No NTIA Eligibility Limits for First $850 Million in DTV Coupons
Each U.S. home can get 2 $40 DTV converter box coupons in a first round of certificates worth $850 million total, under final rules largely reflecting ideas from broadcasters and CE, and summarized Mon. by NTIA. In its Mon. declaration, NTIA reversed a preliminary rulemaking (CD July 25 p3), saying it will let all homes get vouchers and won’t limit the $1.5 billion program to those reliant on broadcast TV. The new rules aim to help viewers with older TVs not linked to cable or satellite buy gear see digital broadcasts after the Feb. 2009 analog cutoff.
CEA, NAB and Assn. for Maximum Service TV (MSTV) cheered the action, as did other groups. The rules reflect many industry comments, NTIA Dir. John Kneuer said. “We have had really broad and, to my mind, historic industry participation… [making] our work that much easier,” he told reporters. The final rules will run in the Federal Register on March 15. NTIA Mon. released a summary of the guidelines.
Starting Jan. 1, a company to be selected by NTIA will give coupons to anyone who requests them. They can be ordered through March 2009 online, by phone or by mail. One company will issue and track coupons, as retailers do gift cards. Each voucher will “be electronically trackable and uniquely numbered,” giving officials timely tallies of coupons issued and subsidy spent, Kneuer said: “We're going to be keeping track in real time… Eligibility is essentially very, very broad.”
Eligibility will shrink in a 2nd coupon-distribution round triggered if consumers buy the 21.25 million converters budgeted for in the first round. NTIA said it can provide $450 million more in coupons “upon certification to Congress that the initial allocated amount is insufficient.” Those coupons cover 11.25 million boxes and will be limited to households without pay-TV subscriptions. Consumers seeking those coupons will have to “self-certify” they don’t get cable, DBS or telco TV, Kneuer said: “We've set rules that should not impose burdens… but will minimize waste, fraud and abuse.” The 2nd round aims to ensure no one reliant on over-the-air broadcasts “is faced with losing TV service,” he said.
Some details are sketchy. NTIA can’t estimate converter box prices, so it’s impossible to project what buyers will spend out of pocket. “The demand curve is uncertain, so we are trying to manage that,” Kneuer said: “One thing is certain… the market is going to set the price… Competition will drive the prices down.” Consumers can use NTIA coupons to get boxes with “smart antennas” and electronic program guides, but converters with more sophisticated equipment such as PVRs won’t be eligible, Kneuer said: “There are a number of options for consumers to effect the transition on their own.”
Basic converter boxes may cost about $60, MSTV Pres. David Donovan said, citing CE figures given Congress earlier. “By setting the rules now, it will help create the mass market,” with at least 2 and perhaps several more makers selling stripped-down boxes, he said. NTIA coupons would cut the cost of 32.5 million converters, about the number MSTV estimated is needed so every set can get DTV. “NTIA is dealing with the amount of money they have,” Donovan said: “Whether additional funds are needed will have to be seen.” Other groups say far fewer sets are involved than MSTV gauges.
It may take months to pick a vendor to run the coupon program, Kneuer said. His agency expects to issue a request for proposals this week, he said. “It’s a multi-month process… We're not going to just take the lowest bid.” NTIA has $140 million in “administrative costs” for the first batch of coupons and $60 million for the 2nd, said another agency official.
The rules reflect input by CEA, NAB and MSTV, the groups said jointly. They praised NTIA for not restricting first- round eligibility, “realizing that limiting coupons in this way would ignore the secondary TV sets in cable and satellite households that are connected to an antenna for over-the-air reception.” Energy efficiency guidelines (see separate report in this issue) also won plaudits, as the groups called them “a key ingredient of the NTIA program” and said the rules in general “provide much needed certainty to broadcasters, manufacturers and ultimately the American public.” The DTV Transition Coalition was more guarded, saying the coupons will “ensure that no American is left without access to over-the-air broadcast television.” The coalition includes APTS, LG Electronics and NCTA.
NTIA’s plans were criticized by 2 influential congressmen. House Commerce Committee Chmn. Dingell (D- Mich.) said limiting eligibility for the 2nd round suggests the White House should have asked Congress for increased money for coupons. “Unfortunately, NTIA’s decision to limit eligible households may impede a smooth transition, which could delay both getting spectrum to public safety users and the benefits of advanced wireless technologies to consumers,” he said. Telecom Subcommittee Chmn. Markey (D-Mass.) said the plan “arbitrarily limits consumer eligibility for the program after the first [round] is spent. This is likely to increase consumer confusion about who is eligible for coupons and when they are eligible.”
For the first time, Kneuer went on record declaring NTIA “will have systems in place to process the coupons” starting Jan. 1, 2008, as mandated. “That being said, I'm not sure we anticipate the large request demand early on in the program,” he said: “As the consumer education campaign grows and moves, we expect it will be later in the year when we have most of the demand, but we'll be ready on January 1.”
Coupon eligibility criteria follow most of what CEA, MSTV and NAB urged in joint comments during the rulemaking. Features “disqualifying” a box include building in an HD DVD or Blu-ray drive or DVR. Specialty features such as HDMI, DVI or 1394 -- though common in many of today’s DTV sets -- are off limits, as are wireless or ethernet functionality, they say. The rules do heed CE maker requests that boxes be allowed to include electronic program guides and smart antenna ports.
Manufacturers wanting to build and sell coupon-eligible boxes must give NTIA a “notice of intent” at least 90 days before submitting test data and 2 production samples of boxes to be certified for the program, the rules say. Certification will be along the lines of a “verification- plus” plan proposed by CEA-MSTV-NAB and backed independently by CE makers and retailers -- but with changes giving NTIA more weight in decisions. The FCC may test boxes at NTIA’s request, the rules say, and NTIA “will make its approval decision upon its consultation with the FCC.” In Q&A, NTIA officials said the agency will be the final arbiter of coupon eligibility, since it will be the only entity responsible for listing those boxes in a publicly available database as each new box is certified.
The CEA-MSTV-NAB proposal asked that the FCC’s Office of Engineering & Technology “be involved in the approval process before the devices are released to market.” They proposed that CE makers submit test results and production samples to the FCC, not to NTIA. The Commission would then “ensure conformity between the converter boxes and the NTIA’s performance standards, which themselves are based on standards endorsed by or known to the FCC.” Under that arrangement, a noncompliant device couldn’t be distributed until “cleared by the FCC,” the proposal said. NTIA’s changes won’t give the FCC less of a role in box certification, but NTIA will call the shots. NTIA still plans to work closely with the Commission and has signed a memo of understanding to do the necessary work, officials told reporters. -- Jonathan Make, Paul Gluckman
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Thomson expects a market for “several million” DTV converter boxes after coupons become available in Jan., said Dan Collishaw, COO of the company’s Americas AV business. Thomson thinks its RCA DTA800 is the “ideal” coupon-eligible box and has begun discussing the product with retailers “for consideration in their upcoming assortments,” Collishaw said. Retail availability and suggested retail pricing will depend on retailer interest in the new product category, he said.