House DTV Bill Likely to Pass, But Democrats Angry

The House DTV bill would spend $990 million on a program designed to give each household two $40 coupons to buy converter boxes to enable analog TVs work after the digital transition, according to a copy of the bill we obtained. The bill, said by sources to be likely to get enough votes to pass out of committee, doesn’t address first responder needs. It differs from a DTV bill the Senate Commerce Committee reported out Thurs (CD Oct 21 p1) that includes a $3 billion DTV converter box subsidy and $1.2 billion for emergency communications. The House bill is set tentatively for Wed. markup, House sources said.

The House bill irritates key Democrats, who say they've been out of the loop since May while House Commerce Committee Republican leaders have discussed changes to the draft (CD May 27 p1). When the new bill began circulating last week, anger mounted over converter box funding, which many wanted to be more generous. “Every person is going to end up paying out of pocket for the govt. to accelerate the transition,” a House Democratic aide said. Rep. Dingell called it a TV tax in an op-ed column last Thurs. in the Hill newspaper. He criticized House Republicans for limiting assistance to consumers and first responders in favor of protecting tax cuts through the budget process to which the DTV bill is linked.

Democrats and industry agree on the bill’s proposed Dec. 31, 2008, date, about 3 months earlier than the Senate bill’s April 7, 2009, target -- something that can be resolved in conference, congressional sources said. “Three months is not going break the deal,” said High Tech DTV Coalition Exec. Dir. Janice Obuchowski. “We're very happy with the forward momentum in the House and Senate. There are no irreconcilable differences we can see.” The Consumer Electronics Retailers Coalition (CERC) praised the bill as a “consumer-friendly” approach to the DTV transition for “effectively balancing Congress’s need to reallocate our country’s analog spectrum for the public good, and the need to protect the interests of consumers.” CERC said the bill satisfies its goals of “a clear, hard date” for the DTV transition “and clearly seeks to minimize consumer disruption.”

The bill spells out elaborate procedures for distributing the $40 coupons, each redeemable when buying a converter box. Up to 2 coupons per household will be available, the bill says. It seems to skirt the issue of a means test for keeping distribution of vouchers to low- income households, seeming to favor a first-come, first- served system. Of the proposed $990 million outlay, $160 million would go for administration, with a net of $830 million to cover 21 million $40 vouchers.

The bill would set up a system via which retailers would seek coupon reimbursements by mail or online, including ways to audit reimbursements. An appeals process would review or resolve complaints by households alleging unfair denials of requests for coupons or by retailers claiming they unfairly were denied reimbursement. To participate in the coupon program, retailers would have to undergo formal certification. Those certified would have to honor all coupons and stock a “reasonable number” of eligible converter boxes. Consumers or retailers found to have engaged in fraud, misrepresentation or other misconduct would be kicked out of the program.

CERC, which initially favored a govt.-run program, now embraces the idea of one administered by retailers. In May, CERC told the House Telecom Subcommittee any subsidy -- even a converter box giveaway -- should flow directly from govt. to “eligible consumers,” protecting retailers from the burden of having to administer them. But a CERC spokesman said the bill -- which imposes administrative tasks on retailers -- is the best his group could hope for. CERC wanted direct-to-consumer subsidy, but that’s been “off the table” for months, he said. CERC is satisfied money would be allocated for reimbursements and that retailers who act within the law are protected from the others’ fraudulent acts, the spokesman said.

The bill would leave the running of the converter box program to NTIA. Technically, the box would be limited to those functions “necessary to enable a consumer to convert any channel broadcast in the digital television service into a format that the consumer can display on television receivers designed to receive and display signals in the analog television service, but not to receive and display signals in the digital television service,” the bill says. A CE source said he fears this definition could lead to a lengthy NTIA rulemaking, “with everyone coming forward with their designs.” He criticized the bill for failing to preempt state limits on electronic devices’ power consumption, a provision Senate Commerce Committee Chmn. Stevens (R-Alaska) said he plans to include in his 2nd DTV bill. Now, cable and satellite boxes are exempt from state energy saving laws, some of which limit to 8 watts the amount of energy an electronic device may consume. But DTV converter boxes, which probably would consume 16 watts, wouldn’t be exempt unless Congress says so in a law.

Cable backs the bill’s dual carriage provision, a policy shift NCTA acknowledged in a statement attributed to NCTA Pres. Kyle McSlarrow: “Cable had concerns with some aspects of the original draft, but… we are willing to accept the significant obligations that are now part of this proposed legislation.” The statement said cable would accept the bill’s dual carriage provision, which requires cable operators on all systems, except those with limited capacity, to provide both a digital and analog must-carry broadcast signal for the first 5 years after the digital transition. “We are willing to make this significant concession expressly to facilitate Congressional action returning broadcasters’ analog spectrum for important uses like public safety and to facilitate the consumer transition,” McSlarrow said. NAB is reviewing the bill, a spokesman said.