[Senate Hearing 110-1168]
[From the U.S. Government Publishing Office]




                                                       S. Hrg. 110-1168
 
       PREPARING CONSUMERS FOR THE DIGITAL TELEVISION TRANSITION

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


                                HEARING

                               before the

                         COMMITTEE ON COMMERCE,

                      SCIENCE, AND TRANSPORTATION

                          UNITED STATES SENATE

                       ONE HUNDRED TENTH CONGRESS

                             FIRST SESSION

                               __________

                             JULY 26, 2007

                               __________

    Printed for the use of the Committee on Commerce, Science, and 
                             Transportation





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       SENATE COMMITTEE ON COMMERCE, SCIENCE, AND TRANSPORTATION

                       ONE HUNDRED TENTH CONGRESS

                             FIRST SESSION

                   DANIEL K. INOUYE, Hawaii, Chairman
JOHN D. ROCKEFELLER IV, West         TED STEVENS, Alaska, Vice Chairman
    Virginia                         JOHN McCAIN, Arizona
JOHN F. KERRY, Massachusetts         TRENT LOTT, Mississippi
BYRON L. DORGAN, North Dakota        KAY BAILEY HUTCHISON, Texas
BARBARA BOXER, California            OLYMPIA J. SNOWE, Maine
BILL NELSON, Florida                 GORDON H. SMITH, Oregon
MARIA CANTWELL, Washington           JOHN ENSIGN, Nevada
FRANK R. LAUTENBERG, New Jersey      JOHN E. SUNUNU, New Hampshire
MARK PRYOR, Arkansas                 JIM DeMINT, South Carolina
THOMAS R. CARPER, Delaware           DAVID VITTER, Louisiana
CLAIRE McCASKILL, Missouri           JOHN THUNE, South Dakota
AMY KLOBUCHAR, Minnesota
   Margaret L. Cummisky, Democratic Staff Director and Chief Counsel
Lila Harper Helms, Democratic Deputy Staff Director and Policy Director
   Christine D. Kurth, Republican Staff Director and General Counsel
Kenneth R. Nahigian, Republican Deputy Staff Director and Chief Counsel
                            C O N T E N T S

                              ----------                              
                                                                   Page
Hearing held on July 26, 2007....................................     1
Statement of Senator Cantwell....................................    28
Statement of Senator Inouye......................................     1
Statement of Senator Klobuchar...................................    21
Statement of Senator McCaskill...................................    23
Statement of Senator Smith.......................................    31
Statement of Senator Snowe.......................................    26
Statement of Senator Stevens.....................................    15
    Prepared statement...........................................     7
Statement of Senator Sununu......................................    18
Statement of Senator Thune.......................................    33

                               Witnesses

Barnett, Nelda, Member, Board of Directors, AARP.................    37
    Prepared statement...........................................    38
Kneuer, Hon. John M.R., Kneuer, Assistant Secretary for 
  Communications and Information, National Telecommunications and 
  Information Administration, U.S. Department of Commerce........     2
    Prepared statement...........................................     4
Nogales, Alex, President and CEO, National Hispanic Media 
  Coalition......................................................    41
    Prepared statement...........................................    43
Seidel, Catherine W., Chief, Consumer and Governmental Affairs 
  Bureau, Federal Communications Commission......................     7
    Prepared statement...........................................    11
Zirkin, Nancy M., Vice President, Director of Public Policy, 
  Leadership Conference on Civil Rights (LCCR)...................    45
    Prepared statement...........................................    46

                                Appendix

Lautenberg, Hon. Frank R., U.S. Senator from New Jersey, prepared 
  statement......................................................    51
Letter, dated July 26, 2007 to Hon. Daniel K. Inouye and Hon. Ted 
  Stevens, from Gary Shapiro, President and CEO, Consumer 
  Electronics Association........................................    55
Letter, dated August 30, 2007 to Hon. Claire McCaskill from John 
  M.R. Kneuer, Assistant Secretary for Communications and 
  Information, National Telecommunications and Information 
  Administration, U.S. Department of Commerce....................    51
Response to written questions submitted by Hon. Frank R. 
  Lautenberg to:
    Hon. John M.R. Kneuer........................................    56
    Catherine W. Seidel..........................................    57


       PREPARING CONSUMERS FOR THE DIGITAL TELEVISION TRANSITION

                              ----------                              


                        THURSDAY, JULY 26, 2007

                                       U.S. Senate,
        Committee on Commerce, Science, and Transportation,
                                                    Washington, DC.
    The Committee met, pursuant to notice, at 10 a.m. in room 
SR-253, Russell Senate Office Building, Hon. Daniel K. Inouye, 
Chairman of the Committee, presiding.

          OPENING STATEMENT OF HON. DANIEL K. INOUYE, 
                    U.S. SENATOR FROM HAWAII

    The Chairman. Between 15 and 21 million households rely 
exclusively on over-the-air television. Many more have second 
and third over-the-air sets in their homes.
    In February 2009, these Americans could see their TVs go 
dark, disconnecting them from the news, public safety 
announcements and their community, unless they get a converter 
box and attach it to their television. Yet, far too few of 
these consumers know that the transition from current analog TV 
technology to digital TV is underway.
    An article in the--last month's National Journal stated 
that only 10 percent of our citizens know that DTV transition 
is slated for 2009. Many stakeholders in industry, in 
government, and in our communities are engaged in well-intended 
efforts to publicize and promote the upcoming transition. To 
date, however, their efforts have yielded too few results. We 
need to get the digital transition right.
    Consumers stand to benefit mightily from the DTV 
transition. They can expect sharper pictures, served up with 
CD-quality sound that provides a dramatically improved viewing 
experience. DTV also makes possible multicasting. This could 
mean whole new channels devoted to local news, weather, 
children's fare, and non-English-language programming. Along 
with these improvements, public safety will receive unbroken 
slices of our airwaves to enable interoperable communications 
and improve information-sharing.
    Managing the transition is, by no means, easy. We are now 
nearly 18 months away. We have seen working groups, 
conferences, tip sheets, and a converter box coupon plan. What 
we do not have yet is a public that is aware that digital TV 
and--transition is taking place.
    The time to act is now, before the digital transition 
devolves into a digital disaster. We must work together to 
ensure that no citizen is left behind in the transition to 
digital television.
    Today, we have a panel of very knowledgeable and 
distinguished men and women. Our first panel is the Assistant 
Secretary of Commerce, for Communications and Information of 
the National Telecommunications Information Administration of 
the Department of Commerce, the Honorable John Kneuer; and the 
Chief of the Consumer and Governmental Affairs Bureau of the 
Federal Communications Commission, Ms. Cathy Seidel.
    Secretary Kneuer, welcome, sir.

         STATEMENT OF HON. JOHN M.R. KNEUER, ASSISTANT

          SECRETARY FOR COMMUNICATIONS AND INFORMATION

  NATIONAL TELECOMMUNICATIONS AND INFORMATION ADMINISTRATION, 
                  U.S. DEPARTMENT OF COMMERCE

    Mr. Kneuer. Thank you, Mr. Chairman. Thanks for having me, 
and for this opportunity to testify before you.
    As you know, NTIA's traditional responsibilities have 
expanded considerably with the enactment of the Deficit 
Reduction Act of 2005. Specifically, the Act charged NTIA to 
administer a number of new one-time programs to be funded from 
the anticipated spectrum auction proceeds associated with the 
transition to digital television. These programs include our 
recently announced Public Safety Interoperable Communications 
Program, as well as two important initiatives that are directly 
germane to the digital TV transition.
    First, Congress directed NTIA to implement a Digital-to-
Analog Converter Box Program, provide financial assistance to 
those consumers that wish to continue to receive broadcast 
programming over-the-air, using existing analog-only 
televisions.
    Second, to ensure that viewers in primarily rural and 
remote areas who rely on LPTV or television translator stations 
are able to continue to receive these services, Congress 
authorized NTIA to provide funding to assist licensees of those 
stations with the transition.
    Under the Digital-to-Analog Converter Box Program, eligible 
U.S. households may obtain up to two coupons of $40 each to be 
applied toward the purchase of a digital-to-analog converter 
box. The Act authorizes NTIA to use up to $990 million to carry 
out this program, including up to $100 million for program 
administration, $5 million of which will be used for consumer 
education. It authorizes an additional $510 million in 
contingent funding, to be available upon 60 days notice to the 
Congress.
    To meet the mandated deadlines to start and complete this 
coupon program, we published a request for proposals in March 
to procure end-to-end services to implement and administer the 
coupon program, including the consumer education and 
communications component. I'm happy to report, this procurement 
process is well underway. We expect to make an award by the 
middle of this month.
    To make the most effective use of the $5 million available 
for consumer education, NTIA has focused its consumer education 
resources on population groups most likely to lose television 
service as a result of the transition. We'll obtain optimum 
leverage from those dollars by maximizing our engagement with 
the diverse range of stakeholders through partnerships. Indeed, 
we received support from many partners in the private sector 
who are working to help inform consumers of the digital 
transition.
    Over 120 business, trade, and industry groups, as well as 
grassroots and membership organizations that share an interest 
in the transition, came together earlier this year to charter 
the Digital Television Transition Coalition. NTIA has been 
working with the coalition since its inception. To reach those 
most likely to be affected by the digital transition, NTIA has 
identified five target groups for its consumer education 
efforts: seniors, the economically disadvantaged, rural 
residents, people with disabilities, and minorities.
    With respect to seniors, NTIA is working closely with the 
AARP to ensure that the coupon program is highlighted in their 
publications and online newsletters. We're also reaching out to 
establish partnerships with the Administration on Aging, the 
National Council on Aging, SeniorNet, and other organizations, 
to ensure that seniors are not caught by surprise by the 
digital transition.
    We're expanding our outreach efforts into minority and 
rural communities. We'll work with the U.S. Hispanic Chamber of 
Commerce, the U.S. Black Chamber of Commerce. NTIA is also 
partnering with the Southeast Asian Resource Action Center to 
translate and distribute coupon program information in Chinese, 
Korean, Vietnamese, and Filipino communities. We're pursuing 
partnerships with the Koahnic Broadcast Corporation for the 
dissemination of coupon information to Alaskan native villages, 
as well as Native Voice One to reach tribal reservations 
through radio communications.
    We've printed our brochures in both English and Spanish to 
explain the digital transition and the options available to 
households, depending on the type of television service. We've 
distributed copies of those brochures to every member of the 
House and Senate, community organizations, constituency groups, 
industry stakeholders.
    We've established a toll-free number, 1-888-DTV-2009. This 
is currently in English, Spanish, and with TTY capability for 
people who are hearing-impaired. In addition to the toll-free 
number, we're working with the American Association of People 
with Disabilities, we maintain our website, Consumer 
Information Accessible Form, to ensure disabled Americans are 
made aware of the transition.
    In addition to the private sector partnerships I've 
discussed, we are also leveraging our relationships with other 
governmental agencies to extend the reach of our message. In 
particular, we will work with agencies that target economically 
disadvantaged Americans. We're currently in discussions with 
the IRS, the U.S. Department of Agriculture Food Stamp Program, 
Social Security Administration, Department of Veterans Affairs, 
GSA, and others.
    As I mentioned at the outset, Title III also directed NTIA 
to implement and administer programs related to the digital 
television transition with regard to eligible low-power 
television and television translator stations, to obtain 
equipment to enable them to convert the incoming digital 
signals into broadcast format, and to ultimately convert to the 
digital signals. We've been working aggressively to effectuate 
the statute's requirements to begin the program authorized 
under the statute, and recently posted information about these 
programs on our website.
    Thank you, again, for the opportunity to testify, and I'll 
certainly look forward to your questions.
    [The prepared statement of Mr. Kneuer follows:]

 Prepared Statement of Hon. John M.R. Kneuer, Assistant Secretary for 
    Communications and Information, National Telecommunications and 
        Information Administration, U.S. Department of Commerce
    Mr. Chairman and Members of the Committee, thank you for this 
opportunity to testify before you today. As you know, NTIA is 
responsible for the development and implementation of United States 
national policies related to domestic and international 
telecommunications and for the effective use of Federal radio spectrum 
and state-of-art telecommunications research, engineering, and 
planning. NTIA also administers the provision of grants in support of 
the equipment needs of public broadcasting stations.
    NTIA's responsibilities have expanded considerably with the 
enactment of the Deficit Reduction Act of 2005. Specifically, the Act 
charged NTIA to administer a number of new one-time programs to be 
funded from anticipated spectrum auction proceeds associated with the 
transition to digital television broadcasts through the Digital 
Television Transition and Public Safety Fund. These programs include 
our recently announced Public Safety Interoperable Communications 
(PSIC) Grant Program and two other important initiatives that are 
directly germane to the digital television transition that is the 
subject of today's hearing: (1) the Digital-to-Analog Converter Box 
Coupon Program, and (2) the Low-Power Television (LPTV) and translator 
digital conversion and upgrade programs. My testimony today will focus 
chiefly on our activities with respect to the Converter Box Coupon 
Program, which will most immediately help to prepare consumers for the 
transition. However, before closing, I would also like briefly to 
discuss our work in the LPTV and translator areas.
NTIA's Role in the Digital-to-Analog Transition
    Title III of the Deficit Reduction Act of 2005 (the Act) directed 
the Federal Communications Commission (FCC) to require full-power 
television stations to cease analog broadcasting on February 17, 2009. 
To avoid any unnecessary service disruptions for American television 
viewers during the conversion from analog to digital television 
broadcasting, the Act established, and directed NTIA to administer, two 
sets of programs. As I will explain, these programs are intended to 
bridge the gaps between the analog and digital platforms that will 
continue to exist for some period of time.
    First, Congress directed NTIA to implement a Digital-to-Analog 
Converter Box Coupon Program to provide financial assistance to those 
consumers that wish to continue receiving broadcast programming over-
the-air using analog-only televisions not connected to cable or 
satellite service. Second, to ensure that viewers in primarily rural 
and remote areas who rely on LPTV or television translator stations are 
able to continue to receive these services, Congress authorized NTIA to 
provide funding to assist licensees of these stations with obtaining 
equipment to (A) enable them to convert the incoming digital signal of 
their corresponding full-power station to analog format for 
rebroadcast; and (B) to ultimately convert the LPTV and translator 
facilities themselves to broadcast in digital format.
The Digital-to-Analog Converter Box Coupon Program
    Under the Digital-to-Analog Converter Box Coupon Program, eligible 
U.S. households may obtain up to two coupons of $40 each to be applied 
toward the purchase of digital-to-analog converter boxes that will 
convert digital signals for display on analog television sets. The Act 
authorizes NTIA to use up to $990 million to carry out the program, 
including up to $100 million for program administration, $5 million of 
this for consumer education. It also authorizes an additional $510 
million in contingent funding to be available upon 60 days advance 
notice to Congress.
Activities to Date
    NTIA has made substantial progress in fulfilling its requirements 
under the law to ensure that coupons for converter boxes will be 
available to U.S. households upon request beginning January 1, 2008. 
Because the auction receipts that fund this program are not anticipated 
to be available until after this date, NTIA entered into a Borrowing 
Agreement in May 2006 with the Department of Treasury to borrow funds 
necessary to implement the Coupon Program. NTIA then initiated a 
rulemaking seeking comments from interested parties on the most 
efficient and effective way to administer the program. In March of this 
year, NTIA published regulations that set forth the framework for the 
Coupon Program and provide guidance to consumers, converter box 
manufacturers, and retailers. The regulations outline requirements 
related to household eligibility, converter box technical 
specifications, and retailer certification. Shortly after releasing the 
rules, NTIA held its first public meeting to discuss various aspects of 
the Coupon Program.
    To meet the mandated deadlines to start and complete the Coupon 
Program, NTIA published a Request for Proposals (RFP) in March of this 
year to procure end-to-end services to implement and administer the 
Coupon Program. The procurement covers three broad, functional areas: 
(1) consumer education and communications; (2) systems processing 
(e.g., determining consumer eligibility, distributing and activating 
coupons, certifying retailers, and providing training materials); and 
(3) financial processing (e.g., administering the processes to 
authorize coupons for redemption and ensure payment to retailers, and 
performing independent auditing). I am pleased to report that this 
procurement process is well underway, and we expect to make an award by 
mid-August.
    NTIA also continues to collaborate with the FCC to ensure that the 
converter boxes offered to consumers under this program meet our 
technical specifications. In that regard, NTIA and the FCC entered into 
a Memorandum of Understanding pursuant to which the Commission will 
provide verification and testing services for the converter boxes. 
Moreover, in May of this year, NTIA issued a Notice that provides 
guidance to converter box manufacturers regarding the submission of 
test results and sample equipment. To accommodate the numerous 
inquiries that the agency receives daily from consumers, manufacturers 
and retailers, NTIA maintains and continuously updates a ``Frequently 
Asked Questions'' section on our website.
Consumer Education Initiatives
    As the title of this hearing reflects, it is essential that 
consumers be prepared for the digital television transition. The 
success of the transition will be judged by how smoothly and 
efficiently it occurs, and this will depend to a critical extent on 
effective outreach to consumers. Consumers will need to know the 
options available to them to participate in the transition. For 
example, consumers who receive cable, satellite or other pay-television 
services to view television will not need converter boxes. Likewise, 
consumers that have televisions equipped with digital receivers will 
not need a converter box. Neither of these groups will need to apply 
for a coupon as part of NTIA's program. Likewise, consumers may choose 
to effect the transition on their own, by subscribing to cable or 
satellite, buying a digital television, or buying a converter box with 
additional functionality, such as a DVD.
    As I mentioned earlier, the Act allotted NTIA $5 million for 
consumer education. To make most effective use of these funds, NTIA 
will focus its consumer education resources on population groups most 
likely to lose all television service as a result of the transition, 
and we will obtain optimum leverage from those dollars by maximizing 
the engagement of a diverse range of stakeholders through partnerships. 
In this regard, I would like to acknowledge the support we have 
received from our many partners in the private-sector who have stepped 
up to the plate to help inform consumers of the digital transition.
    Over 120 business, trade and industry groups, as well as grass 
roots and membership organizations that share an interest in a smooth 
transition, came together earlier this year to charter the Digital 
Television Transition Coalition to ensure that no consumer is left 
without broadcast television due to a lack of information about the 
transition. The Coalition will use marketing and public education 
strategies including paid and earned media placements to distribute 
consistent, unified, and accurate information about the transition. 
NTIA will work with the Coalition to coordinate our messages. In 
particular, we encourage the industry to get the message out about the 
benefits of the digital transition. For example, consumers should be 
made aware that digital transmission is a more efficient technology 
that will allow broadcasters to provide a better viewing experience and 
give consumers more choices while using less radio spectrum.
    We also understand that consumer education must be made at an 
optimal time to afford consumers sufficient time to prepare for the 
transition. To reach those most likely to be affected by the digital 
transition, NTIA has identified five target groups for its consumer 
education efforts: (1) seniors: (2) the economically disadvantaged; (3) 
rural residents; (4) people with disabilities; and (5) minorities.
    With respect to seniors, NTIA is working closely with the AARP to 
ensure that the Coupon Program is highlighted in their publications and 
online newsletters. AARP The Magazine reaches 22.5 million of the 
organization's members and AARP Segunda Jeventud reaches another 
400,000 members. NTIA is also working with the American Library 
Association to distribute posters and coupon applications to 
participating libraries, and to train librarians to help seniors fill 
out coupon applications. NTIA has also reached out to establish 
partnerships with the Administration on Aging, the National Council on 
Aging, SeniorNet, and other organizations to ensure that seniors are 
not caught by surprise by the digital transition. During the recent 
National Cable and Telecommunications Association convention, I 
participated on a panel hosted by Retirement Living TV, available via 
cable to 24 million households, for the purpose of raising awareness 
among seniors of the upcoming digital transition.
    NTIA is also expanding its outreach efforts into minority and rural 
communities. We will work with the U.S. Hispanic Chamber of Commerce 
and the U.S. Black Chamber of Commerce to disseminate coupon 
application information nationwide through retailers in predominantly 
Hispanic and African-American neighborhoods. NTIA is also partnering 
with Southeast Asia Resource Action Center to translate and distribute 
coupon program information in Chinese, Korean, Vietnamese and Filipino 
communities. We are pursuing partnership opportunities with Koahnic 
Broadcast Corporation for dissemination of coupon information to 
Alaskan Native villages as well as Native Voice One to reach tribal 
reservations through radio communications. In addition, NTIA will 
collaborate with the Appalachian Regional Commission to distribute 
information packets about the transition to 70 councils of government 
and local development districts representing 23 million people in 410 
counties (42 percent rural).
    Moreover, we have printed brochures in both English and Spanish to 
explain the digital transition and the options available to households 
depending on the type of television service, and we have distributed 
copies of these brochures to every member of the House and Senate, 
community organizations, constituency groups, and industry 
stakeholders. We have also established a toll free number, 1-888-DTV-
2009, to assist consumers who do not have Internet access, are hearing 
impaired, or who simply prefer to receive information about the Coupon 
Program over the telephone. In addition to this toll-free number, NTIA 
is working with the American Association of People with Disabilities 
(AAPD), and we maintain our website and consumer information in 
accessible form to ensure disabled Americans are made aware of the 
transition.
    The NTIA staff will also continue to participate in meetings and 
conferences over the next 2 years to spread the word about the 
transition as well as the Coupon Program through events such as the 
upcoming White House Faith-Based and Community Initiatives Conference 
in August and the AARP convention in September. We will be hosting a 
public meeting on September 25, 2007, to discuss progress in educating 
the public about the Coupon Program. This public meeting will focus on 
our partnerships in the digital transition and will feature two CEO-
level panels from the impacted industries. The public meeting will also 
include an expo in the Department of Commerce lobby which will include 
displays form over a dozen companies and organizations featuring 
products and services to enable consumers to make a smooth digital 
transition. We invite you to attend that meeting and welcome any 
suggestions or concerns you have about the Coupon Program.
Government Partnerships
    In addition to the private sector partnerships discussed above, 
NTIA will also leverage our relationships with other governmental 
agencies to extend the reach of our message. In particular, we will 
work with agencies that target economically disadvantaged Americans. We 
are currently in discussions with the Internal Revenue Service, the 
U.S. Department of Agriculture Food Stamp Program; the Social Security 
Administration; the Department of Veterans Affairs; the White House 
Office of Faith-Based and Community Initiatives; the General Services 
Administration; and the Department of Health and Human Services' 
Administration for Children & Families, Administration on Aging, and 
Centers for Medicare & Medicaid Services.
    Separately, as I noted above, we are also working in cooperation 
with the FCC to implement significant measures to increase awareness 
among the general public about the DTV transition and the Coupon 
Program. Both the www.DTV.gov webpage and NTIA's website, 
www.ntia.doc.gov/otiahome/dtv/index.html, provide significant 
information about all aspects of the transition. I encourage the 
Members of this Committee, and all of Congress, to help us in this 
important effort by linking your own websites to these consumer 
education materials.
The Low-Power Television and Translator Upgrade Program
    As I mentioned at the outset, Title III of the Deficit Reduction 
Act of 2005 also directed NTIA to implement and administer other 
programs related to the digital television transition. Specifically, it 
mandates that we provide funding to assist licensees of eligible Low-
Power Television and television translator stations to obtain equipment 
to enable them to convert the incoming digital signal of their 
corresponding full-power station to analog format for rebroadcast; and 
to ultimately convert the LPTV and translator facilities themselves to 
broadcast in digital format. We have been working aggressively to 
effectuate the statute's requirements to begin the program authorized 
under Section 3008 of the Act in Fiscal Year 2008 and recently posted 
information about these programs on our website (www.ntia.doc.gov/
otiahome/dtv/lptv.html).
    With respect to the LPTV and translator upgrade program under 
Section 3009 of the Act, however, NTIA has discovered an inconsistency 
in the statute that we believe must be corrected in order to enable us 
to implement Congress' intent. Specifically, as presently drafted, 
Section 3009 requires the Assistant Secretary to ``make payments . . . 
during Fiscal Year 2009 from the Digital Television Transition and 
Public Safety Fund . . . to implement and administer [the] program''; 
however, the same provision later states that ``[s]uch reimbursements 
shall be issued to eligible stations no earlier than October 1, 2010'' 
(i.e., the beginning of Fiscal Year 2011).
    These conflicting payment obligations cannot be resolved without a 
technical correction to the dates contained in Section 3009 of the Act. 
The Department of Commerce has raised this issue with appropriate 
Congressional authorizers and appropriators to suggest a legislative 
remedy.
    In conclusion, I want to thank the Committee for the opportunity to 
testify before you today. I will be happy to answer your questions.

    The Chairman. Thank you very much, Mr. Secretary.
    Ms. Seidel, before I call upon you, I'll call upon the Vice 
Chairman for his opening remarks.
    Senator Stevens. Well, thank you very much, Mr. Chairman. 
I'm sorry to be late, but I would like to put my statement in 
the record, as though read, to begin with.
    The Chairman. Without objection, so ordered.
    [The prepared statement of Senator Stevens follows:]

    Prepared Statement of Hon. Ted Stevens, U.S. Senator from Alaska
    Thank you, Mr. Chairman, for holding this important hearing. One of 
the most important steps this Committee took last year, on a bipartisan 
basis, was to set a hard date for the digital television transition. 
This transition will reap important benefits for all Americans, but 
especially with respect to public safety because they will receive much 
needed spectrum. Additionally, the auction will fund vital programs 
like the $1 billion for interoperability grants, $1.5 billion for the 
convertor box program, more than $7.3 billion for deficit reduction and 
$43.5 million for E-911.
    As such, Congress cannot afford to let the transition delay or 
fail. I am concerned that some of the proposals currently coming out of 
the FCC regarding the auction may threaten the overall value and affect 
the American taxpayer by potentially costing them billions of dollars.
    With respect to the TV side of the transition, I am pleased by the 
progress made to date. We all know that some elements will require 
special attention. I look forward to hearing from our witnesses as to 
how the transition will address rural areas of the country, like 
Alaska. We have our fair share of residents in Alaska who rely solely 
on broadcast TV for their news and entertainment. I am also concerned 
that no demographic is overlooked as the transition moves forward. 
Thank you, Mr. Chairman.

    The Chairman. And now, Ms. Seidel?

            STATEMENT OF CATHERINE W. SEIDEL, CHIEF,

           CONSUMER AND GOVERNMENTAL AFFAIRS BUREAU,

               FEDERAL COMMUNICATIONS COMMISSION

    Ms. Seidel. Good morning, Chairman Inouye, Vice Chairman 
Stevens, and members of the Committee. Thank you for the 
opportunity to speak about the ongoing efforts of the Federal 
Communications Commission to facilitate and promote consumer 
education and awareness about the upcoming digital television 
transition.
    The Commission is working, consistent with its statutory 
authority and budgetary capacity, to ensure that no American is 
left behind in this important part of the digital revolution. 
For some time now, we have been working, both on our own and in 
cooperation with industry, other government agencies, and 
consumer groups, to advance the transition and promote consumer 
awareness.
    Our efforts to date have been threefold. First, we have 
been working to get the right rules in place to facilitate a 
smooth transition. Second, we have been actively enforcing our 
rules to protect consumers. And, third, we have been promoting 
awareness of the transition through our consumer education and 
outreach efforts. Through all of our activities, the Commission 
has been dedicated to minimizing the negative impact of the 
digital transition on consumers, while maximizing the benefits 
to them.
    The Commission has initiated several rulemaking proceedings 
designed to facilitate the upcoming transition. In one recent 
proceeding, the Commission proposed to ensure that cable 
subscribers do not lose access to broadcast signals because of 
the digital transition. About 50 percent of cable subscribers 
today, at least 32 million people, subscribe to analog, not 
digital, cable. These consumers are at risk of losing their 
ability to watch broadcast television after the digital 
transition, unless the Commission acts. According to the 1992 
Cable Act, cable operators must ensure that all local broadcast 
stations carried pursuant to the Act are viewable by all cable 
subscribers. The Commission is currently considering a 
rulemaking that would require cable operators to ensure their 
analog customers don't lose their broadcast signals. Cable 
operators can either continue to carry signals in analog format 
to the millions of analog cable subscribers, or, alternatively, 
cable operators who have chosen to go all-digital can provide 
their subscribers with the necessary equipment to view 
broadcast and other channels.
    One of the most important actions we have taken to 
facilitate a smooth transition is to ensure that electronics 
retailers fully inform consumers at the point of sale about the 
DTV transition date and the equipment necessary to continue to 
be able to receive over-the-air television signals. Consumers 
have certain expectations, and one of which is that the 
television that they purchase today will also work 2 years from 
now. As of March 1st, all television receivers shipped in 
interstate commerce or imported into the United States must 
have an integrated digital tuner.
    Despite this prohibition on shipment, retailers may 
continue to sell analog-only devices from their existing 
inventory. In April of this year, the Commission released an 
order requiring retailers to disclose to consumers that a 
television with only an analog tuner will not receive over-the-
air broadcast signals after February 17, 2009. Such notice 
should ensure that consumers are making a fully informed 
decision about the television that they seek to purchase before 
bringing it home. It will also help educate consumers about the 
upcoming digital transition.
    Just last week, the Commission adopted a Notice of Proposed 
Rulemaking on several DTV education initiatives. This NPRM 
seeks comment on proposals that would require broadcasters, 
multichannel video programming distributors, retailers, and 
manufacturers to take certain actions to publicize the digital 
transition. The Chairman intends for the Commission to complete 
this proceeding expeditiously.
    In addition to our policymaking efforts, we have also been 
vigorously enforcing our digital transition-related rules. As I 
described earlier, in April the Commission adopted labeling 
requirements to ensure that consumers are protected from the 
unknowing purchase of television equipment without integrated 
digital tuners. As of July 24, 2007, Commission staff had 
inspected about 1,089 retail stores around the country, as well 
as retailers' websites, to monitor compliance with the labeling 
rules. As a result of these inspections, the Commission issued 
over 262 citations notifying retailers of violations. As an 
outgrowth of these investigations, the Chairman recently 
presented his colleagues with Notices of Apparent Liability 
against seven large retailers for apparently violating the 
Commission's television labeling requirements. These fines, in 
aggregate, total over $3 million.
    The Commission has actively pursued entities violating the 
DTV tuner requirement by acting on complaints and staff review 
of U.S. Customs data. On May 30, 2007, the Commission issued 
Notices of Apparent Liability against two companies, Syntax-
Brillian Corporation and Regent USA, Incorporated.
    Swift enforcement of all of our DTV-related rules is 
critical to protecting consumers from purchasing television 
sets that may be rendered useless in 18 months. Enforcement 
activities in this area will continue to be a priority for the 
Commission.
    In addition to our policymaking and enforcement efforts, we 
have devoted resources to promoting consumer awareness of the 
upcoming transition through education and outreach. 
Specifically, the Commission has prepared and disseminated 
numerous consumer publications to alert and inform consumers 
about the transition. For example, we have issued a consumer 
advisory on what consumers should know about buying TVs as the 
analog cutoff date approaches. We have also issued a consumer 
advisory on closed captioning for digital television, which 
will help inform and advise people who are deaf and hard of 
hearing. And we recently revised one of our DTV fact sheets, 
``DTV is Coming, (And Sooner Than You Think),'' to add a 
section focused on helping consumers determine whether their 
current TV set contains a digital tuner.
    Moreover, we are reaching out to consumers through many 
different venues, including forming partnerships with 
government and other organizations. For example, we are working 
together with government agencies, including the NTIA and the 
United States Administration on Aging to enhance the 
Commission's consumer education and outreach efforts. In 
addition, we are working with the Digital Television Transition 
Coalition, of which we are now a member, to coordinate consumer 
education and outreach efforts.
    We have also partnered with several organizations, 
including the Consumer Electronics Retailers Council, the 
NACAA--and the NACAA--to help us disseminate DTV education 
information. In addition, we are continually developing working 
relationships with state and local entities and educational 
institutions. For example, we have been in contact with 
representatives of the Council of Great City Schools, which is 
a coalition of 66 of the Nation's largest urban public school 
systems, about ways that we can work with them to inform and 
educate school-aged children about the transition. We have also 
reached out to state and local entities to enlist their 
participation in consumer education and outreach efforts. Some 
of the organizations we have reached out to include the State 
Chambers of Commerce, the National Association of Regulatory 
Utility Commissioners, the National Association of 
Telecommunications Officers and Advisors, the National Council 
of State Legislators, the National Congress of American 
Indians, and other tribal organizations, as well as the United 
States Hispanic Chamber of Commerce.
    Our consumer outreach and education activities are geared, 
in part, toward reaching consumers who are likely to be unaware 
of the upcoming digital transition, including senior citizens, 
non-English-speaking consumers, minority communities, people 
with disabilities, low-income individuals, and people living in 
rural and tribal areas. For example, earlier this month we held 
an Indian Telecommunications Initiative Regional Workshop in 
Albuquerque, New Mexico. The workshop focused on the DTV 
transition, with the goal of assisting Indian tribes in 
preparing, organizing, and conducting DTV outreach campaigns. 
While there, we organized and conducted DTV panels, exhibited 
equipment, and distributed DTV education materials.
    In addition, we have coordinated with the National Council 
of Aging, as well as the Umbrella Leadership Council of Aging 
Organizations, to find ways that we can work together to 
educate seniors about the upcoming transition.
    We have also taken a number of measures to ensure that we 
are communicating with the large Spanish-speaking community 
throughout the country. For example, all of our DTV consumer 
publications are available in Spanish versions, and our 
dedicated DTV.gov webpage has an entire section in Spanish.
    Furthermore, consumers who call our toll-free number, 1-
888-CALL-FCC, may receive assistance, including DTV-related 
information, in English or Spanish.
    Another important way we have been disseminating 
information is through our participation in events and 
conferences. For example, we have worked with AARP to arrange a 
speaking role for Commission staff on the DTV transition at 
AARP's Annual Convention this fall in Boston on one of the 
convention's presentation stages. We are also working with AARP 
to obtain prime exhibit space on their convention floor that 
will further enable us to spotlight the DTV transition and its 
implication for seniors.
    We recently announced that we will host a DTV Consumer 
Education Workshop on September the 26th. The Commission's 
workshop will consist of officials from organizations who 
represent a broad range of DTV stakeholder groups, including 
government agencies, industry, tribal organizations, 
disabilities, community groups, non-English-speaking groups, 
senior citizen organizations, low-income consumers, and other 
public interest organizations that may represent underserved 
communities or those living in rural areas. The purpose of this 
workshop will be to provide an opportunity for all interested 
parties to jointly discuss the challenges associated with the 
upcoming transition, and explore ways in which these 
organizations can work together and with us to develop 
coordinated consumer outreach initiatives.
    In addition to furthering the activities already discussed, 
the additional funding we have requested from Congress will 
allow us to undertake several new initiatives that will greatly 
enhance our efforts to reach these consumers, those who 
currently rely on over-the-air service. For example, in order 
to reach consumers more directly, additional funding would 
allow us to expand our dissemination of published materials 
through targeted direct mailings of DTV-related information to 
hundreds of thousands of households, with a focus on 
underserved communities and senior citizens, and we could 
translate our DTV consumer education materials into languages 
other than Spanish, possibly including French and Mandarin, and 
distribute these materials through government and community 
organizations serving immigrants and non-English-speaking 
consumers.
    In conclusion, the Commission is committed to ensuring that 
Americans are not left in the dark after the DTV transition. 
Through all of our activities, policy enforcement, and consumer 
outreach, the Commission is dedicated to minimizing the 
negative impact of the upcoming transition. We look forward to 
working closely with Congress, other agencies, and industry and 
consumer groups during the next 18 months to minimize the 
burden on consumers and ensure that all consumers reap the 
benefits of the digital transition.
    As the deadline approaches, we plan to continue our close 
coordination with NTIA and the DTV Transition Coalition, and to 
accelerate our consumer education and outreach initiatives, as 
funding permits, to ensure that all Americans are aware of the 
transition and understand what steps they need to take in order 
to continue watching TV when analog broadcasting ends.
    Thank you.
    [The prepared statement of Ms. Seidel follows:]

    Prepared Statement of Catherine W. Seidel, Chief, Consumer and 
     Governmental Affairs Bureau, Federal Communications Commission
    Good morning, Chairman Inouye, Vice Chairman Stevens, and members 
of the Committee. Thank you for the opportunity to speak about the 
ongoing efforts of the Federal Communications Commission (Commission) 
to facilitate and promote consumer education and awareness about the 
upcoming digital television (DTV) transition. The Commission is 
working, consistent with its statutory authority and budgetary capacity 
to ensure that no American is left behind in this part of the digital 
revolution.
    For some time now, we have been working both on our own and in 
cooperation with industry, other government agencies, and consumer 
groups to advance the transition and promote consumer awareness. Our 
efforts to date have been three-fold. First, we have been working to 
get the right rules in place to facilitate a smooth transition. Second, 
we have been actively enforcing our rules to protect consumers. And, 
third, we have been promoting awareness of the transition through our 
consumer education and outreach efforts. Through all of our activities, 
the Commission has been dedicated to minimizing the negative impact of 
the digital transition on consumers while maximizing the benefits to 
them.
Policy and Rulemaking Activities
    The Commission has initiated several rulemaking proceedings 
designed to facilitate the upcoming transition.
    Viewability NPRM. In one recent proceeding, the Commission proposed 
to ensure that cable subscribers do not lose access to broadcast 
signals because of the digital transition. About 50 percent of cable 
subscribers today--at least 32 million people--subscribe to analog not 
digital cable. These consumers are at risk of losing their ability to 
watch broadcast television after the digital transition unless the 
Commission acts. According to the 1992 Cable Act, cable operators must 
ensure that all local broadcast stations carried pursuant to this Act 
are ``viewable'' by ``all'' cable subscribers. The Commission is 
currently considering a rulemaking that would require cable operators 
to ensure their analog customers don't lose their broadcast signals. 
Cable operators can either continue to carry signals in analog format 
to the millions of analog cable subscribers or alternatively, cable 
operators who have chosen to go all-digital can provide their 
subscribers with the necessary equipment to view broadcast and other 
channels.
    Consumer Information and Labeling. One of the most important 
actions we have taken to facilitate a smooth transition is to ensure 
that electronics retailers fully inform consumers at the point of sale 
about the DTV transition date and the equipment necessary to continue 
to be able to receive over-the-air television signals.
    Consumers have certain expectations and one of their expectations 
is that the television that they purchase today will also work 2 years 
from now. As of March 1, 2007, all television receivers shipped in 
interstate commerce or imported into the United States must have an 
integrated digital tuner. Despite this prohibition on shipment, 
retailers may continue to sell analog-only devices from existing 
inventory. In April, the Commission released an order requiring 
retailers to disclose to consumers that a television with only an 
analog tuner will not receive over-the-air broadcast signals after 
February 17, 2009. Such notice should ensure that consumers are making 
a fully informed decision about the television that they seek to 
purchase before bringing it home. It will also help educate consumers 
about the upcoming digital transition.
    DTV Education NPRM. Just last week, the Commission adopted a Notice 
of Proposed Rulemaking on several DTV education initiatives. This NPRM 
seeks comment on proposals that would require broadcasters, 
multichannel video programming distributors, retailers and 
manufacturers to take certain actions to publicize the digital 
transition. The Chairman intends for the Commission to complete this 
proceeding expeditiously.
Enforcement Activities
    In addition to our policymaking activities, we have also been 
vigorously enforcing our digital transition-related rules.
    Labeling Requirement. As I described earlier, in April we adopted 
labeling requirements to ensure that consumers are protected from the 
unknowing purchase of television equipment without integrated digital 
tuners. As of July 24, 2007, Commission staff had inspected about 1,089 
retail stores around the country, as well as retailers' websites, to 
monitor compliance with our rules. As a result of these inspections, we 
issued over 262 citations notifying retailers of violations. As an 
outgrowth of our investigations, the Chairman recently presented his 
colleagues with Notices of Apparent Liability against seven large 
retailers for apparently violating the Commission's television labeling 
requirements. These fines, in the aggregate, total over $3 million.
    DTV Tuner Requirement. The Commission has actively pursued entities 
violating the DTV tuner requirement by acting on complaints and staff 
review of U.S. Customs data. On May 30, 2007, the Commission issued 
Notices of Apparent Liability against two companies--Syntax Brillian 
Corp. and Regent USA, Inc.
    Swift enforcement of all of our DTV-related rules is critical to 
protecting consumers from purchasing television sets that may be 
rendered useless in 18 months. Enforcement activities in this area will 
continue to be a priority for the Commission in the coming year.
Consumer Education and Outreach
    In addition to our policymaking and enforcement activities, we have 
devoted resources to promoting consumer awareness of the upcoming 
transition through education and outreach efforts.
    Consumer Publications. Specifically, the Commission has prepared 
and disseminated numerous consumer publications to alert and inform 
consumers about the transition. For example, we have issued a consumer 
advisory on what consumers should know about buying TVs as the analog 
cutoff date approaches. We have also issued a consumer advisory on 
closed captioning for digital television which will help inform and 
advise people who are deaf and hard of hearing. And, we recently 
revised one of our DTV fact sheets--``DTV is Coming (And Sooner Than 
You Think)''--to add a section focused on helping consumers determine 
whether their current TV set contains a digital tuner or whether they 
will need to purchase a new one.
    Collaborative Partnerships. Moreover, we are reaching out to 
consumers through many different venues, including forming partnerships 
with government and other organizations. For example, we are working 
together with government agencies including the National 
Telecommunications and Information Administration (NTIA) and the U.S. 
Administration on Aging to enhance the Commission's consumer education 
and outreach efforts. In addition, we are working with the DTV 
Transition Coalition, of which we are a member, to coordinate consumer 
education and outreach efforts.
    We have also partnered with several consumer organizations, such as 
CERC and NACAA, to help us disseminate DTV education information. In 
addition, we are continually developing working relationships with 
state and local entities and educational institutions. For example, we 
have been in contact with representatives of the Council of Great City 
Schools, a coalition of 66 of the Nation's largest urban public school 
systems, about ways we can work together to inform and educate school 
age children about the transition.
    We have also reached out to state and local entities to enlist 
their participation in consumer education efforts. Some of the 
organizations we have reached out to include State Chambers of 
Commerce, the National Association of Regulatory Utility Commissions, 
the National Association of Telecommunications Officers and Advisors, 
the National Council of State Legislatures, the National Congress of 
American Indians, other Tribal organizations, and the U.S. Hispanic 
Chamber of Commerce.
    Targeted Outreach. Our consumer outreach and education activities 
are geared in part toward reaching consumers who are likely to be 
unaware of the upcoming digital transition, including senior citizens, 
non-English speaking consumers, minority communities, people with 
disabilities, low-income individuals, and people living in rural and 
tribal areas.
    For example, earlier this month we held an Indian 
Telecommunications Initiative Regional Workshop in Albuquerque, NM. 
This workshop focused on the DTV transition with the goal of assisting 
Indian Tribes in preparing, organizing and conducting their own DTV 
awareness programs and initiatives. While there, we organized and 
conducted DTV panels, exhibited equipment, and distributed DTV 
education materials.
    In addition, we have coordinated with the National Council of 
Aging, as well as the Umbrella Leadership Council of Aging 
Organizations (LCAO), to find ways we can work together to educate 
seniors about the upcoming transition.
    We have also taken a number of measures to ensure that we are 
communicating with the large Spanish-speaking community throughout the 
country. For example, all of our DTV consumer publications are 
available in Spanish versions and our dedicated DTV.gov webpage has an 
entire section in Spanish. Furthermore, consumers who call our toll-
free number, 1-888-CALL-FCC, may receive assistance, including DTV-
related information, in either English or Spanish.
    Events and Conferences. Another important way we have been 
disseminating information is through our participation in events and 
conferences. For example, we have worked with AARP to arrange a 
speaking role for Commission staff on the DTV transition at AARP's 
annual convention this fall in Boston, MA, on one of the convention's 
``Presentation'' stages. We are also working with AARP to obtain prime 
exhibit space on their convention floor that will further enable us to 
spotlight the DTV transition and its implications for seniors.
    We recently announced that we will host a DTV Consumer Education 
Workshop on September 26. The Commission's workshop will consist of 
officials from organizations who represent a broad range of DTV 
stakeholders, including government agencies, industry, tribal 
organizations, disability community groups, non-English speaking 
groups, senior citizen organizations, low-income consumer 
representatives and other public interest organizations that may 
represent underserved customers or those living in rural areas. The 
purpose of this workshop will be to provide an opportunity for all 
interested parties to jointly discuss the challenges associated with 
the upcoming transition and explore ways in which these organizations 
can work together, in conjunction with the Commission, to develop 
coordinated consumer education activities.
    In addition to furthering the activities already discussed, the 
additional funding we have requested from Congress will allow us to 
undertake several new initiatives that will greatly enhance our efforts 
to reach those consumers who currently rely upon over-the-air service. 
For example, in order to reach consumers more directly, additional 
funds would allow us to expand our dissemination of published materials 
through targeted direct mailings of DTV-related information to hundreds 
of thousands of households, with a focus on underserved communities and 
senior citizens. And, we could translate our DTV consumer education 
materials into languages other than Spanish, possibly including French 
and Mandarin, and distribute these materials through government and 
community organizations serving immigrants and non-English speaking 
consumers.
Conclusion
    In conclusion, the Commission is committed to ensuring that 
Americans are not left in the dark after the DTV transition. Through 
all of our activities--policy, enforcement, and consumer outreach--the 
Commission is dedicated to minimizing the negative impact of the 
upcoming transition. We look forward to working closely with Congress, 
other agencies, and industry and consumer groups during the next 18 
months to minimize the burden on consumers and ensure that all 
consumers reap the benefits of the digital transition. As the deadline 
approaches, we plan to continue our close coordination with the NTIA 
and the DTV Transition Coalition and to accelerate our consumer 
education and outreach initiatives, as funding permits, to ensure that 
all Americans are aware of the transition and understand what steps 
they need to take in order to continue watching TV when analog 
broadcasting ends.

    The Chairman. I thank you very much.
    Mr. Secretary, Ms. Seidel, your testimony suggests that 
much is being done. However, recent polls taken in the United 
States suggest that anywhere from 60 to 90 percent of our 
fellow Americans are not aware of this transition. Yet, on the 
other hand, we have been told that, in the British Isles in the 
United Kingdom, about 80 percent of their citizens are aware of 
the transition. Is there something they're doing right, and 
we're not doing?
    Mr. Secretary?
    Mr. Kneuer. Well, I think, if you're looking at whether or 
not consumers are aware of the actual date that this transition 
concludes, in February of 2009, I'm not surprised that there is 
less awareness of that. I expect, as our public education 
campaigns ramp up, and as the broadcasters' campaigns ramp up, 
awareness of the conclusion of this transition will improve. 
But I think there are tens of millions of American households 
that are currently aware of digital television and high-
definition television. By the end of this year, the reports 
are, there will be 85 million DTVs sold and in households 
across America. So, I think Americans are getting very broadly 
aware of, and accepting of, DTV, but we certainly have more 
work to do over the next 18 months to make sure that they are 
aware that this transition will come to a conclusion in 
February of 2009.
    The Chairman. Ms. Seidel, do you have any suggestions?
    Ms. Seidel. I agree with Mr. Kneuer, in that, certainly as 
we ramp up and accelerate our educational programs and our 
consumer outreach, we think that the awareness will increase. 
We think that the efforts we have undertaken so far have 
increased awareness, but recognize there is still much to do.
    We are hoping, for example--the Chairman just announced the 
new membership of our Consumer Advisory Committee, and he 
tasked it with its primary focus being on the DTV transition 
and helping us help to ensure that all consumers are made 
aware. And we have a broad array of organizations that are 
represented there on the membership, including AARP, including 
organizations representing people who are disabled, and 
including organizations representing people from rural 
communities and other consumer groups. So, we think that we 
will receive input that will help us find and develop 
partnerships with others, to help us get the word out and 
increase awareness as the transition nears.
    The Chairman. We have provided $5 million for the education 
program on the transition. On the other hand, the British have 
provided $400 million for similar education, with a smaller 
population. Do you think $5 million is adequate, Mr. Secretary?
    Mr. Kneuer. Five million dollars is certainly a limited 
pool of money to do a broad nationwide education campaign, but 
I think it was at least implicitly understood by setting that 
amount that the vast majority of the public education would be 
performed by those industries that have an interest in this 
transition: the broadcasters, the cable industry, and the 
consumer electronics industries. And they have committed to 
conducting a very active and broad consumer education campaign.
    We're focusing our $5 million on making people aware of the 
existence of our coupon program, that there is, in fact, 
financial assistance for those consumers who need assistance 
with the transition and haven't effected the transition in some 
other way on their own. We're going to be issuing a contract, 
middle of next month, where, included in that, will be the 
funding of that $5 million for that broad consumer education 
campaign.
    The Chairman. I thank you very much.
    Senator Stevens?

                STATEMENT OF HON. TED STEVENS, 
                    U.S. SENATOR FROM ALASKA

    Senator Stevens. Well, thank you very much.
    One of the things I pointed out in the statement I put in 
the record is that we have tied this coming auction to the 
whole subject of the changeover in DTV. We have provided that, 
as the money comes in from the auction, it's automatically 
available from the Treasury; a billion dollars for 
interoperability grants, $1\1/2\ billion for a converter box 
program, $7.3 billion for deficit reduction. And then we go 
into a cascade of funds, thereafter, from the auction.
    Now, Secretary Kneuer, it was our estimate that the auction 
would raise in excess of $10 billion. And--based on that 
estimate, we made these allocations. There is money for public 
safety programs, as well as wireless alerts, and E-911. The 
whole concept related to DTV conversion and the availability of 
funds in order to go into the emergency side is tied to this 
auction.
    Now, let me ask you this. Do you think the current auction 
rules proposed by the FCC are going to undermine that value? 
Should we look forward to having less money come from the 
auction because of the change of the rules proposed by the FCC 
now?
    Mr. Kneuer. I think we've had the highest degree of success 
in auctions where we provided maximum flexibility, from a 
technology standpoint, from service-providing standpoint. You 
know, the auction that we concluded last year, for the AWS 
auction, raised $14 billion. And I think maximum flexibility 
does tend to lead to maximum revenues.
    Senator Stevens. Well, should we be thinking--I'm sure the 
Chairman has mentioned, already--should we be thinking about 
finding ways to finance a part of the public information 
program because of the reduction in funds available from this 
auction?
    Mr. Kneuer. I would hesitate to make a guess of what the 
actual auction revenues would be. You know, I would look to OMB 
and CBO and others to come up with actual scores. I am very 
mindful of the fact that the money that we're currently 
spending, we've borrowed from the Treasury. This is in 
anticipation of those revenues coming in, when--like you said, 
our first obligation when the auction revenues come in is to 
provide $7.2 billion to the Treasury for deficit reduction. 
Then we can pay back the money that we've already borrowed, 
and, to a large degree, already spent. So, I'm very focused on 
making sure that we do have auction receipts that will cover 
all these expenditures under the statute.
    Senator Stevens. In that legislation, we gave several 
entities the right to borrow against the money that would be in 
the Treasury once this auction took place. I'm a little worried 
about it. Not just a little. Senator Inouye and I started the 
auction concept. The first time we had an auction, it was 
estimated that we'd bring in somewhere less than a billion 
dollars; I think it was a little over half a billion dollars. 
That brought in $17 billion, as I recall. And now we have an 
estimate that it is at least $10 billion. Based upon that 
conservative side of $10 billion, Congress, at our request, 
made these allocation of funds in advance, and gave people--
gave entities--the right to borrow against those funds based 
upon the timing of this auction. Now, I'm sort of worried about 
the fact that there is an undercurrent here now that, maybe, 
because the public isn't ready for this auction--this 
transition, we should delay the auction, or we should delay the 
transition date. That either one is going to cost the taxpayers 
money, in my opinion, in the long run. Because if we don't get 
the money from the auction, we're going to have to pay back the 
money you've borrowed from the Treasury. And that's going to be 
a real battle up here, I think.
    What about the converter box program? As I said, that is 
basically going to be financed by the auction. What are you 
doing now to reach out to places in rural Alaska or rural 
America, to make sure people understand about the necessity to 
have those boxes?
    Mr. Kneuer. Absolutely. We're going to be issuing the 
contract for the vendor who will perform the management of the 
coupon program, including the consumer education efforts. When 
we put out our Request for Proposals for that contract, the 
things we focused on, and asked the vendors to focus on, were 
their proposals to reach out to rural America, to reach out to 
retailers to participate in this program, not just big-box 
retailers and large nationwide chains, but also give us 
proposals on how they intend to reach out to rural retailers 
and smaller businesses. We've been working with the Alaskan 
Native Broadcast Corporation and Native Voice One to reach out 
to tribal communities. We clearly have a focus, given the 
limited amount of resources that we have in this program for 
consumer education, to make sure that those monies are focused, 
to the extent possible, on rural, hard-to-reach, hard-to-serve 
communities.
    Senator Stevens. Ms. Seidel, I don't know what your 
responsibilities are, vis-a-vis the Commission itself, to talk 
to them about the relationship between these proposed changes 
and the responsibility of the FCC, as far as the transition is 
concerned. Tell me, do you advise the Commission on the impact 
of some of the proposed changes and what they might do to 
consumers?
    Ms. Seidel. In terms of--if you're talking about the 
specifics of the particulars of the 700 MHz auction, that is a 
proceeding that is handled by our Wireless Bureau, which Fred 
Campbell heads up. Based on the discussion and the exchange a 
few minutes ago, I will certainly take your suggestions and 
your concerns back to the Bureau. If you had particular 
questions about consumer outreach and how we are undertaking to 
reach rural communities and communities in Alaska and other 
places, I'm happy to provide you with some suggestions of 
things that we have been doing in that regard.
    Senator Stevens. Well, my feeling is that maximum 
flexibility leads to the maximum amount of funds coming in from 
the auction, and if the maximum amount of funds are there, 
we're going to have all this cascade of funds that Congress has 
already provided to the transition. Now, again, I can't get 
involved in some of your in-house conversations, but do you 
believe the Commission's aware of the connection between 
flexibility and the amount of funds that come in?
    Ms. Seidel. Oh, certainly. Consumer awareness and making 
sure that we promote the digital television transition and 
reach all consumers, especially those that are hard to reach, 
is a priority for the Chairman, and certainly the 700 MHz 
auction is a priority for the Chairman. So, certainly I think 
the interrelationship between those two is something that is, 
you know, constantly discussed.
    Senator Stevens. Well, I've got to confess, I'm sorry, now, 
we agreed to the concept of 7.3 billion for deficit reduction 
before some of these other matters are dealt with, including 
paying back some of the money that has already been borrowed 
from the allocations of funds that are below that, in terms of 
looking at the total amount that's brought in.
    I hope people are aware of the connection between this 
auction and the transition. The----
    Please, I've got enough already. Thank you.
    [Laughter.]
    Senator Stevens. I do think that we have--the greatest 
problem right now is the distribution of these converter boxes 
to rural America. If there is anyplace rural in America, it is 
Alaska, 241 small villages out there, and a whole series of 
small communities that are not villages, they're not tribes and 
tribal villages. It just seems to me that we've got to have a 
greater awareness of the problems.
    Senator Inouye's Hawaii, most people don't realize that the 
ring of islands around there--actually, if you put a circle 
around Hawaii, it's larger than Alaska. But there is a lot of 
water in between.
    [Laughter.]
    Senator Stevens. But the problems of distribution are the 
same. Their communications are different, their means of 
transportation--70 percent of our villages can be reached only 
by air, year round, and we've got a problem of dealing with 
them, in terms of converter boxes. So, I just don't think that 
the people that are suggesting a delay understand what the 
impact of that delay is going to be on places like Alaska. And 
I don't think the FCC understands that this rattling the cage 
over this, what's going to happen at the auction is doing 
anything other than reducing the amount of money we're going to 
get in. Now, I hope that people settle down and we keep the 
schedule, and the schedule works. I think it will work, and I 
think we'll bring in more money than we expect if we don't 
rattle this cage any longer.
    Thank you, Mr. Chairman.
    The Chairman. Thank you.
    Senator Sununu?

               STATEMENT OF HON. JOHN E. SUNUNU, 
                U.S. SENATOR FROM NEW HAMPSHIRE

    Senator Sununu. Thank you, Mr. Chairman.
    First, just a couple of observations, as we didn't all have 
opening statements, and I know more formal comments will be 
placed in the record.
    But I, first, want to make the observation that there is a 
little bit of good news here, in that we seem to have moved 
past the idea of delaying the transition date. And that's 
really only in the last few months that I think we really 
nailed that down with the finalization of the regulations. And 
I think everyone feels confident that we'll be able to get this 
transition done. And, as an advocate of doing it even earlier, 
I think the fact that there is so much confidence in holding 
that date, at this point, is an indication that we could have 
done it even earlier, which would have been good for consumers, 
and good for the economy. But I am pleased to know, or to make 
the observation that we're beyond a discussion of delay.
    Second, I think we need to remember that, among the 
greatest beneficiaries of this process will be public safety. 
We've got 24 MHz that's going to be put into the hands of 
public safety. That's important. It's something I think the 
members on this committee strongly support. But it is also 
important that, at the end of the day, that 24 MHz is used in--
as efficiently as possible, and that we not burden the public 
safety spectrum with regulations, or with mandates, with regard 
to the technologies that can be used in providing that spectrum 
for public safety.
    There's a lot of skepticism about the intelligence of the 
American consumer, every time we talk about digital transition, 
and I want to stand up for the general intelligence, the 
ability, and the flexibility of American consumers. We want to 
make sure we have good ad campaigns, good communication, but, 
at the end of the day, I remain confident that the video/
television-watching public is going to be able to understand 
what's available to them, in the way of technology, to help 
with this transition, what's available to them in the way of 
products and services, whether it's satellite or cable or fiber 
to the home. All of these are going to be able to deal with the 
digital transition in a very effective way.
    Finally, I think it's important to emphasize that if we 
want this to go smoothly, we've got to end the debate about 
other regulations in the digital transition. Discussion about 
down conversion, discussion about multicarriage or must-carry, 
I don't think that's helpful. I think those are the kinds of 
11th-hour regulations that will cause problems for consumers, 
not because they're not capable or understanding of the 
process, but because imposing those regulations at a late date 
will change the dynamics of delivering the products, will 
change the dynamics of the communications campaign.
    So, I think we're on the right track, and I think consumers 
are going to be able to handle this well, but I do want to hear 
our panelists address a couple of issues. One was touched on 
briefly, and that is the ad campaign, the publicity campaign. 
The point was made that $5 million is a relatively small 
budget, in the way of communications and advertising it and for 
Mr. Kneuer. But, as you mentioned, the private sector is going 
to play a role here, and it is a little disappointing that we 
don't have anyone representing the private sector on either of 
these panels, to talk about what they are or aren't doing. How 
much are they spending? How do they feel about the consumers 
that they serve? Because they're the ones that are going to be 
on the front line in dealing with consumers if this transition 
isn't handled well. As politicians, we're going to bear some of 
the burden and the blame if the process doesn't go well, but 
that's different than dealing with 5 million or 10 million or 
20 million subscribers or viewers that might not be happy with 
the process.
    So, I would like you to address the issue of private-sector 
support. What do you see out there now? And have you made any 
effort to estimate how much will be spent by distributors, 
content providers, and broadcasters in their effort?
    Mr. Kneuer. Sure. The people who are going to be most 
affected by this, these are the broadcasters' customers. There 
are massive market incentives for the broadcasters to reach out 
to their customers and continue to have contact with their 
customers after the transition. So, there is absolutely going 
to be a large, concerted campaign, not just by the 
broadcasters, but also by the cable industry, the consumer 
electronics industry. I talked a little bit in my testimony 
about this DTV Coalition, that started with those three, and 
now includes over 120 members. It's not just the market 
participants in these industries that are taking part in this 
coalition now, but also those organizations that have special 
missions to serve special constituencies and identify groups 
that may be difficult to reach.
    I think the good news is that the easiest way, and the best 
way, to inform people about a change in television is through 
television. So, the broadcasters, by putting on campaigns, 
those who rely most on television, watch the most television, 
are likely to get the most information about this and 
accelerate the transition on their own.
    So, I don't have a sense--and I don't know that they have 
provided, sort of, a dollar figure, ``We're committing X number 
of dollars in PSA announcements,'' and the rest. But they have 
been working together, and have made a commitment to an 
accelerated broad campaign that will get much larger and much 
more intense as we get closer to the transition--get closer to 
the conclusion of the transition.
    Senator Sununu. The money that's been allocated for 
converter boxes, $1.5 billion, was based, in part, on CBO 
estimates, and, in part, on the estimates of the number of 
households that receive over-the-air signals--over-the-air-only 
signals. In our committee memo, it's noted that, according to 
the FCC, as of June 2004, less than 15 percent of households 
relied exclusively on over-the-air transmission. I can't help 
but notice that that number is 3 years old, and it would seem 
to me to be quite helpful to have a number that's a little bit 
more current. Do either of you have more current figures?
    Ms. Seidel?
    Ms. Seidel. I would have to check with my colleagues in the 
Media Bureau on that, but I certainly can check and get back to 
you.
    Senator Sununu. Mr. Kneuer?
    Mr. Kneuer. We have been looking at numbers from lots of 
different sources. There are the FCC numbers. Different 
industries come up with different numbers. I've been hesitant 
to pick an industry number and say, ``This is absolutely the 
right one.'' But the clear trend is that that number is 
shrinking, if by nothing else, by the virtue of the tens of 
millions of digital sets that are being sold year after year. 
So, clearly that number is going down. And, I think, as people 
get more aware of the transition, millions of Americans are 
effecting the transition on their own, either by buying DTV 
sets or subscribing to cable to satellite.
    Senator Sununu. Yes, I agree with that answer, but I can't 
help be a little bit disappointed that it seems neither the 
Senate Commerce Committee, nor the FCC, nor any of the other 
sources that we rely on can give us a more updated number than 
that June 2004 number. Clearly, it's going down. I think that's 
a good thing. And I think, on the whole, the estimates of the 
cost of this converter program were probably higher than will 
ultimately be the case.
    A final point. On the proceeds of the auction that Senator 
Stevens raised concerns about, I'm concerned about the proceeds 
of the auction. Mr. Kneuer, as you emphasize, the more 
regulations, the more encumbrances, the more requirements you 
place on those that purchase or win in the auction for 
spectrum, the less you're going to get from that auction. 
That's an economic fact of life. And it does place some of 
these programs at risk. There could ultimately be less in 
proceeds, because of the regulations and encumbrances the FCC 
is considering on the upcoming auction. That is a reason not to 
change the allocations, but not to place the encumbrances on 
the auction in the first place. If the goal for the taxpayers, 
for the country, for competitive reasons, is to make spectrum 
available so that it can be used in innovative and dynamic 
ways, then we need to avoid coming up with new ways to regulate 
and devalue the spectrum just prior to its auction. That's 
certainly something--I feel very strongly--but I'd like to give 
you both an opportunity to respond.
    Mr. Kneuer, has the administration raised concerns or 
voiced opposition to limitations on the 700 MHz spectrum?
    Mr. Kneuer. You know, I am, likewise, with regards to the 
auction proceeds and the revenues, I think, as Senator Stevens 
was saying, we've already borrowed large amounts of money. It's 
my signature that's on the promissory note, so getting the 
auction revenue in to pay back those notes is of keen 
importance to me. I think you're right, that the more 
flexibility we put on spectrum in the past--you know, we've had 
maximum revenues and lots of innovation--that being said, I 
think the situation around 700 remains pretty fluid. There are 
still people out there pushing for even more regulation than 
the things that have been proposed, whether it be wholesale, 
which sounds a lot like regulated resale rather than wholesale. 
I think there are people who are expressing concerns about, if 
there are constraints on the big block of spectrum, maybe the 
incumbents will be forced into, and dominate, the smaller 
geographic areas and the smaller blocks. So, I think there is 
lots of movement. You're seeing people in the industry still 
putting in proposals, so there is lots of movement around this, 
as of now.
    At the end of the day, I would certainly hope that they 
would adopt policies that maximize innovation and maximize 
investment and bring in enough revenue that we're going to be 
able to cover all these programs and have the $7.2 billion for 
deficit reduction.
    Senator Sununu. Thank you.
    Thank you, Mr. Chairman.
    The Chairman. Thank you very much.
    Senator Klobuchar?

               STATEMENT OF HON. AMY KLOBUCHAR, 
                  U.S. SENATOR FROM MINNESOTA

    Senator Klobuchar. Thank you, Mr. Chair.
    And thank you for being here. I would share what Senator 
Sununu is saying, that this is an exciting opportunity, with 
digital television, but, at the same time, we're only 19 months 
away, as you know--I assume you have the calendar marked on 
your wall--from the February 17, 2009, transition date; and I 
was thinking back to Y2K. I was county attorney at the time, 
and everyone was hooked up with cell phones that night. It was 
New Year's Eve, and I think I talked to our sheriff and our 
police chief, and I remember us just waiting for something to 
happen, and everything went quite well. And I think part of 
that was the planning.
    I'm concerned about this, because of the fact that we have 
457,000 households--this is according to Nielsen, that are 
over-the-air analog TV in Minnesota, and that's just in my 
state. And, of course, most of them are rural customers, and 
many of them are elderly.
    My question, just to follow up on some of the Chairman's 
questions, with Great Britain, 80 percent of them know--and I 
think our stats show 60 percent of American consumers don't 
know, or even higher--and in Great Britain, you have 80 percent 
of them aware of the transition. So, what exactly are they 
doing differently? Just concisely, what are they doing 
differently in Great Britain?
    Mr. Kneuer. Well, they've got a very different relationship 
with their TVs in Great Britain. They've got a annual tax that 
the government reaches out to consumers every year and says, 
``This is the amount of money you owe for your television.'' 
So, the government already has a built-in relationship with 
every TV customer. So, that may be one aspect of it.
    But, like I said, I'm not surprised that the awareness of 
the conclusion of this transition is not extraordinarily high 
right now, but I think there is a broad awareness and a broad 
acceptance of the DTV transition, and American consumers are 
availing themselves, and effecting the transition on their own, 
in huge numbers. As we get closer, I think, if the ad campaigns 
by the broadcasters and others focus on, as we get closer, 
ramping up, making people aware, that, you know, the end is, in 
fact, coming.
    Senator Klobuchar. So, is there a commitment that the 
broadcasters are going to be making these--doing these ads and 
commercials?
    Mr. Kneuer. Well, they've made public announcements and 
commitments. I don't have regulatory authority. I think the 
Commission is introducing rulemakings on specific commitments 
on the amount of public awareness that they'll be required to 
do. But certainly it is not only their responsibility, but it's 
in their own best interest to make sure that their customers 
are aware of this and that they retain access to those 
customers after the transition.
    Senator Klobuchar. Maybe this is for Ms. Seidel. This might 
be a naive question, but is there a way to target the 
advertising to the analog TV customers?
    Ms. Seidel. I think, in talking with the Digital Television 
Transition Coalition, and in talking to NAB in that respect, as 
well, my understanding is that there is a fair amount of 
research underway to try to target in more detail exactly where 
those over-the-air households are. And I've received or, I've 
seen some statistics, thus far, that are by state, and 
percentages of the population within each state that are over-
the-air viewers. And my understanding is that members of the 
coalition are trying to get that down to a more granular level, 
and getting it down by county, and that they feel confident 
they'll be able to get that figure by county. And then, you 
know, we would target--certainly, the Commission would be 
looking to target our outreach in those counties and in those 
areas where that percentage is relatively high, and starting 
there.
    Senator Klobuchar. OK. And then----
    Ms. Seidel. But----
    Senator Klobuchar.--you know, I'm--go ahead.
    Ms. Seidel. Oh, excuse me.
    Back to what Mr. Kneuer said, though, the item, that I 
mentioned earlier in my remarks, that the Commission is 
considering, does ask questions about whether the broadcasters 
should be required to report on their outreach efforts to date, 
and whether there should be other types of industry-required 
reporting or actions to help further outreach on the private 
sector.
    Senator Klobuchar. And when will the Commission complete 
this consideration?
    Ms. Seidel. My understanding is that the Commission has 
adopted the item and is endeavoring to get it released as 
quickly as possible, so that will be in the very near term.
    Senator Klobuchar. Then my last group of questions are 
about the rural customers. And, as we know, they 
disproportionately rely on this. It's my understanding that 
they will most likely have to rely on a coupon program to get a 
converter box. I'm trying to imagine how this will work, in 
practice. You know, what's going to happen to those that are 
not near an electronics retailer? We have some counties in 
Minnesota that it can take hours to get to a electronics 
retailer. So, how are they going to get the converter box? Is 
there going to be a mail-order system? Or what's going on to 
help them to get these boxes?
    Mr. Kneuer. The coupon program is designed to reach all of 
those kinds of consumers. With regards to retailers, we want to 
make sure that we have an outreach to retailers that goes 
beyond just the big nationwide chains and the large consumer 
electronics. So, we've allowed for retailer participation from 
mail-order, over the Internet, as well as traditional brick-
and-mortar, and we've also required that the vendor who's going 
to fulfill the coupon program for us has a plan to reach out to 
some of those nontraditional retailers to make sure that the 
same sorts of retailers that your constituents rely on for all 
of their day-to-day needs will also be able to participate in 
the coupon program.
    Senator Klobuchar. Thank you very much.
    The Chairman. Thank you very much.
    Senator McCaskill?

              STATEMENT OF HON. CLAIRE McCASKILL, 
                   U.S. SENATOR FROM MISSOURI

    Senator McCaskill. Thank you, Mr. Chairman.
    I'm concerned that, as of fairly recent data from Nielsen 
and the broadcasters, one in five Missourians is getting over-
the-air signal right now. I mean, frankly, this scares me, 
politically. I mean, there is no anger that comes close to the 
anger of an American who can't get television.
    [Laughter.]
    Senator McCaskill. And I know who they're going to blame. 
They're not going to call you, Mr. Kneuer. And they're not 
going to call you, Ms. Seidel. But you know who they're going 
to call? They're going to call me, and they're going to be mad. 
So, I am very discouraged that we don't have more finite 
answers this morning. I mean, we're talking about something--I 
mean, this is like tomorrow, if we're talking about government 
time.
    [Laughter.]
    Senator McCaskill. I mean, the idea that this rule hasn't 
been finalized yet as to what we can even expect, in terms of 
PSAs and bill inserts, really worries me. Can you tell us what 
the Commission--are they going to require the broadcasters to 
begin PSAs at a certain date? Are they going to require bill 
inserts anywhere, in terms of that? I mean, do we know what 
they're going to require, the Commission?
    Ms. Seidel. Because that proceeding--the item has not been 
released, and the text of it will be released soon--I think it 
would be premature for me, and because I was not part of the 
staff that worked on that proceeding, I can't really tell you 
the specifics, but it would seek comment on issues such as 
those. But, in addition, I can talk to you a little bit about 
the concerns you raised about outreach and how people are going 
to be made aware.
    I think your point's well taken, that it will be very 
challenging to directly touch every single American about the 
transition and make sure--or make sure the ones we're touching 
are the ones that are the consumers who rely exclusively on 
over-the-air. That's why part of the Commission's approach to 
this has been, not only just developing the materials and 
making sure that we distribute them to consumers who call, or 
consumers who write us, or e-mail us, but making sure that we 
establish partnerships with groups all around the country that 
serve and/or have members who are part of the group--the 
communities we think will be most difficult to reach, including 
people in rural areas and senior citizens, people in tribal 
areas. We had a very productive Indian telecommunications 
initiative earlier in the month, where we had over 78 
different--I believe it was 78 different tribes there 
representing over 30 tribal nations, and we had radio 
stations--tribal radio stations and tribal broadcast stations 
who agreed to work with us to make sure the word got out to 
those hard-to-reach----
    Senator McCaskill. I think that's fine. But let me disagree 
with you. And I don't have a lot of time, and I've got several 
questions. You know, it's not hard to educate the United States 
of America. It's called--you do it over television. You know, 
look around this room, and you'll see people that spent a great 
deal of their lives raising money in order to communicate over 
television. We know how to reach people through television. And 
what I'm frustrated about is that these PSAs and this 
education--I mean, you all are supposed to be the experts on 
educating consumers on this transition, but yet, no one can 
give us definite answers when broadcast education is going to 
begin with public service announcements. I would appreciate, 
just as soon as either one of you know--when there is any kind 
of requirement that these broadcast announcements are going to 
begin so that people will understand.
    Let me move to the boxes. Has NTIA field tested any of 
these boxes yet?
    Mr. Kneuer. We've received--under our regs, manufacturers 
that wanted to submit a box have to submit an expression of 
interest in detail saying that, ``We intend to build the boxes, 
and we intend to participate in the program,'' 60 days prior to 
submitting a box to us. We've received a large volume of those 
expressions. We have some boxes already in. We've got an MOU 
with the FCC that we will be using their labs, in coordination 
with us, to verify the boxes, to make sure that the boxes that 
enter the marketplace actually meet our specs and are 
functional.
    Senator McCaskill. I take it----
    Mr. Kneuer. But we've had----
    Senator McCaskill.--that is no.
    Mr. Kneuer. We have--we do have boxes that are--have been 
submitted. We have not----
    Senator McCaskill. Have they----
    Mr. Kneuer. We have not----
    Senator McCaskill.--been field tested yet?
    Mr. Kneuer. I don't know the status of the actual testing, 
but all that is ongoing.
    Senator McCaskill. OK. I would love to know if any of the 
boxes have, in fact, been field tested and what the results of 
those field tests were. The only thing that's going to make 
people madder is if they get these coupons, and they get the 
boxes, and then their signal is degraded and they don't get a 
good signal. And so, I would like to know what the specific 
plans are for field testing, and what the results of those 
field tests are.
    It's my understanding these coupons are going to be 
available January 1.
    Mr. Kneuer. Yes.
    Senator McCaskill. So, we're talking literally 6 months 
from now.
    Mr. Kneuer. Yes.
    Senator McCaskill. It's also my understanding that we 
couldn't get Best Buy's CEO, in the House, to even commit that 
he would put coupon-eligible boxes in all of his stores. Do we 
have any commitment from the retailers of America as to the 
availability of these boxes? And the second part of my question 
is, do we have any plans underway to protect seniors? Because 
this is going to be an area that will be very easy for the 
elderly to be preyed upon with people handing out coupons that 
aren't real, providing boxes that don't work. So, I'm concerned 
that since we're going to start handing these coupons out in 6 
months, and we don't even have a rule we can talk about in 
public yet as to how we're going to tell people about the 
coupons, but yet, we're going to have the coupons available in 
6 months. I mean, I am really worried about this.
    Mr. Kneuer. To the point on the boxes, the details on what 
the field tests are, what the requirements of--all of those 
were published in our rule. They're transparent. We'll get you 
the information on that.
    And, as we conclude testing, and we approve boxes, that 
information will be made public. So, all that information will 
come out on a rolling basis as they enter the market. Multiple 
manufacturers are on the record saying they intend to have 
these boxes in the marketplace, so I'm confident, given the 
resources that we've put into the program, there is a billion-
dollar marketplace for this. There have been very broad 
expressions of interest by the manufacturers that there will be 
boxes in the marketplace.
    As far as the retailers, as I said, we're going to be 
issuing our contract with the vendor in the middle of next 
month. Part of our agreement--part of the request that we put 
in to the vendors that would fulfill that contract is outreach 
to the retailers to make sure that they are getting as many 
retailers as possible to get into--participate in the program.
    Getting to your point on seniors and fraud, one of the 
challenges, and one of the reasons you don't want to allow any 
retailer, without any constraints, to participate in the 
program, is, you want to have some constraints, to make sure 
that these retailers have systems in place to prevent waste, 
fraud, and abuse, that they are not coming up with phantom 
coupons and defrauding the government.
    So, all of those things are, sort of, balanced together in 
our rule. But, no, I absolutely agree, it's very important that 
we have as broad a cross-section of retailer participation as 
possible, that these devices are out there, as widely 
distributed as we can get them. That's why we didn't rely 
simply on brick-and-mortar, but we're allowing for online 
retailers and catalogs. So, I think there will be a broad 
distribution of these across, essentially, all communities.
    Senator McCaskill. I thank you very much. I appreciate--Mr. 
Chairman--I will warn you that, when people start calling in, 
I'm giving them your numbers.
    [Laughter.]
    Senator McCaskill. Thank you.
    The Chairman. Thank you very much.
    Senator Snowe?

              STATEMENT OF HON. OLYMPIA J. SNOWE, 
                    U.S. SENATOR FROM MAINE

    Senator Snowe. Thank you, Mr. Chairman.
    Well, I know, from the outset, when we considered this 
whole transition, almost, I guess, 10 years ago, could be more 
than that, that this was one of the driving concerns, the fact 
that, you know, we're going to get ahead of the consumer in 
this process. And now that we have a definitive time, in terms 
of the deadline, and being, you know in 2009, in February 2009, 
and you still have 40 million households and, you know, 60 to 
70 million television sets that will require this conversion, I 
mean, that's a monumental undertaking.
    Now, I know that both of your agencies have websites. I'd 
be interested in knowing, Mr. Kneuer, if you could explain to 
the Committee as to how many people have been visiting your 
website. What type of information or feedback are you getting 
from consumers? Does it engage the consumer? I know, we have 
looked at it, and it seems to be, probably, you know not user-
friendly, in terms of engaging the consumer in how this is all 
going to work, more practical information. So, can you describe 
what kind of feedback and traffic that you're getting from this 
website? Because that's going to be crucial. That can't be the 
only thing. That's just one dimension to this enormous problem. 
But it's going to be public education, without question.
    The Horowitz Associates found that approximately 60 percent 
of consumers weren't even familiar with the DDT--DTV transition 
that'll affect them in this digital transition, and only 25 
percent could even discuss it in any detail. So, we really do 
have a long ways to go in this process.
    Mr. Kneuer. I'm happy to get you the numbers on the number 
of web hits we've had at our webpage, and DTV.gov.
    What I can tell you is--based on the most recent meeting of 
the broad DTV Transition Coalition that includes the 
broadcasters and the industry participants they've got their 
own webpages.
    Currently, the vast majority of the traffic to their 
webpages is being driven by ours. So, consumers are starting 
out coming to the Government, looking at DTV.gov. We've got 
links to the other commercial sites. My expectation and 
anticipation is, as the education campaign ramps up, and the 
broadcasters and others engage in their activity, that ratio 
will shift dramatically, so consumers will be made aware of the 
transition by this broad industry campaign. We intend to 
slipstream behind that, making sure that, as they are notifying 
people about the broader transition, they are also directing 
them to us so they can find out about this program we have that 
will give financial assistance to those consumers who need it.
    Senator Snowe. Do you have an agency that's designing your 
websites? I mean, do you have any--I think, certainly, that you 
would want to, you know, probably reexamine it from that 
standpoint.
    OK. Ms. Seidel?
    Ms. Seidel. We have the DTV.gov website, and I can get you 
the number of hits and what feedback we have been receiving on 
those. I don't have it with me.
    But the number of hits to the website have increased 
significantly, even from October of this past year. And, in 
terms of feedback once people visit it, we do get e-mails from 
people about DTV questions. And I don't recall--and we'll 
check--but I don't recall input about how to modify the site 
itself. But, then again, as I think I mentioned earlier, we are 
working with a number of community organizations and 
organizations representing the people that you all have talked 
about, and one of the things we do ask them is whether there 
are ways that we can make our website more friendly. But then, 
also, we recognize that not everyone uses the Internet. How 
else can we reach the consumers and the constituencies that you 
serve?
    But we do have, on the DTV.gov website, one of the pieces 
to that is a DTV Deputy Program Quiz. We've received very 
positive feedback on that piece of it, in particular, because 
it is geared toward students, who we know, in many cases, may 
be more technologically savvy than their parents and 
grandparents, and we go through, What is DTV? And what is the 
difference between the different types of DTV? When is the DTV 
transition occurring? And what might it mean for you? And what 
might you need to do, or your families and your friends and 
other ones--other people you know--need to do, to be sure that 
you're ready, come February 17, 2009? So, that is one piece of 
the website that I know we have gotten very favorable feedback. 
But we constantly look for ways to improve it. So, to the 
extent you all have suggestions, we would welcome them.
    Senator Snowe. Well, do you think $5 million is sufficient 
for a national campaign to educate the public?
    Ms. Seidel. You know, I would refer to what the Chairman 
has said, and I think what we have been endeavoring to do is to 
maximize, with the resources that we have, our ability to reach 
people. Certainly, to the extent additional resources were made 
available, we could enhance the campaign. I think the Chairman 
has spoken about some of the things he would do with the 
additional 2008 funds, like making sure that we have brochures 
and information about the transition in grocery stories in 
communities where we know there may be a high percentage of 
over-the-air users, and being able to run some print--you know, 
doing some PSAs ourselves, and certainly direct mail.
    Senator Snowe. Well, you know, given, you know, this 
monumental task, and the number of TV sets and households 
remaining to make this transition to digital, you know, I would 
suggest having some kind of measurement, in terms of deadlines, 
to accomplish this goal. Can you measure it by the converter 
box purchases? What can you measure it by? And you should have 
timelines, frankly, so that it can go through this process 
through 2008. Otherwise, you're going to converge, in 2009, and 
we're going to have a disaster on our hands.
    Mr. Kneuer. We're going to be able to measure the take rate 
of the coupons, and then, as the coupons are actually 
redeemed--under the statute, the coupons expire after 3 months, 
and I think we can expect that a lot of consumers will request 
these coupons, go into a retailer, and then decide to take some 
other path, either buy a set-top box with more functionality, 
buy a television, do something else. That coupon, then, would 
not be redeemed. We'll be able to track the coupons going out, 
as they're redeemed, and those coupons that aren't redeemed and 
expire after 3 months. So, we'll have very real time tracking 
of how consumers are taking advantage of our program, where our 
resources are, and the amount of money that we have left.
    Senator Snowe. Well, you should have a timeline for all 
that--I mean, certainly to know how many are outstanding, and 
having measurement along the way, so it doesn't all converge in 
2009. I mean, you really should have that calendar and 
measurement and standards, so that further outreach or other 
efforts have to be undertaken in order to accomplish this goal.
    One other question. You know, I come from a small rural 
state, and the National Association of Broadcasters estimates 
that 90 percent of the full-power stations will already be 
transmitting both digital and analog, and the conversion will 
be fairly seamless, but there are 10 percent or so--and there 
are certainly some stations in my state--that will have to have 
an immediate flash cut. So, is there a procedure in place to 
address that, to make sure that that's seamless, as well?
    Mr. Kneuer. On the full-power stations?
    Senator Snowe. The smaller stations.
    Mr. Kneuer. The low-power stations, we've got additional 
programs, under our responsibility, where we will provide 
translators for the low-power stations, so that, immediately 
upon the transition in 2009, where the high-power stations drop 
off, the LPTV stations will be able to have translators to 
continue transmitting to their communities. A second program 
will give them additional resources, to actually upgrade their 
translators to go to all-digital.
    Senator Snowe. Thank you.
    Thank you, Mr. Chairman.
    The Chairman. Thank you very much.
    Senator Cantwell?

               STATEMENT OF HON. MARIA CANTWELL, 
                  U.S. SENATOR FROM WASHINGTON

    Senator Cantwell. Thank you, Mr. Chairman.
    Mr. Kneuer, I'm glad you brought up the coupons, because my 
understanding is they are for 90 days, and obviously they'll be 
available at the beginning of 2008. So, do you think that all 
the set-top boxes will be available for purchase, at that point 
in time?
    Mr. Kneuer. Certainly we expect there will be set-top boxes 
in the marketplace in January of 2008. If, for whatever reason, 
we got information there were not boxes available, and 
consumers were requesting coupons--the statute requires us to 
be able to process coupons as of January 1, 2008--if there was 
a disconnect between the availability of boxes, we wouldn't 
want consumers to get those coupons, have them expire in 90 
days, and not have boxes. So, we would hold, and not deliver, 
the coupons to consumers if there was, for some reason, a 
disconnect in the supply chain of the boxes.
    Senator Cantwell. How are you going to do that?
    Mr. Kneuer. We will have information from the retailers, 
from the manufacturers, we'll know how many boxes are out 
there. If we get an influx of coupon requests, but we have 
information that there aren't, in fact, boxes----
    Senator Cantwell. Are you going to look up every ZIP Code 
and then find a retailer in that neighborhood, and then see, 
and, if it is, then you'll send out the coupon, and, if not----
    Mr. Kneuer. I wouldn't expect that the supply issues, to 
the extent there were any, would be small-market specific. 
There would either be a problem that they didn't get the 
manufacturing completed, or there was only a few manufacturers 
that had gotten boxes done. Like I said, we've had a huge 
expression of interest from manufacturers, so I would expect 
there to be----
    Senator Cantwell. So, you're thinking Wenatchee and 
Ellensburg and the Tri-Cities and Walla Walla, and all these 
places, they're going to, on January 1, 2008, have available 
set-top boxes for purchase.
    Mr. Kneuer. That's everything that we've seen in the 
response, that there would be boxes in place.
    Senator Cantwell. And if they're not, somehow are you going 
to look up that ZIP Code, and you're not going to send out the 
coupon.
    Mr. Kneuer. Those are issues--like I said, if we received 
information that there were geographic problems on the 
distribution of boxes, we would have to go back to our vendor 
and make sure they have systems in place to deal with that.
    Senator Cantwell. But there are no inventory requirements, 
is that right?
    Mr. Kneuer. That's right.
    Senator Cantwell. So, what happens if they run out of 
stock?
    Mr. Kneuer. Like I said, I think our intention, in 
designing this program, was to create it, to make it as easy as 
possible for manufacturers and retailers to participate, while 
doing what's responsible to guard against waste, fraud, and 
abuse. So, we have adopted a standard for the boxes that was 
the broad industry-suggested standard. We adopted criteria for 
retailers that represented a broad consensus among the retail 
industry. So, we have, to the extent possible, wanted to 
encourage as much marketplace participation as possible, but, 
no, we don't have regulatory authority to reach out to every 
retailer in American and say, ``Here are the number of boxes 
you need to carry. You know, make sure you have this,'' that's 
not the way the program is currently set up.
    Senator Cantwell. Well, I think you're hearing a lot of 
frustration from members. It's one of the reasons I've been 
concerned about the dates that we had set for this transition, 
is just how long it takes. Just because technology exists 
doesn't mean that you can deploy it that quickly. And so, how 
we're setting these mandates up, and, if you ask me, there is a 
high potential for a train wreck here. You're basically, as we 
ask these questions, telling us, ``Well, we've not optimized 
the program for that. We optimized the program for the 
retailers.'' Well, it's the consumers we're asking to do 
something. We're asking them to make a big transition. We're 
using resources to try to help that, but a plan that basically 
has coupons available, and maybe not products available, and 
then the coupon expires, all of this.
    So, I think there is a great deal of confusion that could 
go on in this plan, and I suggest, Mr. Chairman, that we, 
certainly, look at upping the education process of the American 
consumer about this. I think the notion that this many people 
can transition over to an adoption of new technology without 
significant problems is being shortsighted.
    But, let me turn to Ms. Seidel for a second, because one of 
the other issues is about--you know, I think in our state we 
have four different television markets, 36 different television 
stations, and over 2,000 translator stations. Some of those 
translators are in suburban communities, some of them are in 
small rural communities. I'm trying to understand, if you're a 
consumer sitting at home and getting a signal from Seattle, but 
through a translator station that's saying that you need to 
make this switch. Isn't that process going to be confusing for 
some people? Because they might actually have a signal that 
they never have to switch, or at least there is no deadline in 
the legislation that says that they have to switch.
    Ms. Seidel. I think the point you raise about that issue 
and the potential for confusion is one we've talked about, as 
well, and we do envision putting together consumer materials to 
help answer questions before they arise, and to build 
awareness, and to try to help address questions that the 
consumer may have, if that's the situation.
    Senator Cantwell. What's the answer you're going to give to 
that consumer, who's getting the signal from a Seattle station 
that's emphasizing the digital transition and so, they listen 
to that, and they go out and make a set-top box purchase; then 
they find out from their neighbor, ``Guess what? You never had 
to do that. We didn't have to do that, because we have a 
translator station here. You didn't have to go make that 
purchase.'' So, now they've signed up for digital broadcast, 
the extra dollars that it takes to get the digital broadcast, 
they went out and made the purchase for the set-top box, and 
they find out from their neighbor they didn't have to. How are 
you going to deal with that?
    Ms. Seidel. Well, I think part of it is an education and 
awareness issue. But I do think you're right, that it will be 
fact-specific in many cases, so it's hard to do, like, an 
across-the-board outreach on an issue that will vary from one 
area to another, but those issues--I think they are important 
ones, and I think they're ones that will, you know, have the 
potential for raising questions for consumers, and certainly 
it's one I'll take back and see what more we could do on our 
side.
    Senator Cantwell. Is there a hard date after which the 
television broadcasters--after February 2009, will we still 
have analog broadcasts?
    Ms. Seidel. On February 17, 2009, analog broadcasting would 
cease.
    Senator Cantwell. But----
    Ms. Seidel. But the low-power--I think, in terms of the 
low-power stations, the analog translators, that would be a 
different issue, and, I think, related to the question you just 
posed.
    Senator Cantwell. Again, I'm asking, because, obviously, 
these low-powered stations--this notion and the uses of ``white 
space'' and where we're going with that. I think having a plan 
as it relates to the percentage of, you know, class A and low-
power stations, and what you're really going to do with them--
--
    Ms. Seidel. Well, I think probably the best thing for me to 
do is to take your questions back to the Media Bureau, who's 
looking at those issues, and make sure that we get back to you.
    Senator Cantwell. Thank you.
    Thank you, Mr. Chairman.
    The Chairman. Thank you very much.
    Senator Smith?

              STATEMENT OF HON. GORDON H. SMITH, 
                    U.S. SENATOR FROM OREGON

    Senator Smith. Thank you, Mr. Chairman.
    For the record, I would note that some of the concerns 
being expressed--and, I think, specifically by Senator 
McCaskill, we included, in last year's bill, a requirement for 
broadcasters to inform the public through public service 
announcements. And I guess my question is--you know, obviously 
they have an incentive to do this, do you know of a date, a 
plan of theirs--have they shared it with you--as to when they 
begin to meet this requirement to make public service 
announcements?
    Mr. Kneuer. Not with the level of granularity that would 
say, ``On this date, we will commence PSAs at the following 
volume, and then we will ramp up to a higher volume, and that, 
by the end, we are going to do an explicit number of PSAs and 
commit X number of resources.'' They have committed that they 
will be conducting a broad campaign that will be based on 
polling on awareness, focused on pockets of population, based 
on what, the level of penetration, what their awareness is, and 
ramping it up as we get closer to the date.
    Senator Smith. Well, I--obviously, they understand their 
own interests in this, do they not?
    Mr. Kneuer. I would think so.
    Senator Smith. OK, you've got that--you've gotten that 
sense from them.
    You know, my own experience, as a dad, is that my kids--and 
I suspect all of yours--are really up on this, and they've 
already made the transition, and they're already with high 
definition, and they're demanding mom and dad get new TVs. And 
I know that has happened in our household. But I suspect that 
the AARP is correct in their concern about, specifically, the 
elderly. I know we're sort of beating a dead horse here, 
because we've mentioned this over and over again, but obviously 
we mention it because of the obvious concern that many who are 
not part of the high-tech age are intimidated by it, don't know 
what to do or where to go, and are, frankly, subject to 
exploitation through fraudsters and others. And I really think 
that needs to be the focus of your efforts.
    To that end, Senator Pryor and I sent a letter to Secretary 
Gutierrez and to FCC Commissioner Martin--it was to them 
jointly--and we asked them to do a number of specific things: 
to jointly prepare a program that has an explanation of the DTV 
transition, including its effective date and who is affected; 
second, instructions to determine whether a television's--a 
television will receive a digital signal, and, if not, the 
options to ensure reception of a digital signal, and the 
related cost; to, third, inform related--information related to 
the National Telecommunications and Information Administration 
Digital-to-Analog Converter Box Coupon Program; and, fourth, 
tips on how to avoid potential fraudulent schemes related to 
the DTV transition that may target the elderly.
    Do you know whether the commissioner or the Secretary have 
responded to that, have you gotten directions to this----
    Mr. Kneuer. Well, we've got the letter, and we're preparing 
a response for you. Each of the things, that I think you called 
out in your letter, are things that we've been looking at and 
working on, either directly, through our relationship with 
seeking a vendor to fulfill this coupon program for us, or 
through our collaboration with other Federal agencies that 
have, as a responsibility, reaching out to elderly communities, 
our partnership with AARP. So, we'll certainly be getting back 
to you with more detail on each of those points. But all of 
those things are things that we're focused on.
    I think----
    Senator Smith. But----
    Mr. Kneuer.--one thing--sorry.
    Senator Smith. No, go ahead.
    Mr. Kneuer. One thing, with regard to seniors and the 
elderly, is that relative to other age groups, they actually 
watch a little bit more television. And so, to the extent that 
most of this campaign----
    Senator Smith. I'm not sure that's possible, when I think 
about my sons watching.
    [Laughter.]
    Senator Smith. But you--you're probably----
    Mr. Kneuer. It's high-school kids, and----
    Senator Smith.--right.
    Mr. Kneuer.--then it ramps up. But it's--for 55-64, it's an 
average of 2.6 hours a day. By the time you get above 75, it's 
more than 4 hours a day. So, they're going to be recipients of 
a lot of this broadcast information about that. That being 
said, we need to make sure that, as they respond to this, that 
they're not taken advantage of, as you said, by people who may 
seek to do that.
    Senator Smith. Do you have any other comments, Ms. Seidel?
    Ms. Seidel. If I might. I do think the--I think the first 
couple of points that you mentioned, about having information 
available to the elderly that would explain to them how to find 
out whether or not what they have is a digital television, or 
what they would need to do, and making sure to explain what the 
transition is and when the transition date is, and providing 
information for them about what options are available for them 
to continue viewing broadcast television, come the completion 
of the transition--we do have a DTV fact sheet that includes 
all of those elements, and it also links to the NTIA website 
and information about the coupon--about converter boxes and the 
coupon program.
    In addition to that, we are definitely emphasizing our 
efforts to reach out to organizations that represent the 
elderly. And the Leadership Council on Aging, as I understand 
it, is an umbrella organization that represents something more 
than--close to 60 organizations that help people who are 
elderly.
    And then, finally, I would say that the Commission is 
definitely committed to addressing and investigating any 
information that it gets about potential scams that may be 
targeting the elderly, and is definitely committed to taking 
enforcement action in this regard, just as it has done with 
respect to the labeling requirements and violations of the 
labeling requirements. So, certainly we understand your 
concern.
    Senator Smith. Well, thank you for that. I look forward to 
a response to the letter and appreciate anything and everything 
you do in regards to these very obvious, but very important, 
steps that we need to take, as a government, to do our part of 
this. I think the number of Senators that have been here this 
morning are an indication that we understand, firsthand, that, 
while we get lots of calls in our offices about Medicare or 
Social Security or veterans issues, ranking right among those 
concerns is trouble with their TV sets, and so, that's why we 
know the flood that's going to come, and if we can make sure 
it's not a tsunami, that would be great.
    Thanks.
    Mr. Kneuer. If I could put----
    The Chairman. Thank you very much.
    Mr. Kneuer.--in a plug for our----
    The Chairman. Senator Thune?
    Mr. Kneuer. As I say, we've supplied our pamphlets, in both 
Spanish and English, to every member of the Senate and of the 
House of Representatives, supplied a PDF link. So, to the 
extent you are getting constituent concerns about this, we've 
got information that I think can be helpful.
    Ms. Seidel. As do we.
    The Chairman. Thank you.
    Senator Thune?

                 STATEMENT OF HON. JOHN THUNE, 
                 U.S. SENATOR FROM SOUTH DAKOTA

    Senator Thune. And they're all watching C-SPAN, so they're 
going to make sure that they're following all this that has 
happened. So----
    [Laughter.]
    Senator Thune. Thank you, Mr. Chairman and Vice Chairman 
Stevens, for holding this hearing. I also want to thank our 
witnesses for their testimony.
    And the digital transition is coming. It's going to be here 
in 18 months, and I think it's important for this committee, as 
well as the agencies and groups that are represented on our 
witness panels, to do their part in highlighting the coming 
transition. There are a lot of other groups--industry groups 
that will also be required to play an important role. But, as 
we all know, change comes easier for some than others, and our 
younger generations are going to be more able to easily adapt 
to the digital transition. My daughters seem to intuitively 
know how to operate their iPods without reading the 
instructions, but our older generations, myself included, I 
think will probably find a lot of these changes a little harder 
to deal with. And I know the clock on my parents' VCR is still 
blinking 12 o'clock, so I think that's probably an indication 
of what we may be dealing with.
    But, in South Dakota we have 12.2 percent of our households 
who rely on free over-the-air broadcast television, which 
represents about 36--almost 37,000 households. And I'm sure a 
lot of those households are older or lower-income families. And 
so, what we're hearing from our witnesses this morning, I 
think, reinforces the fact that it's these households that are 
going to be most impacted by the digital transition. And it's 
my hope that, through efforts like what we're doing here today, 
we can highlight the coming transition, help get people 
prepared for the change.
    I've got a couple of questions. This one, I'll direct to 
either of Ms. Seidel or Mr.--do you say it ``Kneuer''?
    Mr. Kneuer. Kneuer.
    Senator Thune. Kneuer.
    Ms. Seidel mentioned, in her testimony, that, as of March 
1, 2007, all television receivers shipped in interstate 
commerce or imported into the United States must have digital 
capabilities. Retailers are obviously still allowed to sell 
current inventory. But when do you believe there will be no 
more analog televisions for sale?
    Ms. Seidel. At this point, I wouldn't speculate but I can 
certainly take your question back and see if some of my other 
colleagues in the agency have a good estimate for you. But I'm 
not sure I would have a good answer for you.
    Mr. Kneuer. I'm not sure we have good market data on that. 
I think the important thing--and I think the Commission's been 
doing good work in this regard--is making sure that the 
retailers have clear labeling in the stores. There are 
consumers who actually may want one of those old analog TVs 
that are cheap, so they can hook it up to a video game or cable 
set-top box or whatever it may be. So, there are consumers who 
are going in, who, you know, may very well want to make an 
informed choice to purchase one of those sets. The critical 
thing is that it's an informed choice and that there isn't 
confusion in the marketplace as those last sets do move 
through.
    Senator Thune. In your testimony, Ms. Seidel, you mentioned 
that the FCC staff had inspected 1,089 retail stores around the 
country to see how well retailers are informing consumers about 
the impending transition and complying with the new labeling 
requirements, and you mentioned 262 citations that were issued 
during those inspections. That's about a 76 percent score for 
those retail outlets, those stores. As far as grades go, that's 
not quite an F, but it's a long ways from an A or a B. What do 
you think needs to be done to improve that labeling compliance 
at retail stores?
    Ms. Seidel. A couple of things. One thing, I think, which 
seems to always occur is, once there are enforcement actions 
taken, it does seem to get attention from others, from other 
companies around the country. So, I think the fact that 
enforcement action has been swift, and has been consistent, 
will help.
    Second, we have been working with the Consumer Electronics 
Retailers Council, who has, in conjunction with the FCC, put 
out a joint advisory to the retailers, reminding them of the 
labeling obligation and the requirement. And I think that, too, 
will help, because we do have the commitment of that 
organization to help us in this regard, and I think that, the 
consistent and continuous enforcement action, when it's 
appropriate, will be helpful.
    Senator Thune. What happens when you issue a citation? I 
mean, is there some sort of consequence associated with that 
for a retailer?
    Ms. Seidel. And, again, this is probably a better question 
for my colleagues in the Enforcement Bureau, but I used to work 
there. The citation indicates that it appears that this 
violation has occurred, and warns them that, if it is occurs a 
second time, a Notice of Apparent Liability could be issued, 
and actual monetary forfeiture issued. So, they have a very 
clear incentive, after that citation, to fix the problem. And, 
historically, you know, that is generally the case.
    Senator Thune. Citation will get their attention----
    Ms. Seidel. Yes.
    Senator Thune.--in other words. OK. And when you choose are 
you selective about how you audit, or is that sort of random 
retail stores around the country? And----
    Ms. Seidel. That question, I will have to take back to my 
colleagues in the Enforcement Bureau and let you know. But I 
can tell you that enforcement of these issues is, indeed, a 
high priority for the Chairman and the Commission. And so, I 
will get the answer to your specific question, but it will be 
one that will be ongoing effort.
    Senator Thune. We've got a billion and a half allocated for 
the Digital Conversion Box Program, and my understanding is 
that NTIA is going to use the first $990 million to distribute 
$40 coupons to--for converter boxes, on a first-come first-
serve basis. There's no means test and no requirement for a 
household to certify that they solely rely on the over-the-air 
broadcasts for television viewing. And I guess my question 
would be, What was NTIA's rationale for that decision? And, you 
know, you've got the other $550-million contingency fund, and 
have indicated that that's going to be used differently. My 
question, I guess, if you could give us a little bit background 
into what your thought process was----
    Mr. Kneuer. Sure. I think the----
    Senator Thune.--with regard to that.
    Mr. Kneuer [continuing]. The legislative history made it 
clear that this was intended to be a broad program, that the 
transition is essentially going to affect all television 
households, so the program should be as broadly applicable as 
possible. So, that's why, for the first $990 million, we've 
said, essentially, any U.S. household, without any restrictions 
of any kind, can participate in the program.
    The second pool of money, we had a different criteria for 
that, where we have limited access to those dollars to 
households that self-certify that they're exclusively over-the-
air, that they don't receive cable or satellite on some set in 
the house. Our thinking on that was that to maximize the 
possibility--the likelihood that no household--household that 
would otherwise lose television service--doesn't have access to 
some financial assistance, if they need it. So, if we go 
through the first billion dollars, and the money is now limited 
to an additional $500 million, make sure that 500 million goes 
as far as possible to make sure that no household would 
actually lose television service, absent that resource. So, 
households that are ineligible for the second $500 million 
still have access to television, either through cable or 
satellite.
    Senator Thune. And do you have pretty firm estimates about 
whether that's going to be enough money and, in those two 
pools, is going to be sufficient to deal with the----
    Mr. Kneuer. Given the take-up of digital televisions--as I 
said, the numbers I've seen are that by the end of this year 
it'll be more than 85 million digital set-tops in American 
households--given the penetration of cable and satellite, given 
some of the polling that we've seen with regards to, what do 
consumers intend to do at the end of this transition? You know, 
you take a focus group, and you educate them, say, ``It's 
coming in February, your options are: subscribe to cable, 
subscribe to satellite, buy a digital television, buy your own 
set-top box that has some degree of functionality beyond what 
is eligible under the rule, or participate in this government 
program.'' Lots of consumers indicate that they are going to 
effectuate this transition on their own. Aside from the 
program, even exclusively over-the-air households I think a lot 
of consumers are going to take these coupons and go into a 
store and say, ``You know what? That digital TV is actually 
what I want,'' and the coupon won't be redeemed. So, given the 
consumer acceptance of DTV in the marketplace, as we're 
currently seeing it, given the options consumers have to effect 
the transition on their own, I'm confident that the--with the 
full $1.5 billion, we'll have enough money.
    Senator Thune. Well, I appreciate your answers to the 
questions, and I would just, again, say that this is going to 
be--getting this right is going to be important for a lot of--
particularly, seniors, in my state at least--the television is 
a kind of a lifeline and--in those--particularly in those cold 
winter months, it is especially important. And I think that 
making sure that this transition occurs smoothly is going to be 
critical. So, I hope that, as it moves forward and--we'll 
continue to have, I think--all of us, probably, on this 
committee--an ongoing interest in that process, and what we can 
do to be helpful.
    So, thank you for your testimony.
    Mr. Kneuer. Thank you.
    Senator Thune. Thank you, Mr. Chairman.
    The Chairman. I thank you very much.
    Mr. Secretary and Ms. Seidel, I thank you very much for 
your testimony, it's been very helpful. Thank you.
    Ms. Seidel. Thank you.
    Mr. Kneuer. Thank you.
    The Chairman. We will be submitting more questions, if we 
may.
    Our next panel consists of a member of the AARP Board of 
Directors, Ms. Nelda Barnett; the President and CEO of the 
National Hispanic Media Coalition, Mr. Alex Nogales; the Vice 
President/Director of Public Policy of Leadership Conference on 
Civil Rights, Ms. Nancy Zirkin.
    While they're assembling, I'd like to announce that this 
committee will be conducting another hearing in September, and 
at that time we will have industry witnesses, including 
electronic manufacturers, retailers, broadcasters, and cable.
    I'm certain you've been waiting a long time, and I know 
that you want to go ahead, so may I call upon Ms. Nelda 
Barnett.

              STATEMENT OF NELDA BARNETT, MEMBER, 
                    BOARD OF DIRECTORS, AARP

    Ms. Barnett. Thank you very much, and good morning. There 
it is. I'm sorry.
    Good morning, Mr. Chairman and members of the Committee. 
Thank you for this opportunity to testify on behalf of AARP.
    AARP has been actively engaged in addressing DTV transition 
issues before Congress and Federal agencies; in particular, 
with the FCC and NTIA. AARP has urged policymakers to lighten 
the burden of this transition for all consumers, particularly 
older Americans.
    Based on data provided by the National Association of 
Broadcasters, 38 percent know that there is going to be a 
transition, and only 10 percent know what the date is on it.
    AARP's testimony centers on five different points and the 
impact it will have on the transition for older Americans:
    Number one, a large percentage of analog-only households 
are older Americans, who will be disproportionately affected by 
the DTV transition, and who are not prepared. The approximately 
20 million analog-only households should be the primary focus 
of education and outreach campaigns. Some 40 percent of these 
households include at least one person 50 years of age or 
older.
    A recent study conducted by CENTRIS reports that older 
Americans are more likely to be found in over-the-air 
households, and are, therefore, more vulnerable to the 
consequences of the digital television transition. In the most 
recent quarter of 2007, the study found that 24 percent of 
households with Americans 65 and older receive their TV 
programming over the air, compared with 19 percent of the 
younger population.
    The CENTRIS study revealed that 41 percent of older 
Americans, as compared to 55 percent of those younger, have 
purchased a TV set in the past 3 years. This suggests older 
Americans are not likely to be as exposed to DTV transition 
messages from electronic retailers.
    The second point: Older Americans confront additional 
challenges related to obtaining and redeeming converter box 
coupons and installing the converter boxes. For older persons, 
there are additional challenges involved in the DTV transition 
that should be addressed over the next several months. Among 
these are mobility issues, infirmity, isolation from other 
family members, and distance from retail centers to purchase 
the box. It may be difficult, if not impossible, for many older 
people to leave their homes to purchase a converter box. 
Another hurdle would be the installation process. Moving the TV 
to get to the back of the set and connect the box will be 
difficult for frail and disabled persons, including many 
elderly individuals living on their own.
    Number three, coupons should not be distributed until 
sufficient numbers of converter boxes are available for 
purchase in retail stores. A mechanism should be implemented to 
inform consumers about local stores that have the coupon-
qualified boxes in stock.
    Number four, older Americans are particularly vulnerable to 
potential coupon fraud and abuse, and could be subjected to 
retailers' up-selling efforts. It is also critical that steps 
be taken to protect consumers against scam artists who could 
sell unsuspecting consumers counterfeit or illegally duplicated 
converter box coupons. There may also be efforts to sell 
legitimate free converter box coupons. Further, consumers will 
need clear information to prepare for the possibility of 
retailers up-selling.
    The fifth one, a coordinated outreach and education 
campaign should include Federal, State, and local agencies, and 
programs serving consumers who have the greatest risk of losing 
their broadcast television service, particularly vulnerable 
population groups, such as the low-income and the older people.
    In conclusion, on the morning of February 18, 2009, 
consumers in households around the country could discover that 
they are unable to view their regular morning TV programs. 
These consumers will be confused, frustrated, and angry that 
this important information and entertainment source in their 
home is no longer operational, through no fault of their own. 
We all have an important role to play in keeping consumers 
connected. AARP is committed to doing their part to educate the 
nearly 39 million AARP members around the country about the DTV 
transition and Converter Box Coupon Program. AARP and the older 
Americans we represent are also counting on policymakers to 
take the necessary steps to ensure that all consumers, 
regardless of age, income, native language, and other factors, 
stay connected.
    Thank you, sir.
    [The prepared statement of Ms. Barnett follows:]

 Prepared Statement of Nelda Barnett, Member, Board of Directors, AARP
    Good morning. Mr. Chairman and members of the Committee, thank you 
for this opportunity to testify today on behalf of AARP regarding 
consumer issues related to the digital television transition. My name 
is Nelda Barnett. I'm from Owensboro, Kentucky, and I am a member of 
AARP's Board of Directors.
    AARP has been actively engaged in addressing DTV transition issues 
before Congress and Federal Government agencies. We have worked closely 
with the Federal Communications Commission (FCC) and the National 
Telecommunications and Information Administration (NTIA), holding 
numerous meetings with senior officials to discuss AARP's concerns 
regarding the DTV transition. AARP has urged policymakers to mitigate 
the burden of this transition for all consumers, particularly older 
Americans. We supported the establishment of the converter box coupon 
program and we continue to call attention to the importance of 
comprehensive consumer education and outreach to inform all affected 
individuals about the DTV transition and converter box coupon program.
    My remarks this morning will focus on the following issues 
concerning the transition's impact on older Americans.

        1. A large percentage of analog-only households are older 
        Americans who will be disproportionately impacted by the DTV 
        transition and who are not prepared for the transition;

        2. Older Americans confront additional challenges related to 
        obtaining and redeeming converter box coupons, and installing 
        the converter boxes;

        3. Coupons should not be distributed until sufficient numbers 
        of converter boxes are available for purchase at retail stores. 
        There should be a mechanism implemented to inform consumers 
        about local stores that have the coupon-qualified converter 
        boxes in stock.

        4. Older Americans are particularly vulnerable to potential 
        coupon fraud and abuse and could be subjected to retailers' 
        ``upselling'' efforts.

        5. A coordinated outreach and education campaign should include 
        Federal and state agencies and programs serving consumers who 
        are at the greatest risking of losing their broadcast 
        television service, particularly vulnerable population groups 
        such as older Americans.
Background
    Older Americans have had a growing reliance on television 
technology. TV offers more than just entertainment. For older 
Americans, television can be a primary connection to the outside 
world--providing life-saving weather forecasts, public safety 
announcements, information on government and politics, and community 
news. In fact, Americans aged 50 and above watch the greatest average 
number of hours of television a day, almost 5.5 hours.\1\
---------------------------------------------------------------------------
    \1\ Nielsen Media Research, 2005.
---------------------------------------------------------------------------
    The transition to digital television will offer consumers real 
benefits: better-quality transmission and a wider range of programming 
options. However, as Congress has recognized, there are significant 
costs associated with this transition. Consumers with analog sets will 
need to purchase a new set with an integrated digital component, 
connect the set to a cable or satellite service, or purchase a 
converter box. These costs are not inconsequential. But for older 
Americans additional, non-monetary costs may be especially challenging: 
the inconvenience of searching for an available converter box, 
potential difficulties in attaching the converter box to the back of 
their set, and confusion regarding the transition itself.
    1. A large percentage of analog-only households are older Americans 
who will be disproportionately impacted by the DTV transition and who 
are not prepared for the transition.
    According to a 2004 survey,\2\ about 21 million households rely on 
over-the-air (OTA) broadcast-only television. A more recent Nielsen 
Media Research report estimates that the current number of OTA 
households is approximately 20 million. These are the consumers who 
will be without television service at the point of the transition, and 
they should be the primary focus of any education and outreach 
campaign, and the priority households for receipt of the converter box 
coupons. The GAO reported that of these OTA households, about 48 
percent have incomes under $30,000. Moreover, approximately 8 million--
or 40 percent--of these households include at least one person over the 
age of 50.\3\
---------------------------------------------------------------------------
    \2\ Knowledge Networks/SRI, Home Technology Monitor Ownership 
Survey, Spring 2004.
    \3\ Nielsen Media Research TV Household Estimates, 2003-2004.
---------------------------------------------------------------------------
    Recently, CENTRIS released data from a survey \4\ conducted to 
assess the probability that older Americans are more likely to be found 
in over-the-air households and are therefore more vulnerable to the 
consequences of the digital TV transition. The survey's findings 
revealed that older Americans:
---------------------------------------------------------------------------
    \4\ CENTRIS, Analysis of Older Americans and the Digital TV 
Transition, July 2007.

---------------------------------------------------------------------------
        1. Over age 65 are more likely to be found in OTA households;

        2. As a group, are less likely to have purchased a new TV in 
        the past 3 years;

        3. Are less likely to have HDTV capabilities in their 
        households; and

        4. Are less likely to own a digital TV.

    The survey analysis conducted by CENTRIS concluded:

   Older Americans over 65 are a more vulnerable group with 
        respect to maintaining television services as the digital 
        transition is completed;

   Older Americans will not be as exposed to DTV transition 
        messages from electronic retailers as will younger members of 
        the population; and

   The population of older Americans will need special focus in 
        efforts to educate the public with respect to the end of the 
        DTV transition.

    2. Older Americans confront additional challenges related to 
obtaining and redeeming converter box coupons, and in installing the 
converter boxes.
    There are additional challenges involved with the transition to DTV 
that confront older Americans, and they should be addressed over the 
course of the next several months. Among these may be mobility issues, 
infirmity, isolation from other family members, and distance from 
retail centers in rural communities. It may be difficult, if not 
impossible, for many older Americans to leave their home to purchase a 
converter box. Although it may be possible to purchase the converter 
box online, there are a number of older Americans who do not have 
Internet access in their home.
    Another potential barrier for all consumers will be the converter 
box installation process. Assuming the consumer is able to request 
coupons and purchase the converter box, the next hurdle will be the 
installation. The process could require moving the television to get to 
the back of the set and connect the box, which could be difficult for 
frail or disabled persons, including many older Americans living on 
their own. Of course, there is also the possibility that the actual 
connection process required will be difficult for some to master.
    AARP urges Congress to work with the appropriate Federal agencies 
to address these issues in the next several months, to assist older 
Americans and other vulnerable individuals with these challenges.
    3. Coupons should not be distributed until sufficient numbers of 
converter boxes are available for purchase at retail stores. A 
mechanism should be implemented to inform consumers about local stores 
that have the coupon-qualified converter boxes in stock.
    The success of the converter box coupon program involves some 
uncertain timing elements. There are some consumers who will act 
expeditiously, perhaps in response to initial consumer outreach and 
education campaigns, and request converter box coupons when they first 
become available in January 2008. According to NTIA's rules, the 
coupons will expire 90 days after they are mailed to the requesting 
households. AARP has heard from a variety of sources that the converter 
boxes may not actually be available in electronic retail establishments 
until April of 2008. If a consumer receives the coupon in early 
January, it could actually expire prior to the availability of 
converter boxes in stores. It is critical that NTIA coordinate the 
distribution of the coupons with the availability of the converter 
boxes for purchase in stores.
    AARP is also concerned that older Americans, particularly those 
with limited mobility, may have to travel to several retail 
establishments before locating a store that has coupon-qualified 
converter boxes on the shelves. In any one community, there could be a 
limited number of electronics stores that would stock the boxes for 
sale, and some stores may carry only a limited number of boxes. The 
NTIA will need to work with the selected coupon vendor to design a 
mechanism to track the locations of stores that have stocked the 
coupon-qualified boxes for purchase, and update this information on a 
regular basis. Consumers should be able to access this information and 
locate the store in their area with boxes in stock, by calling a toll-
free number as well as by going to an Internet website.
    4. Older Americans are particularly vulnerable to potential coupon 
fraud and abuse and could be subjected to retailers' ``upselling'' 
efforts.
    As recent consumer protection history has shown, whenever there is 
an opportunity for scam artists to take advantage of the consumer, it 
will happen. The converter box coupon program provides such an 
opportunity. It is critical that the necessary steps be taken to 
protect consumers against scam artists who could sell unsuspecting 
consumers counterfeit or illegally duplicated converter box coupons. 
Assuming such steps are taken, there will still be an opportunity for 
legitimate free converter box coupons to be offered for sale. Assisting 
consumers to avoid this unnecessary extra cost will require educational 
materials to inform consumers as to how they can receive a valid 
coupon, and to offer tips on how to avoid scam artists.
    Consumers will need to be savvy shoppers to understand, and perhaps 
reject, anticipated efforts by retailers to sell enhanced converter 
boxes that do not qualify for the coupon discount, or encourage 
consumers to purchase new, digital sets. The process of ``upselling'' 
can be avoided by providing consumers with clear information on the 
types of converter boxes qualifying for use of the coupon, and for tips 
on what they need in their home to continue television reception.
    5. A coordinated outreach and education campaign should include 
Federal and state agencies and programs serving consumers who have the 
greatest risking of losing their broadcast television service, 
particularly vulnerable population groups such as low income and older 
Americans.
    Congress should work with the NTIA and FCC to construct a 
coordinated effort to educate the public about the transition with 
other Federal, state and local government agencies that serve 
vulnerable population groups, including older Americans and low-income 
households.
    There are a number of Federal assistance programs, such as those 
administered by the U.S. Department of Health and Human Services, that 
could be tapped to help. For example, the aging network represents a 
great resource. The Administration on Aging, State Units, and Area 
Agencies on Aging (AAA's), along with the wide range of service 
providers they fund, such as Meals on Wheels and local senior centers, 
could play critical roles in education and outreach.
    Low income assistance programs, such as Supplemental Security 
Income (SSI), the Low Income Home Energy Assistance Program (LIHEAP) 
and the Commodity Supplemental Food Program, should also be engaged in 
distributing information to the low income population most vulnerable 
in this transition. Congress should request a specific plan that 
addresses the coordination of efforts among these, and other government 
agencies.
    AARP recognizes that the task of educating the general public about 
the DTV is enormous--and the $5 million designated by Congress for 
consumer outreach and education related to the converter box coupon 
program is inconsequential, given the task at hand. However, these are 
the resources that are available and many organizations will need to 
step up to inform their own members. AARP is committed to doing our 
part to educate the 38 million AARP members around the country about 
the DTV transition and the converter box coupon program.
    AARP has several publications, including the AARP Magazine and 
Bulletin that reach over 24 million households. In addition, the AARP 
Spanish language magazine, Segunda Juventud, is distributed to over 1 
million Spanish-speaking older Americans. AARP is also planning other 
media activities and an outreach campaign to inform and educate mid-
life and older American members. Materials will be prepared and 
distributed to AARP state offices and volunteer chapters, to implement 
a coordinated outreach plan to extend AARP's reach into the community 
at-large.
Conclusion
    On the morning of February 18, 2009, just a little over eighteen 
months from today, consumers in households around the country could 
discover that they are unable to view their regular morning television 
programs. These consumers will be confused, frustrated, and angry that 
this important information and entertainment source in their household 
is no longer operational, through no fault of their own. Thousands of 
telephones will ring in communities around the country as well as right 
here in hundreds of Congressional offices. Constituents will call their 
elected officials to complain and ask: ``What has happened to my 
television set?''
    We all have an important role to play in keeping consumers 
connected. AARP is committed to doing its part. AARP, and the older 
Americans we represent, are also counting on policymakers to take the 
necessary steps that will ensure all consumers, regardless of age, 
income, native language, or other factors, stay connected.

    The Chairman. I thank you very much.
    May I call upon Mr. Nogales.

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

    Mr. Nogales. Thank you, Senator.
    Mr. Chairman and members of the Committee, thank you for 
giving me the opportunity to speak to you, on behalf of the 
National Hispanic Media Coalition, on preparing consumers for 
the digital television transition. NHMC has 13 chapters across 
the Nation, and is also secretariat for the National Latino 
Media Council, which consists of 17 of the largest Latino civil 
rights and advocacy organizations across the Nation.
    We joined the DTV Transition Coalition, and have been 
working with Consumer Electronics Retailers Coalition on their 
Spanish-language translations as part of their outreach, as 
well as on the outreach itself.
    You have my complete statement on record, but allow me to 
highlight the following points:
    The DTV transition consumer educational program is grossly 
underfunded, and needs to be supplemented. The $5 million 
allocated to NTIA, and the $2 million that the FCC has for 
consumer education, translates to 2 and half cents per person 
for 300 million people here in the United States. When Berlin, 
Germany, made the transition with less than 1 million people, 
it spent 33 cents per person. What a difference!
    Consumers need to be informed on the basics, such as:
    How to figure out if they have an analog or digital 
television set. I don't know. And I know very few people that 
know the difference.
    Two, that their analog TV sets will go dark in less than 2 
years without a converter box, if they are not connected to 
cable or satellite services.
    Three, they need to know that they don't need to purchase a 
new television set, that over-the-air television will continue 
to be free, will offer them many more channels, and will give 
them a better picture, even on an older set.
    Four, consumers need to be able to access user-friendly 
instructions on how to connect the converter boxes to their 
television sets, and be able to contact a live person to help 
them with the connections if they have difficulties.
    Since a predominantly high number of Spanish speakers will 
be impacted by this transition, bilingual and bicultural staff 
is essential. We have the number of 21 million households that 
have rabbit ears, at this point. A full third of those, 7 
million, are Latinos. For any educational campaign to be 
effective, it's not only relevant that the person be able to 
speak the language, but also understand the culture. English-
written materials should not be translated to Spanish, as they 
are seldom culturally effective. Materials to the Spanish-
speaker should be original, and the appropriate place to 
advertise to Latinos should be fully considered. For example, 
Latinos, more than anyone else, consume a great deal of radio 
programming because of the fact that many of our jobs are 
outdoors.
    Already, we have seen coordination problems that can come 
up in major national campaigns that involve translation. 
Specifically, ``converter boxes'' was translated in four 
different ways by the NAB, the DTV Transition Coalition, the 
National Telecommunication and Information Administration, 
NTIA, and the Federal Communications Commission. In fact, the 
FCC was using two different terms for the boxes. It is 
imperative that we avoid confusing the consumer by using 
different terms for key terms. Let's agree on a translation, 
and remain consistent. We prefer ``caja convertidora,'' because 
it is a precise translation of ``converter boxes'' and easy for 
the Spanish consumer to understand.
    I wish, Mr. Chairman, that I was as optimistic as some of 
the other witnesses have been, in terms of this being a smooth 
transition. I am not. I just came from a meeting of the 
National Latino Media Council membership, and, I have to tell 
you, out of the eight people that were there--they're all very 
sophisticated, very smart individuals in the entertainment and 
also in the newspaper business--and not one of them really knew 
very much about the digital transition. They knew the term, but 
they don't know the mechanics.
    As to the advertising, we can't really leave it to cable, 
and we can't really leave it to the broadcasters. As you have 
heard, there is no firm date as to when they are going to start 
with their PSAs. I don't doubt their intentions. I don't doubt 
their intentions at all, but the fact of the matter remains 
that they still cannot give us a date when they're going to 
start their advertising campaign, their PSAs, and everything 
else. So, that being the case, there are no firm dates, and 
we're all kind of in the air that this is going to occur.
    Now, I have it not only from the NAB that this is the case, 
but also from the presidents of several of the organizations 
involved, both the Spanish-language and English-language 
networks. They're going so fast with their business, and they 
live and die, as you know, by the overnight ratings, and they 
have their hands full. So, this is a priority, but a priority 
that they keep thinking, that is way down in the future, not 
realizing that it's happening in 18 months. So, until we have 
timeframes that tell us specifically when this is going to 
begin, I can tell you that I'm not optimistic at all that we're 
going to reach the American public.
    Thank you.
    [The prepared statement of Mr. Nogales follows:]

        Prepared Statement of Alex Nogales, President and CEO, 
                   National Hispanic Media Coalition
    Mr. Chairman and members of the Committee, thank you for giving me 
the opportunity to speak to you today on behalf of the National 
Hispanic Media Coalition's (NHMC) regarding preparing consumers for the 
Digital Television Transition.
    My name is Alex Nogales; I am the President and CEO of NHMC. NHMC 
is a 21-year-old non-profit Latino civil rights, media advocacy 
organization based in Los Angeles, California. We have 13 chapters 
nationwide and our mission is to: (1) improve the image of American 
Latinos as portrayed by the media; (2) increase the number of American 
Latinos employed in all facets of media; and (3) advocate for media and 
telecommunications policies that benefit the Latino community. NHMC is 
also the Secretariat for the National Latino Media Council, a national 
coalition comprised of 15 of the largest Latino Civil Rights Advocacy 
groups in the Nation. Additionally, NHMC is an Executive Committee 
Member of the Media and Democracy Coalition, a national coalition 
comprised of many of the largest mainstream media advocacy groups in 
the Nation. Recently, NHMC joined the DTV Transition Coalition 
membership.
    As you know, the transition from analog to digital television 
brings great opportunities but also great challenges. In 2005, the 
Government Accountability Office (GAO) reported that 21 million U.S. 
households rely solely on over-the-air television. Of these households, 
about 48 percent earn less than $30,000 per year per household. These 
21 million households include a disproportionate number of Spanish 
language speakers: one-third or 7 million people who will be impacted 
by the digital transition are Spanish language speakers. It is also 
estimated that one-third of the 21 million households include residents 
over the age of fifty, many of whom live on fixed-incomes; millions of 
these households will be in rural areas or will include persons with 
disabilities. Further, according to the National Association of 
Broadcasters (NAB), African-American households are 22 percent more 
likely to rely exclusively on over-the-air reception. In summary, 
households impacted by the digital transition will be minorities, low-
income families, living on a fixed-income, and requiring a well-defined 
and more specific educational outreach campaign then the overall 
population requires. I will refer to the groups that I just mentioned 
as our target groups or target population.
    A more specific educational outreach campaign to these target 
populations must be pro-active, consumer-friendly and culturally, 
linguistically sensitive. Appropriate outreach to disabled, minority, 
rural, low-income and senior citizens is essential. For example, the 
public service announcements promoting this initiative must include 
closed captioning for the hearing impaired and should be available in 
Spanish as well as other relevant languages. The call-in centers 
handling the voucher questions must include live-operators that include 
Spanish-speakers, wait time should not go over 10 minutes and must 
accommodate telecom relay services that make it easier for the deaf to 
communicate by phone. And it is not sufficient to translate the English 
materials to Spanish. Those doing the outreach must communicate with 
Spanish speakers in a manner where their message will be understood. 
Cultural awareness here is fundamental for the outreach campaign to be 
successful. Already, we have seen coordination problems that can come 
up in major national campaigns that involve translation. ``Converter 
boxes'' was translated in four different ways by the NAB, the DTV 
Transition Coalition, the National Telecommunications and Information 
Administration (NTIA), and the Federal Communications Commission (FCC). 
The FCC was actually using two different terms for the boxes. It is 
imperative that we avoid confusing the consumer by using different 
words for key terms. Let's agree on a translation and remain 
consistent. We prefer ``caja convertidora'' because it is a precise 
translation of converter boxes and easy for the Spanish consumer to 
understand.
    Congress allocated $5 million to NTIA to educate consumers about 
the DTV coupon program. The FCC has only requested $1.5 million for 
consumer education effort in its 2008 budget request. That's a total of 
$6.5 million to educate 300 million people, about 2 cents per person. 
This is a seriously under-funded consumer education program. When 
Berlin, Germany transitioned to DTV, it spent $984,000 to educate about 
three million people, or 33 cents per person. Why is the City of Berlin 
willing to make this expenditure on its citizens, but our Nation is 
not? Furthermore, the FCC does not plan to begin its public education 
campaign until 2008, when the converter box coupons and the boxes are 
expected to be available on January 1, 2008. In our opinion, the FCC 
campaign is starting a year late. Consumers need to know about the DTV 
transition generally, and the coupon program specifically, as soon as 
possible, but certainly well before NTIA makes the coupons available to 
the public. We need to start seeing Y2K-level consumer education 
efforts soon or you will have a big problem on your hands. Consumers 
need to be aware of how the transition will impact them. They need to 
know (1) how to figure out if they have an analog or digital TV; (2) 
that their analog TV sets will go dark in less than 2 years without a 
converter box if they are not connected to cable or satellite service; 
(3) they need to know that they don't need to purchase a new TV set, 
that over-the-air television will continue to be free, will offer them 
many more channels and will give them a better picture even on an older 
set; (4) consumers need to be able to access user-friendly instructions 
on how to connect the converter boxes to their TV sets and be able to 
contact a live person to help them with the connection if they have 
difficulties .
    We strongly encourage the NTIA to bring in community based 
organizations (CBOs) that represent the disabled, minority, rural and 
senior advocates that will help develop a thorough outreach plan to 
ensure that the outreach and educational component of this program is 
solid and has no holes. We can't afford to make mistakes on a program 
that is a first-come, first-serve program where the populations that 
are in most need of these coupons run the risk of being the last to 
hear about the program.
    NAB estimates that about 5 percent of the population knows that the 
digital transition is taking place. I suspect the NAB is being 
optimistic. Not many people outside the Beltway have heard about the 
digital transition and its possible impact on their households. Not 
enough has been done so far to educate our target groups that this 
historic change is taking place and that their over-the-air televisions 
will go dark after February 17, 2009 without a converter box. The 
outreach program needs to start today and more effort needs to be made 
by the NTIA, FCC and the DTV Transition Coalition to reach community-
based organizations that focus on the target groups. We need more 
people outside of D.C. to know about the transition and be able to 
communicate in a clear and understandable manner to those that will be 
impacted.
    Finally, NHMC objects to the two-phase plan that NTIA is proposing 
for the distribution of the coupons. In the first phase, where 
$990,000,000 is allocated, all U.S. households will be able to apply 
for up to two $40 coupons per household to purchase converter boxes. 
The second phase is only open to households that certify in writing 
that they rely on over-the-air reception. Once the $990,000,000 is 
spent, those that apply late or do not find out about the coupon 
program in time will be burdened by an added certification that may 
deter them from applying. Changing eligibility mid-course will result 
in needless customer confusion. Indeed, the certification will be a 
deterrent to low-income families, especially those that do not 
predominantly speak the English language. Ladies and gentleman, I have 
no doubt that the disenfranchised population that will be the most 
impacted by the digital transition will be the last to apply for the 
coupons. This being the case, having to certify in writing that they 
rely on over-the-air reception is just adding an additional burden that 
will discourage many of them from applying for the converter boxes. A 
two phase-plan with an added burden for those that are hardest to reach 
doesn't make a lot of sense. If the reason for this two-phase system is 
because NTIA thinks there is a likelihood that the program will run out 
of funds before all the impacted households have obtained their 
coupons, then NTIA should go back to Congress and ask for additional 
funding.
Summary

   The DTV Transition consumer educational program is grossly 
        under-funded and needs to be supplemented.

   We need to start seeing Y2K-level efforts for the DTV 
        Transition. Efforts must be pro-active, consumer-friendly and 
        culturally sensitive and they need to begin now. Efforts should 
        include a well-coordinated campaign that includes CBOs working 
        closely with the NTIA.

   Since a predominantly high number of Spanish-speakers will 
        be impacted by this transition, bilingual and bi-cultural staff 
        is essential. For any educational campaign to be effective it's 
        not only relevant that the person be able to speak the language 
        but also understand the culture.

   English-written materials should not be translated to 
        Spanish as they are seldom culturally effective. Materials to 
        the Spanish-speaking should be original and the appropriate 
        place to advertise to Latinos should be carefully considered. 
        For example, Latinos more then anyone else consume a great deal 
        of radio programming.

   We oppose a two-phase program that adds a burdensome 
        requirement for those that apply later. The second-phase 
        certification requirement is in effect a detractor.

    The Chairman. I thank you very much, Mr. Nogales.
    Ms. Zirkin?

         STATEMENT OF NANCY M. ZIRKIN, VICE PRESIDENT,

   DIRECTOR OF PUBLIC POLICY, LEADERSHIP CONFERENCE ON CIVIL 
                         RIGHTS (LCCR)

    Ms. Zirkin. Thank you, Chairman Inouye. And thank you, 
Senator Stevens.
    I am Nancy Zirkin, and I'm Vice President----
    Senator Stevens. Pull the mike up toward you, Ms. Zirkin.
    Ms. Zirkin. Is it on?
    Senator Stevens. Yes.
    Ms. Zirkin. OK. Thank you.
    I'm Nancy Zirkin, Vice President and Director of Public 
Policy with the Leadership Conference on Civil Rights. Thank 
you very much for the opportunity to testify. It's a very 
important issue for the Leadership Conference.
    LCCR, as many of you know, is our Nation's oldest, largest, 
and most diverse coalition of nearly 200 national civil rights 
and human rights organizations. LCCR is also a founding member 
of the DTV Transition Coalition.
    The huge switch from analog into digital TV will have a 
profound impact on millions of Americans, as we have heard 
throughout this morning, especially seniors, the poor, the 
minority communities, people with disabilities, and those for 
whom English is not their first language.
    And the reality today, as Senator Thune said, is that 
everybody needs TV, not just for entertainment, but for news, 
both local, national, and worldwide. Imagine 9/11 without TV 
coverage and you'll understand how important a working 
television is to the 21 million American households who now 
rely solely on free analog TV.
    LCCR believes that access to communications in the 21st 
century is not a luxury, but a fundamental right of every 
American. The challenges involved in preparing Americans for 
the digital TV transition are of such magnitude that a strong 
Congressional response is required. I think Senator McCaskill 
had it right; in the end, voters will look to Congress if their 
TVs go dark.
    LCCR applauds Congress, and both of you, for your 
leadership in this transition, and for recognizing the need for 
government support to help consumers know about the coupon 
program, and about covering the cost for the transition for the 
converter boxes. But we are troubled. The $5 million allotted 
by Congress to educate consumers about the coupon program is 
not nearly enough to support the kind of public education 
campaign that we all know is required. Public education 
campaigns are not unlike State election campaigns, where people 
running for office try to educate, across the board. The actual 
cost of Senate campaigns last year in California, Ohio, 
Pennsylvania, three states whose combined population is about 
21 million households, was $39 million, way more than the $5 
million allocated for the transition.
    Our fear is that the people who will be most affected by 
the change won't hear about it and, therefore, won't have 
access to the coupons. We are also concerned that our most 
vulnerable populations will be the least likely to receive the 
first-come, first-serve limited number of coupons for the 
converter boxes. That is, unless Congress ensures that a 
comprehensive, coordinated, national consumer education effort 
focuses on both the transition and the coupon program to be 
administered by NTIA.
    We heard Mr. Kneuer's assertion on monitoring the program, 
but we believe Congress must determine that the coupons are 
going to those who need them most. Sufficient independent 
research is required to determine, early on, who is taking 
advantage of the coupon program, so that NTIA knows how to 
respond, or whether and where to deploy additional funds for 
the program. We believe that the government can play an 
important role in conducting this research through the GAO, 
with Congress tracking the whole process.
    NTIA and FCC have stated their commitment to educating all 
consumers about the transition and the coupon program, but a 
public education effort must be done by all agencies. Each 
agency should serve as a site where the coupons could be 
distributed. These efforts should be replicated at the State 
and local level.
    Unless the very people in underserved communities who rely 
on free TV are reached early, they will be left with only 
unaffordable actions. It is a complete luxury for them to have 
a set-top box or to have to afford even a converter box. It is 
equivalent to 1 week's food for a poor family. Congress can 
make sure that that does not happen.
    Finally, let me say that LCCR, through our member 
organizations representing over 60 million Americans, will do 
our part to educate consumers, but we and the DTV Transition 
Coalition cannot do it without additional help and oversight 
from the Congress and NTIA.
    Thank you very much.
    [The prepared statement of Ms. Zirkin follows:]

  Prepared Statement of Nancy M. Zirkin, Vice President, Director of 
      Public Policy, Leadership Conference on Civil Rights (LCCR)
    Chairman Inouye, Ranking Member Stevens, and members of the 
Committee: I am Nancy Zirkin, vice president and director of public 
policy of the Leadership Conference on Civil Rights (LCCR). Thank you 
for the opportunity to testify in today's hearing on preparing 
consumers for the digital television transition.
    LCCR is the Nation's oldest and most diverse coalition of civil 
rights organizations. Founded in 1950 by Arnold Aronson, A. Philip 
Randolph, and Roy Wilkins, the Leadership Conference seeks to further 
the goal of equality under law through legislative advocacy and public 
education. LCCR consists of approximately 200 national organizations 
representing persons of color, women, children, organized labor, 
persons with disabilities, the elderly, gays and lesbians, and major 
religious groups. Additionally, LCCR is a founding member of the DTV 
Transition Coalition, a large coalition that includes as members the 
Federal Communications Commission, the U.S. Department of Commerce, 
industry groups, grassroots and membership organizations, 
manufacturers, retailers, trade associations, civil rights 
organizations, and community groups. I am privileged to represent the 
civil and human rights community in submitting testimony for the record 
to the Committee.
    Today, I would like to discuss what the government-mandated 
transition to digital television means for the communities LCCR 
represents, and what needs to be done to ensure than no community is 
left in the dark. Will all Americans be sufficiently educated about the 
transition, so that they will be able to make it relatively easy and 
without undue economic burden? Moreover, will all Americans actually 
receive the benefits of digital television, including High Definition 
Television and multicasting, or will they be deprived of these 
remarkable technological advances?
    While a wide range of private stakeholders in the broadcasting, 
cable, retail, and manufacturing industries are already working hard to 
address the impact of the transition, LCCR believes that the challenges 
involved in preparing Americans for the digital television transition 
are of such magnitude that a strong Congressional response is required.
What's at Stake
    Making the transition to digital is not simply a matter of being 
able to watch wrestling, or American Idol, or reruns of Friends. At 
stake in the transition to digital television is the ability of the 
Nation's most vulnerable populations to maintain uninterrupted access 
to their key source of news and information and emergency warnings: 
free, over-the-air television. It would be a great tragedy if the 
millions of Americans who rely on free TV wake up after February 17, 
2009 and find that their TVs simply don't work.
    A successful digital television transition will require well-
informed consumers who can access what, for many, will be brand new 
technology. This cannot occur without a comprehensive, coordinated 
national consumer education effort focusing on not only the transition 
itself, but also on the coupon program to be administered through the 
U.S. Department of Commerce's National Telecommunications and 
Information Administration (NTIA).
    The need for such an effort is particularly important for the 
communities that LCCR member organizations represent. In 2005, the GAO 
found that up to 19 percent, or roughly 21 million American households, 
rely exclusively on over-the-air, free television. According to the 
GAO, 48 percent of households that rely solely on over-the-air 
television have incomes under $30,000.
    These consumers will face an expensive choice to continue to 
receive a television signal: subscribe to cable or satellite, buy a 
digital television set, or purchase a digital-to-analog converter box 
without assistance from the government through its coupon program. All 
of these options cost money. Even an inexpensive converter box can cost 
more than a week's food budget for many low-income families and for 
many elderly persons living alone and on Social Security.
    We are especially concerned because minority and aging households 
are disproportionately affected by the transition.

   According to the GAO, non-white and Hispanic households are 
        more likely to rely on over-the-air television than are white 
        and non-Hispanic households.

   Of the 21 million over-the-air households, one-third (or 
        seven million people) are Spanish-language speakers, according 
        to the testimony of Alex Nogales, President and CEO of the 
        National Hispanic Media Coalition, before the House 
        Subcommittee on Telecommunications and the Internet in March 
        2007.

   Eight million of the 21 million over-the-air households 
        include at least one person over 50 years of age, according to 
        the March 2005 testimony of Lavada DeSalles on behalf of AARP, 
        before the House Subcommittee on Telecommunications and the 
        Internet.

   One-third or more of over-the-air television viewers have 
        disabilities, according to the American Association of People 
        with Disabilities.

   African Americans make up 23 percent of over-the-air 
        households, according to the National Association of 
        Broadcasters.

    LCCR believes that access to communications is a fundamental right 
of every American. Given the impact the transition will have on all our 
most vulnerable communities, LCCR applauds Congress for recognizing the 
need for a government compensation program to be administered by NTIA 
to assist with the transition. But the process that has been created 
raises a number of troubling concerns.
Funding
    First and foremost, we are deeply concerned that the $5 million 
that Congress has allocated to NTIA to educate consumers about the 
coupon program will be woefully inadequate to support the kind of 
public education effort that the transition requires. Public education 
campaigns are not unlike state election campaigns in terms of scope. 
Therefore, consider California, Pennsylvania, and Ohio, whose combined 
population is approximately 21 million households--comparable to the 
number of households that will likely need to be educated on the 
digital television transition. The cost of a Senate campaign in Ohio in 
2006 was nearly $9 million; for all three, it was approximately $39 
million.
    The lack of sufficient resources within the digital television 
transition consumer education effort for support of nonprofit, social 
justice, or community-based organizations further limits the scope of 
public education efforts that will be possible. LCCR is committed to 
working with our community-based organizations to make sure their 
members know about the transition and the coupon program. However, we 
are skeptical about the success of these efforts without additional 
resources. We believe that the costs of the digital transition to the 
21 million over-the-air households should be paid for by the ample 
proceeds generated by the auctions of reclaimed spectrum.
    If Congress wants the digital television transition and coupon 
program to succeed, it must adequately invest in an educational program 
that truly leaves no community behind. We strongly urge Congress to 
supplement the amount of funding for consumer education efforts. In the 
end, voters will look to Congress if their televisions go dark.
Research and Oversight
    In addition to our concerns that those populations most in need 
will be least likely to know about the coupon program, LCCR is 
concerned that low-income and minority communities, seniors, and people 
with disabilities will be least likely to receive the first-come, 
first-served limited number of coupons.
    NTIA's Digital-to-Analog Converter Box Coupon Program currently 
contemplates what is essentially a two-phase process. Under the first 
phase, while the initial $990 million allocated for the program is 
available, all U.S. households--including cable and satellite 
customers--will be eligible to request up to two $40 coupons to 
purchase up to two, digital-to-analog converter boxes. Under the second 
phase, if NTIA requests the additional $510 million already authorized 
by Congress, then households that certify in writing they rely on over-
the-air reception will be eligible for coupons.
    LCCR urges Congress to ensure that the transition to digital 
television serves to benefit all Americans. In order to do so, there 
must be a way for Congress to determine that coupons are going to those 
who most need them.

   It is too early to comment on the oversight of government-
        funded consumer outreach, since the Request for Proposals (RFP) 
        award to provide services in support of the Digital-to-Analog 
        Converter Box Coupon Program has not yet been made.

   However, it is clear now that we will need sufficient 
        independent research to determine who is taking advantage of 
        the coupon program during the first phase of the process, so 
        that NTIA knows how to respond or whether and where to deploy 
        additional funds.

   The government can play an important role in conducting this 
        research through the General Accounting Office, with Congress 
        tracking the progress.

Additional Governmental Outreach
    While both NTIA and the Federal Communications Commission are 
committed to educating consumers about the transition and the coupon 
program, a public education effort of this magnitude should not be 
limited to only a few agencies.

   Ensuring a successful transition will require public 
        education at the national, state, and local level.

   At a minimum, every Federal agency should be required to 
        participate in educational outreach, and if possible, serve as 
        a site where coupons can be distributed.

   These efforts should also be replicated at the state and 
        local level.

Conclusion
    I want to acknowledge that despite the great challenges in making 
sure that all Americans know about the digital television transition 
and the coupon program, the transition presents great opportunities. 
Industry, broadcasters, manufacturers, interest groups, and Federal 
officials agree that digital TV offers viewers better quality 
transmission and a wider range of programming options. Because the 
digital signal has the ability to provide so much more information, it 
has the ability to provide more services to those who speak languages 
other than English and people with disabilities (such as enhanced 
closed captioning and video description services). We do not know if 
the broadcasters are going to provide such services, but we do know 
that there is the potential to do so. Thus, the transition has the 
potential to open the door for more Americans to participate fully in 
the digital age. This will only be true, however, if all families will 
be able to access digital television programming.
    Thank you for both the opportunity to speak today and for your 
leadership as we move forward in addressing the digital television 
transition. I look forward to answering any questions you may have.

    The Chairman. I thank you very much.
    The population of the United States is about five times the 
size of the United Kingdom. the United States will spend $5 
million for education. The British Isles are spending $400 
million. They will be sending out individuals to vulnerable 
households, such as the elderly, to provide them with 
individual service for installation and explanation. Their 
program of transition will begin in 2008 and end in 2012. Ours 
will begin in 2009. They've already started their education 
program; in fact, a year ago. So, I can assure you that 
Congress has heard your message, and we will do something about 
it.
    Thank you very much. We have to rush off; a vote is on, and 
they're holding it up for us.
    Thank you.
    [Whereupon, at 11:55 a.m., the hearing was adjourned.]
                            A P P E N D I X

            Prepared Statement of Hon. Frank R. Lautenberg, 
                      U.S. Senator from New Jersey
    Thank you, Mr. Chairman, for holding this hearing on the transition 
to digital television. We are on the cusp of a revolution in 
television.
    On February 17, 2009, just a little more than a year and a half 
from today, we will make the transition to digital television.
    The DTV transition will be the biggest development in television 
since color TV. Consumers will enjoy more programming, a clearer 
picture, a wider screen, and improved sound quality. And the transition 
will free up valuable spectrum that can be used to improve public 
safety and to provide wireless broadband service.
    But for some consumers, the DTV transition will not mean improved 
television service. Instead, it will mean no television service at all.
    Those viewers who rely on free over-the-air broadcast television 
could see their TV sets go black on February 17, 2009 unless they are 
prepared for the transition. Nearly 110,000 New Jersey households rely 
on over-the-air television.
    We know that these viewers are disproportionately poor and elderly. 
These are households that need television for their news and to learn 
about everything from local storms to national emergencies. We can't 
leave them in the dark.
    The National Telecommunications and Information Administration 
(NTIA) has a coupon program to help consumers who rely on over-the-air 
TV buy converter boxes for their television sets. But that program will 
only work if consumers know about it. We need education programs so 
that all consumers are ready for the DTV transition.
    I am also concerned that, even with the DTV transition 18 months 
away, there are analog-only television sets still on the market. I want 
to know what is being done to ensure that consumers are fully informed 
before they purchase TVs that may not work in the very near future.
    The DTV transition presents tremendous opportunities. But we must 
make sure that everyone can benefit from it.
    Thank you Mr. Chairman.
                                 ______
                                 
 National Telecommunications and Information Administration
                                    Washington, DC, August 30, 2007
Hon. Claire McCaskill,
U.S. Senate,
Washington, DC.

Dear Senator McCaskill:

    Thank you for your letter following up on my testimony before the 
Senate Commerce, Science, and Transportation Committee hearing held on 
July 26, 2007, regarding ``Consumers and the Digital Television 
Transition.'' I am pleased to respond to your letter.
    NTIA's goals with respect to certifying digital-to-analog converter 
boxes that will be eligible for purchase with coupons are twofold: (1) 
to ensure that the converter boxes meet the required performance 
standards set forth in NTIA's Final Rule (47 C.F.R.  301 Technical 
Appendix 1); and (2) to adopt a certification process that will not add 
significant costs or delay to the development and production of coupon-
eligible converter boxes. The core technical performance requirements 
are based on the Advanced Television Systems Committee (ATSC) 
Recommended Practice: Receiver Performance Guidelines ATSC A/74; 
Federal Communications Commission (FCC) Rules; and industry standards, 
such as those issued by the Consumer Electronics Association (CEA). 
NTIA received public comments on its proposed certification process and 
carefully considered the suggestions that we adopt the well-established 
procedures used by the FCC in certifying certain types of new products. 
Field testing was not suggested and is not required in NTIA's Final 
Rule. Further, NTIA and FCC engineering specialists have determined 
that laboratory tests performed according to the A/74 Guidelines will 
reliably predict performance in the field.
    Once prototypes are ready, participating manufacturers must conduct 
tests or have independent laboratories conduct tests to demonstrate 
that each converter model meets the features and performance 
specifications set forth in our regulations. The manufacturers are 
required to submit detailed certified test results, along with a sample 
of the tested equipment, to NTIA and the FCC laboratories. Working 
closely with the FCC to review the performance of each converter box 
while in the laboratory, NTIA will certify those converter boxes that 
meet the requirements. Manufacturers will then be notified as soon as 
possible whether or not each model has been certified.
    In addition, NTIA plans to purchase and randomly test certified 
coupon-eligible converter boxes to ensure that--as manufactured and 
marketed--they conform to the certified specifications. If a converter 
box is found not to meet NTIA's requirements, that model will no longer 
be eligible for the Coupon Program.
    NTIA has responded to several technical inquiries and has posted 
responses to Frequently Asked Questions on its website to help 
manufacturers understand the requirements in order to help them to 
comply. Those responses can be found at: http://www.ntia.doc/gov/
dtvcoupon/manufacturerFAQ.html.
    With regard to your second inquiry, concerning manufacturers' 
prototypes and testing activities, NTIA's Final Rule indicates that the 
notices of intent received from manufacturers shall be treated as 
business confidential and proprietary information, and states that NTIA 
will not release this information unless otherwise required by law. 
NTIA has accepted notices of intent, test results, and prototypes from 
manufacturers who have relied on NTIA's assurance of confidential 
protection for their highly proprietary information. The Coupon Program 
relies on the voluntary participation of manufacturers. NTIA has not 
requested commitments from any companies to manufacture converter boxes 
by a certain date. NTIA is aware, however, that manufacturers are in 
the process of negotiating distribution and marketing contracts with 
retailers and others. This activity is consistent with our expectation 
that converter boxes will be available for purchase by consumers in 
early 2008.
    NTIA will be very active in the coming months publicizing the 
Coupon Program and the coupon-eligible converter boxes. On August 15, 
2007, NTIA awarded a contract to IBM to support the Coupon Program. 
Among its responsibilities, IBM will work to achieve NTIA's consumer 
education objectives with the assistance of an experienced public 
relations and communications firm. IBM has hired Ketchum, a global 
public relations firm with proven ability to drive consumers to action, 
as demonstrated by their leadership in educating more than 40 million 
seniors about Medicare's Prescription Drug Coverage.
    NTIA's strategic plan includes two objectives that are especially 
relevant to achieving a successful digital transition for all 
Americans. First, our consumer education resources will focus on 
households that rely on over-the-air television. Our research indicates 
these households are on average more likely to consist of rural 
residents, minorities, the economically disadvantaged, seniors, and 
people with disabilities. Therefore, our consumer education activities 
will target these groups. Second, our efforts will leverage resources 
through partnerships to maximize engagement among diverse stakeholders. 
I have enclosed a summary of NTIA's outreach activities to date, which 
illustrates some of our partnership activities.
    With regard to your request that NTIA secure commitments from the 
broadcast community to begin running Public Service Announcements, NTIA 
has no statutory or regulatory authority to secure such commitments. As 
commercial licensees, broadcasters are regulated by the Federal 
Communications Commission. However, NTIA has been working closely with 
the DTV Transition Coalition. In a July letter to Senate Commerce 
Committee Chairman Inouye, the National Association of Broadcasters 
(NAB) addressed your question about the commitment of commercial 
broadcasting to produce and air PSAs informing the public about the 
digital transition. I would refer you to this letter for the NAB's 
specific consumer education plan. In particular, the NAB has committed 
to producing four to six on-air announcements on the transition and is 
exploring how to best use ``crawls''--that is, DTV-related messages 
that scroll across television screens during programming--to alert 
consumers to the transition. Based on discussions with the NAB, it is 
my understanding that these announcements will begin airing this fall, 
before NTIA begins to accept consumers' coupon requests on January 1, 
2008.
    NTIA has produced and made available on its website a brochure 
about the Coupon Program, which we distributed to every member of the 
Senate and House. I would welcome Senators and other Members of 
Congress linking to this information on their websites. This brochure 
is available in English and Spanish at http://www.ntia.doc.gov/
dtvcoupon. I would also invite you and your staff to attend and 
participate in NTIA's September 25, 2007, DTV Transition Public 
Meeting, Expo and Networking Event, to be held at the U.S. Department 
of Commerce. This event will be an important opportunity to hear from 
industry CEOs and key constituency groups about their specific plans to 
inform consumers about the transition.
    I look forward to continuing to work with you and all the Members 
of the Committee, and the U.S. Congress, on efforts to ensure a smooth 
digital television transition. If you have any questions, please 
contact me at (202) 482-1840.
            Sincerely,
                                          John M.R. Kneuer,
            Assistant Secretary for Communications and Information.
cc: The Hon. Daniel K. Inouye, Chairman, Committee on Commerce, Science 
            and Transportation, U.S. Senate
The Hon. Ted Stevens, Vice Chairman, Committee on Commerce, Science and 
            Transportation, U.S. Senate
The Hon. Kevin J. Martin, Chairman, Federal Communications Commission
                               Attachment
 Fact Sheet on NTIA's Outreach Activities Digital-to-Analog Converter 
                           Box Coupon Program
    As of August 23, 2007, NTIA is actively seeking partnerships with 
over 145 groups and organizations--including 14 Federal Government 
departments and agencies and 5 local and state organizations--to work 
with us to raise consumer awareness about the Coupon Program and to 
prepare our citizens for the transition. NTIA is focusing its consumer 
education activities on over-the-air-reliant households who, on 
average, are more likely to be (1) elderly; (2) economically 
disadvantaged; (3) rural residents; (4) minorities; and (5) people with 
disabilities. Some examples of our outreach include:
Senior Outreach
   NTIA is working closely with AARP to ensure that the Coupon 
        Program will be highlighted in their publications and online 
        newsletters, both in English and Spanish. AARP The Magazine 
        reaches 22.5 million members and AARP Segunda Jeventud reaches 
        400,000 members.

   NTIA will partner with SeniorNet, an organization that 
        supports about 200 senior learning centers across the country, 
        to provide information about the Coupon Program to seniors 
        through those centers.

   During the recent National Cable and Telecommunications 
        Association convention, Assistant Secretary Kneuer participated 
        on a panel hosted by Retirement Living TV designed to raise 
        awareness among seniors of the upcoming digital transition.
Economically Disadvantaged Outreach
   NTIA is working with the American Library Association to 
        distribute posters and coupon applications to participating 
        libraries, and to train librarians to help its patrons apply 
        for coupons. For consumers without home Internet access, NTIA 
        will provide a link to be placed on library terminals that will 
        enable consumers to quickly go to the coupon application page 
        and apply online.

   Other groups NTIA is actively recruiting include the 
        Salvation Army, United Way, YMCA, America's Second Harvest, and 
        Catholic Charities.

   NTIA will work with the Community Action Partnership, the 
        national organization representing the interests of the 1,000 
        Community Action Agencies (CAAs) working to fight poverty at 
        the local level.
Minority Outreach
   NTIA has reached out to the National Congress of American 
        Indians, the Pan-Asian Council on Aging, Native American 
        Council on Aging, The National Caucus and Center on Black 
        Aging, National Council on Aging, and the National Hispanic 
        Council on Aging.

   NTIA is exploring with Univision (with reach into 99 percent 
        of Hispanic households) the development of Public Service 
        Announcements and a ``how to'' video aimed at Hispanic 
        consumers.

   NTIA is partnering with the Southeast Asia Resource Action 
        Center and Panasonic to produce and distribute brochures in the 
        most commonly spoken Asian languages, including Chinese, 
        Vietnamese, Tagalog, and Korean.
Disabled Outreach
   NTIA will meet the needs of citizens with special needs to 
        enable them to take advantage of the Coupon Program. For 
        example, NTIA's Final Rule requires that manufacturers pass 
        through Closed Captioning so that this service will be 
        uninterrupted with the installation of the converter box and 
        the transition to all-digital broadcasting. NTIA will work with 
        disability groups to allay concerns that coupon-eligible 
        converters will not pass through Closed Captioning to display 
        on existing analog televisions.

   NTIA will continue to reach out to private and public 
        organizations serving the home-bound and people with special 
        needs. Organizations that provide home health care, meals on 
        wheels, senior day care, and other elder care services will be 
        a particular target of our efforts.

   NTIA has actively sought the input of disability groups in 
        the development of its program, including the American 
        Association of People with Disabilities, the Northern Virginia 
        Resource Center for Deaf and Hard of Hearing Persons, and 
        Easter Seals. NTIA participated in the Telecommunications for 
        the Deaf and Hard of Hearing, Inc. (TDI) conference in San 
        Francisco on August 24.
Rural Outreach
   NTIA is working closely with the Appalachian Regional 
        Commission (ARC) to provide information packets to 70 councils 
        of government, local development districts representing 23 
        million people in 410 counties (42 percent rural).

   In October, NTIA will actively participate in the Rural 
        Telecommunications Congress Conference in Springfield, 
        Illinois.

   NTIA has reached to the U.S. Department of Agriculture 
        Cooperative State Research, Education, and Extension Service to 
        distribute information to extension offices nationwide.

Government Outreach
   NTIA will leverage relationships with government departments 
        and agencies to reach constituencies they serve. NTIA will 
        continue to expand its group of government contacts and expects 
        to reach millions of households through these initiatives.

   NTIA is partnering with departments and agencies to use 
        their existing publications and electronic newsletters to 
        insert coupon information in scheduled mailings; link to the 
        coupon application form from their websites; put coupon 
        applications at local social service offices; talk about the 
        program at meetings and conventions; and utilize all existing 
        communication opportunities to inform them of the Coupon 
        Program.

   NTIA has reached out to the U.S. Department of Agriculture 
        Food Stamp Program, Center for Medicare & Medicaid, Social 
        Security Administration, Veterans Affairs, Department of 
        Education's Faith-Based Office, General Services 
        Administration, Health and Human Services Administration for 
        Children & Families, the Administration on Aging, IRS and its 
        Earned Income Tax Credit section, the USDA's Rural Development 
        and Cooperative Extension, and the Department of Defense.

   NTIA is also reaching out to state and local organizations 
        to reach people where they live and work. NTIA has initiated 
        outreach relationships with the National Association of 
        Counties, National League of Cities, National Council of State 
        Legislatures, and the National Association of Regulatory 
        Utility Commissioners.
Publications, Meetings, and Conferences
   Assistant Secretary Kneuer will be writing and submitting an 
        article for publication later this year in the National 
        Association of Telecommunications Officers and Advisors (NATOA) 
        Journal: Promoting Community Interests in Communication, The 
        National Education Association's Today Magazine reaching 3.2 
        million readers, and the American Library Association's 
        American Libraries. The article will be timed to reach 
        consumers around January 1, 2008, when consumers can begin to 
        request converter coupons.

   NTIA staff will continue to attend meetings and conferences 
        over the next year spreading the word of the transition and the 
        government program designed to offset the cost of the converter 
        boxes. For example, NTIA will attend the White House Faith-
        Based and Community Initiatives Conference and the AARP 
        Convention in September and other major conferences focused on 
        our target groups.
Ease of Information and Application
   Brochures, flyers, posters, and applications will be printed 
        in English and Spanish and other languages as appropriate.

   NTIA intends to make the application process as simple and 
        straightforward as possible for consumers. We will encourage 
        consumers to apply over the phone using a toll-free number, but 
        they will also have the option to use the Internet or mail or 
        fax their applications. The actual coupon application will be 
        straightforward and will be market tested to ensure it is 
        understandable and consumer friendly.

   NTIA will make the process to use the coupon to purchase and 
        install a converter box as simple as possible. NTIA will work 
        with retailers to simplify their processes and encourage 
        retailers to accept phone orders from consumers to meet the 
        needs of the home-bound. NTIA will provide a list of retail 
        outlets selling the converter boxes, including online 
        retailers, and also a list of approved boxes that can be 
        purchased with the coupon.

   NTIA is working with the Consumer Electronics Association 
        (CEA) to create an installation video and quick set-up guide to 
        help seniors set up the converter as effortlessly as possible.
                                 ______
                                 
                           Consumer Electronics Association
                                       Arlington, VA, July 26, 2007
Hon. Daniel Inouye,
Chairman,
Committee on Commerce. Science, and Transportation,
U.S. Senate,
Washington, DC.

Hon. Ted Stevens,
Vice Chairman,
Committee on Commerce, Science, and Transportation,
U.S. Senate,
Washington, DC.

Dear Chairman Inouye, Vice Chairman Stevens and Members of the 
            Committee:

    Thank you for holding today's hearing on Preparing Consumers for 
the Digital Television Transition. The Consumer Electronics Association 
(CEA) has long been committed to ensuring that consumers are informed 
about the DTV transition. As the transition date of February 17, 2009 
approaches, CEA's tireless efforts to educate consumers are even more 
paramount to ensuring a seamless transition. Even as we are less than 2 
years away from the transition date, we continue to lead the way with 
our efforts.
    Currently, CEA's educational tools for retailers and consumers to 
use include:
    Five websites that promote the DTV transition through consumer and 
dealer education:

   myCEknowhow: www.myCEknowhow.com. To help consumers navigate 
        the new features and options made available by digital 
        television. the CEA and CNET have joined forces to produce 
        interactive CEknowhow Buying Guides. The Guides, which can be 
        found on CNET.com and the CEA's consumer information site, 
        www.myCEknowhow.com. are designed to introduce consumers to 
        digital television and to ease confusion about the technology 
        before shoppers even enter the store. Information regarding 
        NTIA's DTV converter box program also is included in this 
        program.

   Antenna Web: www.antennaweb.org. This website specifically 
        permits consumers and salespeople to determine the free, over-
        the-air DTV signals that can be received at their location and 
        what type of antenna is needed to do so. The site receives 
        approximately 100,000 hits per month.

   The Connections Guide website is an interactive resource 
        designed to help consumers better understand how to connect 
        their audio and video (including DTV) products. This site is 
        located at: www.ce.org/connections_application/.

   CE Know How: www.ceknowhow.com. This is an online retailer 
        education program that is designed to equip retailers with up-
        to-date product category training for sales associates. 
        CEknowhow.com is customizable, allowing retailers to license 
        and tailor the program to suit their particular needs. In 2004, 
        more than 24,000 sales persons completed training via 
        CEknowhow.com.

    In addition to these websites, CEA includes a wealth of information 
about HDTV on its own website: www.ce.org/hdtv. In addition, CEA 
recently issued a DTV Toolkit for legislators. The Toolkit contains 
materials for answering constituent questions about the transition. All 
of the materials included in the packet are available on CEA's website: 
www.ce.org/hdtv.
    We have an ambitious schedule of additional consumer education 
education plans for 2007 include producing an HDTV Handbook for 
Retailers and Consumers in partnership with Dealerscope and e-Gear. We 
also are developing and producing a number of short videos for use on 
various websites and for use at retail locations. Video topics will 
include a transition overview, setting up a converter box and how to 
receive HDTV.
    We are updating our Ceknowhow.com consumer website to include 
information on the converter box coupon program and DTV labeling 
information. In addition, we are translating the website into Spanish. 
We are continuing our ongoing media outreach, including press kits 
mailing, satellite media tours and matte service articles--in English 
and Spanish. As part of this outreach, we are developing public service 
announcements about the transition and the coupon program. Further, we 
are reaching out to local government officials and libraries to educate 
about the transition and where to send their constituents for more 
information.
    Finally, CEA is exhibiting at a myriad of relevant conferences, 
including the National Association of Consumer Advocacy Agencies 
(NACAA), National Conference of State Legislatures (NCSL), and Digital 
Life in order to explain all aspects of the DTV transition and coupon 
program.
    We appreciate your interest and support regarding DTV education. We 
welcome the Committee's use of our materials to educate constituents 
and welcome the opportunity to speak to your constituents at any time.
    It is critical that all stakeholders play a part in educating 
consumers. CEA is working closely with industry and government partners 
and we are proud of our leadership role in the DTV Transition Coalition 
(www.dtvtransition.org). It would be extremely helpful for the 
Committee to ensure that all stakeholders are involved in reaching out 
to our Nation's consumers. CEA remains steadfast in its commitment to 
educate consumers about all aspects of the DTV transition.
    We respectfully request that this letter be submitted into the 
formal record of this today's hearing.
            Sincerely,
                                              Gary Shapiro,
                                                 President and CEO.
                                 ______
                                 
Response to Written Questions Submitted by Hon. Frank R. Lautenberg to 
                         Hon. John M.R. Kneuer
    Question 1. Your written testimony indicates that NTIA will not 
award the contract for administering the converter box coupon program 
until mid-August. Will the entity awarded the contract have enough time 
to establish the program before coupons become available on January 1, 
2008?
    Answer. On August 15, NTIA awarded a contract to IBM to provide 
end-to-end services for the Coupon Program. NTIA and IBM will be open 
for business to accept coupon requests between January 1, 2008 and 
March 31, 2009. At that time consumers will be able to call 1-888-DTV-
2009, go online at www.MyDTV2009.gov or mail in their coupon 
applications to request their coupons.

    Question 2. What is the NTIA doing to work with retail outlets to 
ensure that they will display converter boxes conspicuously?
    Answer. NTIA has been working aggressively to recruit retailers of 
all sizes into the program. Manufacturers and retailers have every 
incentive to market and merchandize converter boxes just as they do 
their other products. Manufacturers with whom we have spoken plan to 
make it clear on the converter box that these are coupon eligible 
devices and have been certified by the government. Retailers, such as 
Radio Shack, have committed to in-store signage that will inform 
consumers about the transition and the benefits of the converter 
option. Other major retailers who have expressed their intent to 
participate in the Coupon Program include Wal-Mart, Best Buy, and 
Circuit City.

    Question 3. Are you confident that workable, affordable converter 
boxes will be widely available on January 1, 2008?
    Answer. Yes. Retailers are ordering converters from manufacturers 
in order to be ready to serve consumers after the Holiday 2007 season. 
To date, NTIA has certified three models and 18 retailers. Retailers 
are responsible for determining when converters will be available in 
their stores. Indications are good that they will be ready to sell 
converters and redeem coupons in early 2008.

    Question 4. How will consumers be able to determine which retailers 
carry converter boxes, especially given that many consumers who rely on 
over-the-air broadcasting may not have Internet access?
    Answer. When NTIA mails out the coupons, we will include an 
enclosure in the mailing with important information about the Coupon 
Program including a list of nearby certified retailers, linked to 
household zip code, as well as makes and models of eligible converter 
boxes. NTIA will also provide a list of eligible online retailers.
                                 ______
                                 
Response to Written Questions Submitted by Hon. Frank R. Lautenberg to 
                          Catherine W. Seidel
    Question 1. How many analog-only televisions remain in retailers' 
inventories?
    Answer. The Commission does not have estimates of the number of 
analog-only televisions currently in retailers' inventories. I would 
note, however, that industry statistics indicate that shipments of 
analog-only television sets to retail outlets have declined 
precipitously in recent years. For example, between 2005 and 2006, the 
number of analog-only televisions shipped to retail stores dropped from 
20.43 million sets to 10.79 million sets. In addition, industry 
estimates project that shipments of analog-only television sets this 
year will total 1.35 million. Further, we note that, the Nation's 
largest consumer electronics retailer, Best Buy, recently announced 
that it has pulled all remaining analog television products from store 
shelves and will only sell digital television products. See http://
bestbuymedia.tekgroup.com/
article_text/101707_2DNRFCC.pdf.

    Question 2. What recourse is there for consumers who unwittingly 
buy analog-only televisions because labeling requirements have not been 
complied with?
    Answer. The Commission is devoting significant resources to 
enforcing our labeling requirements. We are doing so in order to 
prevent unwitting consumers from purchasing analog televisions. With 
respect to the Commission's labeling requirement, the Commission has, 
as of October 31, 2007, inspected nearly 1,325 retail stores and 
websites and issued nearly 283 citations notifying retailers of 
violations for failing to comply with our requirements. Because 
retailers are not licensees, we must give them a citation prior to 
issuing a Notice of Apparent Liability (NAL). Currently there are NALs 
pending against fourteen retailers for apparently violating the 
Commission's labeling requirements. These fines, in the aggregate, 
total nearly $4 million. In addition, the Enforcement Bureau has issued 
another six NALs on delegated authority. It is my hope that through our 
vigorous enforcement actions, retailers will take concrete actions to 
avoid consumer confusion as the digital transition draws near.

    Question 3. Is the FCC working with retailers to educate their 
salespeople on how to explain the digital transition to customers?
    Answer. In addition to television broadcasters, cable and satellite 
providers, and consumer electronics manufacturers, retailers can play 
an important role in educating consumers about the transition to 
digital broadcast television. For some time now, the Commission has 
been working with the Consumer Electronics Retailers Coalition (CERC) 
on educating members of the public about the DTV transition. In the 
spring of 2006, the FCC, CERC, and the Consumer Electronics Association 
(CEA) developed and disseminated a ``Buying a Digital Television'' tip 
sheet for consumers. Together with CERC and CEA, we are in the process 
of updating the tip sheet with the latest information on DTV. Also, in 
June of 2007, the FCC and CERC developed and disseminated a join 
``Retailer Advisory on Mandatory Labeling of Consumer Electronics 
Products,'' to assist in educating CERC members and members of the 
public on the Commission's labeling requirements regarding sales of 
analog-only TVs and TV equipment. Additionally, CERC participated in 
the Commission's recent DTV Consumer Education Workshop, serving on a 
panel that addressed the industry's role in the transition. Further, in 
July and August of 2007, CERC distributed over 400 packets of FCC DTV 
information at retailer events and conferences. Finally, Chairman 
Martin recently circulated a draft Report and Order to the other 
Commissioners that, if adopted, would require industry participants to 
implement a number of public outreach and education measures to help 
ensure that consumers receive timely and accurate information about the 
DTV transition. Among other things, the Report and Order contemplates 
that the Commission will work closely with NTIA to ensure that retail 
outlet personnel are fully trained and that consumers have access to 
the information they need to make informed choices.

                                  
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