Digital Television Transition: Questions on the DTV Converter Box
Subsidy Program and a DTV Inter-Agency Task Force (19-NOV-07,
GAO-08-297R).
This letter responds to questions from the November 7, 2007,
Congressional letter inquiring about issues discussed at the
October 17, 2007, hearing before the Subcommittee on
Telecommunications and the Internet on the digital television
(DTV) transition. The letter asked if we have concerns about the
converter box subsidy program. Congress also asked whether the
National Telecommunications and Information Administration (NTIA)
should prepare for a potential shortfall in program funding, in
part by developing a process to address a potential shortfall.
The letter also asked us to elaborate on the statutory provisions
that we believe provide the Federal Communications Commission
(FCC) with the necessary authority to convene an inter-agency
task force. We prepared our responses during November 2007 in
accordance with generally accepted government auditing standards.
Our responses are based on our previous and ongoing work and our
knowledge of the subjects raised by your questions. Because our
responses are based on work for which we sought and incorporated
agency comments, we did not seek agency comments on our responses
to these questions.
-------------------------Indexing Terms-------------------------
REPORTNUM: GAO-08-297R
ACCNO: A78288
TITLE: Digital Television Transition: Questions on the DTV
Converter Box Subsidy Program and a DTV Inter-Agency Task Force
DATE: 11/19/2007
SUBJECT: Advisory committees
Consumer education
Digital television
Federal funds
Funds management
Private sector
Program evaluation
Program management
Statutory law
Strategic planning
Subsidies
Systems conversions
Telecommunications equipment
Television broadcasting
Program implementation
******************************************************************
** This file contains an ASCII representation of the text of a **
** GAO Product. **
** **
** No attempt has been made to display graphic images, although **
** figure captions are reproduced. Tables are included, but **
** may not resemble those in the printed version. **
** **
** Please see the PDF (Portable Document Format) file, when **
** available, for a complete electronic file of the printed **
** document's contents. **
** **
******************************************************************
GAO-08-297R
* [1]PDF6-Ordering Information.pdf
* [2]GAO's Mission
* [3]Obtaining Copies of GAO Reports and Testimony
* [4]Order by Mail or Phone
* [5]To Report Fraud, Waste, and Abuse in Federal Programs
* [6]Congressional Relations
* [7]Public Affairs
November 19, 2007
The Honorable John D. Dingell
Chairman
Committee on Energy and Commerce
House of Representatives
Subject: Digital Television Transition: Questions on the DTV Converter Box
Subsidy Program and a DTV Inter-Agency Task Force
Dear Chairman Dingell:
This letter responds to questions from your November 7, 2007, letter
inquiring about issues discussed at the October 17, 2007, hearing before
the Subcommittee on Telecommunications and the Internet on the digital
television (DTV) transition.^1 In your letter, you asked if we have
concerns about the converter box subsidy program. You also asked whether
the National Telecommunications and Information Administration (NTIA)
should prepare for a potential shortfall in program funding, in part by
developing a process to address a potential shortfall. You also asked us
to elaborate on the statutory provisions that we believe provide the
Federal Communications Commission (FCC) with the necessary authority to
convene an inter-agency task force. We prepared our responses during
November 2007 in accordance with generally accepted government auditing
standards. Our responses are based on our previous and ongoing work and
our knowledge of the subjects raised by your questions. Because our
responses are based on work for which we sought and incorporated agency
comments, we did not seek agency comments on our responses to these
questions.
Regarding the converter box subsidy program, we believe the subsidy
program faces challenges that could affect the outcome of the program.
These challenges include the coordination of several groups, readiness of
retailers to accept coupons, and potential issues related to inventory
planning. In particular, the subsidy program's outcome depends on the
coordination and participation of NTIA, its contractor IBM, converter box
manufacturers, retailers, and consumers. Manufacturers and retailers are
voluntarily participating in the program, as NTIA does not have the
authority to require their participation. Further, retailers we contacted
expressed concerns about the possibility of a coupon redemption system
that would affect their point-of-sale systems, noting that modifying these
systems can be time-consuming, resource-intensive, and expensive, and can
affect their other financial systems. Retailers told us that March or
April of 2008--3 to 4 months after consumers can begin requesting
coupons--is a likely time frame for retailers to be ready to participate
in the program. Retailers also told us that participating in the converter
box subsidy program could require a considerable amount of effort for a
one-time program with a product that has a limited shelf life and low
profit margin. In addition, since retailers' participation in the subsidy
program is voluntary, some manufacturer, advocacy, and retailer
representatives we contacted expressed concern about consumers' ability to
find participating retailers that are able to redeem coupons and have
converter boxes in stock. Furthermore, uncertain demand for the converter
boxes, as well as uncertainty about the extent of retailers' participation
in the program, could affect the number of converter boxes that
manufacturers produce and the corresponding availability of
coupon-eligible converter boxes in stores. During our ongoing work
associated with the DTV transition, we will continue to analyze and
examine the converter box subsidy program, exploring issues such as fraud
and retailer knowledge about the program.
^1GAO, Digital Television Transition: Preliminary Information on Progress
of the DTV Transition, GAO-08-191T. (Washington, D.C.: October 17, 2007).
We have not evaluated whether NTIA should prepare for a shortfall in
funding for the converter box subsidy program. However, we note that the
Digital Television Transition and Public Safety Act provided an initial
amount of $990 million for the converter box subsidy program, of which
$100 million can be used for administrative expenses. If NTIA determines
the initial allocation of funds is insufficient to fulfill coupon
requests, the act requires NTIA to certify that the funds are insufficient
to the House Committee on Energy and Commerce and the Senate Committee on
Commerce, Science, and Transportation. The act provides that 60 days
following this notification, NTIA will receive $510 million in additional
program funds, of which $60 million can be used for administrative
expenses (see table 1). NTIA established that during the initial funding
allocation, any household is eligible to request and receive coupons, but
once NTIA receives the additional allocation of funds (after $890 million
worth of coupons have been redeemed, and issued but not expired) any
households requesting coupons during this second phase must certify that
they do not receive cable, satellite, or other pay television service. In
addition, NTIA required that IBM develop a Web-based electronic
"dashboard" that provides real-time access to program status and
performance measures, including the number of coupons pending, mailed,
redeemed, expired, and canceled. NTIA officials told us that they will
monitor the coupon metrics on the electronic dashboard and use this
information to inform the congressional committees if they would need the
additional funds. They added that this monitoring should help avoid any
lapse in depletion of the initial $890 million and receiving the
additional funding.
Table 1: Converter Box Subsidy Program Funding
Initial allocation:
Funds available for coupons: $890;
Funds available for administrative costs: $100;
Total: $990.
Additional allocation:
Funds available for coupons: $450;
Funds available for administrative costs: $60;
Total: $510.
Grand total:
Funds available for coupons: $1,340;
Funds available for administrative costs: $160;
Total: $1,500.
Source: GAO analysis of NTIA data.
In response to your question about the statutory authority for FCC to
convene an inter-agency task force, the Federal Advisory Committee Act^2
(FACA) authorizes federal agencies (in addition to Congress and the
President) to establish federal advisory committees, which may consist of
private as well as public sector members. FCC has several federal advisory
committees that provide advice and recommendations to the commission on
numerous technical, operational, and consumer telecommunications issues.
All of FCC's federal advisory committees are discretionary, meaning the
committees were not required to be established by law but rather were
established by FCC. FACA requires advisory committees to have membership
fairly representing an array of viewpoints and interests. We reviewed
FCC's federal advisory committees in 2004^3 and found that its advisory
committees had members representing numerous sectors across
telecommunications including industry, academia, advocacy groups, private
consulting, and government. We note that in June 2007, FCC rechartered an
intergovernmental advisory committee comprising 15 representatives from
local, state, and tribal governments to help it address, among other
things, consumer education about the DTV transition. Similarly, it
rechartered a consumer advisory committee that will also make
recommendations to FCC about the DTV transition on behalf of consumers,
with specific representation for people with disabilities and other
underserved or at-risk populations.
^2Pub. L. 92-463, codified at 5 U.S.C. app. 2.
^3GAO, Federal Communications Commission: Federal Advisory Committees
Follow Requirements, but FCC Should Improve Its Process for Appointing
Committee Members, GAO-05-36. (Washington, D.C.: Dec. 10, 2004).
^2Pub. L. 92-463, codified at 5 U.S.C. app. 2.
If you or your staff have any questions or would like to discuss this
response, please contact me at (202) 512-2834 or [8][email protected] .
Sincerely yours,
Mark L. Goldstein
Director, Physical Infrastructure Issues
(543198)
This is a work of the U.S. government and is not subject to copyright
protection in the United States. The published product may be reproduced
and distributed in its entirety without further permission from GAO.
However, because this work may contain copyrighted images or other
material, permission from the copyright holder may be necessary if you
wish to reproduce this material separately.
GAO's Mission
The Government Accountability Office, the audit, evaluation, and
investigative arm of Congress, exists to support Congress in meeting its
constitutional responsibilities and to help improve the performance and
accountability of the federal government for the American people. GAO
examines the use of public funds; evaluates federal programs and policies;
and provides analyses, recommendations, and other assistance to help
Congress make informed oversight, policy, and funding decisions. GAO's
commitment to good government is reflected in its core values of
accountability, integrity, and reliability.
Obtaining Copies of GAO Reports and Testimony
The fastest and easiest way to obtain copies of GAO documents at no cost
is through GAO's Web site ( [9]www.gao.gov ). Each weekday, GAO posts
newly released reports, testimony, and correspondence on its Web site. To
have GAO e-mail you a list of newly posted products every afternoon, go to
[10]www.gao.gov and select "E-mail Updates."
Order by Mail or Phone
The first copy of each printed report is free. Additional copies are $2
each. A check or money order should be made out to the Superintendent of
Documents. GAO also accepts VISA and Mastercard. Orders for 100 or more
copies mailed to a single address are discounted 25 percent. Orders should
be sent to:
U.S. Government Accountability Office 441 G Street NW, Room LM Washington,
DC 20548
To order by Phone:
Voice: (202) 512-6000
TDD: (202) 512-2537
Fax: (202) 512-6061
To Report Fraud, Waste, and Abuse in Federal Programs
Contact:
Web site: [11]www.gao.gov/fraudnet/fraudnet.htm
E-mail: [12][email protected]
Automated answering system: (800) 424-5454 or (202) 512-7470
Congressional Relations
Gloria Jarmon, Managing Director, [13][email protected] , (202) 512-4400
U.S. Government Accountability Office, 441 G Street NW, Room 7125
Washington, DC 20548
Public Affairs
Chuck Young, Managing Director, [14][email protected] , (202) 512-4800 U.S.
Government Accountability Office, 441 G Street NW, Room 7149 Washington,
DC 20548
References
Visible links
8. mailto:[email protected]
9. http://www.gao.gov/
10. http://www.gao.gov/
11. http://www.gao.gov/fraudnet/fraudnet.htm
12. mailto:[email protected]
13. mailto:[email protected]
14. mailto:[email protected]
*** End of document. ***