers, community leaders, and 
retailers to educate Wilmington residents about the early 
transition date. While these efforts, as we all know, were 
basically successful, the FCC, you did receive over 800 calls 
about the transition. Calls ranged from consumers who had no 
prior knowledge of the transition, consumers who had issues 
with the converter box coupon program, as Representative Terry 
was speaking about and consumers who had technical issues with 
either the converter box or reception.
    Using the Wilmington cause as a basis, the national DTV 
transition could spur millions of calls. The FCC call center 
should be prepared for a large influx of calls after February 
17. I hope that all resources can be harnessed nationally to 
provide the same level of consumer saturation for the DTV 
national transition as we saw in Wilmington to reduce or 
prevent confusion and calls on the day of transition. All 
entities, including Congress, must continue to provide consumer 
education, and I encourage new organizations to get involved so 
we can reach all populations. Thank you again, Mr. Chairman, 
for holding this hearing. I yield back the remainder of my 
time.
    Mr. Markey. The gentleman's time has expired. The chair 
recognizes the ranking member of the subcommittee, the 
gentleman from Florida, Mr. Stearns.
    Mr. Stearns. Good morning and thank you, Mr. Chairman. I am 
glad to be here for this hearing. I don't know what number this 
is for the DTV transition, but obviously the more the merrier 
especially after our demonstration in Wilmington, and I thought 
it was a great success. I notice in the hearing, Mr. Chairman, 
that you have nine witnesses on the second panel, so I hope we 
all can stay for those nine witnesses. It is 154 days away from 
the transition, and I believe consumers are well prepared for 
this transition. As of early August, 91 percent of households 
had one or more televisions with a digital tuner or connected 
to a pay service or converter box according to Nielsen. Almost 
80 percent of households, every television had a digital tuner 
or was connected to a pay service or a converter box, thus, 
with more than 6 months still to go only about 8.9 percent of 
households were relying exclusively on analog over-the-air 
television and still needed to take action to continue watching 
television for the transition.
    As of early September, 10 million coupons had been redeemed 
and another 7\1/2\ million coupons were still in circulation. 
One hundred fifty-six converter box models, different models, 
had been approved for purchase with the coupons, 82 of which 
can pass through the analog signal for low power stations. 
While a converter box cannot display digital programming and 
high definition on an analog television, it will improve the 
video and audio and will also enable the analog television to 
receive digital, multicast programming over the air for free. 
Advance non-coupon eligible converter boxes are also available 
such as the ones that include digital recording features. While 
the NTIA sends coupons, it includes a list of participating 
stores that are near and close to the customer. So far the NTIA 
has certified 2,300 retailers with a total of 29,000 store 
locations to participate in the program.
    Consumers can also redeem coupons with 35 online retailers 
and 13 phone retailers. It is also worth noting that consumer 
satisfaction with a converter box is off the charts. Retailers 
say they have never seen electronic devices with such low 
return rates. Another positive aspect of the transition was the 
apparent success of the September 8 test transition in 
Wilmington, North Carolina. By all early indications the test 
went well. Less than half of 1 percent of the 180,000 
television households in the Wilmington area called the FCC 
with questions that day indicating that most consumers were 
ready and able for the transition. Of the 797 calls, most were 
from viewers who were aware of the transition and who had 
obtained the converter boxes but did not know how to scan 
channels or perhaps did not have the right antenna to use with 
the converter box.
    Another positive development from the Wilmington test was 
that churches, firefighters, and other local groups were 
helpful in getting the word out and helping consumers to 
install the converter boxes. A number of students from nearby 
Elon University also helped local broadcasters and cable 
operators take phone calls and answer questions. In light of 
this information, government and industry should now focus 
their consumer education efforts on exclusively over-the-air. 
Households should encourage consumers to try the converters 
boxes early, sort of a simulated test, and should educate them 
on how to set up the boxes and their antennas.
    Local broadcasters should also work with churches, 
firefighters, schools, and other grassroots groups to help 
prepare consumers and answer the phone to answer their 
questions. So, Mr. Chairman, as you can see we are on the right 
track. This does not mean that we can rest completely at ease. 
There will always be some people that have trouble. As we get 
closer to February 17, 2009, we need to remain extra vigilant 
to insure that the transition goes just as smoothly as 
possible. These are important issues. So thank you, Mr. 
Chairman, for holding the hearing, and I look forward to 
hearing from the witnesses. Thank you.
    Mr. Markey. The gentleman's time has expired. 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. Good morning, Mr. Chairman, and thank you for 
your consistent attention to the DTV transition. I think that 
the ranking member expressed it well when he said I don't know 
what number of this hearing represents but there have been a 
lot of them. I think for all the years that I have been on this 
committee we have been dealing with moving up to this moment, 
so the time is just about at hand.
    Last week Wilmington, North Carolina transitioned early as 
a part of the FCC's test market. The FCC provided local viewers 
with a 1-800 helpline, which is good, and based on the analysis 
of those calls, 19 percent of all callers said that they had 
some difficulty with the converter box. Based on these numbers, 
I think that we might not be adequately explaining how to 
install the converter boxes. I think that is what it points to. 
So I am eager to hear from our witnesses today how these 
numbers are being analyzed and if there will be changes to the 
outreach programs based on the data that was secured from this.
    I also want to call attention to the number of calls. The 
FCC estimates that 14,000 households in Wilmington only receive 
free over-the-air broadcasts. In 5 days there were 1,828 calls. 
So I think it is fairly safe to assume that the vast majority 
of those callers are free over-the-air households. I don't know 
if that is a correct assumption but I am assuming that. That 
means that about 13 percent of those households had an issue. 
If those numbers translate nationally the help line is going to 
be flooded with more than a million calls in a few days after 
the transition so my question that I hope you will address is, 
is the transition in place to adequately respond to all of 
these calls?
    It has also come to my attention that on December 31st of 
this year a substantial number of retransmission consent 
agreements are going to expire. If recent history is any guide 
there is a significant risk that more than a few of the 
stations covered by these agreements could go dark on cable 
networks in January, just ahead of the transition date. I 
support a ``quiet period'' beginning before the end of this 
year and extending for a reasonable period of time after the 
transition date to insure that consumers are not subjected to 
additional confusion and disruption. I hope and I urge both the 
broadcasters and the cable operators to quickly negotiate these 
consent agreements well before or after the transition date. I 
am afraid that there will be some confusion and we don't need 
any added confusion of a retransmission consent dispute that 
would, I think, really hurt consumers preceding the transition.
    So, Mr. Chairman, I think these hearings have been 
enormously helpful both to us and to the agency that has to 
implement the change, and I look forward to asking questions 
and thank all the witnesses for being here.
    Mr. Markey. The gentlelady's time has expired. The chair 
recognizes the gentleman from Texas, Mr. Barton.
    Mr. Barton. Thank you, Mr. Chairman. I am going to put my 
written statement into the record and I commend you for holding 
the series of hearings on digital transition. It appears to be 
going well. I appreciate our panelists being here especially 
the chairman of the FCC, Chairman Martin, and with that I yield 
back.
    [The prepared statement of Mr. Barton was unavailable at 
the time of printing.]
    Mr. Markey. The chair recognizes the gentleman from 
Michigan, the chairman of the committee, Mr. Dingell.

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

    Mr. Dingell. First of all, I commend you for the hearing 
and for your longstanding and continuing interest in the 
subject matter of this hearing. It is going under your 
leadership to be, I am satisfied, a most helpful event.
    I welcome the witnesses to the committee's sixth hearing on 
this matter of digital television and the transition. As I have 
said before, DTV transition is a critical consumer issue facing 
the committee this year, and it is essential that we continue 
to address outstanding issues as February 17, 2009, draws 
closer.
    Just a week ago, stations in Wilmington, North Carolina 
transitioned to digital. These stations deserve accommodations 
as do cable, satellite providers, and the DTV transition 
coalition, NTIA, and the Federal Communications Commission for 
their efforts. The DTV transition test evaluated and revealed 
many problems, including consumers who could not connect their 
converter boxes to the televisions and did not know they needed 
to rescan their boxes to search for new channels and did not 
know they needed to obtain or adjust antennas to receive 
digital signals. These are warnings to us that must be heeded.
    In Wilmington, the FCC paid the fire department to make 
house calls to help connect the converter boxes, a very 
forward-looking step. I look forward to hearing from Chairman 
Martin as to whether the FCC will have the resources to provide 
such assistance nationwide and whether it will be desirable. We 
will also need to know what it is that he and the Commission 
learned from this part of the experience and all the rest. If 
not, we will have to call on FCC, NTIA, the DTV transition 
coalition, state and local governments, community 
organizations, consumer groups, retailers, manufacturers, 
broadcasters, cable and satellite providers, and others with a 
stake in this transition, to work together to insure that 
appropriate information and, when needed, in-home assistance 
are available to those who need help in setting up converter 
boxes and acquiring or adjusting antennas. I will also be 
expecting that the broadcasters will inform viewers as they 
have been doing if they will not be maximizing their digital 
signals until after the transition. We cannot have a repeat of 
the problems from Wilmington when the Nation transitions on 
February 17, 2009.I am pleased that the hearing today will 
address issues raised by Ms. Solis's DTV Border Fix Act. This 
is a matter that needs scrutiny of this committee and there are 
problems there that do have to be addressed. Both the culture 
of the border region and the fact that the households there can 
often receive both U.S. and Mexican over-the-air signals are 
unique and they are different than the problems that exist with 
regard to the Canadian border regions where I come from. These 
are also some of the poorest regions in our Nation, making the 
coupon subsidy even more important to them. We must ask the FCC 
and NTIA to pay special attention to this region and their 
consumer education efforts. I look forward to working with Ms. 
Solis to insure that we meet the needs of these communities, 
which amongst everything else are largely bilingual.
    I am also interested in looking forward to hearing from 
Assistant Secretary Baker about NTIA's proposed legislation for 
additional administrator funds for the converter box coupon 
programs. I would like to hear why, if NTIA was prepared to 
recycle expired coupons, it did not budget sufficient 
administrative funds for that purpose.
    I am also curious to know whether or not the contract that 
was let between NTIA and the contractor will be able to 
accommodate the circumstances here. I also reiterate at this 
time what I have written NTIA before--that we cannot balance 
this planning error on the backs of consumers. I must confess 
myself much disappointed that NTIA's proposal is drafted so 
that each dollar spent to make up for NTIA's administrative 
shortfall is a dollar taken away from the funds set aside to 
provide coupons to the households that need them. That is a 
matter that will have to be addressed and I will be difficult 
to satisfy on this matter, for just 154 days remain until--154, 
164, 10 days less, remain until February 17, 2009. We are then 
entering the home stretch. It is critical that we prepare for, 
understand, and be able to predict the problems and outstanding 
issues that are related to the transition so that no household 
is left behind and so that we are fully prepared to handle the 
matter efficiently and expeditiously and well.
    Mr. Chairman, again thank you for your leadership and for 
holding today's hearing. I yield back the balance of my time.
    Mr. Markey. The gentleman yields back the balance of his 
time. We now turn and recognize the gentleman from Georgia, Mr. 
Deal.
    Mr. Deal. Mr. Chairman, I would pass and reserve my time 
for questioning.
    Mr. Markey. The gentleman reserves his time. The gentleman 
from Oregon, Mr. Walden.

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

    Mr. Walden. Thank you very much, Mr. Chairman. I appreciate 
your having this hearing as we keep track of the DTV 
transition. I want to commend the broadcasters and the cable 
casters for aggressively educating the American consumer about 
what is ahead. I think they have done a terrific job in getting 
the word out. I can't turn on my own TV without seeing at least 
one message about the transition or it appears from all the 
data that we have before us that indeed we are seeing a high 
success rate in conversions already and we still have 6 months 
or 5 months to go. And so I am real pleased with that. I do 
want to hear more about the Wilmington transition situation.
    I am going to take the testimony. Unfortunately, I have an 
energy subcommittee hearing that starts in about 3 minutes and 
a classified briefing on the energy grid I am going to have to 
step out for. And speaking of energy, Mr. Chairman, I guess I 
have to just express this. I know this is a DTV hearing. I am 
just really disappointed the speaker doesn't have as much 
respect for this committee as those of us who are on it have 
and that we have a 299-page energy bill that was filed with the 
Rules Committee last night at 10:45 that I doubt anybody on 
this committee has seen or read that I understand is going to 
be on the floor today with no hearing and no markup, and it is 
really unfortunate that the speaker has decided to run the 
House over the top of our distinguished committee chairs and 
the committee process and bring a 299-page bill to the floor 
today.
    And I just want to say that it is really frustrating being 
on the Energy and Commerce Committee to have that happen. I 
yield back the balance of my time.
    Mr. Markey. The gentleman's time has expired.
    Mr. Stearns. Would the gentleman yield just for a moment?
    Mr. Walden. I would yield to my colleague from Florida.
    Mr. Stearns. I would just follow up on that point. It is 
not only that, but the Rules Committee met and made sure that 
there are no amendments allowed so in addition to closing down 
everything and preventing amendments, it would just be an up or 
down vote on a bill that we haven't seen. In fact, the bill is 
going to be offered, I understand, a little bit different than 
the summaries that have been circulated from both sides so 
people on the Democrat side as well as Republican side have 
actually no idea what is in this bill. This is crucial to the 
long-term future of our country so I think the gentleman makes 
an excellent point that in this kind of environment to see an 
energy bill come on the floor, closed rule, with no opportunity 
for anyone to know what is in it is just a very sad situation. 
I thank the gentleman.
    Mr. Walden. And reclaiming my time, not only is it sad, it 
so degrades the legislative process in my opinion. If you can't 
do amendments, if you can't see the bill, and you are required 
to vote on the biggest issue facing this country is energy. It 
is undermining our entire economy right now. Energy is the 
issue, and it is one we need to deal with thoughtfully, 
carefully, deliberately through the legislative process. That 
is what the 700,000 or thereabouts people I represent, and each 
one of us represents, expects out of us, not something written 
in secret, filed in the dark of night at 10:45 with the Rules 
Committee, up at 10:00 today on the House floor, 299 pages. And 
I doubt anybody on either side of the aisle has read this.
    And so, Mr. Chairman, I understand we have a DTV video clip 
that we have agreed to show and so if that is possible.
    Mr. Markey. The gentleman's time has expired.
    Mr. Walden. All right. Thank you, Mr. Chairman.
    Mr. Markey. Why don't we just finish, and we will come back 
over to this side. The chair recognizes the gentleman from 
Washington State, Mr. Inslee.

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

    Mr. Inslee. Well, I feel badly that my Republican 
colleagues are sad, depressed, anxiety-ridden. I don't have any 
medication for that, but I can understand their depression. 
They have been voting on energy against every single way we 
have to break our addiction to foreign oil for the last several 
years and today and tomorrow they will be, and here is the joy, 
I will try to spread some joy here, today our Republican 
colleagues will be given another opportunity, their last 
opportunity of this Congress to vote for solar energy instead 
of against it, to vote wind energy instead of against it, to 
vote for enhanced geo-thermal energy instead of against it, to 
vote for plug-in hybrid cars instead of against it, to vote for 
American ingenuity and innovation to develop a new clean energy 
non-carbonized system of against it.
    They will get to vote for a 15 percent renewable portfolio 
standard instead of against it. They will get to vote for 
giving Americans a break when they buy plug-in hybrid cars 
instead of the oil companies a break when they put all their 
money offshore. They will get to vote for increased efficiency 
standards instead of against it. So they have some anxiety now, 
but I hope they will take the opportunity to join us today to 
really adopt a high tech energy future for this country, and I 
am sincere in that hope, and I think many of them will. I think 
it will be a good day to move forward.
    Addressing the subject of this hearing, I do hope that we 
will hear today about how to help Americans understand how to 
actually apply this technology. The experiments that we have 
had have suggested there are some problems about that. I still 
think that we need to respond to this like we did to Gustav and 
the hurricane and not Katrina, and we are not done yet. And I 
hope we will keep the eye on the ball to figure out a way to 
help Americans actually get these things installed correctly. 
The test case demonstrates the weaknesses of that, and I will 
look forward to a discussion of whether we need that $7 million 
for flexibility to actually get the word out as well. Thank 
you.
    Mr. Markey. Thank the gentleman. This reminds me, my 
favorite twin bill of all time was at the Harvard Square 
theater about 30 years ago. It was Dr. No and Dr. Strangelove, 
two really great movies on a twin bill, $3.00 plus your 
popcorn. Great. And you don't often get the DTV and energy 
issues all in one hearing, so all of you, it is all for the 
price of one admission to the same hearing. Let me turn and 
recognize now the gentlelady from New Mexico for her opening 
statement.

 OPENING STATEMENT OF HON. HEATHER WILSON, A REPRESENTATIVE IN 
             CONGRESS FROM THE STATE OF NEW MEXICO

    Ms. Wilson. Thank you, Mr. Chairman. I also share the 
concerns of my colleague from Oregon. This used to be the 
premier committee in the House of Representatives. We worked on 
important issues. I remember markups here where we were here 
until 2:00 or 3:00 in the morning and there was a series of 
hearts games going on in the back because we were working 
through legislation. We were debating things important to the 
country. And now we are going to take up an energy bill on the 
floor of the House that no one on this committee has even read. 
What are we here for? And I just am appalled at how the system 
has broken down in the Congress, the fact that the Congress is 
no longer functioning as a body that deliberates and passes 
legislation.
    So we just bring things to the floor that aren't going to 
become law, nobody ever considers them, nobody reads them. This 
is a joke, and it has made this committee a joke. And what I am 
most disappointed in is that the leadership, the Democratic 
leadership of the Energy and Commerce Committee, is allowing 
this to happen, is going along with this way of doing business. 
We had Energy markups in 2001, 2005, 2007 that went on for days 
in this committee, but we worked it through, we considered 
amendments, and we legislated. That is what people sent us here 
to do. We are abdicating our responsibility, and we might as 
well close down this committee if that is the way we are going 
to run things.
    So today we are going to talk about DTV. I am not sure this 
committee would ever do anything if the Democratic leadership 
decided they wanted to change something about the DTV bill, 
particularly as I think that it is going to be a real mess when 
it actually gets rolled out in the real world. I don't know 
about you, but my TV doesn't hook up to anything. We don't have 
cable. We don't have satellite. We don't have any of that 
stuff. I live in a neighborhood that is a pretty mixed 
neighborhood, and I can guarantee you that when we go through 
this conversion, I am going to hear about this at the post box 
at the end of my dirt road because government can do a whole 
lot of things but you mess up people's televisions and they are 
going to get really upset.
    And I am very concerned that this roll-out, the information 
that is being given to consumers is inadequate and that there 
are going to be a lot of people who come home on the day after 
this conversion takes place and they are wondering what in the 
heck happened to their television because the information has 
been inadequate, and you are putting the burden on consumers 
who bought a device that worked, a television, and then saying, 
oh, well, you have to buy a new one. It is not an expense that 
families in my neighborhood want to pay right now with the 
price of gas through the roof and concern about jobs and 
housing and everything else. So I think it is about time that 
we got our act together, and I think it is about time that this 
committee started acting like a real committee of a real 
Congress because today we abdicated that responsibility. I 
yield.
    Mr. Markey. The gentlelady's time has expired. The chair 
recognizes the gentlelady from California, Ms. Solis.

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

    Ms. Solis. Thank you, Mr. Chairman, for having this 
hearing, and Ranking Member Stearns, for this important 
oversight hearing on digital television transition. I do 
believe that this committee is doing the right thing by 
focusing in on this issue, and I would like to thank our 
chairman of the overall Energy and Commerce Committee, Mr. 
Dingell, for his strong support for the issues affecting 
communities that will be affected by the digital transition 
along the border. We have an enormous responsibility here and, 
quite frankly, one of the reasons why I introduced H.R. 5335 
was to help provide a fix for many, hundreds of thousands of 
individuals who will be affected if we don't do something 
immediately as well. The legislation that I have introduced 
would create a process at the FCC for broadcasters within 50 
miles of the border to apply to keep running an analog signal 
for a minimum of 5 years after the transition.
    The Senate version of the bill, you may know, authored by 
Senator Kay Bailey Hutchinson, passed the full Senate 
unanimously in August. It does have bipartisan support. I want 
to urge my colleagues on this committee to support the 
legislation because I do think it is crucial and to the success 
of the DTV transition in the border region. And while I 
represent a community in southern California, I know what it 
means to live in those mixed communities where the predominant 
language is not English. We have to keep in mind what those 
viewers there are also being able to obtain in those border 
communities, many which have many economic, particularly right 
now with the hurricane that just left Galveston in Texas, the 
kind of information that they need at hand readily available 
whenever there are problems that crop up.
    Hurricanes are one, earthquakes are another, but other 
disasters where people will be cut off from their main source 
of communication. This bill is important for many of the border 
communities. And I am happy to report that members of the 
Hispanic caucus have gone on record in full support of this 
legislation, as well as several of our national Hispanic 
organizations. And, Mr. Chairman, I would like to submit those 
letters for the record as well, if I could ask unanimous 
consent to have that provided for us.
    Mr. Markey. The gentlelady's time has expired, and the 
chair recognizes the--I am sorry. Without objection, the 
unanimous consent request of the gentlelady from California is 
agreed to. We now turn and recognize the gentlelady from 
California, Ms. Capps.

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

    Ms. Capps. Thank you, Mr. Chairman, and thank you for 
holding this very timely hearing. I appreciate your efforts to 
bring us up to date, and I appreciate our witnesses being here 
to talk to us about the state of affairs with DTV, particularly 
in light of the test that was done recently in Wilmington. I 
also want to thank our leader, the chairman of the full 
committee, for recognizing early on that this switch over 
presents an enormous challenge to our country that we can 
handle but we need to make sure we do it in the most effective 
way. This is also Hispanic Heritage Month, and in light of that 
I look forward to hearing within this setting about how we can 
better insure that our vulnerable border populations are not 
left behind.
    We have a lot of ground to cover so I am going to just 
highlight the areas of most concern to me and my district. 
First, as my district, my congressional district, is 42 percent 
Latino, I am concerned by the latest GAO report, which states 
that households in predominantly Latino areas are less likely 
to redeem their coupons. It is my hope that broadcasters, 
retailers, and everyone refocus their education efforts to 
reflect this reality and to do something about it. Second, the 
results from Wilmington fall short of where we should be in 
terms of consumer understanding of converter boxes and lost 
signals. Once again, it is good to have this test to see what 
the challenges are. We have a few weeks left in which to 
redouble our efforts.
    This needs to happen to educate consumers about how to use 
converter boxes and whether other equipment like antennas might 
be necessary. Lastly, the GAO reports that NTIA has no specific 
plans to address the expected spike in demand for coupons as 
the transition date nears. I think we should all expect that 
that is going to happen. I want to hear from NTIA how it would 
handle such a spike and what administrative costs might be 
associated with that. So again, thank you, Chairman Markey. To 
our witnesses, I look forward to hearing from you how we can 
use the remaining time before the switch-over to insure that 
this transition goes as smoothly as it should. And I yield 
back.
    Mr. Markey. The gentlelady'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, and I apologize for 
being late. I want to thank you for calling this follow-up 
hearing, and I know we have had a number of hearings on it. And 
I have a district in Houston so we have a lot of problems going 
on, and I want to thank you again for holding this digital 
television transition. I look forward to hearing from our 
witnesses about the test in Wilmington, the first city to 
switch to digital, and other issues that need to be addressed 
between now and next February. We have little time to address 
these issues until the beginning of the next Congress. This 
will be the last thorough discussion we have until next 
January, about 1 month out from the analog cut off.
    Most importantly, today as my home town of Houston 
struggles to stabilize the situation and begin to rebuild, 
there is discussion of emergency communication after the 
digital transition. I would like to thank our local 
broadcasters for their work, local coverage to keep the viewers 
informed. I want to thank particularly Direct TV, who carried 
KHOU, Channel 11, Houston CBS affiliate nationwide on their 
satellite service so displaced evacuees could get the local 
coverage. What I am still concerned about is a issue I raised 
at the last DTV hearing on whether there were battery-operated 
digital television converter boxes available or even in 
production.
    When I raised the issue the last time both the FCC and the 
NTIA acknowledged it was a problem. They are looking at how to 
resolve it. I hope to hear that progress has been made. The 
electricity outage that darkened the upper Texas Gulf Coast at 
the height of Hurricane Ike is the largest power outage in the 
State's history according to the Public Utility Commission. 
Nearly 2 million people are still without power in Houston and 
about 90 percent average in my own district. We don't have 
power now at my house or at either of our offices. If I didn't 
have my battery-operated TV, I wouldn't be able to get the 
news. I would have to depend on radio.
    And after February 17, we will not have those battery-
operated TVs that are analog so it is not only something we 
need to consider, it is an emergency, and I would hope the FCC 
and NTIA and the industry, if you are here, the retailers and 
the manufacturers, that is something that is needed. And if it 
takes a federal mandate, we will work on it. The test market in 
Wilmington was almost postponed out of concern that Hurricane 
Hanna was going to hit North Carolina just as full power 
stations in the Wilmington market prepared to shut off their 
analog signals and complete the transition. Tropical Storm 
Eduard, Tropical Storm Fay, Hurricane Gustav, Hurricane Hanna, 
and Hurricane Ike all made landfall during 2008 hurricane 
season. The west has earthquakes and forest fires. The Midwest 
has tornados. The Gulf and East Coast have hurricanes. Whatever 
disaster, we need to make certain information is available over 
the television and people are able to view the information, 
whether there is power running in their home or not.
    And again, like I said, over 90 percent of my households in 
a blue collar, poor area of Houston in East Harris County do 
not have power. Now we also have the Petrol Chemical complex. 
We are trying to get it back up operating but without power you 
can't keep up with the information through your television. 
Again, I want to thank all the witnesses for being here today 
and look forward to the discussion of topics. I hope we can 
look at the need for emergency communication prior to, during 
and after a national disaster and how these communications 
affect our digital transition. Again, thank you, Mr. Chairman.
    Mr. Markey. Thank you, Mr. Green, and all of our prayers 
and thoughts are with you, your family, all of the citizens of 
Houston, Galveston. I know you have family in Galveston, and 
the entire affected area. It is just a complete tragedy down 
there. Again, it makes this hearing so much more important that 
you were able to come here today to remind us. 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. I was coming to 
attend the DTV hearing and I heard an energy debate broke out 
so I ran. No, not really. But it does highlight the frustration 
on this side of regular order and the fact that here we have a 
major energy bill to the floor. We are the Energy and Commerce 
Committee, the most powerful committee in the House of 
Representatives, having a major debate on energy, and it 
doesn't go through the subcommittee, doesn't come through the 
full committee. And when we passed the 2005 energy bill, it 
went through five committees. We know because we spent till 
4:00 in the morning marking it up just in this committee alone.
    And of course because of the time of year it is and the 
closeness to the proximity of elections this things gets thrown 
on the floor, and if there are people who are frustrated and 
disappointed, I think everybody can understand why and 
hopefully in the next cycle when we get to a new Congress, we 
will get back to regular order. I think that is all the point 
being. We do more harm to this institution when we don't use 
regular order and we don't do regular process because then we 
have people here to talk about DTV and a fight on energy breaks 
out, and we are better than that.
    And this committee, as you know, and my colleagues on the 
other side know, this committee is much, much better than that. 
To the DTV, I just tell you I was pleased with the test. I took 
the August break to go to my constituents to talk about 
coupons, to talk about the digital receivers, to help people 
learn to hook them up. I have constituents in rural areas that, 
I know the direct satellite folks aren't going to want to hear 
this, but they have decided to disconnect their direct 
satellite to just receive the great signal free over-the-air 
digital TV, more channels, and that is what we would hope 
through a great transition and also the other benefits of the 
first line responders and using new technologies.
    So I want to thank the folks, and I want to thank Chairman 
Martin because we did have a phone call and a discussion of the 
Wilmington issue that was helpful, and I am pretty excited. I 
would just encourage members to really get proactive just like 
on the Medicare D debate, whether you were for it or against 
it, if you lean forward in the fox hole and you really took the 
offensive action to help educate your constituents, I think the 
problems that will occur, and there will be problems, but if 
you take pre-emptive action you can limit that and that is the 
best thing for all our constituents. Thank you, Mr. Chairman. I 
yield back.
    Mr. Markey. The gentleman's time has expired. All time for 
opening statements by the members of the subcommittee has 
expired. We will now turn to our panel. And we will begin with 
Kevin Martin, who is the Chairman of the Federal Communications 
Commission, a post he has held since 2005. The Federal 
Communications Commission is responsible for DTV consumer 
education, and he is here today to talk about Wilmington, North 
Carolina, and its DTV test market. We welcome you, sir. 
Whenever you are ready, please begin.

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

    Mr. Martin. Thank you and good morning, Chairman Markey and 
Ranking Member Stearns, and all the members of the committee. 
Thank you for inviting me to be here today and to continue to 
update you on the status of the digital transition. With the 
national transition about 5 months away much remains to be 
done. At the same time, since I last appeared before you, we 
have continued to make progress educating viewers and helping 
them prepare for the upcoming transition. In particular, in 
addition to our ongoing consumer education and outreach 
efforts, we have gained real-world experience with the 
challenges facing viewers and broadcasters as we approach 
February, 2009.
    Last week, on September 8, Wilmington, North Carolina 
became the first market in the country to transition from 
analog to digital television. Before I go into the details of 
the Wilmington transition, I would like to start by crediting 
Commissioner Copps of the FCC for challenging me and the 
industry to find a community that would be willing to help the 
rest of the country lead this transition. Commissioner Copps 
deserves the credit for urging the Commission to engage in a 
real-world test that would help ready the broadcasters, viewers 
and all of us at the Commission for this upcoming transition.
    For its part, the Commission worked hard to educate, 
inform, and prepare those in Wilmington for the transition, but 
it was our partnership, particularly those at the grassroots 
level, that was critical in enabling us to contact at risk 
groups that we were focused on reaching, senior citizens, non-
English speakers and minorities, people with disabilities, low 
income consumers, and those living in rural or tribal areas. 
The Wilmington switchover was critically important because it 
enabled us to learn what was effective in informing and 
preparing viewers and broadcasters for the transition, and it 
helped us identify what outreach and technical challenges still 
need to be addressed in the months ahead.
    While we hope that the transition in Wilmington went 
relatively smoothly, the measure of success in Wilmington is 
not what occurred last week. The measures of success in 
Wilmington is what happens next February and whether we are 
able to learn from this experience and apply those lessons as 
we move this effort across the country. Based on our current 
information, it appears that the majority of Wilmington viewers 
were aware of and prepared for the transition. Importantly, the 
consumer education campaign that was conducted appears to have 
been effective. Consumer calls received by the Commission at 
its call center indicated that the majority of the 400,000 
television viewers in the Wilmington area were aware of the 
transition and prepared for it.
    During the first day of the transition, the Commission's 
help line received almost 800 calls representing less than half 
of 1 percent of the area homes. Notably, the volume of calls we 
received decreased by almost 50 percent in the 2 days after the 
switchover and continues to decrease with each passing day. In 
total we received about 1,800 calls regarding the Wilmington 
test, representing about 1 percent of the Wilmington 
households. For the entire first week, only 91 callers said 
they were unaware of the transition and 163 callers were aware 
but did not take any action to prepare for it. Several 
challenges, however, do also remain. Though consumer education 
efforts appear to have been effective, our focus now turns to 
resolving the technical challenges. Some of these challenges 
are easily resolved and others are not.
    With respect to the callers who are experiencing 
difficulty, I have directed our engineers and outreach staff to 
work directly with those viewers and assist them in resolving 
their individual questions and needs. For example, as of last 
Friday there were 329 calls to our help line about converter 
boxes. Thanks to the dedicated Commission staff, many of these 
difficulties have been easily resolved. Specifically, the 
Commission staff were able to resolve 262 or almost 80 percent 
of those calls as they came in. The solutions were often 
relatively simple, consumers just needed to either re-scan for 
channels on their television set or their converter box or 
properly hook up the converter box. On a going forward basis, 
consumer education efforts are going to need to instruct 
consumers about how to effectively hook up their box and the 
need to re-scan.
    Unfortunately, some viewers are experiencing problems that 
will not be as easy to resolve. For example, there are a number 
of consumers in the Wilmington area that have lost access to 
the Wilmington NBC affiliate. Prior to the digital switch, the 
Wilmington NBC affiliate signal was available to viewers 
outside that television market as far south as Myrtle Beach, 
South Carolina and as far north as Raleigh, North Carolina. The 
Wilmington NBC affiliate's new coverage area, however, no 
longer includes these out-of-market communities. Some of these 
viewers will be able to watch their local NBC affiliate in 
Myrtle Beach and Raleigh. There are some, however, who will not 
have access to any NBC affiliate.
    Our goal is to ensure that all viewers in the Wilmington 
area and the country have access to the same television signals 
they did prior to the television transition. The Commission is 
currently exploring what steps can be taken to address this 
problem in Wilmington and to minimize this burden on viewers as 
we move throughout the rest of the country. Finally, relatively 
few consumers lost their broadcast channels as a result of the 
digital cliff effect. I have previously testified that our 
engineers estimate that about 5 percent of over-the-air viewers 
may need a new antenna to receive digital television signals 
due to the digital cliff effect. Only about 15 percent of 
viewers around the country receive their signals over the air 
so we estimate that this will impact less than 1 percent of all 
viewers and that they would need a new antenna. The data from 
Wilmington suggests a similar outcome.
    Of the 960 calls we received about reception and technical 
problems, as I said, 553 related to the NBC affiliate. The 
reception problems for Channel 6 were caused by a significant 
reduction in the service contour, not by the digital cliff 
effect. If we assumed that all the remaining calls were caused 
by the cliff effect, this still represents less than 
approximately .25 percent of all viewers in the Wilmington 
area. Moreover, many of the calls we received, we were able to 
resolve with relatively simple technical advice about 136 of 
them. In short, for stations whose DTV coverage was designed to 
replicate their analog coverage, complaints about the cliff 
effect were well below our estimate of 1 percent.
    The early switch in Wilmington has been instrumental in 
helping the Commission identify, understand, and hopefully 
prevent some future problems with the rest of the nation as we 
move to the transition of February of next year, but the 
measure of success in Wilmington is not what happened on 
September 8, September 15, or October 15. Rather, it is how we 
are going to take those lessons that we learned and apply that 
knowledge throughout the rest of the country. I would ask the 
rest of my statement be entered in the record, and I look 
forward to answering your questions.
    [The prepared statement of Mr. Martin follows:]

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    Mr. Markey. Without objection, it will be included in the 
record in its entirety. We now turn to Ms. Meredith Attwell 
Baker. She is the Acting Administrator of the National 
Telecommunications and Information Administration. She, 
therefore, has primary responsibility for the DTV converter box 
coupon program. Ms. Baker first joined NTIA as a senior advisor 
in January of 2004 and was named Deputy Assistant Secretary in 
February of 2007. We welcome you, Ms. Baker. Whenever you are 
ready, please begin.

  STATEMENT OF MEREDITH BAKER, ACTING ASSISTANT SECRETARY FOR 
     COMMUNICATIONS AND INFORMATION, DEPARTMENT OF COMMERCE

    Ms. Baker. Thank you, Mr. Chairman, and Ranking Member 
Stearns, and members of the subcommittee. I appreciate the 
opportunity to testify before you today. Educating Americans 
about the options for the digital transition has been 
administering an efficient and consumer friendly coupon program 
have been the top priority for NTIA over the past few years. 
With 154 days to go until the DTV switch occurs, we have made 
significant progress. Since the program's launch on January 1 
and through September 10, 2008, the volume of coupon 
applications has been strong. Nearly 27 million coupons have 
been requested from 14 million households. This is equivalent 
to more than 105,000 average household requests for each of the 
260 days the program has been operational.
    Over the last 30 days average household requests are up to 
111,000 per day. The rate of coupon redemptions has likewise 
been strong. Over 10 million coupons have been redeemed through 
September 10, a rate of 49 percent for all coupons and 55.4 
percent for coupons used by over-the-air only households. The 
cooperation of converter box manufacturers and retailers has 
greatly contributed to our consumer friendly program and we 
appreciate their partnership. As of September 10, we have 
certified 156 converter boxes, including 82 boxes with analog 
pass-through and at least one, Weingard, that works with a 
battery pack. The program also now includes more than 23,000 
participating retailers with over 29,000 outlets in all 50 
states and territories along with 35 on line and 13 telephone 
retailers.
    This list does include two notable recent additions: 
Amazon.com and Office Depot. To develop and implement outreach 
for the increased coupon participation by over-the-air 
households, NTIA correlated current participation rates with 
the best available industry data. We estimate that about 70 
percent of over-the-air households that are potential 
purchasers of converter boxes have requested coupons as of 
September 1. In other words, the coupon program participation 
by over-the-air households is on track in 187 of the Nation's 
210 television markets. NTIA is working hard to implement 
specific outreach plans in the 23 markets where participation 
rates and the coupon program are lower than expected.
    This is a tool and it will continue to evolve and we will 
continue to share this with the members of this committee. We 
believe our consumer education efforts are working. Based on 
the Wilmington test pilot held on September 8, we learned that 
strong and steady demand for coupons and boxes can stem a rush 
in the final days leading up to the transition. We also learned 
that it is important for consumers to act early so that they 
have ample time to address any technical issues that might 
arise in installing the converter box. NTIA has now adopted 
messaging to apply by and try converter boxes. Consumers should 
apply early, buy a converter box and try the box to insure that 
it works troubleshooting for any issue that they may experience 
well in advance of February 17. The success of the Wilmington 
pilot shows that when governments, industry, and non-profit 
groups coordinate closely the whole truly does become greater 
than the sum of its parts.
    Last Friday, 24 Federal agencies convened at the White 
House to discuss activities across the executive branch 
agencies to enhance consumer education and assistance to our 
target populations. It was very encouraging to see how USDA, 
the VA, HHS, and the IRS, among others, are helping millions of 
the vulnerable Americans prepare for the digital transition. We 
continue to explore how these good practices can be applied to 
other federal agencies to reach a broader cross section of 
Americans who rely on over-the-air television. I would like to 
now turn briefly to how NTIA is responding to a couple of key 
challenges that we have faced administering the coupon program. 
First, the final rule for the nursing homes and P.O. Box 
program changes is at the Federal Registrar and is awaiting 
publication. We are pleased to be taking this step to make the 
coupon program more inclusive.
    In the same vein, the Department of Commerce submitted 
draft legislation to Congress last week to be able to maximize 
the number of coupons NTIA could distribute while not exceeding 
the 1.5 billion in total funds authorized for the program. The 
legislation provides NTIA with statutory flexibility, if 
needed, to utilize funds from other programs and to spend up to 
7 million to cover administrative expenses of the coupon 
program association with the high demand. Any additional sums 
for such purposes would be authorized upon approval of O&B and 
a 15-day notice to the House Energy and Commerce Committee and 
Senate Commerce Committee. Assuming that consumer requests for 
coupons will increase as the February 17 transition date nears, 
as we all do, NTIA wants to be as prepared as it possibly can 
be to maximize consumer participation in the coupon program.
    Without the flexibility to increase administrative spending 
if needed, NTIA will be able to distribute 44.5 million 
coupons. We believe that the draft legislation is a responsible 
and prudent approach to address potential additional demand for 
coupons and urge its immediate consideration. Thank you again 
for the opportunity to testify today, and I will be happy to 
answer any questions.
    [The prepared statement of Ms. Baker follows:]

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    Mr. Markey. Thank you so much. The time has expired. Our 
final witness, Mr. Mark Goldstein, is the Director of Physical 
Infrastructure for the Government Accountability Office. He has 
also been a frequent visitor to this committee regarding the 
DTV transition and today he will discuss GAO's latest report on 
the DTV converter box coupon program. Welcome back, Mr. 
Goldstein. Whenever you feel comfortable, please begin.

      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 the GAO 
report that we are issuing on NTIA's implementation of the 
mandated converter box subsidy program. The federal government 
and the private sector have taken many steps to prepare for the 
DTV transition. NTIA created and implemented a digital to 
analog converter box subsidy program. Additionally, the 
government, television broadcast industry, cable and satellite 
providers, and other carriers of broadcast signals have 
established several educational efforts informing consumers 
about DTV and the subsidy program. However, the success of the 
DTV transition and the subsidy program requires consumer' 
understanding about the transition and the steps needed to 
continue receiving a television signal.
    In addition, consumers will rely on retailers to provide 
information, as well as supply eligible converter boxes for the 
program. In my testimony today, I discuss what consumer 
education efforts have been undertaken by private and federal 
stakeholders and how effective NTIA has been in implementing 
the converter box subsidy program and to what extent consumers 
are participating in the program. First, private sector and 
federal stakeholders have undertaken various consumer education 
efforts to raise awareness about the transition. For example, 
the National Association of Broadcasters and the National Cable 
and Telecommunications Association have committed over 1.4 
billion to educate consumers about the transition. This funding 
has supported the developed of public service announcements, 
education programs for web broadcasts, Web sites, and other 
activities.
    In addition, most national retailers participating in the 
converter box program have developed consumer education 
campaigns to raise awareness of the transition in the program. 
Federal stakeholders, the FCC, and NTIA have developed consumer 
education plans that target those populations most likely to be 
affected by the transition. In particular, they have focused 
their outreach efforts on certain demographic groups including 
seniors, low income, minority and non-English speaking and 
rural households and persons with disabilities. Second, NTIA is 
effectively implementing the converter box subsidy program but 
plans to address a likely increase in coupon demand as the 
transition nears remain unclear.
    As of August 31, 2008, NTIA had issued approximately 24 
million coupons and as of that date approximately 13 percent of 
U.S. households had requested coupons. As found in our recent 
survey, up to 35 percent of U.S. households could be affected 
by the transition because they have at least 1 television not 
connected to a subscription service such as satellite or cable. 
In U.S. households relying solely on over-the-air broadcasts, 
approximately 15 percent. Of those who intend to purchase a 
converter box, 100 percent of survey respondents told us they 
were likely to request a coupon. Therefore, a spike in demand 
for converter box coupons is likely as the transition date 
nears. According to NTIA, an increase in requests around the 
transition date may cause a delay in issuing coupons.
    However, we found that NTIA has no specific plans to 
address an increase in demand and that it hasn't encountered 
challenges in issuing coupons within its requirement of 10 to 
15 days from the date the coupon application was approved. 
Given the challenges to meet this requirement and its lack of a 
clear plan to address a potential spike in demand, consumers 
might incur a significant wait time to receive their coupons 
and might lose television service if their wait time lasts 
beyond February 17, 2009. In terms of participation in the 
converter box subsidy program, we analyzed coupon data in areas 
of the country comprised of predominantly minority and senior 
populations and found that participation varies. For example, 
we found that zip codes with high concentrations of Latino or 
Hispanic households had noticeably higher coupon request rates, 
28 percent, when compared to areas with predominantly non-
Latino or non-Hispanic households of about 12 percent.
    We also found households in both predominantly black and 
Hispanic or Latino areas were less likely compared to 
households outside these areas to redeem their coupons once 
they receive them. Additionally, we analyzed participation in 
the converter box subsidy program in the 45 areas of the 
country on which NTIA and FCC focus their consumer education 
efforts, and we found coupon requests to be roughly the same 
for zip codes within the 45 targeted areas as compared with 
areas that were not targeted. NTIA estimates it will see a 
large increase in the number of coupon requests in the first 
quarter of 2009 and our analysis confirms that, and as the 
transition nears a spike in coupons is likely. However, NTIA 
has not developed a plan for managing that potential spike or 
sustained increase in coupon demand. The time required for 
processing coupons has improved since consumers incurred 
significant wait times to receive their coupons at the 
beginning of the program but until recently NTIA fell short of 
its requirement for processing coupons within 10 to 15 days.
    Given the relatively low participation rates to date and 
the amount of time it took to process the spike in coupon 
requests early in the program NTIA's ability to handle 
volatility in the program remains uncertain and consequently 
consumers do face potential risks that they may not receive 
their coupons before the transition might lose their television 
service. That is why we have mentioned in our report, we have 
recommended that NTIA take actions to improve a plan that they 
might be able to put in place. Mr. Chairman, this concludes my 
prepared remarks. I would be happy to respond to any questions 
you or members have.
    [The prepared statement of Mr. Goldstein follows:]

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    Mr. Markey. Thank you, Mr. Goldstein, very much. The chair 
recognizes himself for a round of questions. Chairman Martin, 
given the problems that many Wilmington consumers had at home 
in hooking up their converter boxes, would you support more so-
called soft tests in which they replace programming on their 
analog signal with information on the transition?
    Mr. Martin. Oh, sure. I think that trying to implement soft 
tests throughout the country is a good idea. Recently I 
announced that the Commission was going to undertake an effort 
to try to target our resources on educating consumers and those 
at-risk markets, some 81 markets in which you have a high 
percentage of over-the-air population. One of the things we are 
trying to do is coordinate with the broadcasters to encourage 
them to have a soft test during our visits to those markets.
    Mr. Markey. For every broadcast to have that kind of----
    Mr. Martin. Yes, we are trying to actually encourage them 
to, absolutely.
    Mr. Markey. I think that is very important.
    Mr. Martin. One of the things that we did learn in 
Wilmington and the broadcasters actually have already come back 
and informed us that the soft tests need to last for a 
significant amount of time. They first ran the soft test for 30 
seconds and minute, and they discovered that that wasn't 
getting any kind of consumer response. Consumers weren't able 
to go turn on the other televisions in their home to see if it 
was actually connected and they came back and ran one for 5 
minutes the week before and that was the only one that actually 
received a significant number of consumers calling in. One of 
their recommendations to us has been to get all of the 
broadcasters to run soft tests for at least 5 minutes.
    Mr. Markey. Well, let us have all the broadcasters do that 
then in the near future so that they can each learn from that 
experience. Would you support at least one station in each 
market continuing an analog feed after the shut off again with 
such information on the screen?
    Mr. Martin. With the scroll like we have done down in 
Wilmington, listen, I think that would be helpful from the 
consumer standpoint but I think that we are limited by the law 
that requires broadcasters to turn off their analog signals on 
February 17, but I think it would be helpful for us to find a 
way to allow for the broadcasters to inform viewers for a short 
amount of time afterwards.
    Mr. Markey. How do we get more consumers to hook up and try 
their converter boxes prior to February 17 so that we don't 
have chaos on that day for the help lines with everyone waiting 
until the end?
    Mr. Martin. Well, I think one of the both challenges and 
lessons learned from Wilmington was the problems people had 
just in turning on their converter boxes and making sure they 
were scanning for channels, so we need to incorporate into our 
education materials across the country the fact that they do 
need to go on and hook it up and try to scan and look for those 
channels early on so we will be able to make sure that they are 
prepared. The good news is those problems were relatively 
easily solved, but they are going to need to be incorporated 
into education materials going forward.
    Mr. Markey. So I want to commend you for your call to 
retailers to stock more $40 analog pass-through boxes, ensuring 
that low income consumers can take their $40 coupon and get 
inexpensive boxes vital for certain households to make this 
transition successful. I hope that the retailers respond 
favorably because they will be basically on the hot seat and 
people are going into these stores across the country and those 
boxes are not available. Do you know how many stations 
nationally, Mr. Chairman, will shrink their coverage area when 
they switch?
    Mr. Martin. Well, the question is, how many of them will 
significantly shrink their coverage area like what occurred in 
the one channel in Wilmington? The engineers have gone back 
through and they are trying to estimate it. They estimate that 
somewhere in the neighborhood of around 15 percent of the 
markets may have a station that will shrink in some significant 
way. What we are needing to do is go back and analyze how we 
can go in and fill in those coverage areas through one of 
several different mechanisms. We are basically looking at 
putting some other kind of antenna out there to make sure 
coverage is still going to those people that don't have any 
kind of a signal.
    Mr. Markey. How long will it take for us to complete that 
process?
    Mr. Martin. I have told our engineering staff that is the 
highest priority and really the number one lesson learned from 
the Wilmington experience because we need to make sure that we 
are working and coordinating with those broadcasters to address 
this problem, so I think it is going to take us a few weeks to 
identify what all those markets are and what we can actually do 
on a case-by-case basis.
    Mr. Markey. Again, it is very important for that to be 
completed very soon so that those stations can currently 
communicate with their consumers that they won't be receiving 
that signal anymore and that that will be something that can be 
compensated for in some fashion either by that station or by 
something coming out of another market. Assistant Secretary 
Baker, the GAO today states that NTIA has no specific plans to 
address the expected surge in demand for coupons. Often it 
takes up to 15 days or more for consumers to receive coupons 
once they order them. With an increase in demand over the end 
of year holidays and as we near February, we need a specific 
plan to get this surge of applications processed and consumers 
out the door quickly so that consumers don't wait a significant 
amount of time. Will you give us a plan in writing within 30 
days NTIA's plan for dealing with the surge in applications?
    Ms. Baker. Yes, sir, but our plan is the legislative 
package that we have submitted to you this week. I think that 
that is an accounting for what we see as an important uptick in 
requests in the coming months. We would like to see that uptick 
in November and December like it was in Wilmington, a nice 
steady bell curve where it decreases in January and February so 
we continue our consumer education to----
    Mr. Markey. So your plan is more money. Is there anything 
else in addition to more money?
    Ms. Baker. Well, we have looked at several different 
things, including downloadable coupons. Also we have had looked 
at a rebate program.
    Mr. Markey. If you could, put it all in a plan for us. Get 
it to us in 30 days. I understand you want more money but we 
want to see a whole plan. We want to see the concept and then 
we want to see the execution. OK?
    Ms. Baker. Happy to do so.
    Mr. Markey. Concept is 20 percent, execution is 80 percent, 
so we would like to see what your plan is for the execution of 
this because that ultimately is the test. And Chairman Dingell 
and I wrote to you yesterday about additional funding you have 
requested for administrative expenses to implement the coupon 
program. Could we also get a timely response to that as well 
because time is short?
    Ms. Baker. Absolutely.
    Mr. Markey. Could you respond to us in 48 hours on that?
    Ms. Baker. We can--I hope that I can get it cleared in 48 
hours. I will do my very best. They should be drafting the 
answers right now.
    Mr. Markey. We are adjourning for the year next Friday so 
time is of the essence.
    Ms. Baker. Yes, sir.
    Mr. Markey. Please try to respond as quickly as possible. 
The chair's time has expired. I recognize the ranking member of 
the committee, the gentleman from Florida, Mr. Stearns.
    Mr. Stearns. Just a question, Mr. Chairman. You want it in 
48 hours and we are not--we are going to be here all next week. 
Is it possible if she runs into a very difficult situation she 
might have a forbearance here?
    Mr. Markey. We can't forebear on legislating the solution. 
If she gets us the information by the end of the week, we will 
be in a position to be able to evaluate it to make a 
determination as to what form of any legislation that is being 
considered would take. We are hearing complaints today about 
the legislative process so we are just trying to make sure that 
we don't hear the same complaint from your side.
    Mr. Stearns. Well, I saw how quickly you folks turned 
around an energy bill, and so I just wondered here. Chairman 
Martin, let me ask you a question. After the transition in 
Wilmington occurred, I was told you got about 797 calls the 
first day. Is that approximately correct?
    Mr. Martin. That is right.
    Mr. Stearns. And the second day you got maybe 200 calls?
    Mr. Martin. No, it was a little more than that. It was 
about half. It decreased by about 50 percent every day.
    Mr. Stearns. OK. After 5 days, what was the total number of 
calls?
    Mr. Martin. On the fifth--our total of calls was 1,800 
calls.
    Mr. Stearns. 1,800 calls. So that would roughly be maybe 
the first day was a half of 1 percent so it might be less than 
1 percent.
    Mr. Martin. In total it was about--yes, it was around 1 
percent of the total households.
    Mr. Stearns. OK. So eventually 99.9 percent people were 
happy and they didn't call, 1 percent called. Now if you 
extrapolate that for a national that is still very successful, 
it seems to me. Now I admit if you are one of those 1 percent 
that did not get your channel and you are upset, you obviously 
have to get some satisfaction. Do you think you could make a 
confident statement that this roughly 1 percent that were 
questioning, you will be able to bring that down significantly 
by February 17, 2009?
    Mr. Martin. We are certainly trying to work through 
everything we can to try to bring that--continue to bring that 
1 percent down. I mean as you said 99 percent is a very high 
number but on the other hand 1 percent when you extrapolate 
around the country is a lot of people and we are trying to 
focus on how we can continue to bring that down. And I think 
that there are some things that we can end up doing. One of the 
simple things is trying to educate people about how the 
converter boxes actually work. A significant number of the 
calls were people just not understanding how to actually 
connect it to the television and to have it scan.
    Mr. Stearns. But most likely you will bring it down to 
maybe a half a percent instead of 1 percent?
    Mr. Martin. Certainly the----
    Mr. Stearns. If this is the first transition, you are going 
to make all these new steps. You have the rest of September, 
October, November, December, January. You have 5\1/2\ months to 
decide and do this. I think the American people and my 
colleagues should realize this has been a pretty dramatic 
success and you should be proud of it. And I think----
    Mr. Martin. Well, I appreciate it.
    Mr. Stearns. And the NTIA should be proud too. The chairman 
talks about chaos. I don't know if chaos when you have 
something that is 99.9 percent working is chaos.
    Mr. Martin. No, sir.
    Mr. Stearns. So I just want to clarify that.
    Mr. Martin. Well, I appreciate it, and I certainly 
appreciate that, and thank really the folks in Wilmington for 
their efforts and the community in helping make sure that the 
word got out.
    Mr. Stearns. Had you thought about another demonstration 
maybe in November after the election? It might be another 
chance for you to kick it up a notch.
    Mr. Martin. We have, and we would like to. We haven't been 
able to find another market that will volunteer but if we can 
find another market that will volunteer.
    Mr. Stearns . I volunteered Jacksonville but Jacksonville 
didn't seem to--Jacksonville, Florida didn't seem to volunteer 
back.
    Mr. Martin. We did contact them and several other markets 
and we still are looking for a volunteer.
    Mr. Stearns. Have you contacted Gainesville, Florida, where 
the University of Florida is?
    Mr. Martin. We have contacted the Florida Association of 
Broadcasters after our last hearing and we did talk to them and 
had them contact all the markets to see if any were willing to.
    Mr. Stearns. And no one, yes. Assistant Secretary Baker, 
you are asking for an additional $7 million because of the 
statutory cap on administrative funds. Let me ask you, don't 
you expect to give back some of the $1.5 billion that we have 
given to you? Can you explain to us and remind us how much you 
are giving back?
    Ms. Baker. Well, as of now with the 50 percent redemption 
rates, we estimate that we will return $330 million back to the 
U.S. Treasury.
    Mr. Stearns. So $330 million back to the U.S. Treasury you 
are going to give us, so that means that you will use roughly 
1.170 billion, so that is a pretty impressive figure that you 
are going to give back $330 million considering at one time 
Congress wanted $5 billion to do this program and a lot of us 
argued on this side we didn't need 5, we didn't need 4, we 
didn't need 3, we didn't need 2, we didn't need 1. We could get 
by with 900 million, and you are almost at the figure. Now is 
it possible that you might not need this 7 million? How 
confident do you think you are going to need this?
    Ms. Baker. Well, there is just no certainty to this so from 
our best data estimates we think that we might need it so we 
think it is prudent to ask for it since this is our last 
chance.
    Mr. Stearns. And funds are not fundable that you can't--
just because we administratively legislatively said you can't 
do it, it is not fundable, that you could take 7 million out of 
330 million that you are refunding to us, you couldn't use 
that?
    Ms. Baker. We have a statutory administrative cap at 160. 
We have the funds in the coupon money. We have also submitted 
several other programs that were under the Digital Television 
and Public Safety Act where we could come up with the money so 
there are several places where we could come up with the money. 
At this point, we are looking for 7 million. We would like 
flexibility for a couple million more if our estimates are not 
correct but certainly we can get the money in a couple 
different pools.
    Mr. Stearns. This is the last question, Mr. Chairman. Is it 
possible you will give back more than $330 million in refund to 
the taxpayers?
    Ms. Baker. Depending on redemption rates, sure, and demand.
    Mr. Stearns. OK. Thank you, Mr. Chairman.
    Mr. Markey. The chair thanks the gentleman. The chair now 
recognizes the gentleman from Texas, Mr. Gonzalez, for 8 
minutes.
    Mr. Gonzalez. Thank you very much, Mr. Chairman. And I 
guess I need a little clarification. You weren't here for some 
of the earlier remarks by the members on the other side of the 
aisle which dwelled on the energy bill that is coming up so I 
guess I need some sort of clarification. The title today is 
``Status of the DTV Transition: 154 Days and Counting.'' I am 
wondering what the D stands for. Is that digital or drilling? I 
am not real sure. The other thing is I am from the State of 
Texas and to be quite honest with you, we believe that every 
broadcast tower out there, if it doesn't double as an oil rig 
it is a waste of space. But I am also cognizant that maybe my 
narrow view of the energy needs of this country and how we meet 
them isn't the comprehensive approach that we really need, 
which is what we will have on the floor and hopefully my 
colleagues will have an open mind and proceed accordingly.
    We will get back to the subject matter. Chairman Martin, 
thank you for your service. I know there have been many, many 
challenges and this is going to be one of them. I have a couple 
of questions, and I think the next panel probably will give us 
a feel for what is going on the ground. As Members of Congress, 
we go back home and get a sense of it. In your own individual 
capacity, I am not real sure that you are there in those 
communities, but I think we are going to have those 
representatives, so I am going to kind of stick to kind of 
general policy considerations. What hinders and what benefits? 
What encourages and what discourages? And it was brought to my 
attention some time ago, and we are trying to address it 
because I think it does have an impact, and that is the 5 
percent tariff or import tax that is being levied by customs on 
these particular converter boxes, and in your opinion again 
does that lower cost or does it increase cost to the consumer?
    Mr. Martin. Any kind of a tax assessment is going to 
increase the overall cost of it for the ultimate consumer.
    Mr. Gonzalez. Does it encourage or discourage adequate 
supply of the converter boxes?
    Mr. Martin. Well, I am always hesitant at any kind of a tax 
or fee assessment on any kind of a consumer product. That will 
always have the effect of increasing the cost to the consumer 
and therefore decreasing the demand and ultimately the supply.
    Mr. Gonzalez. And I appreciate that, and of course since I 
agree with you I think it is a brilliant answer. I want to talk 
about the quiet period. That can be very controversial. We have 
something going on even in my city right now between 
broadcaster and the cable provider. This quiet period, and I 
know that we have depending on what side of the argument you 
might be on and also even what is coming out of the FCC as to 
what would be--if we have this quiet period what would be this 
time period? Does it make more sense to have the quiet period 
closer to the transition date of February 17, 2009, and shortly 
thereafter rather than way, way before and expiring before the 
operational date?
    Mr. Martin. Sure. I think it is critical that it occurs 
right around the February 17 transition date for some period of 
time shortly before and for some period of time shortly 
thereafter so that there is no confusion from the consumer 
perspective that if they lost any kind of a signal that it 
wasn't because of the transition but rather because of any 
negotiations that were going on so I think it has to be 
centered around the transition date.
    Mr. Gonzalez. I think we will have testimony about why 
people believe a certain period before or after or maybe not 
even after might be best, but I tend to agree with your 
analysis. If we are really addressing the problem of what is 
causing or constituting the confusion and we don't--that is the 
end game here. It is not really to give advantage to any 
particular stakeholder. Secretary Baker, on re-issuance the 
numbers are fairly extreme, are they not, for those that have 
actually applied and received their coupons but have not 
redeemed them?
    Ms. Baker. I would say it is our top complaint is that the 
coupons have an expiration date and that coupons are lost or 
stolen or they have not been received in the mail.
    Mr. Gonzalez. And I have also received some other, I think, 
answers. Simply people get them, hold them, then they decide to 
get cable or buy a new TV. That could be part of it too. I am 
afraid that may not be the majority of those unredeemed 
coupons. I know that I have had town hall meetings where people 
show up with two of the coupons and they just say we didn't 
redeem them, what can I do? I don't have a really good answer 
but I don't believe that you are going to provide me with an 
answer.
    Ms. Baker. Well, the answer that I give to you is the one 
that we give to folks is that we made these coupons 
transferable, and I am sympathetic with the problem but what we 
need here is a groundswell effort of family and friends and 
civic organizations to help people make the transition. Yes, 
their coupon has been redeemed but I could give them my two 
coupons and so that does seem to provide some solace to the 
fact that these coupons have expired.
    Mr. Gonzalez. All right, and that may be one approach. It 
is kind of a practical way we can pull this off if we get the 
right people connected with the right people, but as far as 
anything that you may be coming up with in the way of policy or 
requesting rule changing your testimony or your written 
testimony indicates timelines don't allow it, is that correct?
    Ms. Baker. I think, first of all, the statute does not 
allow it so I think it would take a statutory fix. I think then 
we would have to have a rule change which has proven to be 
quite--even on an expedited basis for the nursing homes and 
P.O. Boxes has taken a good period of time. I think from a 
policy standpoint, I worry about the waste, fraud, and abuse of 
opening it up for re-issuance, but most importantly I guess 
from where I sit is I think it would throw whatever economic 
analysis we have about what coupons we have and need--I think 
it would throw it out the window, so I think there is fairness. 
There is waste, fraud, and abuse. There is timeliness. But most 
important, I think then we would just really have no idea how 
many people whose coupons had expired would come back and ask 
for more coupons.
    Mr. Gonzalez. And I know this is the sixth hearing, and I 
want to commend the chairman for being so vigilant, and I know 
that we are going to have some additional hearings before that 
February date and we will just keep our hands on that pulse. 
Mr. Goldstein--and I don't want to misinterpret what my 
colleague, Mr. Stearns, may have indicated about the success at 
this point. It is way too early to gauge how successful we are. 
Isn't that an accurate statement? I mean as we get closer to 
it, we have high rates of individuals not redeeming coupons. We 
have individuals that may be getting those converter boxes, not 
hooking them up to the last minute, then we find out as in 
Wilmington or maybe I know that in my town the questions of 
individuals just having difficulty hooking up the converter 
boxes and who do we get to assist. When will the jury be in?
    Mr. Goldstein. I think the jury won't be in for some time 
at some period after February 17. I would mention a couple 
things real quickly. I think we have had a lot of success in 
reaching out. I think the private sector and the FCC and NTA 
should be commended for the work they have done in reaching out 
to the public. I think they have done quite a good job, but it 
is an extremely difficult task and there are a lot of moving 
parts here. Some of the issues that have been raised in 
Wilmington quite candidly are things that we raised in reports 
over the last year including coverage area gaps, antenna 
issues, hook-up issues that would be--we said a long time ago 
these things would likely be problems and sure they are. They 
are surfacing now. We have see them in Wilmington.
    The other thing I would add is we are concerned 
particularly about expiration rates that we have seen so far. 
In the work that we did for this report we found that seniors, 
particularly the expiration rates in areas where there were 50 
percent or more seniors in any particular zip code in the 
United States that that rate was 43.2 percent, where for the 
U.S. population it was 30.5 percent. And so there are some--and 
other groups as well for Latino and black groups. Many of the 
minority populations appear to still be at some disadvantage 
and we have a long way to go.
    Mr. Markey. The gentleman's time has expired.
    Mr. Gonzalez. Thank you very much, Mr. Chairman.
    Mr. Markey. The chair now recognizes Mr. Shimkus for 5 
minutes.
    Mr. Shimkus. Thank you, Mr. Chairman. As I said in my 
opening statement, I did take August break to really try to 
work this issue. And, Secretary Baker, I want to especially 
thank you for Brian Danza in the Chicago area who came down 
once or twice for us as went around the congressional district, 
and I have gotten great response from the constituents. And I 
do want to encourage again my colleagues to really be assertive 
as much as the broadcasters are working hard and the cable 
industry and the FCC and you. We could also through our office, 
through our web sites, through our newsletters, through all the 
above be very proactive. Chairman Martin, the calls that you 
received from Wilmington residents, how many was your staff 
able to handle over the phone?
    Mr. Martin. We were able to handle almost 80 percent of the 
calls related to anything on the converter box. We actually 
think we will be able to handle even more of them, but 80 
percent just on the phone initially, significantly less on the 
antenna, about 136 of 600 or so calls on the antenna side were 
able to handle, so a smaller percentage on that.
    Mr. Shimkus. And as we talked in our conversation I think 
last week a lot of that was just encouraging the consumer to 
press the channel scan button.
    Mr. Martin. That is right. A significant problem on the 
converter box program was just that the consumer actually had 
to push the--to restart it and have it scan for channels.
    Mr. Shimkus. I am guilty of that too. Although it is on the 
box to do that. I mean if you just--and even in my discussion 
with constituents it is real easy, you get your box, you take 
the antenna, you plug it in, you take the digital receiver, 
plug it into the TV, but you got to press to scan the channels 
and things so probably a lot of those that you can resolve 
that.
    Mr. Martin. Exactly. That was the single biggest thing that 
we were able to resolve for our consumers just when they called 
up and said that my box isn't working. I got it hooked up. 
First, is checking the connections to make sure it was hooked 
up, walking them through that, and then just asking them to 
scan it.
    Mr. Shimkus. Now going back to Secretary Baker, two of my 
town hall meetings, one was at a senior--both of them were at 
senior centers. One was in Olney, Illinois, the home of the 
white squirrels, and Galconda, this is in--we do have white 
squirrels in southern Illinois. And it is the southeastern 
part, really rural Illinois. At both times, not at my prompting 
but with the seniors at both events there were seniors there 
who already done this on their own and they were offering their 
excitement to the other residents about the digital transition. 
What can you report on consumer satisfaction that you have 
heard back?
    Ms. Baker. Well, we haven't had a single complaint on the 
box and so now that we have Wilmington, now that we have 
Wilmington we know that there are some problems with the 
scanning. We know that some people did not put batteries in the 
remote control, that they didn't realize the television had to 
stay on one channel, but as far as the box itself goes we have 
not had any complaints and people are really thrilled with the 
picture that they are receiving from the box.
    Mr. Shimkus. How about any rate of returns of the receivers 
to the retailers?
    Ms. Baker. From what I know, which is only from the 
retailers which we stay in contact with, you know, all the time 
this is one of the lowest returned of consumer electronics 
products that they have ever had, that they see very little 
return.
    Mr. Shimkus. Well, going back to these two small rural 
areas. As I mentioned, you do the application either by phone 
or the web. You get the letter. It has one or two cards. It 
gives you the retail locations but also what was emphasized by 
one of these ladies is just phone order and mail order of these 
receivers. Can you talk about phone and internet retailers 
instead of the traditional brick and mortar, because in rural 
America, especially with gas prices so high, they may not want 
to drive 50, 60, 70 miles to go to the retailer.
    Ms. Baker. I think you have hit a great issue that we need 
to process that we have 35 online retailers including 
Amazon.com now, and we have 13 phone retailers. I think what we 
are dealing with here is a population that gets in their car 
and they go to their favorite store, maybe Wal-Mart, and if 
Wal-Mart is out of boxes then they go back home and they get 
back in their car the next day and they go to the same Wal-
Mart. We need to encourage people to think a little bit outside 
the box. We have 30,000 retail outlets as well as obviously the 
online and telephones. Radio Shack will mail the box to you for 
free. Best Buy, Circuit City, they all have phone operations 
that should be easy for this population who are not as 
technical to actually get the box.
    Mr. Shimkus. Thank you, Mr. Chairman.
    Mr. Markey. Thank the gentleman. The chair now recognizes 
the gentlewoman from California, Ms. Eshoo.
    Ms. Eshoo. Thank you, Mr. Chairman. It is always nice to 
see you in the chair.
    Mr. Markey. You too.
    Ms. Eshoo. I have three questions, and I am going to put 
the questions out. They are all to Chairman Martin. And I will 
start with the first one. I understand you know how many people 
called the FCC's help line with questions about their converter 
boxes. Do you know how many people called a TV station with a 
question? How engaged, I guess it is a measurement of 
engagement.
    Mr. Martin. The Elon University, a university in North 
Carolina, had volunteered some of their students to answer 
calls. The last estimate I had, they had several hundred calls. 
It was less than 300 calls. I think 260 some odd calls.
    Ms. Eshoo. Not too many. Not too many. On this issue of a 
quiet period, I want to go back to this. I know Congressman 
Gonzalez mentioned it, and I did in my opening statement. I 
think it is important to know when this quiet period actually 
takes place because by all means we want to protect Chairman 
Markey's Patriots or Mr. Barton's Dallas Cowboys. Now the NAB 
has in its letter to you of August 11, proposed I think 
February 4 until March 4, a full 2 weeks prior to and after the 
transition date. There is a big thing that happens in January. 
It is the NFL playoffs. Can you imagine if this thing is 
dropped during the NFL playoffs? I mean there will be a 
revolution in the country. So I think that we have to look at 
this with a very practical pragmatic eye. So can you tell us 
what you are planning to do with a quiet period?
    Mr. Martin. I had--there is an order----
    Ms. Eshoo. When it would begin, when it would end.
    Mr. Martin. There is an order in front of the commissioners 
that deals with some of the other minor issues surrounding the 
DTV transition. There are some more technical issues but I had 
proposed to the other commissioners that we consider 
implementing and having some kind of a requirement of a quiet 
period. I had had one that was slightly longer than the one 
that had been proposed by the NAB. It was approximately 3 weeks 
before the transition is what I had proposed.
    Ms. Eshoo. So would it cover the playoffs?
    Mr. Martin. I don't----
    Ms. Eshoo. You know what, let me just put it this way. I 
think you have to keep that in mind. All right? Be on notice. 
And maybe no one thought of it but it is a big deal in the life 
of our country so I think that we should start sooner and 
stretch it out a little later, and as soon as you make a 
decision on that can you get back to us on it, and I think that 
you can make that decision pretty quickly. My third question is 
I am sure, Mr. Chairman, that you have seen the Reuters Cisco 
report which ranked our country, the United States of America, 
16th in the world in broadband quality. Now I guess the good 
news is that we made it just ahead of Russia, but listen to who 
we are behind or who is ahead of us: Slovenia, Latvia, 
Lithuiana, Japan, Denmark, and Korea.
    This is not a source of pride to us in our country. America 
really should be number one. We should. We know how. So my 
question to you is on surprise, the AWS-3 auction, I believe, I 
think you believe is an extraordinary opportunity for our 
country to dramatically shift access to the internet. Can you 
tell us when you think you are going to bring this up for a 
vote at the Commission?
    Mr. Martin. Sure. I do agree with you on the importance of 
it and the importance of trying to utilize it to help bridge 
the broadband gap that we have in the country so I have 
encouraged it. I have put it up for a vote once already before 
the Commissioners. They wanted some more time. They asked me to 
go----
    Ms. Eshoo. I know you are doing testing.
    Mr. Martin [continuing]. And have some additional testing. 
We have now completed that testing. Just last week our 
engineers submitted the results of that testing into the 
record. We will allow some people to comment on those results, 
but I do anticipate being able to bring that back up in front 
of the other Commissioners. I will need the support of the 
other Commissioners but I will need to bring that back up. But 
I do need to wait for the testing results to be filed in the 
record and allow for people to file any comments they wanted on 
that.
    Ms. Eshoo. Good. OK. I think that my time has just about 
expired, Mr. Chairman. Thank you. Thank you to all of the 
witnesses.
    Mr. Markey. The chair thanks the gentlelady. The chair now 
recognizes the gentleman from Texas, Mr. Green.
    Mr. Green. Thank you, Mr. Chairman. And I appreciate I 
guess because of what is going on now, I do want to talk about 
both to our assistant secretary and our chair about the problem 
with the battery-operated converter boxes at our last hearing 
but we know now it is much more imperative. Without these, like 
I said earlier, I couldn't have had TV at my own house, and 
even as of yesterday when I left to come back how our agency is 
planning to address that and since we brought it up at an 
earlier meeting hopefully there has been some discussion.
    Mr. Martin. That was one of the important issues that came 
up both at the earlier hearings and also in Wilmington it was 
one of the issues that was identified very early on by the 
broadcasters in Wilmington, the concern they had with it. 
Again, I think the importance of the test highlighted the issue 
and actually allowed for us to make some progress on it. The 
broadcasters there worked very closely with one of the 
manufacturers, Weingard, who makes converted boxes. They have 
developed a battery-operated pack that can attach to their 
converter box. It was for sale down in Wilmington before the 
transition. We have seen it. The Commissioners purchased both 
one of the converter boxes and the pack so that we can take 
that around and show people that this is--there is a battery-
operated one to attach to battery-operated TVs and it is 
available now.
    Mr. Green. And the rabbit ears typically, the battery-
operated television, because that is the only thing we have.
    Mr. Martin. It will work within a battery-operated 
television to provide signal the way the battery-operated 
television does in the analog world today, and it will have a 
battery-operated pack. It is a $12 pack you can attach to the 
converter box.
    Mr. Green. OK. So that would work. It is pretty well 
universal, any type of small battery-operated television?
    Mr. Martin. No, it doesn't work--the converter works with 
any battery-operated television. It would work with any of 
them. The challenge would end up being though that the pack 
doesn't attach to every converter box. There is only one 
converter box manufacturer that has developed that kind of a 
battery-operated pack. We are continuing to try to work with 
other manufacturers to see if they will develop a similar 
packet but that is the only one that we have today.
    Mr. Green. I appreciate any update because we still have 2 
months left of the hurricane season but if we don't do it now 
then next year we will really be in a problem. The digital 
cliff where the picture disappears on digital televisions 
rather than coming in snowy as it did on analog sets seems to 
be a problem that wasn't expected. Do you know of any smaller 
battery-operated televisions that would be more susceptible to 
this? Does severe weather affect that in our case?
    Mr. Martin. Weather can affect any kind of a signal. It 
can, but that can always have some kind of an impact when there 
is severe weather. That can always have an impact on reception 
of over-the-air signals.
    Mr. Green. OK. And would it take rulemaking or 
congressional action to allow consumers to use their coupons to 
purchase these battery powered devices for emergency use if 
they happened to have when they get two coupons instead of 
buying one converter box, would it also be available?
    Mr. Martin. The coupons can currently be used for the 
converter box. The battery-operated pack is $12 you have to 
attach to it and the coupons can't be used for the pack. So 
under the NTIA rules it can only be used for the converter box 
itself.
    Mr. Green. And I apologize for being in and out. One last 
question, Mr. Chairman, and I appreciate the--our problem is, 
and I think it was brought up in lots of the opening 
statements, in our district that people got their coupons or 
their little credit cards and they didn't pay attention to the 
expiration date. And I know we had a disabled constituent that 
we actually sent the letter from our own office. And what is 
the practice of NTIA on dealing with something like that?
    Ms. Baker. Well, unfortunately, we are not reissuing 
coupons. We have interpreted the statute to tell us that we 
cannot reissue coupons as well as we think that there is a 
waste, fraud, and abuse issue. There is a fairness issue. But 
we are doing exactly what you just said, and we are encouraging 
families and friends, neighbors, civic groups to help people 
make the transition since the coupons are transferable for 
someone whose coupon is expired to get the coupon from someone 
else.
    Mr. Green. So if someone has an expired coupon, they can't 
apply for another one then?
    Ms. Baker. That is correct.
    Mr. Green. OK. And I have to admit someone told one of my 
constituents just have somebody apply for one and then they 
could give it to you, and I questioned whether--I don't know 
the falsification or anything saying if I applied for something 
for my son or my daughter or even a neighbor and I gave it to 
them, that is not calling into question someone not using it 
for their own personal use?
    Ms. Baker. We have made them transferable to make sure that 
people could help other people in the transition, and if you 
had applied for one and you used one then you could apply for 
another. If you had applied for two and they had both expired 
then you could not apply for another but we want to make this 
transition easier for people so we think if you can help your 
mother make the transition that is why we made the coupons 
transferable.
    Mr. Green. Well, frankly, the best way to make it easier 
would be to let them reissue the coupons instead of having a 
friend or a family member do it. Mr. Chairman, I know I am out 
of time.
    Mr. Markey. The gentleman's time has expired. The chair 
recognizes the gentlewoman from California, Ms. Solis.
    Ms. Solis. Thank you, Mr. Chairman. I want to thank our 
witnesses for coming and speaking to us this morning. And I 
wanted to direct my first question to Assistant Secretary Baker 
and ask you a little more in depth about the outreach to the 
Latino community at large and especially along the U.S. border. 
The Transition Assistance Act which was recently signed into 
law according to your testimony there is approximately $4.5 
million that will be available for consumer education. I would 
like to ask you how the NTIA plans to use this funding and what 
proportion will be used to educate those Latino or Spanish-
speaking recipients or households along the U.S.-Mexican border 
but also in other parts of the U.S.
    And I wanted to know more about how much money was going to 
be spent for that outreach effort. You mentioned I believe in 
your testimony that there is grassroots bid that is underlined 
or monies that will be available for community-based 
organizations. How are you selecting those and what will be 
their effort and how much money is actually being allocated for 
that?
    Ms. Baker. Well, in an effort to expedite this education 
process we are not doing a complete rulemaking. What we are 
doing is taking unsolicited bids of which we have several 
before us currently. We are looking at the underserved 
communities, the minorities, as well as actually having 
transition help, having people go into houses and help them 
hook up converter boxes so those are kind of our priorities as 
we see it.
    Ms. Solis. Will you have some of those individuals that 
will be able to speak Spanish or other languages as necessary?
    Ms. Baker. Absolutely. That is one of the communities that 
is valuable for us to provide extra assistance to.
    Ms. Solis. When is this going to roll-out?
    Ms. Baker. We are hoping the first of October the first of 
the grants will go out.
    Ms. Solis. And how many of those groups will be focusing in 
on the Spanish-speaking population?
    Ms. Baker. Well, it does depend on what the proposals that 
we receive have and I think at this point that the----
    Ms. Solis. So there is really no correlation between the 
need or you are just looking at whoever bids?
    Ms. Baker. Well, we need proposals in front of us to be 
able to expedite so instead of running a full rulemaking as to 
how we would get the grants out which would be after the 
transition what we are doing is taking proposals----
    Ms. Solis. One concern I have is that you might give bids 
out to people who really don't understand or really are 
geographically more inclined to understand the demographics of 
particular areas or regions so that is something that I would 
draw your attention to. Obviously, Californians, Texans, Puerto 
Ricans, and what have you are a little bit different and I 
don't know one size always fits all so you might keep that in 
mind. I am also concerned regarding some of the information 
that has come back to us about how the converter box is 
actually--the coupon for the converter box is actually being 
utilized. And my question is with respect to what is happening 
in Puerto Rico, I have gotten a lot of complaints from people 
there that they have received the coupon but did not have the 
availability to go down and purchase at the local retail store 
so you obviously have a problem here, and I would like to hear 
your response.
    Ms. Baker. Sure. I think, first of all, absolutely taken 
into account as far as the LPTV $4.5 million grants, the 
Hispanic considerations as we do in our target markets. As far 
as Puerto Rico goes, it is a very unique community. I think it 
has the highest over-the-air population at 39 percent and we 
have now received coupon applications from 50 percent of the 
households there. I think that we heard that there was a 
shortage of converter boxes there. We have worked hard with the 
retailers to make sure that that has been--those shortages----
    Ms. Solis. Apparently from a document I have here, a letter 
we sent to you, there was actually a request for 600,000 
coupons but there were only 50,000 boxes that were available on 
the island. How do you bridge that gap? We are talking about a 
big problem here.
    Ms. Baker. Well, we have seen now strong redemption rates 
in Puerto Rico so we feel that those----
    Ms. Solis. Are you working with the retailers?
    Ms. Baker. We have been working with the retailers.
    Ms. Solis. Because we have gotten complaints as of late 
that we still have a big issue here, but not only that, it is 
also the implementation. I think the chairman, Mr. Markey, said 
that earlier. Eighty percent of our focus should be on how we 
actually get the box in the household and people need that 
instruction. They probably need someone beyond just giving them 
the coupon actually calling them back did you acquire the 
converter box, have you plugged it in, do you know where to get 
help and having that information available in Spanish, or 
whatever language it is going to take, and we are also talking 
about senior citizens and rural communities who may not be as 
literate.
    Ms. Baker. I think you are right and I think that our 
consumer education focus clearly needs to turn to 
implementation. That is why we changed our messages to apply by 
and try to make sure that the try part, that the converter 
boxes work, that people can get this assistance that they need, 
and we certainly realize that minority outreach in several 
different languages is important.
    Ms. Solis. I am still a bit concerned. I heard some of our 
colleagues on the other side of the aisle say that they are 
very happy to hear that monies would be returned because they 
wouldn't be utilized because everything was going so 
efficiently. I would beg to differ with that and still would 
like to get more information about how demographic groups are 
going to be addressed, whether they are disabled, seniors, 
rural, and obviously, that are monolingual.
    Mr. Markey. The gentlelady's time has expired. The chair 
now recognizes himself. I want to say at the outset that I 
think the test run in Wilmington was a great idea and I want to 
thank Chairman Martin and Administrative Baker for you and your 
staff's work in getting it together. I think it gives us all a 
much better picture of some of the challenges that we are going 
to face in February. And one of the things that I thought was 
really smart was that the branding was simple. I heard that 
they called it ``The Big Switch'' in Delaware and I think we 
need to think about that Nationwide, something that is a simple 
message and easy to convey to people. And I don't think we 
should rush into any definitive conclusions considering the 
amount of attention that has been paid to Wilmington. I think 
Commissioner Adelstein said that when you send out so many 
staff to a city and give it all this extra consideration that 
the observer effect starts to come into play, so I don't think 
we should rush to judgment on it.
    But I do have a couple questions about it. Administrator 
Baker, I saw in your testimony on the last page at the very 
last line that you estimate only 60 percent of over-the-air 
consumers require a converter box, but in Wilmington we saw the 
participation rate at 203 percent, which is sort of double the 
estimate that we had gotten. What is your explanation for 203 
percent participation rate?
    Ms. Baker. Well, I think that Wilmington was a compressed 
period of time. We announced in May that we were going to 
switch in September. I think if you are--for our switch on 
February 17 people are going to make different decisions. They 
are going to go through the holiday period. They might make 
other choices as to whether they are going to purchase a 
converter box with a coupon or not. I think, you know, when we 
look at the numbers that we project from Wilmington, we still 
find the same bucket needs to be filled, you know. It was 
quicker in Wilmington but the numbers are still kind of the 
same when we estimate our--I got several different estimates of 
data but when we separately make our estimates of the current 
request and then we bump it up for what we think is going to 
happen in November, December, and January, we come to the same 
number if you extrapolate the numbers from Wilmington, so I do 
think it is a valid test although I do think it was a 
compressed period of time.
    Mr. Markey. But aren't you concerned that if your estimates 
sort of cuts the number in half and the actual data doubles 
your estimate and you start to apply that nationwide it sound 
like that we are sort of over estimating the number of people 
who won't need boxes, at least if Wilmington is any indication 
of that. Do you think people are hoarding boxes?
    Ms. Baker. I don't find--we have not heard of such a thing, 
no. We found very little of that--we have not heard any of that 
actually.
    Mr. Markey. You can't reapply once your coupon expires and 
you are going to have bunch of people out there with coupons 
that if they are hoarding them that would be the only market 
for coupons. It sounds like a pretty good industry being 
developed for people selling their coupons that they don't 
need. I am just wondering if you are seeing any evidence of 
that going on as an explanation for why you have such a high 
participation rate.
    Ms. Baker. I guess a couple different things. The boxes are 
good now so we are hoping that people hook them up and use them 
now because digital programs exist now. While the coupons can 
be transferred and we encourage people to help their family and 
friends to transfer them, they can't be sold. We have had 
terrific experience with eBay and Craigslist. We have seen 
coupons appear and they get pulled immediately. So we really at 
this point have had very little of that type of incident.
    Mr. Markey. Chairman Martin, I read accounts that the 
biggest problem wasn't that people weren't aware that the 
switch was coming. The biggest problem seemed to be that they 
didn't have a clue about how to get these converter boxes 
installed. I guess they thought they would set them on top of 
their TV sets and by osmosis or something they would connect 
themselves. And I see we are going to open up a new eligibility 
application for firefighters grants now where in addition to 
training and equipment, putting converter boxes together is 
going to be a way to get a firefighter grant.
    I mean in Wilmington basically we asked the help of the 
firefighters to help people connect their boxes. Did we pay 
them for that? Did they do that for free?
    Mr. Martin. We had very small contracts with several 
grassroots organizations to be able to go into people's homes 
who were disabled and were shut-ins and otherwise unable to get 
out and hook up the converter boxes for them and a special 
number people could call. The last estimates we heard as of 
last Monday there had only been about 35 people but as of today 
there has been about 250 people that local fire departments and 
local public safety officials have gone.
    Mr. Markey. So is it the Commission's intention to contract 
with fire departments across the country come February to 
install people's converter boxes, and do you have the money to 
do that? What is the game plan for--it seems that one of the 
big missing pieces of this puzzle that we are learning from 
Wilmington is we need a lot more education for folks or a way 
to get assistance out to seniors and disabled and other folks 
that need help putting the converter boxes on.
    Mr. Martin. Well, absolutely. We want to make sure as many 
people as possible understand how the converter boxes work and 
how to hook them up and how to scan, but we actually are trying 
to--we put out a bid for other grassroots organizations to be 
able to come forward and do the same thing that we did in 
Wilmington. We put out a bid for grassroots groups to come 
forward and say they could do the same thing for shut-ins and 
other people that are disabled that can't get out and hook up 
their boxes that we would try to do that at least in those 81 
markets that we are trying to target throughout the country, so 
we actually are trying to do that.
    Mr. Markey. Thank you very much. I see my time has expired, 
and the chairman now yield to the gentlewoman from California, 
Ms. Harman.
    Ms. Harman. Thank you, Mr. Chairman, and thank you to the 
subcommittee for holding yet another hearing on this important 
issue. I welcome the panel and I am going to use my few minutes 
just to make a couple of comments that won't surprise Chairman 
Martin at all. Number one, this transition matters. It matters 
to a lot of people, especially the folks you, Mr. Chairman, 
were just discussing with Chairman Martin, but the reason for 
this transition to remind us all is to make available analog 
spectrum for critical emergency communications, which leads me 
to the D block auction. And I know, Mr. Chairman, that you are 
having a meeting on the 25th or I think that is still the case, 
which is next week, of your commission to see about auction 
rules. I want to urge you to get along with this and move on 
with this and to make sure that there is full public 
participation in the rulemaking. I think it is critical that we 
do this, we do it right, and we do it quickly. This is a set of 
comments you have heard me deliver many times.
    Secondly, I think I spoke to you and I also have tried to 
follow up about the possibility of a regional hearing in 
southern California. It is not the only place that there should 
be such a hearing but I know there have been hearings in 
various parts of the East Coast. The reason I want to suggest 
that is, one, there is a emergency communications group out 
there that is keenly interested in this issue. LA County is the 
largest and most diverse county in America, and I think is 
proceeding on one path but maybe after such a hearing could 
think about some other directions. That is one point.
    But my second point is with respect to the DTV transition 
there is a very large minority community out there. I represent 
many cities, and I know Ms. Solis does too, which are majority 
Latino and so far as I can tell some real progress is being 
made, so we might actually be able to tell a success story, for 
example, with respect to markets that at least Univision 
reaches. They claim they have a very good plan for this. So I 
want to repeat my invitation, give you a chance to respond in 
public to my invitation if you care to and to urge you again 
about moving quickly and with full participation on a set of 
auction rules that will be successful this time. And I just 
would invite your comments.
    Mr. Martin. Sure. First, thank you for your support and for 
supporting the Commission going forward as quickly as possible. 
It does have to be an open process but it is time for us to go 
on and put out a further notice because we still need to go 
through that public process before we move to a final order. At 
this stage even on an expedited basis you are talking about an 
order not being able to get out until around the end of the 
year, which would still mean an auction couldn't even occur 
until some time after about 6 months. So this is really 
critical for us to move forward, and I appreciate that support 
and I think it is time for the Commission to--and we actually 
am happy to and would like to end up going out to southern 
California to end up participating in the hearing.
    We have been working with your staff on some dates that 
would make sense from your perspective. One of the original 
time frames you and I talked about on the phone was this week. 
With this hearing, that didn't work out as well. But we are 
actually looking at further dates that we can come out there.
    Ms. Harman. Well, I appreciate that. I would just point out 
the obvious, which is that even on your time table the auction 
will not be completed before the transition is completed. I 
would not only note major natural disasters which have been 
occurring with regularity along the southern coast of America 
but my continued fear that there may be some unnatural man-made 
terrorist attacks that could still come our way, and we don't 
have a day to waste before putting in place a robust national 
interoperability capability for emergency communications. And 
at least I don't understand how that happens if we don't have 
either one national or several appropriate regional auctions 
and develop this public-private idea that we have been talking 
about for a long time where the private sector lends its 
enormous capability to build out for the public sector a 
capability way beyond push to talk radios that it can grow into 
over time and that will give it on U.S. battlefields the same 
capability or better that we have on foreign battlefields for 
our U.S. soldiers. America is a battlefield as well both 
against nature and against terrorist attacks.
    So I will continue to ask the same questions to all of you 
until we get to the right place. And I have 3 seconds, but if 
anyone has any additional comments, I am sure the chairman 
would let you speak. Thank you, Mr. Chairman.
    Mr. Markey. The chair thanks the gentlelady. There being no 
further questions from members, the chair would like to thank 
this panel for being here, and we are going to get ready to 
seat the second panel. Thank you so much. OK. We are going to 
get started. We want to welcome our second panel. We are going 
to go right down in order. Our first speaker will be Mr. Tom 
Romeo. Mr. Romeo is currently Vice President of Federal 
Services for IBM where he is responsible for managing IBM's 
business with numerous federal agencies. Most importantly, he 
is responsible for managing IBM's contract with NTIA to run the 
converter box coupon program. Mr. Romeo, welcome, and turn your 
microphone on and you have 5 minutes for your opening 
statement.

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

    Mr. Romeo. Thank you, Mr. Chairman. Mr. Chairman and 
members of the subcommittee, thank you for the opportunity to 
testify before you today on the continuing progress the IBM 
team is making implementing the NTIA TV converter box coupon 
program. Earlier this morning, you heard from NTIA Acting 
Assistant Secretary Baker about how interest in the TV 
converter box coupon program continues to grow. Consumer demand 
for coupon remains high with over 26 million total coupons 
ordered as of September 10, representing an average of more 
than three million coupons ordered on a monthly basis. The 
continued high rate of demand is exceeding expectations. 
Consumers requested the total initial base phase allotment of 
22,250,000 coupons as of July 31, 2008.
    After hitting this milestone, the coupon program shifted to 
a two-track distribution mode. The program now ships both 
contingent phase coupons which go only to over-the-air reliant 
households, as well as recycled initial base phase coupons. 
Because the redemption rate for coupons remains below 100 
percent, funds continue to be available to recycle coupons from 
the initial base phase of the program. This allows households 
not solely reliant on over-the-air broadcasting to continue to 
request and received coupons. Between August 1 and September 10 
over two million recycled coupons were ordered. During this 
same time frame, over two million contingent phase coupons were 
ordered.
    The unique and fluid nature of the coupon program continues 
to require our team to react quickly to pinpoint needed 
adjustments and implement alternative solutions when necessary 
along the way. When Wilmington, North Carolina was designated 
as a test market for the DTV transition, we were able to 
expedite updates to the web site providing information 
specifically tailored to consumers in Wilmington. We refined 
consumer education targeted for the Wilmington market, 
resulting in over 70,000 coupons ordered by Wilmington 
residents.
    We continue to refine the Interactive Voice Response or IVR 
system to make it easier and faster for callers to order their 
coupons over the phone. A new IVR script implemented in July 
increased by 15 percent the number of callers able to complete 
their coupon order within the IVR system. Overall, the IVR 
system is able to support 60 to 65 percent of the callers 
without the need for a live agent, a very high IVR resolution 
rate by industry standards. We continue to adjust messaging on 
both the English and Spanish IVR system to expedite the coupon 
ordering process and provide a positive experience for the 
consumer.
    I am pleased to report the voluntary participation of both 
large national retailers and smaller, local retailers remains 
strong. As of August 29, 2008, more than 2,300 retailers, 
representing more than 29,000 stores Nationwide, are currently 
certified and participating in the program. Eight of the 
largest consumer electronics retailers are among the retailers 
participating in the coupon program. Consumers are also able to 
order converter boxes from 35 online retailers or from any of 
the 13 retailers offering a phone order option. Amazon.com 
became a participating online retailer earlier this month. The 
strong demand for coupons indicates the effectiveness of our 
consumer education strategy. We are on the right track 
educating consumers about the coupon program and remain focused 
on intensifying and further refining consumer education as we 
end towards February, 2009.
    Our partner, Ketchum Public Affairs, continues to lead the 
consumer education effort focusing on communities most likely 
to rely more heavily on over-the-air broadcasting than the 
general population but continuing to build and leverage a 
network of committed partners. The proportion of households 
ordering coupons who self identify as over-the-air reliant has 
increased from 47 percent in January to 55 percent today. The 
consumer education campaign is increasing its reach to those 
consumers most at risk as we transition to digital 
broadcasting.
    We are now refining coupon program messaging to encourage 
consumers to act early in the process and order their coupons 
prior to December 31, 2008. Today, a consumer can expect to 
have their coupon order processed and mailed within 10 to 15 
days, and to receive their coupon within 3 to 4 weeks of 
placing their order. Ordering coupons prior to the end of 2008 
will give consumers enough time to buy a converter box, install 
it, and troubleshoot any issues before February 17, 2009. 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 home-land 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 Vice 
President 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 a maximum of two coupons, 
worth $40 each, to be used toward the purchase of a certified 
converter box.
    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 continue 
to be able to order coupons using any of the four available 
options. Applying online at www.DTV2009.gov continues to be the 
option used most frequently by consumers. Other options include 
the toll-free phone number (1-888-DTV-2009) which is 
operational 24x7 to accept coupon orders, and by mail (P.O. Box 
2000, Portland, OR 97208-2000) or via fax (1-888-DTV-4ME2). 
Coupon application forms are also available in Braille for the 
visually impaired.
    As we reported to you in June, interest in the TV Converter 
Box Coupon Program continues to grow. Consumer demand for 
coupons remains high with over 26,686,001 total coupons ordered 
as of September 10 representing an average of more than 
3,000,000 coupons ordered on a monthly basis.
    The continued high rate of demand is exceeding 
expectations. Consumers requested the total initial base phase 
allotment of 22,250,000 coupons as of July 31, 2008. After 
hitting this milestone, the Coupon Program shifted to a two-
track distribution mode. The Program now ships both contingent 
phase coupons which go only to over-the-air reliant households, 
as well as ``recycled'' initial base phase coupons. Because the 
redemption rate for coupons remains below 100%, funds continue 
to be available to recycle coupons from the initial base phase 
of the program. This allows households not solely reliant on 
over-the-air broadcasting to continue to request and receive 
coupons. Between August 1 and September 10 a total of 2,020,219 
``recycled'' coupons were ordered. During this same time frame, 
2,415,782 contingent phase coupons were ordered. At the current 
rate of demand, and assuming some spike in demand as we move 
closer to the actual transition date of February 17, 2009, we 
anticipate over 50,000,000 coupons will have been mailed out to 
consumers by the end of the program.
    The unique and fluid nature of the Coupon Program continues 
to require our team to react quickly to pinpoint needed 
adjustments and implement alternative solutions when necessary 
along the way. When Wilmington, North Carolina was designated 
as a test market for the DTV transition, we were able to 
expedite updates to the web site providing information 
specifically tailored to consumers in Wilmington. We refined 
consumer education targeted for the Wilmington market resulting 
in over 70,000 coupons ordered by Wilmington residents.
    We continue to refine the Interactive Voice Response (IVR) 
system to make it easier and faster for callers to order their 
coupons over the phone. A new IVR script implemented in July 
increased by 15% the number of callers able to complete their 
coupon order within the IVR system. Overall, the IVR system is 
able to support 60-65% of the callers without the need for a 
live agent, a very high IVR resolution rate by industry 
standards.
    We continue to adjust messaging on both the English and 
Spanish IVR system to expedite the coupon ordering process, and 
provide a positive experience for the consumer.

                          Retail Participation

    I am pleased to report the voluntary participation of both 
large national retailers and smaller, local retailers remains 
strong. As of August 29, 2008 a total of 2,316 retailers 
representing more than 29,053 stores nationwide are currently 
certified and participating in the program. Eight of the 
largest consumer electronics retailers--Best Buy, Circuit City, 
Fry's, Radio Shack, Sears, Sam's Club, 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 35 online 
retailers, or from any of the 13 retailers offering a phone 
order option. Amazon.com became a participating online retailer 
earlier this month. 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.''

                           Consumer Education

    The strong demand for coupons indicates the effectiveness 
of our consumer education strategy. We are on the right track 
educating consumers about the Coupon Program, and remain 
focused on intensifying and further refining 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.
    The proportion of households ordering coupons who self-
identify as over-the-air reliant has increased from 47% in 
January to 55% today. The consumer education campaign is 
increasing its reach to those consumers most at risk as we 
transition to digital broadcasting.
    We are now refining Coupon Program messaging to encourage 
consumers to act early in the process and order their coupons 
prior to December 31, 2008. 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. Ordering coupons prior to the end of 2008 will give 
consumers enough time to buy a converter box, install it, and 
trouble shoot any issues before February 17, 2009.

                               Conclusion

    As mentioned above, educating consumers to take action and 
order coupons before the end of 2008 is a high priority for the 
Program and an important component to a smooth transition 
overall. 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. 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.
    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.
                              ----------                              

    Ms. Harman [presiding]. Thank you. The Committee now 
welcomes Christopher A. McLean, who is the Executive Director 
of the Consumer Electronics Retailers Coalition of the Nation's 
largest electronic retailers. Mr. McLean has also served as the 
Administrator of the Rural Utility Service. Please summarize 
your testimony in 5 minutes and begin now.

    STATEMENT OF CHRISTOPHER A. MCLEAN, EXECUTIVE DIRECTOR, 
            CONSUMER ELECTRONICS RETAILERS COALITION

    Mr. McLean. Thank you very much. Thank you for inviting the 
Consumer Electronics Retailers Coalition to appear today. Our 
members include Best Buy, Circuit City, Radio Shack, 
Amazon.com, K-Mart, Sears, Target, and Wal-Mart, as well as 
three major retail associations. As we gear up for the final 
DTV push, we can be very proud of how far we have come. 
Retailers have now accepted more than 10 million NTIA coupons 
with very few problems. I am pleased to report that every CERC 
member company is now a participant in the NTIA program coupon 
program. CERC members have been working at the local level with 
community organizations, government leaders, and the media to 
take the initiative in DTV public education.
    Our members have transitioned their inventories to feature 
analog pass-through boxes and the current supply seems to be 
plentiful. The Wilmington pilot has been very useful to all DTV 
stakeholders. We were gratified that Chairman Martin 
specifically thanked CERC and our members at the September 8 
Wilmington ceremony. Our members participated in educational 
events, donated converter boxes to senior centers in 
conjunction with the CEA, and directed the earlier shipments of 
analog pass-through boxes to Wilmington. A few issues from the 
Wilmington pilot stand out for retailers. Even with 
extraordinary educational efforts some shoppers waited until 
the last minute to purchase their converter boxes.
    Also, apparently many consumers also waited to hook up 
their DTV converter boxes. Some viewers also had more problems 
with antennas than had been anticipated. Our members are 
looking closely at the Wilmington experience to analyze and 
apply the lessons learned. As we approach the final days of 
this Congress there is one more thing that can be done to 
approve the DTV transition for consumers. It is ironic that 
with one hand our government is subsidizing the distribution of 
converter boxes to consumers, yet with the other apparently 
inadvertently is imposing a 5 percent tariff that makes the 
product more expensive. Representatives Ron Kind and Kevin 
Brady have introduced bipartisan legislation to correct this 
problem, and we respectfully ask members of this committee to 
support the timely passage of this bill.
    As we enter the home stretch of digital transition some 
challenges remain. Retailers are working to keep up with 
broadcasters soft shut-offs. These on air experiments are very 
useful to viewers. We are working with the NAB to share 
scheduling information with retailers to prepare for customer 
response. We are also preparing for early shut-offs. CERC is 
aware of a handful of communities where stations are planning 
to complete convert to digital and cease analog broadcast in 
advance of the February deadline. These situations, most 
notably in western Nebraska, where public television stations 
and a couple of commercial stations convert ahead of schedule 
create many Wilmington experiences.
    Retailers are studying the Wilmington lessons and we are 
working with NTIA and the FCC to understand not just what 
happens in advance and at the time of conversion but that 
happens in the aftermath. Retailers are assisting the FCC and 
their 81-city DTV tour, and we are focused on Puerto Rico. Our 
understanding is that the supply and demand situation on the 
island is improving. Madam Chairman, nobody knows that the end 
game will look like. However, there are two key dates that we 
keep in mind in this respect. First, of course, is the February 
17, 2009, transition date. The Wilmington data suggests that 
some consumers will wait until the last minute to address their 
conversion needs. The more conversions that can be banked in 
advance of the switch, the better. Second is the date when the 
last coupon expires perhaps well into 2009. As unprecedented as 
the coupon program is the post coupon market for converter 
boxes is completely uncharted territory.
    In conclusion, it has been our privilege to work with this 
subcommittee as well as the NTIA and the FCC to make the DTV 
transition a success. The chairman and the subcommittee has 
literally planted the first seeds of the DTV revolution many 
years ago. CERC and our individual members are committed to 
helping all Americans reap the rewards of a rich DTV harvest. 
Thank you.
    [The prepared statement of Mr. McLean follows:]

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    Ms. Harman. Thank you, and thank you for the interesting 
information about some communities acting in advance. It seems 
to me that is a wise idea. Our third witness is David K. Rehr, 
President and Chief Executive Office of the National 
Association of Broadcasters. Prior to joining the NAB, Mr. Rehr 
served as the President of the National Beer Wholesalers 
Association. Welcome, and please summarize your statement in 5 
minutes.

    STATEMENT OF DAVID K. REHR, PRESIDENT AND CEO, NATIONAL 
                  ASSOCIATION OF BROADCASTERS

    Mr. Rehr. Thank you. Good morning, Congresswoman Harman, 
Congresswoman Solid, and Mr. Gonzalez. My name is David Rehr, 
and I am President and CEO of the National Association of 
Broadcasters, a trade association that represents over 8,300 
free over-the-air radio and television stations and networks. I 
was in Wilmington, North Carolina with Chairman Martin, 
Commissioner Copps and Secretary Baker on Monday, September 8, 
when the four commercial and one religious station transitioned 
to all digital broadcasting. So what lessons did we learn and 
what are we doing to implement those lessons? One, in 
Wilmington there was universal awareness of the DTV transition. 
On the day after the switch stations received preliminary data 
that showed out of the 226 telephone calls received only one 
caller was unaware of the switch to digital.
    This is indicative of the nationwide numbers that show DTV 
transition awareness near universal levels. Despite these high 
numbers, however, broadcasters will continue to run DTV action 
spots to educate viewers. Additionally, the NAB is compiling 
polling information from the Wilmington experiment which I will 
be happy to share with the committee. Two, we learned that many 
viewers needed help adjusting or moving their antennas or 
needed more detailed information about what kind of antenna 
they needed. Prior to Wilmington, NAB released two spots, 
Antenna Highway and Not Tech Minded, that raised this important 
issue. The announcer is the same person that we used to help 
build awareness of the DTV transition, and our spots are all 
closed captioned in both English and Spanish, and I would like 
to show one now.
    [Video shown.]
    Most viewers experienced reception problems following the 
switch because they failed to scan for digital channels using 
their new converter box. As part of our national education 
campaign, NAB will create and distribute spots detailing how to 
use the scanning feature. Four, the call center in Wilmington 
was a key ingredient to their transition. A centralized call 
center will be invaluable to the success of the nationwide 
digital switch. As you know, in just 154 days the remainder of 
the country will make the historic switch from running DTV 
action spots to organizing speakers bureaus to driving the DTV 
trekkers to communities across the country. NAB and its 
television networks, syndicators and local TV stations are 
executing a $1 billion plus marketing plan to inform the 
country about the transition.
    Now in addition to all that we have done, NAB has taken 
another step to further minimize the potential for consumer 
confusion. While we do not believe there will be any consumer 
confusion in an abundance of caution the NAB television Board 
of Directors has voluntarily committed not to disrupt any 
relationship with our cable or satellite distributor partners 
beginning on February 4, 2009, and running through March 4, 
2009, a full 2 weeks prior to and after the DTV transition date 
of February 17.
    History demonstrates that broadcasters and our distribution 
partners have a positive relationship, and we have every 
incentive to continue to work together. At present, there are 
1,017 stations, that is 81 percent of commercial stations that 
support the NAB resolution. We have a broad range of stations 
endorsing this proposal from NAB, members like ABC, NBC, 
Hearst-Argyle, and Belo to non-NAB members like Sinclair 
Broadcasting. I expect that we will continue to add more 
stations and companies in the upcoming weeks. Through this DTV 
journey, I am most proud of the outreach we have done with 
diverse and varied groups around the country, including the 
Black Church initiative, Esperanza USA, Native American tribal 
groups, the Leadership Conference on Civil Rights, state and 
local governments, AARP, the Congressional Hispanic Caucus, the 
Congressional Black Caucus, the 241 members of the DTV 
coalition, and local television broadcasters across the 
country.
    Working together, we can meet the goal of insuring that no 
one is left behind for lack of information. Thank you for 
having me, and I look forward to your questions.
    [The prepared statement of Mr. Rehr follows:]

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    Ms. Harman. Thank you very much. Our fourth witness, Kyle 
McSlarrow, is President and Chief Executive Officer of the 
National Cable & Telecommunications Association, NCTA, the 
trade association representing the nation's largest cable 
operators. Mr. McSlarrow also served as a deputy secretary of 
the Department of Energy, and I would like to welcome back our 
chairman of the subcommittee, Mr. Markey, who has chosen to 
stay down there in the corner. He is very modest and shy. And, 
Mr. McSlarrow, you are now recognized to summarize your 
statement in 5 minutes.

STATEMENT OF KYLE MCSLARROW, PRESIDENT AND CEO, NATIONAL CABLE 
               AND TELECOMMUNICATIONS ASSOCIATION

    Mr. McSlarrow. Thank you, Mr. Chairman, distinguished 
members of the committee. I think I can safely say I am glad to 
be here talking about the DTV and not energy.
    Ms. Harman. You are the only one who feels that way, Mr. 
McSlarrow.
    Mr. McSlarrow. Well, it is because I knew I was on the hot 
seat all those other times. In many respects, I think the 
industry cooperation to educate consumers to make available the 
information they need to know about the tools that they should 
be equipped with to manage the transition has gone very well. 
And I should say that we are very pleased. I want to compliment 
David Rehr and other leaders in the industry for what they have 
done to insure that cooperation has moved forward. But I do 
want to flag what is potentially a coming storm, which is 
called re-transmission consent. And I know on the first panel 
there was an exchange of views about this but I think it is 
important to understand the context. Re-transmission consent 
was added to the legal landscape. In 1992, a time when the 
marketplace was very different, and by and large over the last 
15 years most broadcasters, most cable and satellite operators 
have managed to work through that in a way that there is a 
rough equivalence of value being exchanged that consumers have 
been well served.
    But is in increasingly clear with a new election coming up 
on October 1 in terms of broadcasters electing to be must carry 
or pursuing re-trans that with the economic pressures on the 
broadcasting side with more and more equity or hedge funds 
investing in the broadcasting sector looking for a quick buck 
as opposed to a long-term view that there is going to be 
greater tension. And it is important to point out that re-
transmission consent is not a free market negotiation. Every 
broadcaster walks into a room knowing that at the very least 
they can insist on must carry carriage or if they feel up to it 
they can choose to pursue re-transmission consent negotiations 
so it is a classic ``heads I win, tails you lose'' proposition.
    When they enter the negotiations, they then know that every 
cable customer has to, by law, buy a package with all the 
broadcast stations in it before they can buy any other cable 
network, including premium networks, and the networks know and 
the broadcasting station groups know that you can't as a cable 
operator or a satellite operator go out and negotiate for 
another signal with similar or identical program because 
network non-duplication and syndicated exclusivity rules 
prevent you from carrying an out of market signal which 
competes with what is essentially an exclusive product in a 
local market. So it is not a free market negotiation, and as I 
say the overwhelming number of cases I am confident will 
probably be worked out at the bargaining table, but it is clear 
that increasingly there is tension, and if you go by public 
statements from some broadcasters there is a desire to ratchet 
up dramatically in some cases 500 percent the cost of those 
signals that would be carried by the consumers.
    Now this is relevant in the short term to the digital 
transition because most of the re-trans agreements will expire 
around December 31 of this year, and so we have been having 
conversations with friends of the broadcasting industry about a 
quiet period, but the problem is if you are putting consumers 
to the choice of either, A, paying a higher bill the cable 
operator insists on protecting the interest of the consumer, 
then the threat is going to be that a broadcaster is going to 
pull the signal. And when are they going to do that? Well, they 
are going to do that in January, the precise time that NAB's 
voluntary quiet period doesn't cover so you have this odd lapse 
of time where the food fights are undoubtedly going to break 
out where consumers have two choices, pay a higher bill or lose 
the signal.
    So I would urge this committee to make clear in 
unmistakable terms in the short term to broadcasters around the 
country that the digital transition is not business as usual. 
Cable operators, satellite operators are carrying--in the case 
of cable operators were carrying must carry stations in a dual 
format which we didn't think we were required to do but we 
voluntarily agreed to do that. It was incorporated into an FCC 
order. Everybody is leaning forward. This is not the time to 
confuse consumers about what is happening.
    And I should hasten to add that this isn't about leverage 
in the market place. I heard you, Mr. Gonzalez, before. I agree 
with your point. It should be short. Whatever the deal is, 
whenever it is struck, it should be retroactive back to the 
date of the expiration of the agreement, and then I think for 
the committee there is a long-term challenge that we would like 
to work with you on reforming re-transmission consent. Thank 
you, Mr. Chairman.

    [The prepared statement of Mr. McSlarrow follows:]

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    Ms. Harman. Thank you, sir. I would just note for the panel 
that there is a motion to adjourn on the House floor and we 
will recess this hearing 5 minutes before the conclusion of 
that vote. It is now 10 minutes so we have time to hear from 
another witness, David Candelaria, who is Vice President and 
General Manager of Entravision Communications, a Spanish 
language media company. Entravision operates one of the largest 
Spanish language radio networks as well as the largest 
affiliate group of two Univision network channels. Welcome, and 
please summarize your testimony.

   STATEMENT OF DAVID CANDELARIA, VICE PRESIDENT AND GENERAL 
        MANAGER, ENTRAVISION COMMUNICATIONS CORPORATION

    Mr. Candelaria. Thank you and good morning. I have worked 
in the broadcasting industry for nearly 20 years and have spent 
nearly 40 years of my life living in El Paso, Texas. What I 
particularly want you to know is how important it is that the 
Congress pass the Border Fix Act legislation. Each and every 
member of Congress from the border region supports the 
legislation. While they may be Democrats, support of the 
legislation is bipartisan, and we have heard from other 
Republican members that they are behind the Act as well.
    The reason I care so much about the bill is as our 
Congressman Silvestre Reyes has said that unless we do so that 
tens of thousands of families and individuals in our region may 
be left behind. There is a fact of life in the Hispanic 
community along the border that you should be aware of. In El 
Paso, for example, approximately 45 percent of the Hispanic 
population is Spanish language dominant. That is 310,000 
people, approximately. When Spanish speakers in El Paso and 
along the border need information, they turn to Spanish 
language television. Our television station, KINT, who share 
the evening news, is six times that of the ABC affiliate, 
achieved that success by consistently providing quality news 
and vital information. Unless this Congress passes the Border 
Fix Act, our Spanish-speaking viewers will simply tune into 
Mexican television.
    As I have spoken about the Act with various parties, a 
number of questions have been posed to me, and I would like to 
address them. First, I have been asked is this not the best 
time for viewers to transition since we have the educational 
efforts and the converter box subsidy. While it is a good time, 
you need to be aware that there is a cultural resistance that 
will prevent it from being completed at this time. Second, I 
have been asked why we don't seek to educate our Hispanic 
viewers to convert. In fact, our station has helped achieve in 
El Paso coupon orders and redemptions at 240 percent of the 
national rate, yet this is still not enough.
    Third, I have been asked why should not expect our young 
people to press their parents to acquire digital sets in order 
to be able to watch the English language networks. The Nielsen 
numbers prove it. In El Paso between my station, KINT, and the 
most popular station in the market, Mexico's XHJC, we take 30 
percent of the viewing in prime time. The NBC affiliate, in 
contrast, takes just 4 percent in prime time, which I believe 
represents the English language population in the market. 
Fourth, I have been asked why would 4 years help if I am 
worried about getting Hispanic viewers to transition. The 
reason is simple. We just need more time to persuade Hispanics 
to transition and to acquire the digital receivers.
    Fifth, I have been asked whether this sends the wrong 
message to other broadcasters who have invested in the 
transition. Now we have all invested in the transition, and to 
continue the analog signal is simply optional. Sixth, I have 
been asked whether the legislation will prevent the recovery of 
the 700 megahertz spectrum so that it can be used by wireless 
and public safety purposes. The answer is a definite no. We 
have determined and the FCC has confirmed to the Senate that 
there is no impact on any proposed 700 megahertz user should 
the Congress pass this legislation. Finally, I know that you 
will hear from English language broadcasters as to why the Act 
is a mistake. However, these are the very same broadcasters who 
readily admit that dominant Hispanics do not watch their 
stations anyway.
    This testimony will be in the great tradition of the 
broadcast community that it has resulted in our poor reputation 
before the public sector. If there is a legislative or 
regulatory proposal that would maintain or promote competition 
broadcasters rush to stifle it with arguments claiming that the 
sky is falling. In fact, my English language competitors view 
the digital conversion as their opportunity to grab my 
business. Their view is that if Hispanics migrate to Mexican 
stations, the share of domestic English language stations will 
increase. This translates to money.
    All I can say is that the opinion of our Congressman and 
local leaders such as Mayor Cortez of McAllen, State 
Representative Veronica Gonzalez of the Rio Grand Valley, who 
all support the legislation, should weigh more heavily on the 
scale than my self-interested competitors. In summary, I urge 
you to consider that neither education, more coupons, more 
converter boxes, or visits from the FCC will convince the great 
number of Spanish speaking population along the border to 
transition when they have a clear alternative available. I am 
pleased that Hurricane Ike did not hit the border, but I worry 
that next year if there is a hurricane that hits the Rio Grande 
Valley and then El Paso how the word will get out if domestic 
Spanish language television stations are not transmitted in 
analog because we cannot rely on Mexican competitors. So as to 
protect the Spanish speakers along our border, I urge you to 
enact this legislation before this Congress recesses. I am 
prepared to answer any questions you may have.
    [The prepared statement of Mr. Candelaria follows:]

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    Ms. Harman. Thank you, Mr. Candelaria. I would just point 
out that your last argument is also an argument for clearing 
the 700 megahertz spectrum so we can have true national 
interoperable communications.
    The subcommittee will now stand in recess for the shortest 
possible time while members who are still here go to vote. And 
when we return, we will begin with Mr. Kittleman for 5 minutes.
    [Recess.]
    Ms. Solis [presiding]. We would like to call the hearing 
back to order. Since we do have expedited votes that are coming 
up, we would like to hear from all our witnesses, so next I 
would like to introduce our witness, Mr. John Kittleman. Mr. 
Kittleman is the General Manager of KRGV-TV, the ABC affiliate 
serving the Weslaco, Harlingen, Brownsville, and McAllen areas 
of south Texas. Welcome, and you have 5 minutes.

     STATEMENT OF JOHN KITTLEMAN, GENERAL MANAGER, KRGV-TV 
                NEWSCHANNEL 5, KRGV-DT 5.2 LATV

    Mr. Kittleman. Thank you, Chairman Markey, Ms. Solis, 
members of the Subcommittee on Telecommunications and the 
Internet. Thank you for allowing me to testify today in 
opposition to H.R. 5435, the DTV Border Fix Act. My name is 
John Kittleman, General Manager of KRGV-TV, the ABC affiliate 
serving the Westlaco, Harlingen, Brownsville, and McAllen areas 
of deep south Texas. America's transition to digital is a major 
undertaking for government, broadcasters and the public. Thank 
you for your continuing commitment to make this transition as 
smooth as possible. A key component of a smooth transition, 
however, is coordination among the parties to insure that 
public confusion is minimized. Congress recognized this when it 
changed the law governing the digital transition from one which 
would have permitted individual television markets across the 
country to transition at various time spread over the course of 
years to the current law which sets a single, nationwide 
deadline of February 17, 2009, for the termination of analog 
broadcasts.
    Unfortunately, H.R. 5435 threatens to undermine the 
effectiveness of a unified national transition by permitting 
stations in border markets to delay the transition for as long 
as 5 years creating tremendous public confusion. Now is not the 
time to delay the transition for our border markets. Converter 
box coupons are easily acquired on the phone and online. 
Converter boxes themselves are widely available in stores, over 
the phone and online, and all pass-through converter boxes are 
widely available and will allow border residents to benefit 
from the advanced U.S. digital services as well as to continue 
reception of analog signals from Mexico.
    An unprecedented national and local education effort is 
underway and will grow substantially as we draw closer to the 
transition date. As broadcasters serving along the U.S.-Mexican 
border, we understand fully the challenge before us. However, I 
would ask, imagine the challenge for border markets on our own 
to transition to digital in 5 years. No government subsidy 
program. National manufacturers and retailers unlikely to 
produce and sell converter boxes for the border residents who 
have not yet transitioned. No national education program. No 
unified local education effort as stations convert to digital 
piecemeal over 5 years. Attached to my written testimony is a 
letter written by 11 border market broadcasters from 
Brownsville to San Diego acknowledging these and similar 
concerns and opposing H.R. 5435.
    Also of concern is the impact on educational broadcasters 
such as our local PBS affiliate. I spoke with Mr. Pedro 
Briseno, General Manager of KMBH, last week. KMBH must vacate 
its analog frequency, Channel 60, because the FCC has auctioned 
that spectrum for non-broadcast use. In addition, he indicated 
he cannot afford to continue to maintain analog and digital 
service, and explained the difficulty of obtaining replacement 
analog parts as the country moves to the digital platform.
    Indeed, under the Border Fix Act, the date of a station's 
transition to digital will not be governed by a carefully 
choreographed public education campaign, but by the date that 
that station's analog equipment fails and is too expensive to 
repair. Despite its analog difficulties, KMBH is well 
positioned to embrace the digital future. Their station's 
digital lineup is as follows: PBS in English, PBS in Spanish, 
EWTN in English, EWTN in Spanish from 38.1 to 38.4, 
respectively. Imagine the educational opportunities for our 
market that will be lost if our viewers wait 5 more years to 
transition to digital.
    Attached today is a letter from four border market PBS 
stations from Harlingen to San Diego stating opposition to 
5435. This is all the PBS stations along the border. Congress 
has asked broadcasters to convert their stations to digital and 
our stations along the U.S.-Mexico border have risen to that 
challenge. We have spent millions of dollars to be digital 
ready on February 17. Many of us offer multiple digital 
channels including local weather and targeted entertainment 
formats to better serve our communities. In today's difficult 
financial environment, should Congress now add the significant 
financial burden to border broadcasters alone of continuing 
analog broadcast operations for an additional 5 years or 
finding themselves at a competitive disadvantage against those 
that do.
    I would ask proponents of the bill, what will change in 5 
years to make this transition any easier? We will still face 
the challenges of serving Spanish speaking residents, low 
income residents, and the elderly. What will change is that we 
will not have a government converter box subsidy, manufacturer 
and retailer support, nor a nationwide education effort. Border 
broadcasters will be left on their own with the massive task of 
educating and equipping an unknown number of analog only 
consumers. We ask Congress to help our border markets by 
assuring an abundant supply of coupons, of converter boxes, and 
education's efforts continue. Once again, thank you for your 
leadership in the transition to digital and for your 
consideration of these concerns.
    [The prepared statement of Mr. Kittleman follows:]

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    Ms. Solis. Thank you. Our next witness is Mr. Andrew Setos. 
Mr. Setos is the President of Engineering for Fox Group. He is 
the Senior Technology Strategist for the company with oversight 
of engineering for all the Fox divisions. He is also a Fellow 
of the Society of Motion Picture and Television Engineers. You 
have 5 minutes, and thank you for coming.

STATEMENT OF ANDREW G. SETOS, PRESIDENT, ENGINEERING, FOX GROUP

    Mr. Setos. Thank you, Madam Chairwoman. My name is Andrew 
Setos. I am President of Engineering of the Fox Group, and I 
thank you for inviting me to participate here today. As we 
approach the deadline for digital transition, Fox is incredibly 
excited about the many benefits that digital television will 
bring to the American public. We have been working diligently 
to prepare our network, our own stations, and our affiliates 
for this important transition from analog to digital, and we 
are on schedule. From the beginning, Fox has been a leader in 
the digital TV build out, in the creation and distribution of 
high definition programming, and in the effort to educate 
consumers on how to prepare for the digital transition.
    To that end, Fox has aired more than 38,000 public service 
announcements on its own stations. I would like to focus on one 
issue that is vital to the long-term success of local broadcast 
television, the broadcast flag. The flag is a descriptor that 
broadcasters may imbed in a television program that signals 
that the program is not to be indiscriminately redistributed. 
Currently, there is no requirement that any television product 
respond to the broadcast flag. Local broadcasters are required 
by law to provide their content in the clear. This means that 
high value content like the Super Bowl, the World Series, The 
Simpsons, and American Idol is not technologically protected 
against indiscriminate redistribution. Other platforms, such as 
cable, satellite, telephone companies, and Internet 
distributors have already spent millions on the design, 
deployment, and maintenance of increasingly sophisticated 
technology for content protection. By contrast, local 
broadcasters are unable to offer any protection.
    This imbalance threatens the long-term viability of local 
broadcasting, which will lose high value content to platforms 
that offer technological protections. The broadcast flag is the 
best way to prevent this serious threat to the future of free 
TV and we therefore strongly urge Congress to pass legislation 
that would authorize the FCC to adopt the broadcast flag rule. 
The digital revolution has created the opportunity for the 
theft of content on an unprecedented scale. The formerly 
burdensome and time-consuming process of uploading high 
definition video content has become easy to accomplish. 
Millions of users of peer-to-peer applications upload and 
download copies of broadcast television shows stripped of their 
commercials, thus putting local television at risk.
    Why? Because local broadcast TV cannot exist without 
advertising revenue, which is determined based on the size of 
the broadcast audience that is exposed to those advertisements. 
Fewer local broadcast viewers translate into less advertising 
revenue. If our revenues drop because of content theft, local 
broadcasters will no longer be able to compete with other 
distribution platforms for high value content. This, in turn, 
means that people will no longer be able to watch their 
favorite shows or national sporting events from their local 
broadcasters for free. And without high value content, local 
broadcasting will struggle to survive.
    The demise of local broadcast stations would be devastating 
for tens of millions of Americans for whom local broadcast 
stations are the sole source of news and entertainment. But 
even for people who have cable or satellite, local broadcast 
stations are the only source of televised local news, local 
political races, local community affairs, local sports, local 
traffic, and local weather reports. These include lifesaving 
emergency weather updates like those we are doing around the 
clock on our Houston station, KRIV, as Hurricane Ike devastated 
Texas. Local broadcast television, free to the public, is 
uniquely American.
    The broadcast flag is the only solution to protect against 
the indiscriminate redistribution of local broadcast content 
while at the same time protecting the television viewing 
experience. With the broadcast flag, people will continue to 
enjoy the ability to make multiple copies of their favorite 
television shows. They will continue to enjoy the flexibility 
of their home network, and they will continue to enjoy the 
features of every digital TV product that they have purchased 
to date.
    In conclusion, the broadcast flag will have no impact on 
the American public's legitimate enjoyment of broadcast 
television while at the same time will help protect the future 
of free, local television. Thank you once again for the 
opportunity to address this important matter. I would be 
pleased to answer any questions.
    [The statement of Mr. Setos follows:]

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    Ms. Solis. Thank you very much. Our next witness is Mr. 
Chris Murray. Chris Murray is Senior Counsel to the Consumers 
Union where he manages advocacy for Consumers Union on 
technology, communications, and media policy in the United 
States and internationally. You have 5 minutes, Mr. Murray.

   STATEMENT OF CHRIS MURRAY, SENIOR COUNSEL, CONSUMERS UNION

    Mr. Murray. Madam Chairman Solis, Representative Deal, Mr. 
Gonzalez. I would like to thank you for your extraordinary 
attention span today to sit through a long hearing. I would 
like to start with a story, a true story from a friend of mine, 
about John Smith, not his real name. He is a retired bus driver 
who lives in northeast Washington, D.C. He watches his favorite 
football team, the Washington Redskins, on an over-the-air 
television. That is the only kind of television he has in his 
home, so he is going to need a converter box. He doesn't have 
an Internet connection, so my friend helped him order coupons 
and find a retailer near him and the government's printed 
information directed him to a Radio Shack, which was within 
walking distance.
    When he was there, he was surprised to hear the employee 
tell him that the only box they were carrying in the entire 
D.C. metro area was $60, not $40 as he had expected. He wasn't 
prepared to spend almost $50 for two converters plus tax so he 
went home. My friend and I tried to find another store in the 
D.C. area and came back empty-handed for a $40 box. His wife 
eventually went and bought the converters for more than $60 
each and, sure, they got two converter boxes for $50 out of 
pocket, which is a lot better than the more than the $100 it 
would have been without the coupon program, but that is still 
$50 just for them to keep their TVs working as they always had 
been working. I will come back to Mr. Smith, but I would like 
to turn quickly to lessons learned from the DTV transition test 
in Wilmington.
    And I would like to echo Chairman Martin's gratitude to 
Commissioner Copps for his excellent plan for a test market in 
Wilmington. I think it has yielded some valuable information. 
We learned in the Wilmington test that there are more Americans 
who rely on over-the-air than we had previously imagined. In 
Wilmington Nielsen had put the number at 13,500 over-the-air 
viewers, and what came back was that between 16,000 and 18,000 
households said they rely on over-the-air and purchased a 
converter box. Now that means not only did every single last 
over-the-air viewer in that market get a converter box but 
another 20 to 35 percent also said they relied on over-the-air 
and got a converter box, so we should expect, I think, a big 
increase in demand. We should expect a spike as we near the end 
of the transition.
    And, frankly, if the transition has an open moment, I think 
that is by definition a good thing. We really want people to be 
sensitized that this is happening. We want them to know that if 
they are an over-the-air family and they don't get a converter 
box their television is going to turn into a brick. My 
colleague, Dr. Book, has an excellent idea that we would like 
to second for a series of national blink-outs, basically taking 
5 minutes out of popular programming to say here is where you 
can go for information about the transition if you need it. The 
problem that we were most interested in today was that the 
least expensive converter boxes aren't always making it to 
electronics retailer shelves as I noted with Mr. Smith. When 
our magazine Consumer Reports tested 24 DTV boxes, we found 
little variance in picture quality and features. In other 
words, we recommended that consumers buy the less expensive box 
but the problem is they are just not widely available.
    We have one electronics retailer who--excuse me, 
manufacturer who has a $40 converter box and is selling that 
direct to consumers, but we are not seeing it in stores. In a 
country where 25 million of these boxes are likely to be 
purchased, why is it that we are not seeing the less expensive 
options? We hope that the Committee would use its bully pulpit 
and insure that consumers have these less expensive choices. We 
are also hearing complaints about cable providers taking 
channels out of basic tiers and moving them into the more 
expensive digital tier under the cover of the DTV transition, 
which forces consumers to buy a more expensive package to get 
identical service. When consumers paid for the same service 
at--excuse me, when consumers pay more for the same service, it 
is a rate hike, and at $10 per set per month, in some cases it 
is $5.00, $6.00 in other cases, this hike is not minor. And 
with the DTV transition already confusing consumers, we feel 
that the timing of the industry's rate hike is deceptive.
    I am also concerned to hear Mr. Setos discuss the broadcast 
flag as a solution to the DTV transition. We heard Viacom in 
2002 tell us that they wouldn't put HD programming over the air 
unless they got the broadcast flag. They didn't get it. That 
program eventually made it out there. I fear that this has long 
been a story of trying to restrict the innovative consumer 
electronics market place and we would vigorously oppose any 
such proposals. In conclusion, I will just say that on February 
17 the U.S. is going to make the jump to digital. At that time 
either millions of Americans will have been educated about 
exactly what they need to do to minimize transition hiccups or 
millions of Americans will wake up to find that their TVs don't 
work anymore. I hope that we will void the latter scenario and 
I hope that we will apply some serious pressure to get that 
done. Thank you very much for the time today.
    [The statement of Mr. Murray follows:]

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    Ms. Solis. Thank you very much. Our last witness is Dr. 
Connie L. Book. Dr. Book is the Associate Dean of the School of 
Communications at Elon University in North Carolina. She serves 
on the board of the North Carolina Agency for Public 
Telecommunications and has conducted a wide array of research 
on broadcast communications issues. Thank you and you have 5 
minutes.

    STATEMENT OF CONNIE LEDOUX BOOK, PH.D., ASSOCIATE DEAN, 
              ASSOCIATE PROFESSOR, ELON UNIVERSITY

    Ms. Book. Thank you, Madam Chairman and members of the 
subcommittee. We handled 172 calls that came into local 
television stations in the Time Warner Cable call center from 
noon to 10 p.m. on the day of the transition. I brought a 
handful of bright and energetic Elon University students with 
me and one of them is here today with me, Lauren Limerick, and 
she handled several calls gracefully and patiently that day, 
and so we are grateful for the opportunity to share some of 
what we have learned in that process. When I was in the 6th 
grade my sister, Yvette, who was the pretty one in our family, 
was a huge fan of Elton John. ABC, which aired on Channel 33 in 
Baton Rouge, Louisiana, was scheduled to have a live concert. 
Unfortunately, we only had a VHF TV station.
    My dad, faced with five teenage girls, succumbed and on the 
day of the concert brought home a new color UHF TV set, raised 
the antenna, and, bam, we had Elton. I remember my dad fooling 
with the TV to get the best signal, the concert, the big 
sunglasses, and the white leather suit. I start there this 
morning because that is what we are asking Americans to do on 
February 17, 2009, not a hard task for my dad at the time 
because he had the means and the ability, but that is not the 
case for all Americans, and we don't want them to miss the 
concert. Today I would like to share just a few of the lessons 
that we learned as part of our efforts in Wilmington.
    First, the information campaign in Wilmington was a hands 
down success. Virtually everyone that faced disrupted signals 
and called knew about the transition and had purchased a 
converter box. The means employed by the FCC, local government, 
broadcasters, and grassroot efforts worked. The rest of the 
country will need to follow suit, and we asked people where 
they had heard the news about digital television and most said 
I heard it on TV. And TV can be used more effectively to help 
Americans make the transition. Prior to the switch on Monday, 
Wilmington conducted what I call a series of blinking tests, 
soft tests, where they interrupt analog program with a slate 
that says if you are looking at this you are not ready. They 
were 30 seconds, a minute, and were at different times of day.
    We would recommend that other markets in the U.S. start 
blinking that signal more frequently and during viewers' 
favorite programs. That may sound odd but the truth is a viewer 
can forgive you for missing 5 minutes of their favorite program 
but not the whole program. We learned that in Wilmington when 
phones heated up after Oprah Winfrey went on the air at 3:00 on 
Monday with the launch of her new fall season. Those viewers 
left with a slate telling them to call a 1-800 number or a 
county office weren't thinking too kindly of the digital TV 
mandate. Also, interrupting viewers' favorite program will 
create a sense of urgency that they need to get ready. In 
Wilmington, most of the callers had ordered and redeemed 
coupons for their digital converter boxes. Elon students 
assessing the retail conditions found Wal-Mart to be the 
primary point of purchase.
    When local residents went to Wal-Mart and got that box, 
they did so from a shelf with a small typed up on white paper 
note saying the switch was scheduled for September 8, nothing 
fancy, and on a shelf with lots of other products. More can be 
done at this point of sale. The primary issue with callers was 
not that the converter box wasn't working but the antenna 
wasn't picking up signals. In Wilmington analog signals sat on 
one tower and digital signals on another. People had to move 
their antennas to receive the new UHF signals. Working with key 
retailers like Wal-Mart, broadcasters should create documents 
that are visually heavy to walk through the local information 
needed to install the best antenna and to point it in the right 
direction.
    To do this, the local TV engineering staff should be busy 
the next month testing signal strength at local points 
throughout their communities and creating one-page documents 
with neighborhood level data. For example, we got calls from 
different pockets of Wilmington, and residents would say nobody 
on my street can get that signal. This street level 
neighborhood data should be available at the point of purchase 
of DTV converter boxes. We recommend broadcasters get busy 
creating them.
    Even with a slate telling them to call the FCC, 172 
Wilmington residents decided to call their local TV stations, a 
telephone number they probably had to look up in the phone 
book. A majority of these callers were elderly residents, and 
frequently there was someone calling on their behalf. People 
have a relationship with their local broadcaster, especially 
the older, often home-bound. We would recommend rather than a 
slate that directed viewers to call a 1-800 number that 
stations use local talent to teach viewers experiencing 
problems what is necessary to acquire a signal. For example, 
Atlanta should have Monica Kauffman explain how to set up the 
converter box and antenna using a graphic. The Hispanic 
community should hear from local Spanish speaking broadcasters 
at Univision or another station teaching them how to get their 
signal.
    These local segments could be aired on continuous loops in 
the marketplace and give people a chance to solve their own 
problem rather than calling a 1-800 number, and if they do call 
TV stations need to set up prototype viewing environments so 
that if callers work through issues with station volunteers or 
staff they can have a visual in front of them to look at what 
the caller is experiencing and more effectively walk through 
resolving the problems. You still will have hardship cases and 
in these we need to create an emergency converter box.
    [The prepared statement of Ms. Book follows:]

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    Ms. Solis. Thank you very much. Before I turn to our 
members for questioning, I want to request unanimous consent 
for 3 items. One is a press release and fact sheet concerning 
consumer awareness of the transition by the Consumer 
Electronics Association, second, a letter from Commissioner 
Copps, the FCC to Chairman Martin concerning steps the FCC 
should take to prepare for the DTV transition, and then third a 
letter sent by Chairman Martin to the Consumer Electronics 
Retailers Coalition regarding the availability of low cost 
converter boxes. I request unanimous consent to submit these 
for the record.
    [The information appears at the conclusion of the hearing.]
    Ms. Solis. And I would recognize Congressman Gonzalez from 
Texas for a line of questioning. He has 5 minutes.
    Mr. Gonzalez. Thank you very much, Madam Chair. The 
question is going to be to Dr. Book because you had mentioned 
something about making available emergency converter box and 
then your time was up, and I am not going to let you get away 
with that. So what is an emergency converter box?
    Ms. Book. Well, I was just trying to make the argument that 
there needs to be some system for hardship cases and that 
broadcasters should have either a supply of boxes on hand at 
the broadcast stations or retailers should be empowered to 
provide a box to a hardship case and know that they will be 
reimbursed for that so there needs to be some last resort so 
that people can solve people's problems.
    Mr. Gonzalez. Which I think is a good suggestion and we 
need to start thinking in those terms so the next question kind 
of goes to that. Mr. McLean, I am trying to figure out the 
relationship between the deadline and such. In your written 
testimony you point out an important fact and that is going to 
be applications for the coupons will be accepted up until what 
date?
    Mr. McLean. March 31 if there are sufficient resources to 
be able to fill coupon requests.
    Mr. Gonzalez. What was that date again?
    Mr. McLean. March 31.
    Mr. Gonzalez. All right. And then these coupons will have 
an expiration?
    Mr. McLean. Ninety days.
    Mr. Gonzalez. Ninety days, so that conceivably would still 
be going to the retailers to purchase these boxes all the way 
up until 90 days from whenever this coupon is issued, so that 
the supply has to be out there. I am not a business person. 
Obviously, I am in Congress and if I was a business person we 
would probably be running this show a little differently but 
inventory, are we going to have sufficient inventory because it 
seems to me that you are going to anticipate a surge of some 
sort and like most surges just regardless of their application 
the surge is temporary as well as the consequence of that surge 
so are you going to be--are these retailers going to be 
stocking tremendous numbers of converters figuring that after 
February 17 and so on that you are going to have a consistent 
high demand all the way 90 days after the March date?
    Mr. McLean. I can report that our members are working very, 
very hard to assure that our customers have product available 
when they want it, but you have identified I think precisely 
the challenge here because we are--we have no playbook. We have 
no prior program to look at. We have one future program. This 
is a once in 100 years, once in a lifetime transition, one of 
unprecedented complication, and one that is done on a free 
market basis where we have competitors unable to coordinate 
with each other on price or availability and you have like in 
Star Trek where you have the multi-level chess game where you 
have competitors in the market place moving product and price 
and supply in response to what other competitors are doing.
    We are analyzing the data from the coupon redemptions and 
fulfillments. We are looking at the data at the Wilmington 
experiment, and I know that they logistics and the buyers are 
studying that very hard to try to make the right decision. The 
big question is what happens when the coupon program ends. Do 
we have a product that suddenly is unpopular and we have 
shelves stocked with products that we cannot sell without a $40 
coupon, so that is another piece of the puzzle that our buyers 
are trying to make independently of course of each other and to 
make sure the customers are happy, so we are working very hard 
to make sure that we don't have a problem but we are in 
uncharted territory in general and it is going to take, I 
think, a high degree of data communication which thankfully we 
have received from NTIA and the FCC and the broadcasters to 
make sure that we can make adjustments as we approach those two 
critical dates.
    Mr. Gonzalez. And my fear is that we don't have that 
coordination as we get closer to it, and all I can say is what 
I am saying in anticipation, we had nothing about reissuance 
and that is an issue that has been out there for some time, 
under utilization, the number of boxes not being available, 
none of that. I know there is a certain degree of success but I 
am saying I hope this is not true, but I think the real 
challenge still awaits us as we get closer to that date. So all 
I am saying is let us just work together, try to give you as 
much predictability as possible so you retailers will have 
those boxes.
    Mr. Kittleman, I only have 4 seconds but I want to cover 
quickly, don't Spanish language TV stations have a totally 
different situation than your TV station, and that is they got 
competitors you don't have. Right over the border they are 
going to continue to broadcast in analog. Should that be a 
concern?
    Mr. Kittleman. You are correct. They do compete directly 
with Mexico channels. I would point out the largest station in 
Mexico, XERB, is already digital in our market.
    Mr. Gonzalez. And I am out of time. Thank you, Madam Chair.
    Ms. Solis. Thank you. Mr. Deal from Georgia for 5 minutes.
    Mr. Deal. Thank you. I want to go to an issue that has 
already been alluded to and that is the fact that a number of 
retransmission consent agreements are going to expire around 
the end of the year, and some cable operators as we have heard 
Mr. McSlarrow enunciate are concerned that if the programming 
is simply pulled at the end of the year because of a failure to 
reach an agreement on retransmission that there probably will 
be a confusion as to whether or not that actually is 
attributable to the DTV transmission issue. I have a quote from 
NAB, and I am going to ask Mr. Rehr and Mr. McSlarrow if they 
would respond to this after I give you the quote and then ask 
you a question.
    And the quote is this: ``Many major broadcast events will 
occur in early 2009, think National Football League playoffs 
and Super Bowl, and that a quiet period longer than 1 month 
would shift significant negotiating leverage away from 
broadcasters to the multi-channel video providers and without a 
resulting benefit to the public that could justify such a 
government thumb on the scale.'' Now my question is, and this 
is attributable to NAB from a publication broadcast I cable, 
the question is this: what significant negotiating leverage is 
NAB referring to? Do you believe that the broadcasters on 
admission of having significant negotiating leverages due to 
government created rules whereby they have the leverage of must 
carry and the retransmission consent regulatory regime and the 
significant negotiating leverage created by cable operators not 
being allowed to shop the broadcast signals from neighboring 
DMAs or is it simply a natural result of the so-called free 
market system? Mr. Rehr, I will start with you and then I will 
go to Mr. McSlarrow.
    Mr. Rehr. Thank you, Mr. Deal, for that question. I would 
like to, and I brought with me and I would like to put into the 
record, an explanation of the retransmission consent process. 
This hearing is about the DTV transition. We can get into the 
quiet period relating to it, but I think it will answer a 
number of concerns. Let me make just a couple points. Number 
one, the retransmission consent law has been in effect since 
1992. That means that there have been five cycles of tens of 
thousands of contracts, agreements, between cable and satellite 
operators and broadcasters. You can count the number of 
problems where there hasn't been some accommodation by all 
sides less than the number of fingers on my hand.
    So if we are looking at is it going to be a big problem and 
we multiply five cycles, which is probably in the upwards of 
30,000 to 40,000 contract less than 10 problems, that would 
give kind of the weight of significance to a potential problem. 
Number two, Congress wisely built in checks and balances since 
1992. For example, the FCC does have a right if either party, 
not just broadcasters but cable operators as well are not 
operating in good faith. There has only been one occasion when 
FCC has said a party has not been negotiating in good faith and 
it wasn't a broadcaster. It was a satellite distributor.
    The FCC has never found a broadcaster not operating in good 
faith. Point number three, local communities see the benefits 
of this local programming in this retransmission process and I 
have a great respect and a great admiration for my good friend, 
Kyle McSlarrow, but broadcasters, local broadcasters, have to 
choose for 3 years must carry or retransmission consent. Once 
you choose retransmission consent there are a number of 
variable on the table which are negotiation with cable 
operators including program insertion options, spot sales, 
fiber runs between transmitters and head ends, promotion spot 
guarantees, channel position, tier placement, et cetera, et 
cetera, et cetera. It is all outlined in this kind of what I 
refer to as the Candyland way to understand retransmission.
    Mr. Deal. I apologize for interrupting you, but I am down 
to less than a minute. Let me use that for Mr. McSlarrow to 
respond.
    Mr. McSlarrow. I don't think this is a matter of good 
faith. I think this is the structure of the system. People in 
good faith can reach a result that harms consumers, and it is 
different in 2008 and it is increasingly becoming different, I 
think, in the out years from the way it has been the last 15 
years. The economics and the balance of leverage, if you will, 
was roughly equivalent for many years, and I think as David 
said in most cases people work it out in a way that serves 
consumers' interests, but you are now talking about public 
statements from what used to be--and remember every broadcaster 
has said it today, free over-the-air. You are not talking about 
exorbitant cash demands. They are going to change the balance 
and put operators who stand in the shoes of their consumers in 
a position of having to either pass that cost on or to insist 
that it be something lower which is what raises the threat of 
pulling the signal.
    The quote that you just read, assuming that it is an 
accurate quote, I think, tells the story. The point is if you 
are saying we have a retransmission agreement that expires 
December 31, what would get us through the digital 
transmission----
    Ms. Solis. Can you sum up real quick?
    Mr. McSlarrow. Yes. You would naturally just say take it 
from that point through the transition. The fact that they have 
chosen January as a carve out is precisely because some 
stations, some broadcasters would like to threaten the loss of 
signals. That is the risk of confusion.
    Ms. Solis. OK. Thank you. Our time is almost up but I still 
have 5 minutes so I want to go through my questions. But I want 
to just make a comment to Mr. Rehr, Mr. McSlarrow and others 
who have really worked with the Congress and the different 
entities in helping to bring about more awareness for the 
transition, particularly in the Spanish language media and the 
senior citizen and those different segments of our population. 
I really think that is great, but one of my questions still 
remains, how we do get the retailers to provide sufficient 
boxes there that are needed that are at a low cost preferably 
for many folks that can't afford them, and what is it going to 
take to make that happen. That is a question I have generally 
for Mr. Romeo.
    But I want to hold off for a minute because I want to go to 
Mr. Candelaria. You come from Texas, the area that may be 
affected more heavily in a different way regarding the 
transition here. And I wanted to ask you what has been your 
feeling or what are you picking up out there in terms of the 
information that is getting out to the Hispanic community about 
the transition?
    Mr. Candelaria. Well, the information is getting out there 
but not to the rate that we would like for it to get out there. 
And the simple barrier here is the Spanish language. We have 
over 310,000 people just in El Paso alone that are Spanish 
language dominant. They are not getting the information that 
they need on a regular basis. I mean they are watching our 
station but that is the difference between us and the English 
language stations. If their language was Spanish or at least 
bilingual then this wouldn't be an issue. This wouldn't even be 
a question anymore and it wouldn't be a fight.
    Ms. Solis. What about the issue regarding your opponents 
that say 4 years is too long and is actually going to be a cost 
that will be a burden on many that will be affected by this?
    Mr. Candelaria. Well, it is only a burden if they choose to 
continue analog but it is only optional. We have the same 
expense they do. We have converted, and our expenses are that 
much or more than any of the broadcast stations simply because 
of what we have, but the transition is we are asking for 4 
years just to appease certain people, and I think that that 
will give us enough time at least to get the majority of the 
Hispanic population in compliance.
    Ms. Solis. Could you touch on the public safety aspect 
issue?
    Mr. Candelaria. Well, yes. In El Paso alone we had the 100-
year flood a couple years ago and there were literally houses 
under water in El Paso. Imagine. And without our broadcasting 
signal and strength there were a lot of people that could have 
perished, and just the simple fact that, you know, natural 
disaster, you have the border war over there in Juarez where it 
is starting to spill over into El Paso where there is way over 
1,000 people have been killed in Mexico alone, and it is a 
disaster that is just waiting to spill over to the U.S. side of 
the border, and that is the concern just to mention a few 
things that we are greatly concerned about as far as our public 
safety.
    Ms. Solis. I wanted to ask you about advertising revenues 
for local affiliates. That is an important part of this debate. 
If tens of thousands of Spanish dominant households opt to 
watch Mexican analog TV instead of purchasing a converter box 
to transition to U.S.-based digital television advertising 
revenue for both English language and Spanish language border 
stations based in the U.S. would undoubtedly be impacted. 
Specifically how would a large drop off of Spanish dominant 
viewers in the border region affect revenue for both English 
and Spanish language affiliates?
    Mr. Candelaria. Well, the shift, right now our station is 
the leading station in the market both in revenue and in 
ratings, and a lot of the over-the-air signals that are 
predominantly Spanish dominant households receive that jut 
through the over-the-air waves, and the problem here is that 
there would be a shift because it is a dire rated market, and 
that shift would go away to the Spanish language Mexican 
stations simply because they are broadcasting in analog when 
everybody else is broadcasting----
    Ms. Solis. Is it disadvantaging some of our folks----
    Mr. Candelaria. It is a total disadvantage and the shift 
would go to the English station rating.
    Ms. Solis. Just one last question. We talked about the 
expiration of the coupons and if this program, if this bill 
were to be signed obviously there would have to be a whole new 
mechanism set up for something like that. How would you see 
something like that working?
    Mr. Candelaria. Well, it has got to be promoted well, and 
there has got to be an extension on the couponing, and we are 
over delivering our redemption rate in El Paso to the tune of 
about 240 percent, so I think with a little bit more time that 
is all we are asking is just a little more time to consistently 
promote, then we can foreseeably get the majority of the 
Hispanic population on board.
    Ms. Solis. And you are saying opting in is kind of a key 
word here that people need to know about. OK. We will recess 
momentarily for the chairman to come back. He is on his way 
back here to the committee and I have to go vote, so we will 
recess momentarily. Thank you to all the witnesses, by the way.
    [Recess.]
    Mr. Markey. The hearing is reconvened with apologies to our 
panel. Just for the purposes of understanding what is going on, 
we do not have a filibuster rule in the House of 
Representatives so you cannot filibuster. However, you can call 
any number of irrelevant roll calls to adjourn and do many 
things which is a substitute for what actually makes 
filibustering look rational. So that is what we are now engaged 
in out on the House floor and why the members have been running 
in and out like it is the 400 meter relay in the Olympics, and 
we just hope no one drops the gavel here on the Democratic side 
so that we are not disqualified. And we are trying our best 
here to be respectful of the panel, and we appreciate all the 
effort that you have made to be here and to present your 
testimony.
    So, Mr. McLean, how can we get retailers to stock more of 
the $40 analog pass-through devices so that consumers can watch 
this brand new technology?
    Mr. McLean. Well, our members have worked extraordinarily 
hard to get products onto the shelves. When they go to market 
individually and independently to purchase products, they have 
to be able to buy it at a scale that could fill hundreds of 
stores. And it is a complex matrix of features and price points 
and quality and returns that the retailers have to make. Our 
counsel has done a survey of online suppliers and has 
identified the $40 box available, but we have found that the 
supply chain issues that we faced at our last hearing were very 
severe and it required rapid action and in some cases 
extraordinary absorption of costs in order to be able to get 
pass-through boxes onto shelves.
    Among the members they have had to incur costs for air 
freighting the pass-through products. There has been a 
tremendous amount of training and point of sale requirements 
and complying with the program. As a coalition of competitors, 
we cannot do any kind of coordination on price or product so 
each one of our members are making individual decisions. I will 
let the chairman know, however, with Chairman Martin's letter 
introduced into the record today and published on the web last 
night everyone of our members is aware of Chairman Martin's 
request about the $40 box.
    Mr. Markey. We are going to have a really, really difficult 
situation along the border. And what do you need in order to 
insure that all the companies are cooperating at the point at 
which that becomes a much more urgent matter? What do you need 
from us? Do you need an anti-trust exemption for that purpose? 
Do you need something that we can make legal for a temporary 
period of time in order to deal with the specific situation 
because I would like to be able to find a way in which we can 
authorize all of you to go into one room and then all of you 
are responsible for putting together a plan and then we can 
hold you all accountable if something goes wrong rather than 
saying, well, we didn't have stores here, there or the other 
place. So do you need an antitrust exemption?
    Mr. McLean. Well, our members have of course accepted the 
premise of the program itself which did not----
    Mr. Markey. No, that is great, that is great. I just don't 
like the fact that you are not able to talk to each other 
comfortably if that is what I am picking up from your 
testimony.
    Mr. McLean. Well, we certainly under the current law cannot 
coordinate price, product selection, terms of sale. That is 
absolutely prohibited as a coordinated basis. In terms of the 
border, I can tell you that each one of our members has gone to 
extraordinary lengths to be able to have Spanish language and 
English language availability of information. There are 
installation videos available in Spanish. There is tremendous 
outreach through the DTV coalition into Hispanic community in 
order to be able to put forward the urgency of conversion, and 
in the fact the polling validates that among the highest level 
of awareness is in the Hispanic community.
    Mr. Markey. So they can't talk to each other though. Can 
they talk to you? Can each company talk to you? Does each 
company talk to you?
    Mr. McLean. Companies do talk and there are things they 
cannot tell other companies.
    Mr. Markey. You can know everything though, is that right? 
That is the point I am trying to reach. You can know everything 
even if you can't share it with the other companies?
    Mr. McLean. Counsel advises me that I may not be able to 
know everything. I certainly would not pretend to know 
everything.
    Mr. Markey. How about this, if we asked you the questions 
that we want to have answered, could you ask each one of the 
companies to tell you what the answers to those questions are 
and then you tell us, would that violate any law?
    Mr. McLean. It depends. Again, counsel advised me it 
depends on the subject matter. However, that is precisely how 
we prepared our testimony today is----
    Mr. Markey. I want you to share the specifics with us and 
then we will know who to really cut down hard on. So does that 
violate anything that you can then tell us and then we will 
know who you think isn't doing the job, and if you tell us 
everyone is doing the job then we can rely upon you to be the 
person who is determined that they are all doing the job. Can 
we construct something like that?
    Mr. McLean. I can certainly report to you that each one of 
our members is working very hard----
    Mr. Markey. I know that. What I would like to do here is 
make sure that it is coordinated to the maximum extent possible 
so that there are companies getting an A in your opinion, a B, 
not generally. Generally, the class is doing very well. But 
there is a first row and a last row and then it averages out to 
a grade in the middle. I just want to know who is getting the 
A's if you can kind of tell us, and who is in the last row and 
then we can coordinate to get Mr. Candelaria down here a little 
bit more comfort that the stores are going to have--we got to 
know who is not doing the job.
    Mr. McLean. And, Mr. Chairman, your analogy of the 
classroom is exactly perfect because some of my class members 
excel in certain areas and others excel in others, and yet they 
are not coordinated in any way. We have some members that are 
online retailers, some members that have telephone services, 
some members that are exclusively consumer electronics and some 
members that are general retailers.
    Mr. Markey. I appreciate that. You know, the nuns at the 
Immaculate Conception grammar school, we had 60 boys in the 
room and there were six rows of 10 a piece. There was a first 
row and a last row, if you know what I mean. In the last row 
the sister would always let them know what they needed to do to 
get out of the last row, but you needed first to know who was 
in the last row. She had high expectations for them because she 
really wanted them to maximize all their God-given abilities 
but it wasn't as though there was some charitable attitude that 
there was an average here in the middle that they could benefit 
from. OK. So all I am saying to you is, and we are going to 
press you on this and then hold you accountable that we are 
going to use you as an intermediary to insure that there is 
accountability so that if during that period of time which has 
more urgency something has gone wrong, OK, that you will have 
had the ability to know.
    Mr. McLean. And our ability to inquire on price and product 
plans is limited. I do not want to be sent to Mother Superior's 
office as a result of those inquiries.
    Mr. Markey. Mr. Setos, your testimony paints the broadcast 
flag as pro-consumer and you are sitting next to Mr. Murray who 
differs as a consumer advocate. Could you tell me succinctly 
why you think he is mistaken and then, Mr. Murray, if you could 
respond. Mr. Setos.
    Mr. Setos. Thank you, Chairman. The challenge we face, and 
I sit here not as a producer of a movie studio, not as a 
broadcast network, but as the operator of 27 full power local 
broadcast stations, and many corporations are operated like 
this. The local broadcast stations are very concerned. The ones 
that we own and operate, they will not be able to compete for 
high quality, high value content in the coming years because 
their content can now be absconded with and transmitted all 
over the world in digital pure high definition form with 
impunity, and other platforms such as pay television operators, 
cable satellite, even on the Internet like iTunes insure that 
the content is only used as the official bargain to the 
consumer so states.
    And so those local broadcasters are saying to their own 
company we are very exposed, we are very concerned, and so the 
benefit that it brings is as I said in my testimony it 
continues the promise of free local television in the market. 
On the other side of the equation is what harm might this 
cause, and as I have mentioned in this testimony and previous 
testimonies the flag doesn't add any cost to the product nor 
any limitations to the product nor does it obsolete any product 
that was ever sold to a consumer or probably is going to be 
sold to a consumer so we see no down side except what the rule 
that the Commission did pass in fact insures that products that 
see the flag in a broadcast won't allow that content to be 
indiscriminately redistributed. Thank you, Mr. Chairman.
    Mr. Markey. Mr. Murray.
    Mr. Murray. I come at this as a big believer in innovation 
and competition. I think that we are better suited by if we 
turn the Federal Communications Commission into the Federal 
Computer Commission and have them have purview over a series of 
consumer electronics products and have to have companies vet 
business plans through the agency, I think that is ill suited 
to innovation and ill suited to strong competition. I don't see 
revenues eroding rapidly. In fact, some have made the case that 
market share is growing because of additional content 
distribution.
    We are not saying people shouldn't be able to protect their 
products. We just don't think that they should be able to fob 
off a mandate onto the whole of the consumer electronics 
industry to get that done. We have been through this throughout 
the broadcast flag. We thought it was anti-consumer then. We 
think it is anti-consumer now.
    Mr. Markey. Back to you, Mr. Setos, 30 seconds.
    Mr. Setos. Well, the court threw it out because the 
judicial branch pointed out that the FCC didn't have the 
jurisdiction, not on the merits, not on the substance.
    Mr. Markey. Back to you, Mr. Murray.
    Mr. Murray. Right. The FCC doesn't have jurisdiction, I 
think, to be regulating consumer electronics products given a 
mandate to manufacturers. The story of the motion picture 
industry has been a struggle to lock down technology since the 
1980s. We have heard from them then that the VCR was to--the 
motion picture industry is the Boston Strangler as to the woman 
alone and of course the end of that story was that it became 
the most lucrative slice of their copyright pie. But how do we 
lock that technology down? Then I don't think we would have 
seen all of the benefits of innovation that we have seen over 
the last 20 years.
    Mr. Markey. Well, thank you. We thank each of you. The roll 
call did go off one more time, and there is 5 minutes left to 
go on the House floor on that roll call, so I think I can 
report to you that a sense of relief can set in down at the 
witness table that no members of Congress will return here to 
ask you any more questions. So it is with the thanks of the 
committee, and we know that everyone here is interested in the 
solution. We just have to make sure that everyone else that is 
related to each one of the entities that is represented down 
here has the same sense of commitment and that is really our 
highest goal.
    We think we can do this but we absolutely have to have a 
plan because the consequences can be catastrophic. Thank you so 
much. The hearing is adjourned.
    [Whereupon, at 1:25 p.m., the subcommittee was adjourned.]
    [Material submitted for inclusion in the record follows:]

                    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 results 
of the test run in North Carolina. I understand that the public 
awareness of the switch was high but that in executing the 
switch and hooking up the equipment there were major problems. 
I believe this shows that the FCC and the stakeholders still 
have a considerable amount of work to do and urge them to 
concentrate almost exclusively on these issues as we go forward 
to February 17, 2009. I remain concerned that seniors, non-
English speaking, and lower income Americans are in danger of 
being left behind.
    I look forward to all the witness's 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.
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