Washington

Treasury to Get Nine-Figure Return On Coupon Program

After NTIA redeems final converter box coupons, at least $139 million to be left over 8/24/2009 02:15:00 PM Eastern

The U.S. Treasury will get at least $139 million back when the National Telecommunications & Information Association has redeemed its final $40 DTV-to-analog converter box coupon, and likely more along the lines of a $200 million-plus return.

That is according to the final NTIA figures for coupon requests.

While NTIA cannot calculate exactly how much money will be returned until the program ends at the end of October, the deadline for requests was July 31 and NTIA published a final active coupon request figure of 4,287,379. That is the number of coupons it had sent out but had not been redeemed.

With $310,796,690 in coupon funds left as of Aug. 12 (the last update), if every one of those coupons had to be redeemed, it would cost $171,496,516, leaving the government with $139,300,174 left over.

But at the current average redemption rate of about 55%, that would mean the refund to Treasury would be more on the order of $214 million. Also in the equation is how many equipment returns turn up, but those would only increase the pot of left-over dollars. If a consumer returns their converter box, the retailer must refund the money to the government, though the return rate is said to be negligible.

The converter box money was taken out of three government tranches. The initial $1.83 billion funding for the program was divided into the $990 million initially handed out, with the balance in a contingency fund held in reserve to make sure there was enough money to cover analog-only households, since the initial $990 million was available to homes with analog-only sets in cable or satellite households. The NTIA had to begin dipping into that second fund a year ago after all $990 million had been committed.

NTIA got the third tranche-$650 million-with passage of the Recovery Act stimulus package to help clear up a backlog of coupon orders after an accounting problem prevented NTIA from filling any more requests before more funds could be re-committed (money became available as those 45% of coupons expired without being redeemed, but the way the law was written, NTIA had to wait until those expirations before it could spend the money it was confident would be freed up).

A number of legislators, mostly Republicans, proposed fixing that accounting problem rather than moving the date, but that did not fly. The program wound up using the majority of that extra $650 million. The government agreed to allow consumers to reapply for expired coupons. Initially once coupons expired, their holders were out of luck. But allowing for reapplication was part of the bill to move the DTV date.

Clearing up the coupon backlog was one of the main reasons the DTV transition date was moved from Feb. 17 to June 12.

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