NTIA Gets First Funding as It Prepares to Launch Massive Converter Box Program

The Bush budget would provide $15 million for the voucher program, approved by Congress in the Deficit Reduction Act to be signed into law by President Bush this week. The budget also provides $15 million each for public safety interoperable communications grants and the N.Y.C. 9/11 digital transition programs.

Time is tight for NTIA. Congress required NTIA to set up a program under which consumers can request coupons Jan. 2008- March 2009 and they will expire 3 months after issuance. Congress provided up to $1.5 billion for the program, which will allow households to receive up to two $40 converter-box coupons in the mail to pay for boxes estimated to cost $50-$60 each. The program provides enough money for 37.5 million vouchers.

NTIA officials had no comment about what form the program will likely take. A spokesman said the agency is developing a management plan, which will provide details. The NTIA will bear responsibility for mailing the coupons and for ensuring that no household exceeds the maximum. But how retailers may be directed to help enforce the 2-voucher cap is another of many unanswered questions, as is whether retailers will be indemnified for fraud.

Other unknowns relate to the 90-day voucher expiration. How long will it take the NTIA to fulfill a voucher request by mail, and would long turnaround cycles cut into the 90-day life of the coupons? What happens if a consumer arrives at Circuit City’s door with a voucher expiring the same day?

Other unanswered questions: (1) What reporting requirements, if any, will be imposed on retailers? (2) Can retailers file electronically with the govt. for reimbursement? (3) How would a consumer redeem a physical voucher when buying the converter box online? (4) How would a publicly traded retail chain account for the costs and revenue of coupon redemption and reimbursement in its quarterly results?

With no means-testing, the voucher giveaway is first- come, first-served. Retailers we polled said they believe the govt. had little choice but to avoid a cumbersome means- testing system that might have had even more potential for fraud. Given CE industry estimates that fewer than 15% of households will be disenfranchised in an analog cutoff, the retailers we canvassed said the 37.5 million $40 vouchers authorized under the $1.5 allocation would take care of all that will need a converter box. But no one will know for sure until 3 years from next week -- Feb. 17, 2009 -- when the analog service goes dark.

Former NTIA Dir. Janice Obuchowski said the NTIA may want to consider outsourcing the rebate program, after consulting with industry about what model would work best. For example, the NTIA could work with a firm with experience making class-action lawsuit payouts. “This is a major technological shift in the U.S. and NTIA is going to have the mandate… to run a program that is of real consequence,” Obuchowski, head of the High Tech DTV Coalition, said: “The smartest thing that NTIA could do is to seek expertise from those in the government and private sector who have run such programs.” She added that the NTIA will have to add some staff to oversee the program and make sure it is audited according to govt. standards.

An industry source said NTIA would have to seek outside help to handle a mass consumer program like the one created by the deficit act. “They're not set for that,” the source said. “They could outsource it to the people who process consumer coupons.” -- Howard Buskirk, Paul Gluckman

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Of the $62.8 million NTIA budget proposed Mon. by President Bush, a total of $45 million would go to DTV Transition & Public Safety Fund (DTTPSF) programs. Along with the digital converter box program, $15 million each also would go to public safety interoperable communications grants and a temporary DTV broadcast system for N.Y.C. Grants will go to public safety agencies to upgrade communications systems to share voice and data signals, the proposal said. Agencies are to raise from non-federal sources no less than 20% of costs of deploying interoperable systems. No funds are assigned to assist LPTV stations, E-911 service support, national alert and tsunami warning systems or other programs. Not all funds for DTTPSF programs need be appropriated, a spokesman said, noting that the Deficit Reduction Act authorizes the Commerce Dept. to borrow. The administration also proposed zeroing out the Public Telecom Facilities Program (PTFP) grants as it did last year.

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Few details in the FY 2007 budget related to communications were viewed as surprising Mon., as the White House unveiled its annual spending wish list. The Administration asked Congress to allow the FCC to set user fees on unauctioned spectrum licenses. Fee collections are proposed to start in 2007 and hit $3.6 billion total through 2016. The White House also repeated its annual call that FCC auction authority be extended indefinitely. Currently, auction authority is to expire in 2011.

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Under the budget proposal, the FCC would receive $302.5 million in FY2007, up from $289.8 million in 2006, most of that supported by regulatory fees. The budget includes funds for consumer outreach for the DTV transition and to pay for replacement of mobile digital direction finding vehicles in FCC field offices. The vehicles are used to check for interference, often in support of public safety.

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Public broadcasters girded for another battle on Capitol Hill, as the budget calls for steep cuts in CPB appropriations for FY 2007 and FY 2008 and would eliminate advance appropriation for FY 2009. CPB is forward-funded 2 years. The Administration proposed a $53.5 million cut in 2007 funding of $400 million and a $50 million cut in the 2008 appropriation of $400 million. No FY 2007 funding has been allocated for public broadcasters’ digital conversion or public TV’s new interconnection system, but CPB will be allowed to use a portion of next year’s allocation for these programs. The Ready to Learn program will be funded at $24 million, a slight reduction from the previous year. In an e- mail to stations, CPB Pres. Patricia Harrison said if the budget is enacted, FY 2007 funding levels would be 24.7% below 2006 levels. She said she understood the “hard choices facing the administration,” but CPB was still “disappointed.” Reminding stations that the President’s budget is only the first step in a “long process,” she said CPB will make the case to Congress for full support for public broadcasting. After facing a nearly 50% funding cut in the House last year, public broadcasters fought back to get full funding restoration. APTS Pres. John Lawson said by proposing no advance funding for FY 2009, the Administration “may be laying the foundation for the elimination of all federal funding for public broadcasting.” Forward funding, the norm for 30 years, shields public broadcasting from political abuse, he added. Charging the Administration with “renewing the attack” on public broadcasting and ignoring the “will of the American people,” he said the cuts amounting to $157 million are “devastating.” As they did last year, stations will work with supporters to “fight these cuts vigorously,” Lawson added.