NTIA Taps IBM for Digital Conversion Program

The technology giant will provide consumer education, coupon distribution and financial management

The National Telecommunications and Information Administration (NTIA), the arm of the Department of Commerce charged with overseeing the deployment of government-subsidized digital-to-analog converter boxes that will allow analog sets to to receive digital television (DTV) signals, has awarded technology giant IBM a $120 million contract to provide services for the DTV converter box effort.

NTIA has been alloted $1.5 billion in government funds in order to distribute $40 coupons to consumers that will help defray the cost of the DTV converter boxes, which will be required to receive over-the-air signals after analog broadcasts cease on February 17, 2009. NTIA has selected IBM to provide various services for the "Digital-to-Analog Converter Box Coupon Program," including consumer education; coupon distribution to consumers and retail store participation; and financial processing to reimburse retailers, to maintain records, and to prevent waste, fraud and abuse.

Between January 1, 2008, and March 31, 2009, all U.S. households may request up to two coupons to be used toward the purchase of up to two digital-to-analog converter boxes, which should cost between $50 and $80, until the initial $990 million allocated for the program has been exhausted. After this initial phase of the program, NTIA may request an additional $510 million already authorized by Congress. During this “contingent period,” coupons will be available only to households that rely on over-the-air broadcasting as their sole source of television programming.

The total value of contract to IBM is $119,968,468, which breaks down to $84,990,343 for the base period, and $34,978,125 for a contingent period. The contract begins immediately and is scheduled for closeout September 30, 2009.

“This is a major milestone toward implementing a successful Coupon Program to ensure the switch from analog to digital television is completed smoothly and as planned,” said NTIA Administrator John Kneuer in a statement. “By awarding the contract on schedule, NTIA is preparing to be open for business so consumers may request coupons starting January 1, 2008, as required by law.”

The National Association of Broadcasters (NAB) applauded the selection of IBM to help facilitate the converter-box effort.

“This is an important step in a process that will bring digital television (DTV) to all Americans,” said Jonathan Collegio, Vice President of the NAB’s digital television transition unit, in a statement. “The success of the converter box coupon program is critical to upgrading America to digital television. NAB looks forward to working with NTIA and IBM to ensure all Americans continue to have access to free, over-the-air television.”