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NTIA Footdragging Delays Government's Converter Box Program 3 Months; & More

August 19, 2007

This week: the converter box delay, TV industry feedback on the FCC's proposals to get broadcasters ready for the analog shutdown, the timetable for the FCC's consumer education proposals, Sharp's new D64 LCD series, and finally, NFL referees get high-definition instant replay.

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When it set the hard cut-off date for the transition to our new digital television standard, Congress also set up a subsidy program to help people pay for the converter boxes needed to keep their old analog TVs from going black at the end of February 17, 2009 (or sooner). The legislation said "A household may obtain coupons by making a request as required by the regulations under this section between January 1, 2008, and March 31, 2009, inclusive. The Assistant Secretary shall ensure that each requesting household receives, via the United States Postal Service, no more than two coupons."

It was of course the intent that people requesting those coupons would get them promptly and could then take them to the store and buy their converter boxes. Ain't gonna happen, at least not until April 1, 2008. The NTIA was given the job of running the program but took so long getting starting that it was no longer possible to start the program on time. What's most disappointing is that they've done their best to keep this dirty little secret from Congress and the American public.

The NTIA on Wednesday announced that IBM would be the contractor that administers the converter box program. NTIA (National Telecommunications and Information Administration) is part of the Department of Commerce and also is the political arm of the White House that advises on telecommunications policies that will promote U.S. business interests. That's priority one.

It was odd that NTIA was tasked with running the converter box program (legislation written in 2005), since it had neither the operational expertise nor apparently the motivation to do so, but there seems to be some kind of snit between the FCC and certain Congressional leaders, so the FCC was shut out, to the detriment of the public.

In any case, the NTIA did not hit the ground running on this program; it seems to have been put on a back burner for a long time last year. Eventually they hired a couple of new people to work on it and borrowed the services of a contract administrator from another agency in the Department of Commerce -- the National Oceanic and Atmospheric Administration (NOAA- the oceans and weather people). A slight mismatch, but oh well.

With the Congressionally mandated 1/1/08 program start date fast approaching, NTIA last March finally put out the technical requirements for the converter boxes and issued a Request for Proposals (RFP) from companies seeking to administer the program. This is not the sort of document that screams "read me" unless you have some immediate business interest, although it is publically available if you are willing to look for it.

I started poking around the NTIA's web site last week and found a Q&A page for potential contract bidders. Q&A number 196 stunned me. It asked about an apparent discrepancy in the program start date, to wit: the requirement that coupon requests must be accepted starting January 1, but that coupon distribution would not start until April 1. Basically, what does the contractor do with the coupon requests for January 1 - April 1?

The answer is hold the coupons until April 1, except that some test number of coupons may be processed as part of the demonstration phase before the operational phase begins.

Section C.4 of the RFP says there are three phases to the program:

1) Start-up and operational capability demonstration (OCD) phase, which runs from contract award until March 31, 2008

2) Operational period. The "distribution, redemption, and retailer payment of coupons for both the initial funding and optional Contingent Funding is covered during this period as follows: a. Accept consumer requests and coupon distribution -- between April 1, 2008 and March 31, 2009."

3) Closeout period.

The contractor's technical solution for processing coupons will be demonstrated during start-up and OCD phase, with some "limited" distribution of coupons (number to be defined by the contractor). NTIA says the demonstration "at some point must process actual transactions."

The period between January 1 and March 31 is essentially for a dry run - a test.

The outshoot of this is that except for some few test coupon distributions and redemptions (presumably in a controlled setting), don't expect to run out and buy that new subsidized converter box during the first week of January, or February, or March. If all goes well and the NTIA approves the contractor's system early, the program may begin before April.

I went back and watched the relevant parts of Congressional hearing webcasts with this new information in head, and better understood the weazel-wording of industry and NTIA witnesses when Committee members questioned them about the industry's readiness for the nominal January 1 coupon program start.

This was after the RFP had been issued. NTIA knew about the delay, the broadcast industry lobbyists knew, the converter box manufacturers knew, the consumer electronics retailers knew. Not one of them advised Committee members (and public) of the delay.

For example, on March 28 Congressman Ed Markey (chairman of the House subcommittee that has responsibility for the transition) was asking Best Buy's Vitelli if they were going to have converter boxes in all of their stores beginning on January 1.

Markey: "We want them available on January 1 in all of your stores because that's when the converter boxes will be available for sale and the coupons will be in people's hands."

Markey kept pressing; Vitelli equivocated and obfuscated, saying things like "If there are converter boxes available, we will have them in our stores" and "on the assumption of when they will be available."

At the July 26 hearing on DTV consumer education, Senator Claire McCaskill interrogated NTIA head John Kneuer about converter boxes being ready (and working correctly) by the start date of the coupon program:

McCaskill: "It's my understanding that these coupons are going to be available January 1?"

Kneuer: "Yes."

McCaskill: "So we're talking, literally, six months from now."

Kneuer: "Yes."

Sounds like Kneuer is lying to the good Senator. McCaskill was hot; she was upset that the converter box program is going to start and neither Kneuer nor the FCC's Seidel could tell her when TV PSAs would start telling consumers about the program, nor that there was even a plan on when public service announcements would start.

Later in the hearing there was an exchange between Senator Maria Cantwell and Kneuer about box availability on January 1, 2008:

Cantwell: "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?"

Kneuer: "Certainly expect there will be set-top-boxes in the marketplace in January of 2008. If for whatever reason we got information that 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."

Cantwell: "How are you going to do that?"

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 . . ."

Cantwell: "So are you going to look up every zip code and find a retailer in that neighborhood, and then see, and if it is, then you'll send out the coupon, and if not. . ."

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 would only be 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 . . ."

And it was all downhill from there. Senator Cantwell noted that "There's a high potential for a trainwreck here." She thinks they need to up the education process.

Kneuer's testimony seemed to be setting up a self-serving explanation for why coupons will not be available on January 1. It wasn't NTIA's fault -- we knew our statutory obligations -- and the box manufacturers had been assuring us the boxes would be ready.

It certainly wouldn't be because NTIA was sitting on its hands and was profoundly late in getting converter box specifications out and in getting the RPF issued, so that the contractor was not able to get started on the program until last week -- August 15.

Coupons won't be sent out because last March NTIA specified that the program wouldn't become operational until April 1, 2008. If manufacturers won't have boxes ready until then, it will be because NTIA told them large numbers of boxes will not be needed until April. It will not be because Kneuer would suddenly get surprise information at the end of the year that boxes are not ready.

Clearly, members of Congress think coupons and subsidy-eligible converter boxes are going to be available to the American public starting January 1 -- as their legislation mandated. The logical corollary to that would be to begin educating the public about the transition months before then, but the TV industry has been telling Congress that airing public service announcements this year would cause "tremendous confusion" and perhaps "panic."

The industry has stated that they plan to start PSAs sometime in 2008. Members of Congress are increasingly frustrated by the lack of movement on the education front. Maybe now we know why the industry had been operating in stealth mode.

But what difference will it make whether converter boxes are available in January or April, since the end of the transition won't be until February 2009? Consider this:

First, it will take time for people to learn about the transition and to decide what to do about the transition; everyone is not going to run out at the same time and buy boxes, or digital TVs. Many will want to take action right away. Others will wait.

Second, broadcasters are now bringing their transition problems out in the light, in response to the FCC's proposed specific rules on how they must convert to digital. I discuss their comments next, but they are all asking for "flexibility," and the National Association of Broadcasters (NAB) is asking that they be allowed to reduce analog signal strength, perhaps by half, up to one year before the end of the transition, and that they be allowed to cut off their analog signals altogether as early as six months before 2/17/09.

These actions will greatly facilitate converting antennas and transmitters, but if over-the-air viewers do not have converter boxes during the last year of the transition, they may not be able to receive either analog or digital signals for affected stations.

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On Wednesday comments came in on the FCC's proposed deadlines and procedures to ensure that broadcasters complete construction of their post-transition, digital facilities by the statutory deadline. Many comments were submitted -- most of them from station owners explaining why they were having trouble meeting the schedule or the required performance parameters. Some stated flatly that they would not be ready in time. Most asked for FCC flexibility in applying its rules. Some wanted to be left to their own devices.

As Harris Corp. (the leading builder of TV transmitting equipment) stated, the switch-over cannot be instant. Either stations reduce analog service prior to 2/17/09 and switch over to digital on that date (their preferred approach), or maintain analog to the end and start the switchover to digital on 2/17/09. Harris also suggested that the FCC allow stations to start broadcasting on their final digital channel before the end to avoid a crunch and provide for a more even distribution of specialized resources (tower construction crews, etc).

Many broadcasters do not yet want to install equipment to implement some of the finer details of the ATSC digital TV standards. These include Advanced Format Description (AFD) which automatically tells your TV how to display different format pictures, which could be 4:3, or 16:9, or letter-boxed. Consumers have both 4:3 TVs and widescreen TVs; without AFD pictures could be displayed incorrectly, e.g. with black bars on all sides. Broadcasters want to "work through these issues on their own," or in other words, install the needed equipment in stages after the end of the transition.

Much the same thing goes for station identification rules, pieces of the Program and System Information Protocol (metadata), and digital closed captioning.

The National Association of Broadcasters (NAB) proposed the 12-month reduction of analog service (mentioned above) and 6-month termination of analog service - before the end of the transition. They also proposed that stations be allowed to transition to their final digital channel up to six months before 2/17/09, if doing so would not result in significant interference to other stations. They also want stations to be allowed to end broadcasting on their interim digital channel up to six months early, to focus on building out their final digital channel facilities. Or alternatively, to continue broadcasting on their interim digital channel up to six months after the transition.

Is this going to be a nice and neat switchover? Ha!

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On Thursday the FCC's proposed Consumer Education Initiative (described in my August 5 story) was published in the Federal Register. Comments are due September 17, and reply comments on October 1. Assuming it takes the Commission three months to publish a final rule, with another 60 days before those requirements go into effect, it would be March 2008 before we would see any results. Not encouraging, but that timing ties in with the delayed converter box coupon program.

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Oh, the fun stuff! Sharp just announced a new D64 LCD series which will replace the popular D62 line that came out last fall. Sizes are 42", 46", 52", and 65", and this time the specifications are the same for all sizes.

The big change is reduced depth and weight -- they're 25% thinner and 20% lighter, with narrower bezels. They have HDMI 1.3 inputs that accept 1080p, 2000:1 native contrast ratio (10,000:1 dynamic), 4 ms response time, and Sharp's usual wide viewing angle.

  • LC-42D64U will be available in August for an MSRP of $2,099.99
  • LC-46D64U will be available in August for an MSRP of $2,699.99
  • LC-52D64U will be available in August for an MSRP of $3,799.99
  • LC-65D64U will be available in September for a TBA MSRP

Here's the full press release.

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The NFL is the first major sports league to get HD in its stadium instant replay booths. Referees will be able to see what really happened, maybe. Powered by Harris Corp. equipment, and FORCE (Football Officiating Replay Challenge Expeditor) software (who gets paid to think of these names?).

It's already in 28 NFL stadiums. The stadiums in New York, Dallas, and Indianapolis are up for renovation; they'll get theirs at that time. Who knew?

Look for it.

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Until next week. . .