What’s up with DTV?

The first panel included John Kneuer, Assistant Secretary of Commerce, in charge of NTIA, and Cathy Seidel, chief of the FCC's Consumer and Governmental Affairs Bureau. Secretary Kneuer opened his testimony by briefly describing the NTIA's responsibilities under the 2005 Deficit Reduction Act, which charged NTIA with administering the D2A Converter Box Program as well as assisting small and rural broadcasters with making the transition in order to assure that the most vulnerable citizens do not lose service after the 2009 hard date. He stated that the $5 million allocated for consumer education has been directed to the "most affected" populations, including 5 target groups:

1. Senior citizens
2. Economically Disadvantaged households
3. Rural households
4. Disabled viewers
5. Minority groups (including language minorities and Native Americans).

Secretary Kneuer noted that NTIA has translated coupon program information into many non- English languages, including several Native American tongues, and that such literature has been distributed to members of Congress. He also stated that NTIA is working with other agencies that reach economically disadvantaged Americans, including the IRS, Social Security Administration, and Veterans Administration.

Ms. Cathy Seidel from the FCC CGAB was the next witness on the first panel and opened her testimony by attempting to explain the FCC's efforts to promote consumer education and outreach efforts. She cited several rulemaking and enforcement proceedings in which the FCC is considering a) how to deal with analog-only cable subscribers, including multicast must-carry, and b) how to exercise its' consumer education responsibilities.

Ms. Seidel noted that there were several recent Notices of Proposed Rulemaking on DTV initiatives, consumer education, and enforcement, which I have attached. She also noted that with regard to enforcement, the Commission had issued 262 citations to retailers, as well as 7 Notices of Apparent Liability to major retailers for failure to comply with the Commission's directives to properly label analog-only TV sets that will not function after the February 2009 transition.

During questioning, Chairman Inouye reminded Secretary Kneuer that the United Kingdom has succeeded in making 80% of consumers aware of their upcoming transition, and asked why we are only at 10% awareness. Secretary Kneuer responded that as the campaign "ramps up" he expects consumer awareness to rise, and that he believes that consumers are aware of DTV itself, but not the impending analog shutoff. Ms. Seidel noted that the FCC has tasked a Consumer Advisory Commission with DTV education efforts, including a broad coalition of members. Chairman Inouye responded that the UK has allocated $400 million for their education efforts compared to our $5 million, to which Secretary Kneuer responded that there is an "implicit understanding" that retailers, broadcasters, and consumer electronics manufactures will do most of the education.

Vice-Chairman Stevens (R-AK) asked Secretary Kneuer if he believes that the current auction rules as proposed by the FCC (obviously referencing Chairman Martin's "wireless Carterphone" concept) would undermine auction revenue, which is supposed to fund the transition program. Secretary Kneuer responded that he believes that "maximum flexibility will lead to maximum revenue." Senator Stevens again asked if the Secretary believed that funding for education and outreach needed to be revisited in light of a possible decline in revenue due to the auction rules, and suggested that we may need to delay the transition if the auction revenue is not as projected. When he posed a similar question to Ms. Seidel, she "passed the buck" to the Wireless Bureau which she said is handling the auction and related rules.

Next, Senator Sununu (R-NH) asked the panel if the $5 million for education is too little, to which Secretary Kneuer said that they expected the various broadcast and electronics industries to do much of the heavy lifting for education because they have "a massive market incentive" to make this succeed. Senator Sununu also expressed concern that the estimates NTIA and the FCC are using regarding how many households are OTA-only are three years out of date. Ms. Seidel responded by "passing the buck" to the Media Bureau with regard to those numbers. Secretary Kneuer declined to give a number because he "gets his data from the industry." The Senator concluded by stating that he was concerned about Chairman Martin's proposed auction rules, because he believes that more restrictions (i.e., wireless Carterphone) would equal less revenue.

Senators Klobuchar (D-MN) and McCaskill (D-MO) ripped into Secretary Kneuer with regard to the NTIA's consumer education efforts, expressing concern that their rural constituents would be furious when they wake up after the transition and cannot watch their morning programs because of poor education and outreach efforts. Senator McCaskill in particular was blunt in her questioning of the Secretary, asking him about NTIA efforts to educate rural viewers about the transition.

Secretary Kneuer responded that when NTIA awards the D2A Coupon contract, education will be part of the responsibilities of the vendor. Ms. Seidel said that the FCC has not set a target date for requiring Public Service Announcements and Bill Inserts because the NPRM has not been finalized, and she would not offer specifics as to any of the Commission's potential requirements in that area.

Senator McCaskill then turned to the D2A Converter Boxes which would be available under the program, asking Secretary Kneuer if any had been field-tested. Secretary Kneuer would not offer a concrete answer. The Senator then referred to a House hearing this past spring in which the witness from Best Buy refused to confirm whether or not they would even carry coupon-eligible converter boxes, and asked the Secretary if the NTIA had received any commitments from major retailers to help implement the program and carry the boxes, as well as if NTIA has any initiatives to prevent fraud or protect seniors from predatory tactics involving fake coupons and boxes. In response to a question about inventory requirements from Senator Cantwell (D-WA), Secretary Kneuer made a rather damning comment that the program was designed to "make it easy for manufacturers and retailers to participate." and that NTIA does not have the authority to force a retailer to carry eligible boxes.

Senator Gordon Smith (R-OR) asked when Public Service Announcements regarding the transition and coupon programs would begin. Secretary Kneuer did not know but expected that broadcasters would soon "ramp up" efforts. The Senator also referenced a letter sent by himself and Senator Mark Pryor (D-AR) to NTIA about the D2A program, to which the Secretary acknowledged receipt but did not offer a timetable for response.

The second panel included representatives from AARP and several other groups, and made statements about the importance of education with regard to the transition among the elderly and language minority groups.

Chairman Inouye closed the hearing by noting that this coming September, he will hold another DTV hearing with witnesses from the broadcasting and consumer electronics industry to further examine the transition.