TV Converter Program Runs Out of Funding

TV Converter Program Runs Out of Funding

By Kim Hart
Washington Post Staff Writer
Tuesday, January 6, 2009; D01

The government's billion-dollar program to help people prepare for the transition to digital television has run out of money, potentially leaving millions of viewers without coupons to buy converter boxes they need to keep their analog TV sets working after the switch.

As of this past Sunday, consumers who request a $40 coupon to help offset the cost of a converter box are being placed on a waiting list. They may not receive the coupons before Feb. 17, when full-power television stations will shut off traditional analog broadcasts and transmit only digital signals.

Members of Congress are now scrambling to find ways to allocate more money to the program.

"We saw a massive spike in coupons in the past six weeks," said Meredith Atwell Baker, head of the National Telecommunications and Information Administration, an agency within the Commerce Department that runs the coupon program. She said a record 7.2 million coupons were ordered in December, while the agency was expecting roughly 4 million requests. She urged consumers to make sure at least one television set is ready for the transition, with or without a coupon.

After Feb. 17, about 70 million TV sets that receive over-the-air broadcasts will get nothing but static without a converter box. A coupon is not needed to purchase a converter box. But with boxes costing $50 to $80 in retail stores such as Best Buy and Wal-Mart, Congress allocated $1.34 billion to provide coupons to help offset the price. Consumers who have a newer digital TV or who subscribe to cable or satellite service will not lose programming.

Consumer groups, television stations and lawmakers say the NTIA should have planned for an increase in demand for the coupons as the deadline approached. They are criticizing the agency for failing to notify Congress of a possible funding shortfall earlier.

"They've left us precious little time to respond," said Rep. Edward J. Markey (D-Mass), chairman of the House Commerce subcommittee on telecommunications and the Internet. "They've created a mess by not admitting that there was not sufficient funding until the very last minute. So now we're looking for creative ways of solving the problem."

Each household is eligible to order two $40 coupons, which expire after 90 days. Under the rules set by Congress, the NTIA cannot commit more than $1.34 billion at any time to cover the cost of coupons, so people on the waiting list cannot receive coupons until already-issued vouchers expire. Congress could solve the funding shortfall by approving more money for the program or waiving the rule to allow the NTIA to issue new coupons without waiting for unredeemed ones to expire.

There were 103,000 people on the waiting list as of yesterday afternoon, Baker said. She added that about 351,000 coupons are set to expire each week, which could pump 6 million more coupons into circulation in the next few months. But they may not reach consumers in time for the transition, she said.

As of yesterday, 46.2 million coupons have been requested, but only 18.6 million have been redeemed, according to the NTIA.

In September, the Government Accountability Office issued a report saying the NTIA had no specific plans to address an increase in demand for the coupons as the transition nears. In a hearing that month, Markey asked Baker if the agency had enough money to meet a spike in coupon demand. Baker said the agency had sufficient funds.

Markey said he is working on legislation to waive the accounting rule, which could make tens of millions of additional coupons available for the program and give Congress more time to look into other funding issues. His staff is also working with President-elect Barack Obama's transition team to solve the problem.

"NTIA is going to stop processing coupons precisely at the time when people need them the most," said Joel Kelsey, policy analyst for Consumers Union. "Whatever Congress decides to do, it needs to be done as soon as possible to help people through this complicated transition," he said.