Summary

This letter responds to questions from the November 7, 2007, Congressional letter inquiring about issues discussed at the October 17, 2007, hearing before the Subcommittee on Telecommunications and the Internet on the digital television (DTV) transition. The letter asked if we have concerns about the converter box subsidy program. Congress also asked whether the National Telecommunications and Information Administration (NTIA) should prepare for a potential shortfall in program funding, in part by developing a process to address a potential shortfall. The letter also asked us to elaborate on the statutory provisions that we believe provide the Federal Communications Commission (FCC) with the necessary authority to convene an inter-agency task force. We prepared our responses during November 2007 in accordance with generally accepted government auditing standards. Our responses are based on our previous and ongoing work and our knowledge of the subjects raised by your questions. Because our responses are based on work for which we sought and incorporated agency comments, we did not seek agency comments on our responses to these questions.

Regarding the converter box subsidy program, we believe the subsidy program faces challenges that could affect the outcome of the program. These challenges include the coordination of several groups, readiness of retailers to accept coupons, and potential issues related to inventory planning. In particular, the subsidy program's outcome depends on the coordination and participation of NTIA, its contractor IBM, converter box manufacturers, retailers, and consumers. We have not evaluated whether NTIA should prepare for a shortfall in funding for the converter box subsidy program. However, we note that the Digital Television Transition and Public Safety Act provided an initial amount of $990 million for the converter box subsidy program, of which $100 million can be used for administrative expenses. If NTIA determines the initial allocation of funds is insufficient to fulfill coupon requests, the act requires NTIA to certify that the funds are insufficient to the House Committee on Energy and Commerce and the Senate Committee on Commerce, Science, and Transportation. The act provides that 60 days following this notification, NTIA will receive $510 million in additional program funds, of which $60 million can be used for administrative expenses. In response to the question about the statutory authority for FCC to convene an inter-agency task force, the Federal Advisory Committee Act (FACA) authorizes federal agencies (in addition to Congress and the President) to establish federal advisory committees, which may consist of private as well as public sector members. FCC has several federal advisory committees that provide advice and recommendations to the commission on numerous technical, operational, and consumer telecommunications issues. All of FCC's federal advisory committees are discretionary, meaning the committees were not required to be established by law but rather were established by FCC.