Battle Over Freebies

The federal government wants to make sure a wide swath of TV viewers aren't left without reception when the plug is pulled on analog transmission in February 2009. But broadcasters are concerned the government's plan could potentially disenfranchise some viewers and delay the transition to digital.

The National Telecommunications & Information Administration (NTIA) will distribute $1.5 billion to consumers in the form of $40 coupons—up to two per household—while supplies last. Viewers can use the money to buy a digital converter for their analog sets.

But what bothers some broadcasters is that, two weeks ago, the NTIA proposed that it provide the coupons only to households that don't subscribe to cable or satellite services. That's a small handful: The National Association of Broadcasters says only 19.6 million out of 110.2 million TV households get their TV reception over-the-air; that's about 18%.

Most viewers would get the digital signal downloaded to their primary set from the set-top box provided by their cable or DBS suppliers. But, without the government's coupon, that spare TV set in a bedroom or workshop would become an unwatchable antique.

NTIA says there are 74 million analog sets out there and it can give only enough coupons to convert about 20 million sets before exhausting the fund.

But that will leave a lot of TV sets dormant, says David Donovan, president of the Association of Maximum Service Television (MSTV), who charges that the NTIA has “changed the nature of the program. We don't believe the statute was ever intended to be so limited.” The cable industry hasn't reached consensus about how to respond to the NTIA because it would like approval to convert digital signals to analog at its headend, which would eliminate the problem for the cable industry altogether.

Donovan, whose group essentially is the broadcast industry's spectrum watchdog, says the giveaway plan is to make sure that viewers don't suddenly lose TV service. “It said the boxes would be supplied to TVs not connected to cable or satellite,” he argues, “but did not differentiate between whether they were in cable or satellite households or not.”

Also, NTIA says it plans to make the coupons available on a first-come, first-served basis to viewers who certify that they are in analog-only households. Viewers will get only one coupon per set and will have to swear they actually have another analog set to get the second coupon. NTIA is trying to discourage a black market in fraudulently obtained coupons.

Actually, the agency may not be doing the heavy lifting at all. Last week, it suggested that it might outsource the program, asking for information from the private sector from companies with the experience and qualifications to administer it.

MSTV has other concerns about the government's role in the DTV conversion.

Donovan says his organization is “very worried” about a Federal Aviation Administration (FAA) proposal that would require broadcasters to make almost any TV-license application subject to FAA clearance. The FAA essentially wants more say-so over tower construction and potential interference to navigation from radio and TV signals. But it is flexing its muscle just as 1,600 TV stations are in the midst of making various modifications in the switch to digital.

Michael Marcus, director of consulting firm Marcus Spectrum Solutions and former FCC technology expert, says the FAA's bid to expand its authority over spectrum issues stems in part from a historical rift between the two agencies. “FAA spectrum staffers see the FCC as a handmaiden of its industries with little interest in safety,” he says.

“This is clearly an exaggeration,” he adds, “but sometimes, insensitive FCC staffers have acted in ways that reinforce this bias.”

Beyond the turf fight, Marcus is concerned about a process that gives the FAA broad and not clearly defined review power over tower construction and interference issues. MSTV plans to fight the proposal.

E-mail comments to jeggerton@reedbusiness.com