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House Transition Hearing; NTIA Coupon Rule Change

June 15, 2008

Eight months left until the end of the transition, and there's apparently much work left to get there.

The House Sub-committee on Telecommunications and the Internet held its DTV transition status hearing on Tuesday; witnesses were put on notice that a number of committee members are less than pleased by progress on several fronts.

Comments are in on the NTIA's proposed rules expanding coupon eligibility for seniors and P.O. box holders. All supported the intent, but many objected to the proposed extra application requirements.

Pioneer advances their plasma offerings (if you've got the bucks). CBS News is almost ready to go HD. And I've got a few other bits for you.

The House DTV status hearing was the fourth in a continuing series. At this point it is almost certainly too late for new legislation that would alter the path leading to February 17, but members of Congress do exert some sway from their bully-pulpit. You don't want powerful members of Congress to be angry at you or the industry you represent.

One aspect of the transition could still need Congressional action, and that concerns the converter box coupon program. More money may be required to fund increased administrative costs due to an unexpectedy high demand for coupons.

As of June 3, requests for 16 million coupons had been received; 14.6 million coupons had been mailed. The NTIA is getting an average of 104,000 requests per day. These numbers are a lot higher than the NTIA expected.

The 16 million coupon requests represent 70% of the $890 million base funding Congress authorized for coupons -- a total of 22,250,000 coupons that would be funded and available to anyone, whether or not they relied exclusively on over-the-air broadcasts for their programming. That is, cable subscribers are also welcomed. The government is projecting that it will have mailed out these 22 million-plus coupons by August.

Congress also authorized supplemental funding that could be used if more coupons were needed. NTIA is reserving this second wave of coupons for people who get their TV by antenna only.

At the current rate of coupon mailings, the full 33 million coupons (base and supplemental funds) will have been mailed out by October. Oops, that doesn't quite get us to February.

Funding, of course, is applied to reimburse retailers whensomeone uses a coupon to buy an eligible converter box. If a coupon is not used, it does not have to be funded.

Of the 800,000 coupons mailed out in the first batch, only 42% were redeemed before their expiration date. This may be because the people who applied during the first couple of days in January didn't know enough about the converter boxes--they might not have needed one either because they already had a digital TV or planned to buy one or their televisions were connected to cable, etc.

It might also be because they were not able to find a box right away, and then forgot about the expiration date. We should know more by the end of July whether the 42% redemption figure was a fluke.

In any case, when a consumer gets a coupon but lets it expire without using it, the government doesn't spend the $40 for reimbursement and that money then is available to fund a new coupon. The 33 million coupon limit is not for coupons mailed, but rather for coupons redeemed.

The problem that came out in the hearing relates to the administrative expense: money for IBM--NTIA's contractor--to mail coupons. If the government wants them to mail out more than the 33 million coupons they agreed to mail in their contract, it needs to give them more money, and that is money not authorized by Congress.

If just half the mailed coupons are redeemed, and 30 million coupons are actually used to buy boxes (as an example), then 60 million coupons would have been mailed. The funding for the coupon reimbursement would be sufficient, but not for the administrative expense, which was funded for processing and mailing up to 33 million coupons. Depending on how demand for coupons and the reimbursemant rate shakes out, Congress may need to produce some more money, and they want to know about it SOON, before they adjourn for summer recess, so the remaining coupons can be mailed well before the end of the transition.

Dr. Bernadette McGuire-Rivera, an Associate Adminstrator at NTIA (who is responsible for the coupon program and making her first appearance brefore the committee in lieu of acting NTIA-head Meredith Baker, who replaced the infamous John Kneuer, who resigned after screwing up the coupon program) was unwilling to tell committee members when she might know if they would need more money to fund the program, or how much. As was the case with John Kneuer, she didn't sound like she felt much urgency to get coupons to everyone who needed them.

It came out that a number of retailers (that had no converter boxes in stock) were nevertheless swiping customers' coupons (and thereby getting their $40 per box reimbursement from the government), but never delivering the boxes promised to the coupon holder. McGuire-Rivera seemed flippant about the problem, saying there were a few bad apples (those stores had been de-certified), but expressed no empathy for the consumer. Neither did she offer a remedy for the problem.

Committee Chairman Ed Markey pressed witness John Ripperton, from Radio Shack, who was also representing the the electronics retailers association, on what actions that group would take to police the bad apples among retailers. Ripperton would not commit. Markey was not happy and said at the next hearing the retailer industry representative had better have an answer or be prepared to be crucified (my word, but reflective of Markey's mood).

A number of committee members were concerned that there were not enough converter boxes in stores to meet demand. In some areas of the country, consumers have been unable to find a box. If they couldn't supply the boxes now, members wanted to know, how were the NTIA, box manufacturers, and retailers going to cope with a surge in demand at the end of the year (characterized by Representative Gonzales (TX) as an "avalanche")?

The witnesses didn't have an explanation.

Representatives pressed McGuire-Rivera to either extend the 90-day expiration period or to reissue coupons for those people whose coupons expired (upon reapplication). She would not commit to either action. In any case changing the rules would take months; by then the end of the transition would be fast approaching.

There were a number of questions about problems with digital reception. FCC Chairman Martin repeated the FCC assessment that about 5% of over-the-air viewers would have to upgrade their antennas, adding that at the end of the transition, many stations would be increasing their digital signal strength as they switched over to their final digital channel. That seems to mean that between now and then, more than 5% will have inadequate antennas.

Martin also responded to questions about low-power TV stations, which do not have to switch off their analog channels at the end of the transition. The FCC had earlier promised to have a proposed rule out early this year that would set a date for low-power stations' transition to digital, but that never materialized.

Now Martin is saying that the FCC has been working with low-power (including translator) stations to help them make the switch to digital. He told the committee "the Commission needs to start focusing on the rules and the requirements" to get them to do that, and "it will take several years" before low-power stations are all digital.

Several committee members planned to make funds available earlier than now authorized to low-power stations to subsidize their transition to digital. Knowing free money is on the way sort of takes the incentive out of switching this year.

There were some questions about battery-powered converter boxes to work with battery-powered analog TVs. But there are no battery-powered converter boxes, so people will just have to buy new battery-powered digital TVs if they feel the need.

Radio Shack's Ripperton said they would be changing their converter box inventory completely over to analog pass-through models. This is good for people who will be watching both full-power digital stations and low-power analog stations, but not so good for the rest of us who will be all-digital. The pass-through boxes sacrifice half the signal strength, so if your digital reception is marginal, it will be gone with a pass-through box. Buy your boxes elsewhere.

Comments on the NTIA's proposed rule to expand the eligibility for coupons were due last Monday. The proposed rule would affect seniors in nursing homes and other assisted care facilities, and people who get their mail using post office boxes.

Nursing home residents have been denied coupons because they did not have their own household. John Kneuer's NTIA adopted the Census Bureau's definition of household as an easy way to prevent waste, fraud, and abuse (that had been rampant in the post-Katrina aftermath, and for which the Department of Homeland Security had been much criticized). So Kneuer came down on the side of playing it safe for his agency, and said anyone not living in a traditional home was on their own.

At the same time the government and everyone else said the biggest problem we were going to have was reaching seniors, who were expected to be the most reliant on over-the-air programming, and who watched more TV than everyone else, and who would likely be the least able to deal with the new technology -- financially, technically, mentally, physically, etc.

So no converter boxes for them!

Kneuer was forced out, Baker was in, and new rules proposed.

NTIA proposed that seniors living in nursing homes could get just one coupon if they provided their date of birth, social security number, and a copy of the nursing home's license. If someone applied on their behalf, that person would have to provide, in addition to all of the above, their own social security number and a copy of a power of attorney giving them authority to act on the senior's behalf. If a facility operator wanted to apply on behalf of their residents, then more information. Unlike coupons for the general population, NTIA is proposing that coupons be matched to, and used only by the applicant.

Virtually all of the comments voiced support for giving nursing home residents coupons. A bunch of Congressmen asked that coupons be delivered to residents denied coupons without their having to reapply. Many commenters were opposed to the "excessively burdensome" application process. Submitting social security numbers, especially, could subject already vulnerable seniors to identity theft. Requiring a power of attorney would discourage friends and family members from assisting challenged seniors. And so on.

At least one commenter asked for a streamlined process by which a facility adminstrator could batch order coupons for their residents, buy the boxes in bulk, and then install the boxes for them.

One commenter pointed out that the nursing home database NTIA intended to use was not nearly inclusive enough. Another pointed out that there are many assisted-living "adult homes" whose residents are not seniors. Those people also needed coupons, and should be brought into the rulemaking's umbrella.

Many commenters suggested specific, practical solutions to the problems expressed.

The Consumer Electronics Association didn't want any changes to the coupon program that would require alterations to their education campaign. More work for them.

NTIA's proposal to allow coupons to be delivered to people using post office boxes was also universally supported, with the occasional caveat that the required documentation proving that the applicants resided in a legitimate household went too far. Some applicants have been denied a coupon because they lived upstairs in a building that housed a business on the ground floor. A few retired couples living on the move in RVs were denied coupons because their mailing forwarding service was a business address (a no-no).

It's apparent that a lot of people aren't going to get their rightful coupons, and that NTIA's rules should have been perfected years ago. Many of the same comments were submitted the first time around, in 2006, and ignored. Time is short.

Pioneer announced on June 10 a new plasma monitor -- the 60" KRP-600M. The new monitor is being marketed for people "who are very particular about picture quality."

Its black luminance has been significantly lowered compared to their last KURO monitor, increasing its contrast ratio to 100,000:1. Pioneer says it will not use contrast numbers in its advertising, preferring that customers take a look at the actual picture.

The KRP-600M will first go on sale in Japan in late June. When it arrives in the U.S., expect a price in the $8000 ballpark. Pioneer intends to build a similar 50" monitor to be out in time for the holiday buying season.

CBS News is putting the final touches on its glorious new high-definition control room.

They expect the CBS Evening News broadcast to make the jump to HD sometime in late-June or early-July.

60 Minutes will switch-over to HD at the beginning of its new season in September.

I've got a couple more consumer comments submitted to the FCC, both complaining about digital reception with converter boxes:

This from Missouri --

"We have installed the DTV converter box, ever since then, our reception has been awful! the signal is horrible on every channel. Examples- rain, wind, clear days the signal will not be strong enough and the transmission will stop. this is not every minute of every day- just enough to not appreciate DTV"

And from Ohio --

"The new dtv reception is unacceptable! There are too many dropped signals; words missing and gaps!!! The analog service was much better! What are you going to do about it? Thanks!"

Looks like someone needs an antenna upgrade, but it points to a real challenge in the transition -- that of educating consumers about problems as well as benefits.

Active Format Description (AFD) is in the news again. The more visibility the issue gets, the more likely that broadcasters and the FCC will actually do something about it. An article in shed some light on broadcast network feelings about AFD.

Titled "AFD Coming Soon: Is TV Ready?," the article carried the witty and very appropriate subtitle "Broadcasters see light at the end of the postage stamp."

Regular readers of this column know that postage stamp video refers to a tiny 4:3 picture presented with black bars on all four sides on the screen of a 4:3 TV. This happens when 4:3 programming is formatted for widescreen TVs, then displayed on 4:3 TVs without having the proper (or any) AFD coding.

AFD can instruct the television to display programming in the best way, whether the source program is native 4:3 or widescreen.

Many widescreen programs are now shot with the center (4:3) portion of the image "protected." That is, the camera operator and director make sure that nothing important is placed at the left and right edges of the picture. In this case, cropping a widescreen program to fill up a 4:3 screen might be most appropriate.

If the director wants to fill the whole widescreen frame with signifcant information, the programmer could set AFD to display the image letter-boxed on the 4:3 display (no cropping).

Use of AFD would both banish postage stamp video and preserve the director's intent.

The article said AFD was one of the most talked about issues at this year's National Association of Broadcasters (NAB) Show. Unfortunately, that doesn't mean everybody is anxious to implement it.

While NBC Universal is a big proponent of AFD, using it in all of their HD-native content, CBS has no plans to implement it. In fact, if a producer sends a program to CBS with AFD already encoded, CBS will strip it out. They seem to have a neanderthal mentality about this, reflected in their late embrace of HD.

They've even gone further, insisting that all widescreen CBS programming be protected for 4:3, meaning people with widescreen HDTVs will not get the full advantage of those displays when watching CBS (and CW) shows. (no stuff happening in the right and left sides of the picture, only in the 4:3 middle)

To be fair, even NBC has adopted this protection policy for the near term, while urging that AFD be adopted now so that in a couple of years, a more enlightened policy will be possible. They don't want people to zoom the edges of their sponsor's commercials out of the frame.

On the other hand, PBS has embraced widescreen. Everything is letterboxed; they make full use of the whole wide frame.

There has been some more testing of the proposed mobile broadcast TV standard. The good news is that it seems to work very well. The bad news is that the signal requires a lot of bandwidth to make reception robust enough to hold up with a moving reveiver.

That bandwidth must come from each TV station's 6 MHz spectrum/19.39 Mbps data rate, thereby cutting into what is available for the station's fixed channels -- that is, high definition programming and any other subchannels that stations like to run these days. Something has to lose; either they degrade HD quality or sacrifice their SD subchannel(s).

There is talk that the new mobile TV service would likely adopt a more efficient compression protocol than the MPEG-2 variety that is written into ATSC standards. That would be MPEG-4 Part 10, a.k.a. AVC, a.k.a. H-264. There is also some talk that the regular non-mobile digital TV standards could be changed to permit MPEG-4 encoding, which would take time to implement (new TV receivers or converter boxes needed, as well as broadcaster equipment). Ulitmately it would mean a shift from 1080i to 1080p would be possible for broadcast HD.

I watched the Senate spyware hearing. Interestingly, only three Senators were in attendance, and the chairman left as soon as he made his opening statement, leaving just two.

I was not encouraged. There is no definition of spyware and no effective law enforcement authority to discourage the evil culprits who sow the seeds.

The opening government panel had one witness, from the Federal Trade Commission. She was not able to answer many of the Senators' questions, and seemed to be behind the 8-ball on the cutting edge technology involved.

The second private sector panel witnesses offered a scary assessment of the capabilities of the latest crop of spyware. The guy from Symantec said 95 million Americans have spyware on their computers.

The guy from the Direct Marketing Association objected to potential statutory provisions that could be interpreted to include "legitimate" marketing strategies. He characterized the term "objectionable" software as being subjective. He too often used the words "legitimate," "helpful," and "advantageous" when talking about marketing software delivered to consumers' computers by businesses.

Like I said, I was not encouraged. Be very careful!

Until next week . . .

The FCC is holding a converter box workshop on Thursday. Click on this link to watch it, or watch it later if you're inclined. 10:00 a.m. to 2:00 p.m.

The agenda does not list a "problems" item, or an "antenna upgrade" item, but I'm hoping they will cover the challenges as well as the happy basics.

10:00 -- Welcomes by Commissioners and introductions.

10:20 -- 11:30 "Digital Television Converter Boxes: Connection and Use"

  • Converter Boxes

  • Analog Pass-Through Options

  • The NTIA Coupon Program (NTIA)

  • Connections

  • Channel Scanning and Use

  • Special Features: Closed Captions, Video Description and Parental Control

11:30 --12:00 Questions and Answers

12:00 -- 2:00 Hands-On Demonstrations