<DOC>
[110th Congress House Hearings]
[From the U.S. Government Printing Office via GPO Access]
[DOCID: f:45347.wais]
THE STATUS OF THE DIGITAL TELEVISION TRANSITION
=======================================================================
HEARINGS
BEFORE THE
SUBCOMMITTEE ON TELECOMMUNICATIONS AND THE INTERNET
OF THE
COMMITTEE ON ENERGY AND COMMERCE
HOUSE OF REPRESENTATIVES
ONE HUNDRED TENTH CONGRESS
FIRST SESSION
----------
MARCH 28, OCTOBER 17, 31, 2007
----------
Serial No. 110-27
Printed for the use of the Committee on Energy and Commerce
energycommerce.house.gov
THE STATUS OF THE DIGITAL TELEVISION TRANSITION
=======================================================================
HEARINGS
BEFORE THE
SUBCOMMITTEE ON TELECOMMUNICATIONS AND THE INTERNET
OF THE
COMMITTEE ON ENERGY AND COMMERCE
HOUSE OF REPRESENTATIVES
ONE HUNDRED TENTH CONGRESS
FIRST SESSION
__________
MARCH 28, OCTOBER 17, 31, 2007
__________
Serial No. 110-27
Printed for the use of the Committee on Energy and Commerce
energycommerce.house.gov
------
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45-347 PDF WASHINGTON : 2008
----------------------------------------------------------------------
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THE STATUS OF THE DIGITAL TELEVISION TRANSITION
COMMITTEE ON ENERGY AND COMMERCE
JOHN D. DINGELL, Michigan, Chairman
HENRY A. WAXMAN, California JOE BARTON, Texas
EDWARD J. MARKEY, Massachusetts Ranking Member
RICK BOUCHER, Virginia RALPH M. HALL, Texas
EDOLPHUS TOWNS, New York J. DENNIS HASTERT, Illinois
FRANK PALLONE, Jr., New Jersey FRED UPTON, Michigan
BART GORDON, Tennessee CLIFF STEARNS, Florida
BOBBY L. RUSH, Illinois NATHAN DEAL, Georgia
ANNA G. ESHOO, California ED WHITFIELD, Kentucky
BART STUPAK, Michigan BARBARA CUBIN, Wyoming
ELIOT L. ENGEL, New York JOHN SHIMKUS, Illinois
ALBERT R. WYNN, Maryland HEATHER WILSON, New Mexico
GENE GREEN, Texas JOHN B. SHADEGG, Arizona
DIANA DeGETTE, Colorado CHARLES W. ``CHIP'' PICKERING,
Vice Chairman Mississippi
LOIS CAPPS, California VITO FOSSELLA, New York
MIKE DOYLE, Pennsylvania STEVE BUYER, Indiana
JANE HARMAN, California GEORGE RADANOVICH, California
TOM ALLEN, Maine JOSEPH R. PITTS, Pennsylvania
JAN SCHAKOWSKY, Illinois MARY BONO, California
HILDA L. SOLIS, California GREG WALDEN, Oregon
CHARLES A. GONZALEZ, Texas LEE TERRY, Nebraska
JAY INSLEE, Washington MIKE FERGUSON, New Jersey
TAMMY BALDWIN, Wisconsin MIKE ROGERS, Michigan
MIKE ROSS, Arkansas SUE WILKINS MYRICK, North Carolina
DARLENE HOOLEY, Oregon JOHN SULLIVAN, Oklahoma
ANTHONY D. WEINER, New York TIM MURPHY, Pennsylvania
JIM MATHESON, Utah MICHAEL C. BURGESS, Texas
G.K. BUTTERFIELD, North Carolina MARSHA BLACKBURN, Tennessee
CHARLIE MELANCON, Louisiana
JOHN BARROW, Georgia
BARON P. HILL, Indiana
------
Professional Staff
Dennis B. Fitzgibbons, Chief of Staff
Gregg A. Rothschild, Chief Counsel
Sharon E. Davis, Chief Clerk
David Cavicke, Minority Staff Director
(ii)
Subcommittee on Telecommunications and the Internet
EDWARD J. MARKEY, Massachusetts, Chairman
MIKE DOYLE, Pennsylvania FRED UPTON, Michigan
Vice Chairman Ranking Member
JANE HARMAN, California J. DENNIS HASTERT, Illinois
CHARLES A. GONZALEZ, Texas CLIFF STEARNS, Florida
JAY INSLEE, Washington NATHAN DEAL, Georgia
BARON P. HILL, Indiana BARBARA CUBIN, Wyoming
RICK BOUCHER, Virginia JOHN SHIMKUS, Illinois
EDOLPHUS TOWNS, New York HEATHER WILSON, New Mexico
FRANK PALLONE, Jr, New Jersey CHARLES W. ``CHIP'' PICKERING,
BART GORDON, Tennessee Mississippi
BOBBY L. RUSH, Illinois VITO FOSSELLA, New York
ANNA G. ESHOO, California GEORGE RADANOVICH, California
BART STUPAK, Michigan MARY BONO, California
ELIOT L. ENGEL, New York GREG WALDEN, Oregon
GENE GREEN, Texas LEE TERRY, Nebraska
LOIS CAPPS, California MIKE FERGUSON, New Jersey
HILDA L. SOLIS, California JOE BARTON (ex officio)
JOHN D. DINGELL, Michigan (ex officio)
C O N T E N T S
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MARCH 28, 2007
Page
Barton, Hon. Joe, a Representative in Congress from the State of
Texas, opening statement....................................... 10
Blackburn, Hon. Marsha, a Representative in Congress from the
State of Tennessee, opening statement.......................... 15
Dingell, Hon. John D., a Representative in Congress from the
State of Michigan, opening statement........................... 4
Doyle, Hon. Mike, a Representative in Congress from the
Commonwealth of Pennsylvania, opening statement................ 13
Green, Hon. Gene, a Representative in Congress from the State of
Texas, opening statement....................................... 13
Harman, Hon. Jane, a Representative in Congress from the State of
California, opening statement.................................. 9
Markey, Hon. Edward J., a Representative in Congress from the
Commonwealth of Massachusetts, opening statement............... 1
Pallone, Hon. Frank, Jr., a Representative in Congress from the
State of New Jersey, opening statement......................... 9
Shimkus, Hon. John, a Representative in Congress from the State
of Illinois, opening statement................................. 6
Solis, Hon. Hilda L., a Representative in Congress from the State
of California, opening statement............................... 12
Stupak, Hon. Bart, a Representative in Congress from the State of
Michigan, opening statement.................................... 7
Terry, Hon. Lee, a Representative in Congress from the State of
Nebraska, opening statement.................................... 14
Towns, Hon. Edolphus, a Representative in Congress from the State
of New York, opening statement................................. 15
Upton, Hon. Fred, a Representative in Congress from the State of
Michigan, opening statement.................................... 2
Walden, Hon. Greg, a Representative in Congress from the State of
Oregon, opening statement...................................... 8
Witnesses
Britt, Glenn A., president and chief executive officer, Time
Warner Cable................................................... 47
Prepared statement........................................... 49
Fetchet, Mary, founding director, Voices of September 11th....... 56
Prepared statement........................................... 59
Nogales, Alex, president and chief executive officer, National
Hispanic Media Coalition....................................... 43
Prepared statement........................................... 45
Taylor, John I., senior vice president, LG Electronics, USA,
Incorporated................................................... 16
Prepared statement........................................... 18
Vitelli, Michael, senior vice president, consumer electronics and
product Management, Best Buy, Inc.............................. 65
Prepared statement........................................... 68
Yager, K. James, chief executive officer, Barrington Broadcasting
Company, LLC................................................... 21
Prepared statement........................................... 23
Submitted Material
``What You Need to Know About the February 17, 2009 `DTV
Transition''' Consumer Electronics Retailers Coalition......... 104
``Digital Television Transition Campaign Plan'' prepared by
Jonathan Collegio, National Association of Broadcasters........ 108
Comments of the Association for Maximum Service Television, et
al., letter of September 25, 2006 to NTIA...................... 130
RCA press release of March 12, 2007.............................. 163
David H. Arland, vice president, marketing,Thomson, letter of
March 27, 2007 to Messrs. Markey and Upton..................... 165
OCTOBER 17, 2007
Barton, Hon. Joe, a Representative in Congress from the State of
Texas, opening statement....................................... 176
Capps, Hon. Lois, a Representative in Congress from the State of
California, prepared statement................................. 185
Deal, Hon. Michael F., a Representative in Congress from the
Commonwealth of Pennsylvania, opening statement................ 172
Dingell, Hon. John D., a Representative in Congress from the
State of Michigan, opening statement........................... 171
Doyle, Hon. Mike, a Representative in Congress from the
Commonwealth of Pennsylvania, opening statement................ 173
Eshoo, Hon. Anna G., a Representative in Congress from the State
of California, opening statement............................... 175
Ferguson, Hon. Mike, a Representative in Congress from the State
of New Jersey, opening statement............................... 179
Green, Hon. Gene, a Representative in Congress from the State of
Texas, opening statement....................................... 180
Inslee, Hon. Jay, a Representative in Congress from the State of
Washington, opening statement.................................. 182
Markey, Hon. Edward J., a Representative in Congress from the
Commonwealth of Massachusetts, opening statement............... 167
Solis, Hon. Hilda L., a Representative in Congress from the State
of California, opening statement............................... 178
Stearns, Hon. Cliff, a Representative in Congress from the State
of Florida, opening statement.................................. 182
Stupak, Hon. Bart, a Representative in Congress from the State of
Michigan, opening statement.................................... 184
Terry, Hon. Lee, a Representative in Congress from the State of
Nebraska, opening statement.................................... 181
Towns, Hon. Edolphus, a Representative in Congress from the State
of New York, prepared statement................................ 185
Upton, Hon. Fred, a Representative in Congress from the State of
Michigan, opening statement.................................... 169
Walden, Hon. Greg, a Representative in Congress from the State of
Oregon, opening statement...................................... 174
Witnesses
Benjamin, Michael, executive director, Family, Career, and
Community Leaders of America................................... 308
Prepared statement........................................... 310
Answers to submitted questions............................... 355
Fazlullah, Amina, staff attorney, media and telecommunications,
U.S. Public Interest Research Group............................ 299
Prepared statement........................................... 302
Answers to submitted questions............................... 360
Goldstein, Mark L., Director, Physical Infrastructure Issues,
U.S. Government Accountability Office.......................... 229
Prepared statement........................................... 231
Answers to submitted questions............................... 363
Kneuer, John M.R., Assistant Secretary, Communications and
Information, National Telecommunications and Information
Administration, U.S. Department of Commerce.................... 186
Prepared statement........................................... 189
Answers to submitted questions............................... 369
Martin, Kevin J., Chairman, Federal Communications Commission.... 207
Prepared statement........................................... 211
Answers to submitted questions............................... 401
Romeo, Tom, director, Federal services, Global Business Service,
IBM Corporation................................................ 326
Prepared statement........................................... 328
Stout, Claude, executive director, Telecommunications for the
Deaf and Hard of Hearing, Inc., on behalf of the Coalition of
Organizations for Accessible Technology........................ 283
Prepared statement........................................... 286
Answers to submitted questions............................... 421
Zirkin, Nancy M., vice president/director of public policy,
Leadership Conference on Civil Rights.......................... 315
Prepared statement........................................... 317
Answers to submitted questions............................... 426
Submitted Material
``Broadcasters Announce Comprehensive $697 million Campaign to
Educate Consumers about the February 17, 2009 Transition to
Digital Television (DTV),'' DTVAnswers .com, October 15, 2007.. 431
Kyle McSlarrow, president and chief executive officer, National
Cable and Telecommunications Association, letter of September
6, 2007 to Messrs. Dingell, Barton, Markey and Upton........... 438
``Univision Communications Inc. Launches Industry's First Digital
Television Conversion Education Campaign,'' Univision press
release, October 1, 2007....................................... 442
Hon. Fred Upton, ``Auction the Spectrum's `White Spaces,''' op-
ed, The Hill, October 16, 2007................................. 444
OCTOBER 31, 2007
Capps, Hon. Lois, a Representative in Congress from the State of
California, opening statement.................................. 452
Eshoo, Hon. Anna G., a Representative in Congress from the State
of California, opening statement............................... 449
Green, Hon. Gene, a Representative in Congress from the State of
Texas, opening statement....................................... 450
Harman, Hon. Jane, a Representative in Congress from the State of
California, opening statement.................................. 449
Markey, Hon. Edward J., a Representative in Congress from the
Commonwealth of Massachusetts, opening statement............... 447
Radanovich, Hon. George, a Representative in Congress from the
State of California, opening statement......................... 451
Solis, Hon. Hilda L., a Representative in Congress from the State
of California, opening statement............................... 451
Stearns, Hon. Cliff, a Representative in Congress from the State
of Florida, opening statement.................................. 451
Upton, Hon. Fred, a Representative in Congress from the State of
Michigan, opening statement.................................... 448
Witnesses
Abbott, Jonathan, president and chief executive officer, WGBH,
Boston, MA..................................................... 583
Prepared statement........................................... 585
Answers to submitted questions............................... 644
Barrett, David J., president and chief executive officer, Hearst-
Argyle Television, Incorporated, New York, NY.................. 467
Prepared statement........................................... 469
Bruno, Ron, president, Community Broadcasters Association,
president, Bruno-Goodworth Network, Inc., Pittsburgh, PA....... 453
Prepared statement........................................... 456
Knorr, Patrick, president, and general manager, Sunflower
Broadband, Lawrence, KS........................................ 458
Prepared statement........................................... 460
Swanson, Dennis, president, station operations, Fox Televsion
Stations, Incorportated, New York, NY.......................... 556
Prepared statement........................................... 558
Taylor, John, vice president, government relations and
communications, LG Electronics, Lincolnshire, IL............... 599
Prepared statement........................................... 601
Uva, Joe, chief executive officer, Univision Communications,
Inc., New York, NY............................................. 550
Prepared statement........................................... 552
Vitelli, Michael, senior vice president and general manager, Home
Solutions Operating Group, Best Buy, Incorporated, Richfield,
MN............................................................. 566
Prepared statement........................................... 568
Answers to submitted questions............................... 648
Willner, Michael S., vice president and chief executive officer,
Insight Communications, New York, NY........................... 540
Prepared statement........................................... 542
THE STATUS OF THE DIGITAL TELEVISION TRANSITION
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WEDNESDAY, MARCH 28, 2007
House of Representatives,
Subcommittee on Telecommunications
and the Internet,
Committee on Energy and Commerce,
Washington, DC.
The subcommittee met, pursuant to call, at 10:00 a.m., in
room 2123 of the Rayburn House Office Building, Hon. Edward J.
Markey (chairman of the subcommittee) presiding.
Members present: Representatives Doyle, Harman, Inslee,
Boucher, Towns, Pallone, Stupak, Green, Solis, Dingell, Upton,
Hastert, Deal, Shimkus, Wilson, Walden, Terry, Blackburn, and
Barton.
Staff present: Johanna Shelton, Colin Crowell, Maureen
Flood, Mark Seifert, Tim Powderly, David Vogel, Kyle Chapman,
Neil Fried, and Courtney Reinhard.
OPENING STATEMENT OF HON. EDWARD J. MARKEY, A REPRESENTATIVE IN
CONGRESS FROM THE COMMONWEALTH OF MASSACHUSETTS
Mr. Markey. Good morning, ladies and gentlemen and whoever
is watching this on C-SPAN. Twenty-five million people. That is
bigger than ``Dancing with the Stars.'' If they see this on
delay, it is March 28, 2007. But it has been 80 degrees here in
Washington, and all of these various blossoms are completely
confused, and this is the debate over whether or not global
warming is affecting our country and causing this personality
disorder in plant life. I am saying that I have had such a
pollen attack that it is going to affect how people hear me
today, but I am going to be kind of in a Luca Brasi sound alike
contest today, and I don't have a cold, but----
Mr. Upton. You are sounding a little bit like Charlie
Rangel.
Mr. Markey. Charlie Rangel, Luca Brasi, I am not going
there, OK, but there is a, I think, a real problem for many
people here today in Washington. The purpose of today's hearing
is to provide this subcommittee with a clearer picture of how
Government, industry and community groups will work together to
ensure that millions of Americans do not lose free, over-the-
air television after the transition from analog to digital
broadcasting on February 17, 2009.
Recent oversight hearings with the Federal Communications
Commission and the NTIA have left this subcommittee with a DTV
transition picture that is fuzzy, at best. If we are going to
make sure that all Americans don't see their analog televisions
go dark on February 17, 2009, we need to start getting better
reception from the parties who are responsible for making sure
this digital transformation is a success.
I truly hope today's panelists can provide high-definition
clarity to the DTV transition so that we can assure the public
it will be a success for everyone. Let me start by reaffirming
my support for the DTV transition. I held the first HDTV
hearing as chairman of this subcommittee in this room 20 years
ago, 1987. We have long known the benefits of transitioning to
digital TV and it is time to get the job done and done
correctly.
If implemented successfully, transitioning broadcast
television to digital service will free up valuable spectrum to
enhance public safety communications, may bring consumers an
array of new digital broadcast video and other services and
will provide spectrum that, if also implemented properly, will
enhance wireless competition and spur a new wireless broadband
deployment and innovation.
Mr. Dingell and I and other Democratic colleagues urged the
administration and our Republican colleagues in the last
Congress to ensure sufficient funding for this program so that
all of the almost 70 million analog television sets would be
covered. The CBO estimated that this would cost roughly $3.6
billion, or more than twice the amount in the final law. With
the relinquished spectrum estimated to garner upwards of $10
billion at auction, there is sufficient money to do this right.
In the last Congress, the Democratic side offered a plan
which allocated enough money to cover every possible applicant
for a converter box and we proposed that the remainder of the
$10 billion in auction revenue should be used to fund public
safety interoperability and network upgrades. Instead, our
colleagues proposed less than half that amount for converter
boxes and only $1 billion for first responders. In addition,
there is only $5 million for consumer education at NTIA and
$1.5 million at the FCC in order to deal with this issue.
We have to get this job done. That is what this hearing is
all about. We are going to make sure that all of the parties
from the Government and the private sector play their role in
protecting the American right to their television set, turning
on when they have spent their good hard earned money to
purchase that set.
And the time of the Chair has expired. I turn and recognize
the gentleman from Michigan, Mr. Upton.
OPENING STATEMENT OF HON. FRED UPTON, A REPRESENTATIVE IN
CONGRESS FROM THE STATE OF MICHIGAN
Mr. Upton. Well, thank you, Mr. Chairman, and I would like
to thank the witnesses for testifying today on this very
important issue. I commend you for holding this extremely
important hearing. The DTV transition is an issue that
continues to generate an outstanding amount of attention and it
is certainly imperative that the attention on the issue focuses
on the heart and soul of the matter, and that is giving our
first responders, many whom I have met with this morning in my
office, from my district, the resources that we need to keep
America safe.
The catalyst for the DTV transition is the post-9/11
realization that we have to get the 24 MHz of spectrum into the
hands of public safety officials for interoperability once and
for all. In fact, clearing the 24 MHz was precisely the task
which the bipartisan 9/11 Commission, in its recommendations to
Congress, also recognized as a mission very critical to
homeland security. And despite the moral imperative, much of
the debate is focused on the NTIA program to provide consumers
with coupons for subsidized converter boxes. And I am confident
that the NTIA coupon program is more than adequate to provide
subsidized converter boxes.
According to the National Association of Broadcasters'
testimony there are a total of 69 million TVs not connected to
cable or satellite, including those in homes that subscribe to
cable and satellite. They estimate that after a broadcaster
sponsored consumer education campaign, consumers will want
subsidized converter boxes for about a third of those TVs. That
makes 23 million subsidized converter boxes well below, well
below the 33\1/2\ million subsidized converter boxes that the
$1.5 billion coupon program is intended to cover.
In fact, I think the initial $990 million will be more than
enough to cover the demand for the subsidized converter boxes
based on the estimates using data from the FCC or the consumer
electronics industry. And according to the CEA, the
manufacturers building the boxes, only 25 million sets will
need a converter box by the transition date and only a third of
those will feel that they need the subsidy, and that is a
little more than 8 million boxes which easily can be covered by
funds for the program.
The fact remains that it is in the financial interest of
the broadcasters, the satellite and cable folks to make sure
that each TV-viewing household knows about the DTV transition.
The last thing the industry wants to do is lose viewers. The
broadcasters should be commended for the work that they are
going to do to ensure consumers to be aware of that transition
and I am confident that they will continue to do more than
their share to ensure that the transition is successful.
It should be noted that the transition has been difficult
for our local broadcasters. Individually, each broadcaster has
had to invest significant sums, often more than a million
bucks, to make this Government imposed transition; not to
mention the energy and the insurance costs for operating both
analog and digital facilities at the same time. Our local
broadcasters are to be commended for doing their part. Had it
not been for their hard work and sacrifice, the transition
would not have been possible.
However, if any of my colleagues on either side of the
aisle have doubts or concerns about the industry's resolve to
educate consumers, I would urge them to cosponsor and pass H.R.
608, the Digital TV Consumer Education Act. Make no mistake, if
we alter any of the fundamental pillars of the DTV Act plan,
like changing the auction date or the spectrum allocations, we
jeopardize, jeopardize the 24 MHz of public safety spectrum and
the billion dollar public safety grant that was included in the
legislation. The stakes are too high to gamble and we have come
so far. We should try to risk avoid strain from that well-
plotted course.
As I conclude my opening statement, I would just like to
highlight a few of the relevant numbers again. Fifteen million
exclusively over-the-air homes; 94 million cable and satellite
homes. Projected demand for the subsidized converter box is
21.8 million. Thirty-three and a half million converter boxes
are available through the Federal coupon program, which is,
should be, more than enough to cover the 21.8 million. But the
numbers that matter the most are the 24 MHz of spectrum and the
billion dollars for public safety.
I look forward to hearing from the panel today. The 9/11
Commission understood the importance of ensuring that our first
responders have the equipment and the spectrum necessary to
communicate in times of emergency. I am proud that we were
successful in not only passing the DTV transition last
Congress, but we are also providing a helping hand to enable
our first responders to better protect all of America.
Mr. Markey. The gentleman's time----
Mr. Upton. Oh, wait. If I could just submit a unanimous
consent to put in a letter from Thomson indicating that they
will have the converter sets available by January 1, 2008.
Mr. Markey. Without objection it will be included.
Mr. Upton. And also to allow Congresswoman Blackburn, to
sit in and participate in the normal process, as she is not a
member of this subcommittee?
Mr. Markey. Without objection Mrs. Blackburn will be
allowed to participate in the hearing and she will be
recognized after all of the members of the subcommittee have
been recognized, but we welcome you. Thank you. The Chair
recognizes the gentleman from Michigan, the chairman of the
committee, Mr. Dingell.
OPENING STATEMENT OF HON. JOHN D. DINGELL, A REPRESENTATIVE IN
CONGRESS FROM THE STATE OF MICHIGAN
Mr. Dingell. Mr. Chairman, I thank you and I commend you
for holding this hearing. This is the first oversight hearing
on the digital television transition since the law that set a
hard date to turn off analog television was enacted more than a
year ago. I think that careful oversight is going to be very
much needed because I have great apprehensions that a fine mess
lies before us.
Mr. Chairman, consumers deserve a clear picture of the
digital television DTV transition. This committee will work
hard in the coming months to see to it that the public and
private stakeholders are doing all that they should to prepare
consumers. Much will be gained for our country if the
transition is done properly and is successful. The timely
return of the spectrum will produce significant public
benefits, particularly for the first responders and wireless
innovators.
Indeed, led by my good friend Mr. Stupak of Michigan, many
of us voted to use the bulk of the spectrum auction proceeds,
$5.8 billion, for first responder interoperability.
Unfortunately, that law was enacted in the previous Congress
and set aside far less funding for first responders. Decisions
being made now by this administration and others will lay the
foundation for success of the transition; good decisions that
put the consumer first will go far towards ensuring a timely
return of the analog broadcast spectrum.
Consumer adoption is the lynchpin of a successful DTV
transition. I suspect few consumers know that they will need to
purchase new equipment to keep their analog television sets
working. We must reach all Americans with accurate information
about the transition date and about the coupon program. The law
established a first-come, first-served converter box coupon
program. That imposes significant perils on portions of our
society that may or may not be aware of that feature of the
law.
When that money runs out many households, including those
dependent on free, over-the-air television, for every day for
their local news, weather and emergency alerts may be left with
a blank screen. Retailers must provide consumers with simple
and useful information. When consumers walk into a store, the
necessary equipment, including eligible low-cost converter
boxes, must be in stock and visible on the shelves.
Consumers should see effective informational displays and
be able to pick up coupon applications right at the store where
the boxes are sold. Sales associates should accurately answer
questions and assist coupon holders in obtaining eligible low-
cost boxes. Consumer electronics manufacturers must also make
certain that affordable converter boxes are produced in
sufficient numbers and available to retailers in the proper
timeframe.
Given that coupon distribution will begin in January 2008,
I am curious whether orders have been placed to produce low-
cost boxes and in what quantities. How will manufacturers
market, promote and test the boxes? Will there be installation
or antennae assistance? Will product labeling easily identify
coupon eligible boxes? The most crucial part of any consumer
education campaign is the efforts of the broadcast industry,
itself. Broadcast television is a powerful media to reach
consumers.
Local broadcasters must begin a thorough public education
program as the coupons become available next January.
Broadcasters should also partner with local retailers and
community organizations to promote outreach to hard-to-reach
populations. Cable operators must also do their part. They must
provide accurate and appropriate information to guide their
subscribers through this transition. It must be noted that
retailers and wholesalers and others involved in the sales of
television equipment must also do their share and must not sell
equipment which will not best suit the needs and the concerns
of the consuming public.
Importantly, Government agencies such as the Federal
Communications Commission and the National Telecommunications
and Information Administration must step up their efforts.
There has been too little appreciation for the task of properly
informing and equipping American households. It is the
responsibility of the FCC to inform all Americans about the
transition and coordinate the technical steps required to usher
in full digital broadcasting. NTIA has serious responsibilities
here and they must conduct vigorous consumer outreach regarding
the coupon program and they must keep Congress adequately
informed on the progress of their efforts.
As we prepare for February 2009 we should not forget that
we are asking ordinary people to pay for a Government decision
that essentially makes their television sets obsolete. For that
reason we should ensure that this transition is as painless as
possible for American consumers and that they have all of the
information needed to protect themselves in what could be a
dangerous undertaking for their viewing interests. Thank you,
Mr. Chairman.
Mr. Markey. The Chair recognizes the gentleman from
Illinois, Mr. Shimkus.
OPENING STATEMENT OF HON. JOHN SHIMKUS, A REPRESENTATIVE IN
CONGRESS FROM THE STATE OF ILLINOIS
Mr. Shimkus. Thank you, Mr. Chairman. Remember what we did
in the Deficit Reduction Act of 2005? The primary
responsibility was to get 24 MHz up to the first line
responders and a billion dollars to help in that transition,
but I want to highlight something that I covered in a hearing
of last week; it is up on the screen, it is up on this placard
and it is really the best way to get a hold of some numbers to
understand whether we have enough money or whether we don't
have enough money.
At last week's DTV hearing I walked through the converter
box numbers with NTIA, demonstrating that the initial $990
million allocated to the program would cover demand. Some said
I did it too quickly, so I thought I would do it again, this
time with some help. According to the FCC's most recent
estimate, there are 15.36 million exclusively over-the-air
homes. NAB's February 2007 survey projects that 25 percent of
the over-the-air homes may want a subsidized converter box;
that comes to 3.84 million homes. Over-the-air homes tend to
have two televisions for a total of 7.68 million subsidized
converter boxes.
According to the same FCC estimates, there are 94.23
million cable and satellite homes. According to NAB, 15 percent
of cable and satellite homes may want a subsidized converter
box. That comes out to 14.13 million homes. Those homes are
likely to have only one television not connected to their cable
or satellite service, so that is a total of 14.13 million
subsidized converter boxes. If you add those numbers together
you get 21.81 million subsidized converter boxes. That is less
than the 22.25 million subsidized converter boxes that the
initial $900 million less the administration costs can fund.
And I would like to point out the consumer electronics
industry, the ones who actually are making and selling the
converter boxes, thinks the numbers needed will be even
smaller. I realize that many of these numbers are estimates,
however. If they are accurate, then we are headed in a great
direction. When we passed the Deficit Reduction Act of 2005
with these provisions included and I personally think we did a
good job.
I will end, again, with my primary, my opening part of this
was it is all about dollars and cents and priorities. And the
number one priority is get the spectrum to the first line
responders so they can communicate. The second major
responsibility is to make sure that we have money to help in
the interoperability. That is all what this debate is primarily
responsible and I think, budgetary, we can defend the $990
million for the set top converters.
With that, Mr. Chairman, I will yield back my 20 seconds.
Mr. Markey. The gentlelady from California. Let me go to
the gentleman, if you wouldn't mind, let me recognize the
gentleman from Michigan. I know he has got to run.
OPENING STATEMENT OF HON. BART STUPAK, A REPRESENTATIVE IN
CONGRESS FROM THE STATE OF MICHIGAN
Mr. Stupak. Thank you, Mr. Chairman, and thanks for holding
this hearing. While I support the transition to digital
television, I do not support legislation passed by the last
Congress to implement the DTV transition because it does not do
enough to help consumers and it fell short of what could be
done to help public safety. Nonetheless, the legislation passed
and now we have to make sure it is implemented in a way that
best meets the needs of consumers and public safety.
I supported setting a hard date to finally give an
additional 24 MHz of spectrum to public safety agencies to
improve first responder communications. I am also a strong
supporter of freeing up this beachfront spectrum to speed
advanced wireless and Internet services to rural America.
Unfortunately, these benefits come at the expense of rendering
69 million analog television sets useless. Many of these sets
are in homes which have cable or satellite for their primary
TV, but their other television sets in their homes will be
affected by this transition.
Perhaps more importantly, there are 21 million households
who depend solely on over-the-air television. The average
income of these over-the-air households is $30,000, which is
representative of my district. Forty-one percent of the over-
the-air viewers can't afford cable or satellite. Over-the-air
viewers are more likely to live in rural America and they are
more likely to be older. Consumers didn't ask for this
transition. They don't know it is coming and they are not going
to appreciate being hit with a $50 TV tax. They are going to
need to be educated about how to make their TVs work after
February 19, 2009. Americans will need to be persuaded that
this transition is a good thing.
Under the best case scenario, we have a tall order ahead of
us. Unfortunately, the Deficit Reduction Act did nothing to
provide us for this best case scenario. Instead of funding for
a robust coupon program and education campaign, we have a
piecemeal approach that will inevitably lead to confusion and
television sets being left in the dark come January 2009. Let
me be clear, it did not have to be this way. I voted for an
alternative bill that provided a converter box to every
household that needed one. In addition, I fought to direct the
remaining spectrum proceeds to help public safety update their
communications equipment.
Public safety officials need additional spectrum but they
also need modern equipment. Yet, this administration has
committed just $2 billion to interoperability upgrades since
September 11 to meet a need that is estimated to be $18
billion. I offered an amendment to direct $5.8 billion of the
spectrum auction money to create a public safety communications
trust fund for interoperability. Unfortunately, my amendment
failed on a tie 24-24 party line vote. Republican leadership
chose much of the $20 billion from the sale of the spectrum to
offset another round of tax cuts for the wealthiest Americans
rather than to adequately compensate consumers for this digital
transition and invest in first responder communications.
In closing, unless we want these converter boxes thrown at
us, Congress had better meet its obligation to consumers and
make DTV transition as inexpensive and as least burdensome as
possible. With that, I yield back, Mr. Chairman. Thank you for
the time.
Mr. Markey. The gentleman from Oregon, Mr. Walden.
OPENING STATEMENT OF HON. GREG WALDEN, A REPRESENTATIVE IN
CONGRESS FROM THE STATE OF OREGON
Mr. Walden. Thank you very much, Mr. Chairman. I look
forward to hearing from our witnesses today and appreciate the
breadth and scope of their testimony. I do have to take some
exception with my friend and colleague from Michigan when he
indicated that the Deficit Reduction Act did nothing to help
consumers. There is $1.5 billion in there to help subsidize
these consumer converter boxes, which in my part of the world,
is still a lot of money, billion and a half.
Now, the one thing I would say is that I had my own
reservations, as many of you know, about this legislation and
the hard cutoff date, recognizing a cutoff date was essential,
but was not convinced that the market was ready for this and
that agreements had been in place before that spelled out how
this transition would occur. Clearly, those agreements have
gone by the wayside and we have a new law in place that sets a
hard cutoff date.
With a hard cutoff date in place, the worst thing we could
do is change it, because, I think, the manufacturers are
ramping up to make the converter boxes; consumers are beginning
to get educated and the real issue for us now is how do we
effectively educate consumers in a timely and appropriate way
so that they are ready for this transition. I know at one
point, the cutoff date was going to be New Years Day of 2009,
which I thought was pretty stupid, actually, because most of us
would wake up that day and turn on our televisions; if they
didn't work, you had no place to except to the phone book to
call your Member of Congress. I would prefer they go to Radio
Shack or somewhere else and get the converter box. Of course,
those stores would have been closed.
The other thing I would say is I stayed up late last night
to read the Constitution. Right next to the second amendment,
which deals with guns, is how we deal with televisions and so I
do think we have to be cognizant of this right of consumers to
get TV the way they have been getting it in the least
disruptive way or we are all going to hear about it, so it is
important for all of us to get it right. The date is there, the
transition needs to happen. First responders need the spectrum
and frankly, the Government can better use the funds from the
auction for essential Government services, including helping
first responders.
I think consumers are used to technological changes. Nobody
likes having to buy one of these boxes or upgrade their
software when some operating system changes, but we recognize
that is the price of progress, too. So we are going to do our
part to help those who need the help the most. We need to make
sure that as few sets are rendered inoperable as possible and
that HD signals are passed through the cable systems to analog
sets in an un-degradated way.
And I look forward to your comments today as we work to
make this happen in a positive direction. I look forward to
working with you in the future to make sure consumers are duly
educated and ready for this transition. Thank you, Mr.
Chairman.
Mr. Markey. The Chair recognizes the gentlelady from
California, Ms. Harman.
OPENING STATEMENT OF HON. JANE HARMAN, A REPRESENTATIVE IN
CONGRESS FROM THE STATE OF CALIFORNIA
Ms. Harman. Thank you, Mr. Chairman. Good morning to our
witnesses. Over 5 years ago, former Congressman Curt Weldon and
I introduced the Hero Act to clear 24 MHz of spectrum in the
700 MHz band for our Nation's first responders for public
safety communications. In the mid-1990s this committee and that
Congress promised that the spectrum would be cleared by the end
of last year provided that the DTV transition was well under
way. The DTV transition was not well under way, so we have
moved the deadline to 2009.
I view this decision, to move the deadline, as extremely
problematic. I believe there is ample evidence that we could
face more terror or natural disasters on the scale or bigger
than 9/11 and Katrina before 2009 and what will that mean?
Well, ask Mary Fetchet, one of our witnesses today, who will
explain to you exactly what that means and then sober up
everybody and understand that we just better find the way to
keep this promise.
Mary and the 9/11 families like her are the reason Congress
has taken action at all. And in the memory of Mary's wonderful
son, Brad, and the numbers of first responders and other family
members that were lost on 9/11, we simply cannot fail. Last
week at our hearing with NTIA chief, John Kneuer, I said, and I
just want to repeat it today, I feel very strongly about this;
that this is not a broadcaster relief issue.
This is a public safety issue and to those who are going to
cite all the problems with the converter boxes and the details
of the transition, I just say to you, you have spouses and
parents and children who live in communities all over America.
Those communities are vulnerable today, as they were on 9/11
because we have not fixed this problem. If we have one of these
catastrophic attacks and you lose your Brad, what will you say
about your failure to act? I yield back, Mr. Chairman.
Mr. Markey. The gentlelady's time has expired. Chair
recognizes the gentleman from Virginia, Mr. Boucher.
Mr. Boucher. Thank you, Mr. Chairman. I am going to waive
an opening statement and reserve time for questions.
Mr. Markey. Gentleman reserves his time. Gentleman from New
Jersey, Mr. Pallone.
OPENING STATEMENT OF HON. FRANK PALLONE, JR., A REPRESENTATIVE
IN CONGRESS FROM THE STATE OF NEW JERSEY
Mr. Pallone. Thank you, Mr. Chairman, and I want to thank
you for holding this very important oversight hearing on the
digital television transition. And I would also like to welcome
our panelists, who will play a very large role in this mandated
transition. Mostly, I am interested in what measures we can all
take to prepare the country. With good intentions last year,
Congress passed the law setting a hard date for the digital
television transition.
Without modification, such as a digital converter box or
subscription service, approximately 70 million analog TVs will
go black after February 17, 2009 and my concern is that most
Americans have no idea that this transition is coming. The task
of educating over a hundred million U.S. households is
enormous. There should be no disagreement that we have not
provided nearly enough funding to the various agencies
responsible for the transition. Berlin, Germany needed nearly
$1 million for its entire city and we have allocated a mere $5
million for the whole country. Anyone can do the math and
figure out that is not going to work.
And now that the date is set, I do not believe it should be
postponed. The resulting spectrum auction will have large
impacts on the public safety communications and that should not
suffer. Instead, we must all work together and share the
responsibility of making this as smooth a transition as
possible. I, myself, am taking steps to help educate my
constituents. I am writing a letter shortly alerting them to
the transition. I have also made arrangements with local radio
stations to record public service announcements and I just want
to commend the industries like NAB, LG and NCTA, who have
already taken voluntary efforts to create a DTV transition
coalition.
I am afraid, however, that you will have to pick up where
the administration leaves off and it is my hope that you are
willing and ready to do so. We have a lot of work to do over
the next 2 years. I strongly believe this must be a fully
coordinated effort so that American consumers are not
blindsighted by the transition to DTV. Obviously, today's
hearing is an important part of that process. Thank you again,
Mr. Chairman.
Mr. Markey. The gentleman's time has expired. The Chair
notes the presence of the ranking minority member of the
committee, Mr. Barton. If he would seek recognition, we would
recognize him at this time.
Mr. Barton. Thank you, Mr. Chairman. It sounds like you
have what I have had. You seem to have a little bit of a chest
cold.
Mr. Markey. I have already explained that it is pollen. It
is global warming. It is excessive fossil fuels in the
atmosphere finally coming back in this catastrophic----
Mr. Barton. Having to put up with the pesky minority. We
understand. I especially understand because I have sat where
you are sitting now, so I----
Mr. Markey. It is a burden I am willing to bear to be the
majority.
OPENING STATEMENT OF HON. JOE BARTON, A REPRESENTATIVE IN
CONGRESS FROM THE STATE OF TEXAS
Mr. Barton. I would like to thank you for your continuing
interest in the digital television transition. This is the
second hearing in as many weeks that has been called to take a
second look at legislation that we passed several years ago.
The bill that we did pass was such a good compromise that it
passed this particular committee 33 to 17. Then it also passed
the House and the Senate.
We understand that there are some concerns about the
converter box program that is in the law as it currently is. We
understand that there is some concern that we should do
consumer education differently. Having said that, just because
there is some lingering concerns about the bill doesn't mean
that it is time to go back and redo it all over again. I
personally believe that we go the balance right when we did it
and I hope that we will stick with it.
People in the industry and people in the country, the
affected stakeholders, I think, will benefit by sticking with
what we already have. Broadcasters are going to return 24 MHz
of spectrum to be used by first responders, implementing one of
the 9/11 Commission's recommendations. The FCC will auction 60
MHz of spectrum for wireless broadband. One billion dollars of
these proceeds are going to be used in grant programs to help
give police, fire fighters and paramedics the equipment they
need to better communicate with each other and with us when we
need them most.
Another $1.5 billion is available for consumers who may
still wish to use their old analog television sets with rabbit
ears after February 17, 2009. Under the NTIA's rules that have
been promulgated, all households may request, free of charge,
one or even two converter boxes, and the cost is going to be
subsidized from the first $990 million allocated to the
program. If NTIA needs the remaining $510 million, only homes
without cable or satellite service will be eligible for this
second round of funding. That is to ensure that the subsidized
converter boxes go to those who really need them the most.
I hope that the added money won't be necessary. A dwindling
minority of Americans use analog television sets with over-the-
air antennas. Fewer still will want taxpayers to give them a
subsidy. After all, they are taxpayers, too. Using broadcaster
demand projections and FCC estimates of number of the over-the-
air cable, and satellite homes, it appears that we would need
approximately 21.8 million subsidized boxes. The consumer
electronics industry the ones who are actually building and
selling the boxes--think that the demand is going to be
considerably less than that.
Regardless, the $990 million fund, by itself, can fund
22.25 million converters, which is a number larger than 21.8
million. Keep in mind, anyone can accumulate the requisite
wealth to buy a $60 converter box, if they wish to, just by
putting their pennies and dimes into their piggy banks.
Yes, the Senate's Byrd rule stripped the consumer education
requirements other than the $5 million for the NTIA. But these
are the broadcasters' consumers. And those of the cable,
satellite, retail and consumer electronics industries. They
have every incentive to inform the American public how to
manage the transition. They are in a far better position to do
so, with almost 2 years still to go, I might add.
I continue to think that the bill, as it is, is right, but
I am not in the majority now. You can allocate more money for
converter boxes if you think it is necessary. If you don't
think industry is going to do enough to educate their own
consumers, you can move H.R. 608, the bill that I have
introduced with Mr. Upton and Mr. Hastert to replace the
consumer education requirements that were stripped out in the
Senate by the Byrd rule. Or you can introduce your own consumer
education bill. We shouldn't squabble over the coupon program;
the public safety and other benefits of this legislation are
too important.
I also, before I yield back, Mr. Chairman, want to welcome
Mary Fetchet from the Voices of September 11th for testifying.
I hope her presence will help us keep things in their proper
context as we look at this issue. With that, Mr. Chairman, I
hope you feel better soon. I yield back.
Mr. Markey. I thank the gentleman very much. The Chair
recognizes the gentlelady from California, Ms. Solis.
OPENING STATEMENT OF HON. HILDA L. SOLIS, A REPRESENTATIVE IN
CONGRESS FROM THE STATE OF CALIFORNIA
Ms. Solis. Thank you, Mr. Chairman, and I won't sound like
Luca Brasi. But I want to thank you for this hearing, Mr.
Chairman, and also Ranking Member Upton. I want to thank our
witnesses that here today and I especially want to thank a good
friend of mine, Alex Nogales, who has agreed to testify,
representing the National Hispanic Media Coalition based in Los
Angeles, for coming all the way out here today. I worked with
Mr. Nogales for the past few years on telecommunication issues
important to the Latino and under-represented communities.
The deadline for the digital television transition is fast
approaching. In just 9 months the NTIA's coupon program to
provide consumers with financial assistance to purchase a set
top digital converter box will soon begin and I join with my
colleagues in voicing serious concerns that some consumers,
particularly low-income minority communities, will be left
behind in the DTV transition. Households with over-the-air
television sets and no cable or satellite service are
disproportionately low-income and many, in some cases, are
Spanish speaking.
The Deficit Reduction Act allocated a relatively small
amount of money for the NTIA to educate consumers across the
country about the transition and the set-top box coupon
program. It seems that the NTIA and FCC are relying heavily on
education and outreach from the industries affected most by the
DTV transition. So therefore, I am eager to learn today how all
of the industry is impacted, including broadcasters, cable
providers, retailers, advocates and manufacturers are working
to make the transition a positive change for all consumers.
And I hope that the witnesses today will address outreach
efforts to households with limited Internet access, language
barriers, cultural barriers, outlining more creative solutions
to ensure that all consumers are educated about the DTV
transition. I want to thank the witnesses again and look
forward to hearing from all of you.
Mr. Markey. The gentlelady's time has expired. The
gentleman from Pennsylvania, Mr. Doyle.
OPENING STATEMENT OF HON. MIKE DOYLE, A REPRESENTATIVE IN
CONGRESS FROM THE COMMONWEALTH OF PENNSYLVANIA
Mr. Doyle. Thank you, Mr. Chairman. Mr. Chairman, the world
woke up on January 1, 2000 without computer outages, without
power failures and without the end of the world as we know it.
We woke up that day with no major problems because we had been
talking about Y2K and the potential for problems. We are now
less than 2 years away from the end of analog broadcasting as
we know it and if we don't get this transition right, then
dealing with constituents complaining about their TVs not
working anymore will be the least of our concerns.
A few years ago, 20 percent of Americans didn't know how to
set the time on their VCRs. For millions of Americans, that
darn VCR blinked twelve o'clock until they bought a TiVo or a
DVD player. We now have the challenge of telling millions of
people, who watch broadcast television, also known as our
constituents, that the Government has broken their TV sets and
that they have to act fast to get a fix. If we are going to use
the spectrum to create interoperable communications for our
first responders, prevent another tragedy that befell the
firefighters on 9/11 and we should, then we have to get this
right.
Mr. Chairman, thank you and I yield back my time.
Mr. Markey. Gentleman's time has expired. Gentleman from
Texas, Mr. Green.
OPENING STATEMENT OF HON. GENE GREEN, A REPRESENTATIVE IN
CONGRESS FROM THE STATE OF TEXAS
Mr. Green. Thank you, Mr. Chairman, and following my
colleague from Pennsylvania, some of us may still not be able
to set our clocks on our DVDs. The digital transition, it
seemed so far away for so long, it is hard to believe it is
almost around the corner. In less than 2 years 69 million
television sets will no longer be able to receive over-the-air
signals due to an act of Congress and I know that 1.5 billion
seems like a lot, but it is interesting, unfortunately, that
act of Congress that did that only includes enough funding to
cover maybe half to two-thirds of the cost for about one-third
of those television sets.
Millions of these sets were bought within the last few
years, some as recently as 4 years ago and many consumers are
not aware of it and I know my colleague from Oregon and I,
Congressman Walden, talked about this a few years ago before
the budget passed that included the transfer and the hard date,
but it didn't include some of the consumer information that
should be out there now instead of saying we are still talking
about it. We are taking a big gamble that the public will not
demand more coupons and I am afraid that we may lose that bet.
Perhaps retailers and manufacturers who sold those
television sets without warning consumers should contribute
toward the coupon program. We expect that we are not going to
get enough funds. The public owns the spectrum and we are
moving them involuntarily, so we should compensate them. By
failing to compensate all over-the-air viewers, this plan
transfers the wealth from those who rely on over-the-air,
primarily seniors and moderate income families, to the U.S.
Treasury. Working families and seniors like many of my
constituents use their television sets for years and do not
tend to go out and purchase a $1,000 high tech television very
often.
I think there is a good chance we are going to need more
funding for the program; the sooner we know about it, the
sooner we can do it. Our district has lots of homes that rely
on over-the-air, including middle class families, seniors,
Spanish speaking consumers. Our office is going to do
everything in our power to inform our constituents about the
need to get their coupons early. We are probably going to
include this information in about everything we send out for
the next 2 years to make sure.
My concern is that we should have a pre-order list for
coupons where people can sign up ahead of January 2008. This
would give consumers more time to sign up, starting
immediately. It would also give us a better idea on how many
boxes we are going to need earlier in the process, which will
help plan ahead. This list could encourage production, ordering
and stocking of the converter boxes. This information would
help the transition by telling us about where the demand is and
how strong it is that these converter boxes may be much better
than some consumer surveys.
If NTIA keeps a we should start out sooner, maybe we would
have something proactive to tell consumers to do instead of
telling them to get ready for January 1, 2008 and then starting
help remind people. Again, I am glad our witnesses are here,
Mr. Chairman, and I look forward to our committee to continue
to publicize what is getting ready to happen to folks.
Mr. Markey. Gentleman's time has expired. The gentleman
from Nebraska, Mr. Terry.
OPENING STATEMENT OF HON. LEE TERRY, A REPRESENTATIVE IN
CONGRESS FROM THE STATE OF NEBRASKA
Mr. Terry. Thank you, Mr. Chairman, and I just want to say
hello to John and follow up on our last conversation where I e-
mailed you and bragged about buying a new LG HD set that was on
special at Nebraska Furniture Mart, so I am enjoying that, the
transition, and it is the one that doesn't need a box, that is
cable ready; one of the projects that we worked on and I would
agree with all of the statements of my colleagues up here that
we have to continue to build confidence in the transition and
inform of the hard date and make sure that people aren't making
mistakes in their purchases today or at least not making
uninformed decisions when they go to Best Buy or Nebraska
Furniture Marts of the world to buy a new television and that
is why you are here today.
In an unrelated issue that I think is important to
confidence in the transition to digital and high definition, is
an issue that is more for the broadcasters and cable folks to
be before us, but when a local broadcaster refuses to allow the
HD signal to be aired on a cable network, which has occurred
twice in Omaha, and so I want to bring that up because I think
that destroys confidence in the transition at an early stage,
so we are talking about how to build confidence from now until
the transition date, but what is occurring right now, there is
an erosion, when those signals are hijacked.
So I wanted to just put that out there and give it an
opportunity. I may ask one of you what you feel about that.
Now, with that laid on the table, I yield back to the chairman.
Mr. Markey. Gentleman's time has expired. Gentleman from
Washington State, Mr. Inslee.
Mr. Inslee. I will waive.
Mr. Markey. Gentleman from New York, Mr. Towns.
OPENING STATEMENT OF HON. EDOLPHUS TOWNS, A REPRESENTATIVE IN
CONGRESS FROM THE STATE OF NEW YORK
Mr. Towns. Thank you very much, Mr. Chairman, for holding
this hearing. We need to make sure that DTV transition is
handled smoothly because the benefits of transitioning are
enormous, opening up desperately needed spectrum for first
responders. I believe my constituents will support this
transition if they know how to keep their TV signal and that
they know why it is important. I look forward to hearing from
our witnesses on how they plan to educate consumers and on what
other ways Government or industry can take to prepare us.
First, let me welcome all of the witnesses and I am
especially pleased to see Mr. Glenn Britt, the CEO of that fine
cable company, Time Warner, a leader in the transition digital.
Glenn's presence is a testament to his commitment to make the
transition a success. I look forward to hearing his thoughts on
educating the public about the transition and making the
transition as seamless as possible.
There are varying estimates of the number of analog TV sets
still in use and I am concerned that the outreach and
implementation of this program will not be sufficiently
targeted. How will one of my senior constituents know how to
get and plug in their converter box? I have a very diverse
district and how many different languages will the outreach be
available for them. This level of detail in the program will be
crucial to make sure our constituents don't lose their TV
signal.
In addition, I am eager to hear the witnesses' concerns
about converter box technical rules. We are right to address
the consumer education and other issues, but I believe that any
uncertainty in the box technical rules will have serious
repercussions all the way down the line because of the delay of
manufacturing, testing, approval and distribution. I am eager
to hear from our witnesses on these crucial considerations and
I thank them for taking the time to appear before us today. And
Mr. Chairman, on that note, I yield back the balance of my
time.
Mr. Markey. The Chair recognizes the gentlelady from
Tennessee, Mrs. Blackburn.
OPENING STATEMENT OF HON. MARSHA BLACKBURN, A REPRESENTATIVE IN
CONGRESS FROM THE STATE OF TENNESSEE
Mrs. Blackburn. Thank you, Mr. Chairman. I want to thank
you and Ranking Member Upton for allowing me to participate in
the hearing. This is an issue that is of tremendous importance
to my constituents in Tennessee. So many are involved in the
entertainment industry. And we know that there is another side
to this, also, which is the public safety aspects and the 24
MHz and having that spectrum made available and made available
quickly.
I think that we would all agree that the problems that are
before us with the issue are solvable problems and we should
not focus on those; we should focus on what will be the end
result, which is improved safety in the times of national
disaster. This is something, as the gentlelady from California
so beautifully stated, this has languished for too long. We
have allowed procrastination to take hold and this process not
to be completed. The legislation has been passed. We know that
this is something that should be done and done in a timely
manner and that there should be not one single excuse accepted
for missing this deadline.
I look forward to hearing from our witnesses and again, I
thank you for the opportunity to participate.
Mr. Markey. The gentlelady's time has expired. All time for
opening statements by members of the committee has expired.
We will now turn to our panel. Our panel consists of Mr.
John Taylor, who is vice president of public affairs for LG
Electronics, a manufacturer of consumer electronics devices.
Mr. Taylor represents LG in matters before Congress and the
executive branch. James Yager, who is the chief executive
officer of Barrington Broadcasting, a consortium of 21 local
television stations located throughout the United States.
Mr. Alex Nogales is president and chief executive officer
of the National Hispanic Media Coalition, a nonprofit advocacy
organization that represents the interests of Latinos in
telecommunications policy. Next, Mr. Glenn Britt, who is the
chief executive officer of Time Warner Cable, the Nation's
second largest cable television operator. Next, it is our honor
to have with us Ms. Mary Fetchet, who is the founding director
of Voices of September 11th, an advocacy organization that
represents families who lost loved ones in the World Trade
Center attacks. Thank you for coming today.
And finally, Mr. Michael Vitelli, who is senior vice
president of consumer electronics and general manager of Home
Solutions Operating Group for Best Buy. Mr. Vitelli is
responsible for Best Buy's consumer electronics product lines.
So each of you will have 5 minutes and then we will go to
questions from the subcommittee members. Mr. Taylor, when you
feel comfortable, please begin.
STATEMENT OF JOHN TAYLOR, VICE PRESIDENT, PUBLIC AFFAIRS AND
COMMUNICATIONS, LG ELECTRONICS USA, INC.
Mr. Taylor. Thank you, Mr. Chairman. My name is John
Taylor. I am the vice president of public affairs for LG
Electronics. I also serve as the chairman of the HDTV Committee
for the Consumer Electronics Association and vice chair of the
Video Division. I have been involved in HDTV personally for a
number of years. In fact, I was at Zenith, Mr. Chairman, 20
years ago working on HDTV when you held that first hearing. We
should all take great pride in the progress we have made over
these years and we have really come a long way. I feel like we
are on the 20 yard line and we are going to make the touchdown
in just 692 short days.
A brief word on my company. We are one of the world's
leading manufacturers of television sets and flat panel
displays. LG is also the parent company of Zenith, which was
one of the primary developers of the digital television
standard. But I think apropos to today, it is important to
point out that LG Electronics is also one of the early
developers of the digital to analog converter box in
conjunction with our friends in the broadcast area with the
Association for Maximum Service Television and the National
Association of Broadcasters. Two companies, LG Electronics and
RCA, developed prototype boxes to help define the
specifications and create a reference designed for the
industry.
Mr. Markey. Could you hold that up so the Members can see
it?
Mr. Taylor. Sure.
Mr. Markey. Thank you.
Mr. Taylor. And I will discuss that a little more in few
minutes. Three issues I would like to address today. The NTIA's
specifications for these converter boxes; the pricing and
timing and availability of the boxes; and this very important
issue of consumer education.
First, the NTIA has now issued its specifications and rules
which gives us, as manufacturers, the certainty we need to move
ahead, complete the development of these boxes and prepare for
mass production. The NTIA provides the appropriate level of
features necessary to provide reliable reception and to enable
consumers to use these boxes.
The NTIA correctly did not require additional features
beyond the basic function of the box, which is to receive
digital signals and output them to existing analog sets. This
kind of box doesn't include a DVR, digital video recorder or a
DVD player. It doesn't even output high definition. We have
other products that do that and consumers will buy those beyond
the coupon program.
But the NTIA did permit a number of valuable features not
required, but as optional features that we think provide value.
For instance, our implementation includes a very simple
electronic program guide that allows consumers to navigate
through these new digital channels, especially the new
multicast channels that are coming from the broadcasters. And
finally, the NTIA, in establishing minimum performance
standards, we think, is very, very important to the success of
the program to assure that the consumer experience measures and
that consumers have a great experience when they get that box
home.
Second, regarding the number of coupons and the box price.
The number of coupons is really hard to put your finger on at
this point. We have heard lots of numbers here this morning. We
think that there will be a demand for tens of millions of
boxes, but when you look at what is going to happen over the
next 2 years, between now and February 2009, more than 60
million digital television receivers will be purchased by
American consumers, separate from the coupon program. That is a
result of the FCC's tuner mandate that requires all television
sets shipped in interstate commerce, as of this past March, to
have those digital television tuners. Our plan at LG
Electronics is to introduce this converter box in time for
early 2008 in time for the converter coupon program and expect
it to sell for around $60.
Finally, consumer education efforts are really crucial to
the success of the overall program and the manufacturers are
undertaking a vibrant consumer education effort. We are taking
an active role in the new Digital Television Transition
Coalition, whose singular goal is to assure that no consumer's
analog TV goes without free over-the-air television service for
lack of information. And even though we have just launched a
month ago, there is a tremendous amount of momentum already
with the Web site being launched and moving into multilingual
Web sites and continuing that effort.
My company is preparing for the launch of this box and we
will have a toll-free number for consumers to call, easy
installation instructions so consumers can understand. This
basically is the box that goes on Grandma's TV and Grandma
needs to be able to hook it up herself. It has a very simple
input and out put, simple instructions, should be able to use
your existing antenna.
Finally, we are stepping up our sales training efforts, as
well, to make sure that this is a successful activity and our
colleagues in the industry are doing the same. I am proud to
report that the consumer electronics industry will continue its
efforts to educate consumers.
[The prepared statement of Mr. Taylor follows:]
Testimony of John I. Taylor
Mr. Chairman and members of the Subcommittee, my name is
John I. Taylor. I am senior vice president at LG Electronics
USA, Inc. I also serve as chairman of the High-Definition
Television (HDTV) Committee of the Consumer Electronics
Association (CEA) and vice chairman of CEA's Video Division. I
also represent LG Electronics as a founding member of the new
Digital Television Transition Coalition. I welcome the
opportunity to appear before you today to speak about the
exciting transition to digital television (DTV).
LG Electronics USA is the North American subsidiary of LG
Electronics, a $48-billion multinational electronics and
communications firm. One of the world's largest manufacturers
of television sets and of TV flat-panel displays, LG
Electronics has established itself as a global digital leader,
and its LG brand is among the fastest-growing in the United
States.
LG Electronics also is the parent company of Zenith
Electronics Corporation (Zenith), the U.S. technology company
that developed the VSB (Vestigial Side Band) digital
transmission system adopted by the Federal Communications
Commission as the centerpiece of the Nation's DTV broadcast
standard.
Decades ago, Zenith was instrumental in the founding of
both the National Association of Broadcasters (NAB) and CEA. In
addition to its long-time leadership in digital HDTV, Zenith
pioneered industry standards for black-and-white and color
television and is credited with the invention of countless
industry-leading innovations, including Stereo FM radio,
television stereo sound, television remote controls and flat
color picture tubes, to name a few. Zenith was one of the first
developers of HDTV technology, beginning in 1988. In 1993,
Zenith helped found the Digital HDTV Grand Alliance, which
developed the Advanced Television Systems Committee (ATSC) DTV
broadcast standard.
Building on this extensive experience, and the combined
strengths of LG Electronics' worldwide engineering and
production capabilities and the Zenith R&D capability in the
United States, LG Electronics has led the industry in
optimizing DTV broadcast reception. In particular, LG
Electronics' fifth-generation VSB chips, which eliminate
multipath interference concerns, are considered top performers
by both broadcasters and consumer electronics industry
analysts.
As part of our commitment to driving the DTV transition to
a successful conclusion, LG Electronics and its U.S. R&D lab,
Zenith, partnered over the past two years with the NAB and the
Association for Maximum Service Television in a joint effort to
develop prototype high-performance, low-cost digital-to-analog
converters to enable existing analog TVs to continue to receive
free over-the-air broadcasts after the Nation's switch to all-
digital broadcasting in 2009. This alliance with broadcasters
accelerated LG Electronics' product development timetable,
resulting in prototypes that meet the goals set forth by the
National Telecommunications and Information Administration
(NTIA) and the establishment of a state-of-the-art reference
design for the industry. So, I believe, it is obvious that LG
Electronics has a significant stake in the digital transition.
The Committee is focused today on the status of the
Nation's transition to digital television technology. Mr.
Chairman, LG Electronics shares your view that successfully
concluding this transition is of critical importance. This
Committee has been instrumental in advancing DTV's deployment,
and as a result, today we are seeing exciting marketplace
developments involving digital technologies. Digital
transmission offers incredible high-resolution video, and
anyone who has experienced HDTV becomes an instant believer in
this technology. In addition to these benefits, the digital
transition provides an opportunity to return spectrum for
important governmental objectives (including public safety and
homeland security needs) and to deploy new commercial
technologies for consumers.
Many important issues are associated with the DTV
transition, including manufacture of boxes compliant with
NTIA's requirements; government assistance to help consumers
purchase boxes capable of converting free, over-the-air DTV
broadcast signals for viewing on their existing analog TV sets;
and consumer education. Please permit me to address these three
areas this morning.
When LG Electronics testified before this Subcommittee in
2005, we stated that factors such as the level of technology
and unit sales volume influence any estimate of converter box
costs. NTIA now has issued technical specifications for
converter boxes eligible to be covered by the coupon program,
giving manufacturers the certainty we need to prepare for mass
production of these devices. The NTIA rules help manufacturers
to know what we must build and to have some ability to estimate
the cost of our converter boxes.
Consistent with the intent of Congress, NTIA's
specifications provide an appropriate level of features
necessary to provide reliable reception and to enable consumers
to use the boxes satisfactorily. Some of NTIA's converter box
elements are required, while others are permitted (but not
mandatory). NTIA addressed encoding; output formats; Program
and System Information Protocol (PSIP) processing; the range of
capability for receiving radio channels; radio frequency input
and output requirements; composite output; and interference
levels. Also, NTIA required that converter box equipment must
display all channels; must provide closed captioning, emergency
alert systems, and parental controls; will include a remote
control; and must meet energy efficiency standards. These
parameters should yield converter boxes sufficient for average,
non-technical consumers to enjoy the DTV experience.
We are pleased that NTIA did not mandate additional
features that are not required to convert a digital over-the-
air signal, as that would have increased the prices of
converter boxes by a significant margin. Rather, NTIA permitted
manufacturers to include a limited range of ``no frills''
functions in eligible converters so that they will be easy to
use and perform well.
For example, NTIA permitted the optional inclusion of a
simple electronic program guide (EPG), and this adds very
little to a converter box's price. But the EPG will make the
box much easier to use, and this is especially important
because digital broadcasters can ``multicast'' or transmit
multiple programming streams via their DTV signals. This
multicasting greatly expands the number of program offerings
made available to over-the-air television viewers. Allowing
simple EPGs in eligible boxes will enable these viewers to
navigate multicast channels and thereby maximizes the number of
viewers able to enjoy the benefits of DTV technology.
In addition, we are pleased that NTIA's rules help to
ensure that the performance quality of the converter boxes
eligible for the coupons remains at a high level consistent
with the needs and expectations of consumers. By adopting
minimum performance requirements, NTIA has enhanced
significantly the likelihood of success for the overall program
by helping to assure that the devices eligible under the coupon
program perform to the satisfaction of American consumers.
NTIA's specifications are now clear, and at LG Electronics, we
are moving forward rapidly to comply with these standards as
quickly as possible.
Regarding Government assistance for consumers to purchase
converter boxes, we are pleased that NTIA provided that
households with analog-only sets reliant on over-the-air TV
services are not excluded from participating in the coupon
program initially. By NTIA's expanding the definition of
households eligible to participate in the coupon program beyond
that proposed in its original notice, the program should
attract more interest and benefit consumers.
NTIA has recognized that many consumers may neither need
nor want a coupon to purchase a converter box. Between now and
February 2009, according to CEA estimates, American consumers
will purchase more than 60 million television receivers and
set-top boxes with over-the-air DTV tuning capability,
independent of the converter box program. This is in addition
to the 50 million DTVs purchased by consumers in the past 5
years (2002-06).
While it is unclear how many of these have actually
displaced or will displace older analog-only TVs, these
receivers no doubt will impact the number of American
households needing a low-cost converter box under the coupon
program. Given the rapidly growing number of households that
are expected to have access to digital signals--either over-
the-air, via cable or by satellite--well before the
transition's end in 2009, we are hopeful that sufficient funds
will be available in the coupon program to ensure that
converter boxes are provided to all households that need them.
With regard to the price of converter boxes, LG
anticipates that its converter boxes meeting NTIA's
specifications should be available to consumers for around $60.
Manufacturers anticipate producing tens of millions of
converter boxes. Given this number, and with the certainty
provided by NTIA's specifications, LG Electronics thinks that
boxes can be available in our $60 price range for retail
distribution by early 2008.
Finally, we are pleased that, pursuant to Congressional
direction, NTIA addressed the critical need for a vibrant
consumer education effort related to the DTV transition. As you
probably know, there is a cross-industry consumer education
effort related to NTIA's program and the DTV transition
generally.
Spurring consumer interest in the converter box program
and ensuring that consumers' participation in the program is
not burdensome will require a broad-based effort that involves
the government and multiple industries and stakeholders. As an
active participant in the new DTV Transition Coalition, LG
Electronics is fully committed to working with the government,
our major retailers, and our colleagues in the consumer
electronics and broadcast industries to facilitate the
program's success.
In particular, we are intensifying our own sales training
efforts with retailers and collaborating with broadcasters to
promote DTV technology. We also maintain an informative DTV Web
site guide (http://us.lge.com/GuidetoHDTV/what/index.html),
which introduces consumers to the features available through
DTV technology. We will update this Web site on an ongoing
basis with valuable information about the DTV transition and
the converter box program.
Consistent with NTIA's efforts to encourage manufacturers
and retailers to provide adequate information to consumers to
ensure that they fully understand how to install and use their
converter boxes, LG will implement a special toll-free number
that consumers can call to receive assistance with installing
and connecting their new LG converter boxes. LG's converter
boxes also will feature an easy-to-follow installation guide
that includes simple instructions in multiple languages. We
anticipate that these efforts will help consumers to use the
devices, and prevent them from unnecessarily returning boxes to
retailers.
Of course, the converter box program is just one aspect of
the digital transition effort. By 2008 there will be a range of
options, including very affordable integrated DTV receivers.
Those who want high definition reception and other features
will pay more, just as they do today for progressive-scan DVD
players. Manufacturers such as LG Electronics are doing our
part to offer consumers a wide array of quality DTV products at
affordable prices. Product prices will continue to decline, as
they have done since DTV's introduction in 1998, and this will
speed the transition.
LG Electronics commends this Committee for its efforts to
advance the digital transition, and for its attention to
avoiding potential disruption to consumers when the final
switch-over to digital broadcasting occurs. We look forward to
continuing to work with you to ensure that all Americans are
able to enjoy the tremendous benefits of digital television.
I am, of course, pleased to respond to any questions you
may have, and I appreciate the opportunity to appear before you
today.
----------
Mr. Markey. Gentleman's time has expired. What we could do
is actually bring out a TV set and ask a grandmother in the
audience to take that box and to put it on very simply and see
how long it takes Grandma to do it with the instructions handed
to her. I bet she beats members of this committee. I thought
grandmothers just called their grandchildren.
Ms. Harman. Sorry, I am a grandmother. I am volunteering
for this exercise. I am a lot less talented than some on the
other side, obviously.
Mr. Markey. Mr. Yager, you are recognized for 5 minutes.
STATEMENT OF K. JAMES YAGER, CHIEF EXECUTIVE OFFICER,
BARRINGTON BROADCASTING CO., LLC
Mr. Yager. Thank you, Mr. Chairman. Thank you, Ranking
Member Upton and members of the subcommittee. My name is Jim
Yager. I am the chief executive officer of Barrington
Broadcasting, which owns and operates 21 television stations in
medium and small markets across the country. I am testifying
today on behalf of the National Association of Broadcasters and
the Association for Maximum Service Television, Incorporated.
We are here today to talk about the transition to digital
television or DTV. America's broadcasters are taking the DTV
challenge head on. As of last month over 90 percent of full-
powered television stations are providing digital programming,
which was achieved at a cost of nearly $5 billion to the
television industry. Of those stations remaining, many have
faced specific technical problems; for example, the
construction delays in New York City. According to recent NAB
surveys, about 40 percent of Americans have any idea that the
DTV transition is underway and among those who do, only 1 to 3
percent realize that the transition will be completed by
February 2009.
In all, NAB estimates that 69 million television sets will
potentially be impacted by the DTV transition. In other words,
we have a lot of educating to do. The good news is that
broadcasters take that educational campaign very seriously.
Once consumers become aware of the transition, they will learn
that they have three options to navigate it. First, consumers
can obtain a DTV converter box that will convert the new
digital signal for display on analog television sets. Second,
consumers can buy new television sets with integrated digital
tuners. Finally, consumers could decide to subscribe to a pay
television service, like cable, satellite or telephone video
service.
For our part, broadcasters are engaged in consumer
awareness campaigns. NAB has hired a full-time staff dedicated
exclusively to the DTV transition. We have commissioned
research and conducted focus groups not only to measure the
demographics of who will be affected by the transition, but
determine where these viewers get their information and how to
best frame the DTV message with consumers.
We have undertaken an active media campaign, not only
gaining stories in national media, but in local newspapers and
on local newscasts, as well. We will kick off a large speakers
bureau, utilizing local station talent for community
appearances at the local level. We are working on the launch of
a DTV road show where we will have a van that goes from
location to location with DTV demonstrations to help generate
buzz on the transition. We are also helping coordinate a large
coalition of organizations, 27 at last count, to help bring
everyone who has an interest in smooth transition on to the
same message regarding digital. In fact, AARP joined the
coalition just yesterday.
The coalition has launched a consumer Web site and local
stations will also be launching their own Web sites. NAB has
proactively met with European officials who have completed or
are in the midst of their own DTV transition. We are also
reaching out to NTIA and the FCC to ensure that our messaging
is consistent and resonates with the American public.
Broadcasters view our public service announcements as the real
currency of the DTV marketing campaign. We are prepared to
launch PSAs across the country beginning in 2008 to raise
public awareness about the transition and consumer options.
We may also employ crawls at the top of our screens during
programming to complement the PSAs. We believe those PSAs
should begin when the converter boxes become available to avoid
any consumer confusion. The broadcasters and the coalition
group cannot educate consumers by themselves. We want to work
in partnership with the Government and each of you in Congress.
For instance, we will supply you with articles for your
constituent newsletters and DTV kits to educate your
constituents in town meetings in your individual district.
The NTIA coupon program is also in step in the right
direction, but more needs to be done. All consumers who have
analog sets that rely on over-the-air television signal should
have access to coupons, especially those in under-served
communities. Lower income households, minority people living in
rural areas and seniors will be disproportionately impacted by
the transition and the coupon program needs to work for them.
Finally, other countries have successfully utilized a 1-800
number to provide consumer information and the FCC and NTIA may
want to consider a similar program.
The bottom line is that television will change dramatically
on February 17, 2009. The benefits of going digital are
remarkable. Public safety will get its much needed spectrum and
consumers will see clearer pictures, more programming and high
definition television. And while we all have a lot in front of
us, from broadcasters to retailers to manufacturers to you in
Congress, we can join our efforts to make this happen in
February 2009.
Thank you, Mr. Chairman, Ranking Member Upton, for inviting
me to testify. I look forward to answering your questions.
[The prepared statement of Mr. Yager follows:]
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
Mr. Markey. Thank you, Mr. Yager, very much. Mr. Nogales.
STATEMENT OF ALEX NOGALES, PRESIDENT AND CEO, NATIONAL HISPANIC
MEDIA COALITION
Mr. Nogales. Thank you. Mr. Chairman and members of the
subcommittee, thank you for giving me the opportunity to speak
to you today about the National Hispanic Media Coalition's
concerns regarding the status of the digital television
transition. My name is Alex Nogales. I am the president and CEO
of the National Hispanic Media Coalition and HMC is a 21-year
old non-profit Latino civil rights advocacy organization based
in Los Angeles, California. We have 13 chapters nationwide and
our mission is to improve the image of American Latinos as
portrayed by the media; includes a number of American Latinos
employed in all facets of media and advocate for media and
telecommunications policies that benefit the Latino community.
In 2005 the Government Accountability Office reported that
21 million U.S. households rely solely on over-the-air
television. These 21 million households included a
disproportionate number of Spanish language speakers, one-
third. Seven million people who will be impacted by the digital
transition are Spanish language speakers. It is also estimated
that one-third of the 21 million households include residents
over the age of 50, many of whom live on fixed incomes. Million
of these households will be in rural areas or will include
persons with disabilities. Further, according to the National
Association of Broadcasters, African American households are 22
percent more likely to rely exclusively on over-the-air
reception.
In summary, households impacted by the digital transition
will be minorities, low-income families living on a fixed
income and requiring a well-defined and more specific
educational outreach program than the overall population
requires. I will refer to these groups as our target groups or
target population. More specific educational campaign to these
target populations must be proactive, consumer friendly and
culturally and linguistically sensitive.
Appropriate outreach to disabled, minority, rural, low-
income and senior citizens is essential. For example, the
public service announcement promoting this initiative must
include closed captioning for the hearing impaired and should
be available in Spanish as well as other relevant languages.
The call-in centers handling the voucher questions must include
live operators that include Spanish speakers. Wait time should
not go over 10 minutes and must accommodate telecom relay
services to make it easier for the deaf to communicate by
phone. And it is not sufficient to translate English materials
to Spanish. Those doing the outreach must communicate with
Spanish speakers in a manner where the message will be
understood. Cultural awareness here is fundamental for the
outreach campaign to be successful.
Congress allocated $5 million to the National
Telecommunications and Information Administration to educate
consumers about the DTV coupon program. The Federal
Communications Commission or FCC, has only requested $1.5
million for consumer education effort in its 2008 budget
request. That is a total of $6.5 million to educate 300
million, about 2 cents per person. To put this in perspective,
when Berlin, Germany transitioned to DTV, it spent $984,000 to
educate about three million people, or 33 cents per person. Two
cents versus 33 cents per person. Why is the city of Berlin
willing to make this expenditure on its citizens, but our
Nation?
I want to jump ahead a little bit. We strongly encourage
the NTIA to bring in community based organizations, CBOs, to
represent the disabled, minority, rural and senior advocates
that will help develop a thorough outreach plan to ensure that
the outreach and educational components of this program is
solid and has no holes. We can't afford to make mistakes on a
program that is a first come, first served program where the
population that are most in need of these programs run the risk
of being the last to hear about the program.
Already we see problems with the so-called one step
clearinghouse of consumer information and tools provided by the
NTIA and hosted by the DTV Transition Coalition. Its Web site
has no consumer information in Spanish. How is that possible
when we already know that one-third of the 21 million
households that should be targeted consists of Spanish
speakers? NAB estimates that about 5 percent of the population
knows that the digital translation is taking place. I suspect
the NAB is being optimistic. Not many people outside the
beltway have heard about the digital transition and its
possible impact on the households.
This past weekend I was in Calexico, California visiting my
family, most of whom are bilingual. Calexico is a little rural
town on the border with Mexicali in Mexico. While having
supper, I asked several heads of households sitting at the
table if they knew about the digital transition. None of them
did nor did they understand how it was going to impact them.
This was not a scientific full granted, but I am inclined to
believe the target population, my large family included, is
oblivious to the digital transition and the effect it will have
on them. If the target population doesn't learn of the
transition until the year it is going to take place, then I
don't think we are ready to transition to digital.
NHMC also objects to the two-phased plan the NIT is
proposing for the distribution of the coupons. The first phase,
where $990 million is allocated----
Mr. Markey. Mr. Nogales, could you summarize, please?
Mr. Nogales. Of course. Thank you for the time. A well-
funded proactive consumer friendly and culturally sensitive
outreach program needs to begin as soon as possible and should
include a well-coordinated campaign that includes CBOs working
closely with the NTIA. The money that is projected to be spent
on the educational outreach program is not enough and should be
supplemented. Since a predominantly high number of Spanish
speakers will be impacted by this transition, bilingual and
bicultural staff is essential.
For any educational campaign to be effective, it is not
only relevant that the person be able to speak the language,
but also understand the culture. English written materials
should not be translated to Spanish as they are seldom
culturally effective. Materials to the Spanish speaking should
be original and the appropriate place to advertise to the
Latino community should be carefully considered.
For example, Latinos, more than anyone else, consume a
great deal of radio programming. A two-phased program with an
added burdensome requirement for those that applies doesn't
make sense.
Mr. Markey. Mr. Nogales, I appreciate the detail that you
want to go into in your opening statement. Your entire witness
statement will be placed in the record and I think you are
going to be given plenty of opportunity during the question and
answer period to further elaborate on what you think the
Hispanic community will need in order to make a transition.
Mr. Nogales. Very good. Thank you, Mr. Chairman.
[The prepared statement of Mr. Nogales follows:]
Testimony of Alex Nogales
Mr. Chairman and members of the Subcommittee, thank you for
giving me the opportunity to speak to you today about the
National Hispanic Media Coalition's (NHMC) concerns regarding
the Status of the Digital Television Transition.
My name is Alex Nogales; I am the president and CEO of
NHMC. NHMC is a 21-year old non-profit Latino civil rights,
advocacy organization based in Los Angeles, California. We have
13 Chapters nationwide and our mission is to (1) improve the
image of American Latinos as portrayed by the media; (2)
increase the number of American Latinos employed in all facets
of media; and (3) advocate for media and telecommunications
policies that benefit the Latino community. NHMC is also the
Secretariat for the National Latino Media Council, a national
coalition comprised of 15 of the largest Latino Civil Rights
Advocacy groups in the nation. Additionally, NHMC is an
executive committee member of the Media and Democracy
Coalition, a national coalition comprised of many of the
largest mainstream media and consumer advocacy groups in the
nation.
The transition from analog to digital television brings
great opportunities but also great challenges. In 2005, the
Government Accountability Office (GAO) reported that 21 million
U.S. households rely solely on over-the-air television. Of
these households, about 48% earn less than $30,000 per year per
household. These 21 million households include a
disproportionate number of Spanish language speakers: one-third
or 7 million people who will be impacted by the digital
transition are Spanish language speakers. It is also estimated
that one-third of the 21 million households include residents
over the age of fifty, many of whom live on fixed-incomes;
millions of these households will be in rural areas or will
include persons with disabilities. Further, according to the
National Association of Broadcasters (NAB), African-American
households are 22% more likely to rely exclusively on over-the-
air reception.
In summary, households impacted by the digital transition
will be minorities, low-income families, living on a fixed-
income, and requiring a well-defined and more specific
educational outreach campaign then the overall population
requires. I will refer to the groups that I just mentioned as
our target groups or target population.
A more specific educational outreach campaign to these
target populations must be pro-active, consumer-friendly and
culturally, linguistically sensitive. Appropriate outreach to
disabled, minority, rural, low-income and senior citizens is
essential. For example, the public service announcements
promoting this initiative must include closed captioning for
the hearing impaired and should be available in Spanish as well
as other relevant languages. The call-in centers handling the
voucher questions must include live-operators that include
Spanish-speakers, wait time should not go over ten minutes and
must accommodate telecom relay services that make it easier for
the deaf to communicate by phone. And it is not sufficient to
translate the English materials to Spanish. Those doing the
outreach must communicate with Spanish speakers in a manner
where their message will be understood. Cultural awareness here
is fundamental for the outreach campaign to be successful.
Congress allocated $5 million to the National
Telecommunication and Information Administration (NTIA) to
educate consumers about the DTV coupon program. The Federal
Communications Commission (FCC) has only requested $1.5 million
for consumer education effort in its 2008 budget request.
That's a total of $6.5 million to educate 300 million people,
about 2 cents per person. To put this in perspective, when
Berlin, Germany transitioned to DTV, it spent $984,000 to
educate about three million people, or 33 cents per person. Why
is the City of Berlin willing to make this expenditure on its
citizens, but our Nation is not?
Furthermore, the FCC does not plan to begin its public
education campaign until 2008, when the converter box coupons
and the boxes are expected to be available on January 1, 2008.
In our opinion, the FCC campaign is starting a year late.
Consumers need to know about the DTV transition generally, and
the coupon program specifically, as soon as possible, but
certainly well before NTIA makes the coupons available to the
public.
We strongly encourage the NTIA to bring in community based
organizations (CBOs) that represent the disabled, minority,
rural and senior advocates that will help develop a thorough
outreach plan to ensure that the outreach and educational
component of this program is solid and has no holes. We can't
afford to make mistakes on a program that is a first-come,
first-serve program where the populations that are in most need
of these coupons run the risk of being the last to hear about
the program. Already, we see problems with the so-called one-
stop clearinghouse of consumer information and tools promoted
by NTIA and hosted by the DTV Transition Coalition. Its Web
site www.dtvtransition.org has no consumer information in
Spanish. How is that possible when we already know that one-
third of the 21 million households that should be targeted
consist of Spanish Speakers?
NAB estimates that about 5 percent of the population knows
that the digital transition is taking place. I suspect the NAB
is being optimistic. Not many people outside the Beltway have
heard about the digital transition and its possible impact on
their households. This past weekend I was in Calexico,
California visiting my family, most of whom are bilinguals,
Spanish/English. Calexico is a rural area right on the border
with Mexicali, Mexico. While having supper I asked the seven
heads of households sitting at the table if they knew about the
digital transition. None of them did, nor did they understand
how it was going to impact them. This was not a scientific
poll, granted, but I'm inclined to believe the target
population, my large family included, is oblivious to the
digital transition and the effect it will have on them. If the
target population doesn't learn of the transition until the
year it is going to take place, then I don't think we are ready
to transition to digital.
Obviously, not enough has been done so far to educate our
target groups that this historic change is taking place and
that their over-the-air televisions will go dark after February
17, 2009 without a converter box. The outreach program needs to
start today and more effort needs to be made by the NTIA, FCC
and the DTV Transition Coalition to reach community-based
organizations that focus on the target groups. We need more
people outside of D.C. to know about the transition and be able
to communicate in a clear and understandable manner to those
that will be impacted.
Finally, NHMC objects to the two-phase plan that NTIA is
proposing for the distribution of the coupons. In the first
phase, where $990,000,000 is allocated, pay-TV customers will
be able to apply for up to two $40 coupons per household to
purchase converter boxes. The second phase is only open to
households that certify in writing that they rely on over-the-
air reception. So once the $990,000,000 is spent, those that
apply late or do not find out about the coupon program in time
will be burdened by an added certification that may deter them
from applying. Changing eligibility mid-course will result in
needless customer confusion. Indeed, the certification will be
a deterrent to low-income families, especially those that do
not dominate the English language. Ladies and gentleman, I have
no doubt that the disenfranchised population that will be the
most impacted by the digital transition will be the last to
apply for the coupons. This being the case, having to certify
in writing that they rely on over the air reception is just
adding an additional burden that will lock many of them from
applying for converter boxes. A two phase-plan with an added
burden for those that are hardest to reach doesn't make a lot
of sense. If the reason for this two-phase system is because
NTIA thinks there is a likelihood that the program will run out
of funds before all the impacted households have obtained their
coupons, then NTIA should go back to Congress and ask for
additional funding.
Summary:
<bullet> A well-funded pro-active, consumer-friendly, and
culturally sensitive outreach program needs to begin as soon as
possible and should include a well-coordinated campaign that
includes CBOs working closely with the NTIA.
<bullet> The money that is projected to be spent on the
educational outreach program is not enough and should be
supplemented.
<bullet> English-written materials should not be
translated to Spanish as they are seldom culturally effective.
Materials to the Spanish-speaking should be original and the
appropriate place to advertise to Latinos should be carefully
considered. For example, Latinos more then anyone else consume
a great deal of radio programming.
----------
Mr. Markey. Thank you, sir. Next we will hear from Mr.
Britt. Welcome.
STATEMENT OF GLENN BRITT, PRESIDENT AND CEO, TIME WARNER CABLE
Mr. Britt. Thank you, Mr. Chairman, Mr. Upton and Mr.
Barton and members of the subcommittee. We, at Time Warner
Cable, are one of the leaders in the conversion to digital. We
provide our customers with high quality digital video services
like high definition television and video on demand, as well as
Internet access service and digital phone service. As of last
December, approximately 7.3 million, or 54 percent of our video
customers also subscribed to digital video services and 1.9
million of those customers had taken our high definition
service.
We encourage our subscribers to move to high definition
service by providing HD boxes at no additional cost over
digital. Mr. Chairman, now that Congress has established a hard
date for the end of analog broadcasting, I think all of the
affected industries and elected officials have a common goal
and that is to make sure that all of our consumers and your
constituents are not left in the dark at midnight on February
17, 2009.
The cable industry is ready, willing and able to work with
you and our industry partners to achieve this important goal.
And to that end, in January 2007, NCTA, CEA and NAB agreed to
join forces to form the DTV Transition Coalition. This
coalition is comprised of a broad range of diverse entities
representing affected industries and interest groups. This
privately funded initiative will engage in coordinated
marketing and public education strategies to help television
viewers better understand the nature of the transition and to
provide information about steps that consumers may need to take
to maintain the over-the-air television signals.
The coalition has launched a Web site targeted to consumers
that offers information, important information about the
transition and we will include this information in Spanish, as
well. In addition, Time Warner Cable has established an
internal working group to create a comprehensive plan to ensure
our customers understand exactly what they need to do and maybe
just as importantly, what they don't need to do.
We will train our customer service representatives to
answer the tough questions consumers will raise as the hard
date gets closer. We will also reach out to all of the
populations we serve, including a large number of Spanish
speaking customers we have in Texas, California, New York and
the Carolinas. We stand ready to commit the resources to help
make this transition a success.
Though an increasing number of customers are opting for
digital cable services, a vast number of televisions are not
equipped to receive digital signals. NCTA estimates that just
in the homes of cable customers, there are 134 million analog
television sets that are not equipped to receive digital
transmissions or are not connected to additional set top box.
With so many analog TVs still on the market, cable operators
have a huge stake in ensuring that the digital transition is
seamless for all our customers.
Each cable operator's first priority is to make certain
that its customers do not suffer any disruption in their
television service. We believe we have the flexibility to
ensure their customers can, on the first day of digital only
broadcasts, continue to watch all of the stations they receive
today on their existing televisions. This flexibility permits
cable operators to employ a variety of solutions to ensure a
seamless transition from the consumer's viewpoint.
For instance, the cable operator may decide to convert the
digital broadcast signal to an additional analog format at the
head end and under this option, cable customers can continue to
receive the service on analog television without a set top box.
In cable systems that have significant digital penetration,
another option might be to deploy digital set tops to every
consumer. This option, however, would require these consumers
to change equipment or to add a set top box where maybe they
didn't have one before.
Thanks to Congress and the NTA, cable customers will be
able to have the ability to obtain coupons to purchase digital
to analog converter boxes that will make the over-the-air
digital broadcast signals available on analog TV sets that are
not connected to cable. We look forward to continuing to work
with you and other members of this committee on our shared goal
of promoting an affordable and seamless digital transition. And
I would be pleased to answer any questions during the Q and A
period.
[The prepared statement of Mr. Britt follows:]
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
Mr. Markey. Thank you, Mr. Britt. Again, we are honored to
have Mary Fetchet, who is the founding director of the Voices
of September 11th with us today. Thank you so much for being
willing to appear before us. Whenever you are comfortable,
please begin.
STATEMENT OF MARY FETCHET, FOUNDING DIRECTOR, VOICES OF
SEPTEMBER 11TH
Ms. Fetchet. Good morning, Chairman Markey and Congressman
Upton and our distinguished members, especially Congresswoman
Harman, who I worked so closely with when we were trying to get
legislation passed. It was an honor to work with her. And it is
an honor to be here on this panel and I am relieved to hear
that people are moving forward in this process.
My name is Mary Fetchet and I am founding director of
Voices of September 11th, a 9/11 family organization whose
membership includes over 6,000 individuals worldwide. As you
may know, my husband and I suffered the ultimate loss, as
parents, when our 24-year old son, Brad, was tragically killed
in the Tower 2 of the World Trade Center. Like many Americans,
my sense of security and my faith in our Government's
effectiveness was shattered on that horrific day.
The past 5 years have been a painful education for me,
grappling with the challenges presented by political
maneuvering, Congressional inertia and powerful special
interest groups. But due to the dedicated efforts of 9/11
family members, the 9/11 commissioners and many of our elected
officials, some progress has been made. However, I am
frustrated by the slow progress concerning first responder
communications. Imagine, if you will, being told that your
loved one's death could have been prevented. Imagine then that
the solution to this problem was identified a full 5 years
earlier. Imagine further that nearly 6 years later little has
been done. As you know, this is not a hypothetical example. It
is an unfortunate reality that exists today.
I was horrified to learn, actually when we were at a caucus
meeting, sitting on a panel, that this final report of the
Public Safety Wireless Advisory Committee, which was published
in 1996 to the FCC and NTIA, nearly 11 years ago, identified
the exact problems in first responder communications that still
exist today. ``The lack of sufficient quality radio spectrum
suitable for public safety users deters technological
innovation, diminishes the responsiveness and effectiveness of
public safety and ultimately compromises the safety of the
responding officers and of the very individuals seeking their
help.''
I was baffled that a problem identified after the 1993
World Trade Center bombing, confirmed in Oklahoma City,
confirmed on 9/11 and confirmed during Hurricane Katrina, has
yet to be corrected. I can think of no other words than
negligence. The 9/11 Commission made a strong recommendation in
their 2004 report urging the expedited and increased assignment
of spectrum for public safety purposes. Less than a year ago
Chairman Tom Kean and Vice Chairman Lee Hamilton asked a
committee of your colleagues, ``Who can say that no disaster
will strike us before 2009? It is inexcusable that we still
haven't gotten our rescue workers the tools that they need to
do their jobs.''
This sentiment resonates strongly with American people, as
well. In August 2006, Voices of September 11th conducted a
national survey of over 2,000 individuals to measure their
perception of preparedness. The results were sobering. Over
two-thirds of respondents rate national preparedness as fair or
poor. Local preparedness and home preparedness rate only
slightly better. I fear, as Congresswoman Harman said, that
another mother, father or sibling will suffer the same loss as
my family. I fear not only for their loss but for the torment
and anger that they, too, will experience following that their
loved one's death could have been prevented had these important
reforms been implemented.
Please prove these fears wrong. We cannot afford to wait,
cannot afford to jeopardize the lives of our first responders
or the lives of those they are called upon to save. In the
past, the Federal Government has neglected its fundamental
responsibility to protect its citizens. Who will be held
accountable when the next lives are lost? I would like to play
the message my son left me around 9:00 a.m. on September 11th.
[Recording played]
As you can see, Brad was unaware that his life was in
jeopardy and followed the direction he was given to remain in
his office. They were safe and secure. Sadly, individuals
trying to evacuate the building were sent back up to their
offices. Firefighters and first responders who rushed into the
building to save lives were not able to communicate. I remain
convinced that Brad's life and the lives of over 600 other
innocent citizens in Tower 2 could have been saved if the first
responders were able to communicate on 9/11.
Let me close as I began. My husband and I suffered the
ultimate loss, as parents, when our 24-year old son, Brad, was
tragically killed in Tower 2 of the World Trade Center. Today I
am very hopeful, as I am hearing these panelists talk about
moving forward and how they are going to approach converting
the spectrum. And I believe that you will learn from the
lessons of 9/11 and that with your support, our brave first
responders will be better equipped to respond and minimize the
loss of life in the next catastrophic emergency, whether it is
a terrorist attack or a natural disaster.
We all have an obligation, both public and private sectors,
to ensure this radio spectrum transition. Appropriate funds
must be dedicated with vigilant oversight by this committee to
ensure we are spending limited homeland security dollars
wisely. A concerted effort on all levels of Government must be
made to work in a bipartisan manner and concrete deadlines must
be adhered to. I implore you to make a promise to my family and
the families like mine that we will not allow this problem to
continue any longer.
Voices of September 11th remains committed to working
towards the full implementation of the 9/11 recommendations,
especially in the area of preparedness and improved first
responder communications. I make a personal commitment to
support your efforts in educating the general public, as well
as the efforts of everyone sitting here on the panel, as you
move forward with the spectrum conversion. I sincerely thank
you for the opportunity to speak today and I look forward to
answering any questions.
[The prepared statement of Ms. Fetchet follows:]
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
Mr. Markey. Thank you very much, Ms. Fetchet, and thank you
for sharing your story with us today. Mr. Vitelli, you have 5
minutes.
STATEMENT OF MICHAEL VITELLI, SENIOR VICE PRESIDENT, CONSUMER
ELECTRONICS AND PRODUCT MANAGEMENT, BEST BUY, INC.
Mr. Vitelli. Good morning. Chairman Markey, Mr. Upton and
members of the subcommittee, my name is Mike Vitelli and I am
pleased to be here today on behalf of Best Buy and the Consumer
Electronics Retailers Coalition, otherwise known as CERC. Best
Buy is the country's leading consumer electronics retailer with
over 800 stores in 49 States with approximately 130,000
employees. We are a founding and leading member of CERC, which
includes other leading consumer electronic specialty retailers,
major general retailers that sell consumer electronics and
three major national retail associations.
In the last Congress, you set a clear, definite,
unconditional date for the end of analog broadcasts, which we
agreed would be the single most effective thing you could do to
complete the transition to digital broadcast signal. Since
then, CERC and its members have worked proactively with the FCC
and the NTIA. We look forward, as well, with working with
members of this subcommittee, its leadership, any interested
members, to help make this transition an unqualified success
for our customers and your constituents, so I want to talk
about four key points about the transition.
First is the purchase of a new television is more complex
than it needs to be and the education of consumers will help
the transition. Best Buy research shows that 77 percent of all
DTV shoppers visit Best Buy before they buy a TV. And they may
not all buy at Best Buy, but we can use these visits to help
people better understand the DTV transition. Television
shoppers are now increasingly studious and deliberate. In
addition to other stores, they actually visit a Best Buy store
four or five times before buying a TV and almost 80 percent of
our shoppers have researched their options online before they
buy a TV.
Buying a TV often involves in-depth dialog with our sales
associates to learn the customer's particular requirements and
how they are going to use it and what their budget is. The
sales associate can then identify a combination of display
features, single acquisition choices and what they home network
options are to give them the best overall home entertainment
experience.
We expect that consumers with TVs that rely on antenna
signals will find the option of a Government subsidized
converter box attractive. Many customers will not need a
converter box, but our opportunity for discussion with each of
them fosters a better understanding about the transition, as a
whole, and each informed consumer will then be better able to
help others, like their parents, understand the transition. So
second, that goes to public education about the transition to
the DTV is critical and retailers are playing a role. Albert
Einstein said you really don't understand something until you
can explain it to your grandmother. And we try to do this as a
business, as part of an industry group and as part of the
broader coalition.
CERC has worked with the FCC and the CEA to develop,
publicize and distribute a DTV tip sheet with core information
about digital television products and services. Best Buy,
Circuit City and Radio Shack have distributed hundreds of
thousands of copies of these to our stores, physically and
electronically, and it has been published twice in retail
industry magazine and remains on the CERC Web site today. CERC
has also published a 3-page consumer guide, ``What You Need to
Know About the February 17, 2009 DTV Transition'', and
continues to update this document with each critical step in
the transition and we are about to add more information about
the NTIA regulations.
Third, targeted public education about the need for
converter boxes is required and needs to be simple. Last week,
before the subcommittee, Assistant Secretary Kneuer stressed
that the NTIA would leverage its own public education resources
by working with the private sector. In anticipation of this
need, CERC joined with APTS, NAB and CEA in founding the DTV
Transition Coalition. This steering committee of a very broad
coalition includes NCTA and the Leadership Conference on Civil
Rights.
The objective is to work with the FCC, the NTIA and the
Congress to provide accurate and consistent information via all
media and avenues to assure that no American household is
without the information they need to handle the transition
successfully. The goals of this broad public education campaign
should be to help people understand whether they will and
perhaps more importantly, whether they will not need a
converter box; help the people that do need the box to
understand how to receive one through the program and ensure
that people understand the reasons why the transition is
occurring and the many benefits and choices that it offers.
Though a majority of Best Buy's customers will complete
this transition without the need for a Government subsidized
box, we know that the success of the transition will be judged
by the experience of those who do need or want a converter box,
which leads me to the final point. In order for NTIA's CECB
program to be successful, the program has to work with
retailers and their systems.
CERC has been concerned that NTIA design a program that is
feasible for a broad scale of small, medium and large
retailers, including online only retailers, such as our member
Amazon.com and thus far, we have appreciated the fact that the
NTIA has shown sensitivity to our concerns and our advice. And
we know that NTIA's selection of a turnkey program vendor,
which it plans to announce on August 15, 2007 may be the key to
determining whether the necessary electronics systems for
processing coupons and handling payments will be feasible for a
broad scale of retailers and their customers.
So aside from the matter of expense, making any change in
your point of sales system or payment system is dangerous and a
daunting task. A single bug can bring the system down. In the
case of a large retailer like us, this can mean sever
inconvenience for our customers and a smaller retailer, can
literally put them out of business. And no entity can afford to
endanger its mission critical systems, whether that is for
ringing up sales or tallying up votes and I think you will
appreciate the fact that for the welfare of your constituents
and local economies, the time for retailers to make this change
in our mission critical systems shouldn't be during the holiday
selling season.
So NTIA has correctly left the door open for coupon
redemption early in 2008 and a sufficient number of retailers
are coming online. So in summary, the DTV transition is all
about offering new choices. We and our competitors are in the
business to offer consumers these options, help them to
understand them and choose the options best for them. The
coupon eligible converter box provides an option which our
customers must be and will be well aware of.
And Mr. Chairman, at last week's hearing, members of this
subcommittee asked Secretary Kneuer to plan to work with them
and their constituents to understand and anticipate the change.
On behalf of CERC and all of its members, I expect and hope you
will offer the same thing to us. We want to work with you, as
well as the FCC and the NTIA and other members of the DTV
Transition Coalition to make February 17 and 18 days that will
pass only with the appropriate recognition for all that we have
accomplished by working together. And on behalf of Best Buy and
CERC and its members, thank you again for inviting me to meet
with you today.
[The prepared statement of Mr. Vitelli follows:]
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
Mr. Markey. Thank you, Mr. Vitelli, very much. We will now
turn to questions from the subcommittee members.
Mr. Vitelli, if a consumer walked into Best Buy today,
could they still buy an analog TV set?
Mr. Vitelli. There are, yes. The answer is yes. There are
very few left.
Mr. Markey. Are they told, do your sales people tell, are
they mandated by you, by your company to tell the consumer that
the TV will not work in 2 years without a converter box?
Mr. Vitelli. Our education of our sales employees gets into
a tremendous amount of detail about high definition, standard
definition.
Mr. Markey. So if I walked in, if I left here this
afternoon, which I am going to do, and go into a Best Buy and I
ask to buy that TV set right over there, knowing it is an
analog, would the salesman tell me it won't work in 2 years?
Mr. Vitelli. If you engaged in that conversation with that
person, you should get into that conversation.
Mr. Markey. No, no. I am asking does he give me or she give
me a warning that it won't work in 2 years? I am saying I want
that TV, I like that TV. Does the salesperson say it is a good
TV, but it is an analog TV; it won't work in 2 years without a
converter box?
Mr. Vitelli. That is part of our training with our sales
staff.
Mr. Markey. So they will do that?
Mr. Vitelli. That is part of our training.
Mr. Markey. OK, so is there a sticker on the TV that says
this will not work in 2 years without a converter box?
Mr. Vitelli. Individual manufacturers are doing that. Some
do and some don't.
Mr. Markey. Now, what does Best Buy do? Does Best Buy put a
sticker on the analog TVs?
Mr. Vitelli. We are not putting stickers on the
televisions.
Mr. Markey. Is there a sign near the analog TV sets that
says these TV sets won't work in 2 years? It is kind of like a
clearance sale right now? When you know that those ties that
cost $19.95 are the ties that they couldn't sell for $119? Do
you have any kind of warning like that, Mr. Vitelli?
Mr. Vitelli. No.
Mr. Markey. You should. And I think our committee is going
to insist that you do warn from now on and we are going to ask
your association to warn all consumers that the analog TV set
will not work in 2 years and we are going to ask you to report
back to the committee as to the types of warnings on the sets
or near those sets and what requirements you have placed on
sales people for the next year because otherwise they are
engaging in very bad consumer purchases.
If I went into a Best Buy this afternoon, what are the
chances that a salesperson would know about the digital TV
conversion?
Mr. Vitelli. Very high.
Mr. Markey. Very high. What efforts will Best Buy make next
January to ensure that the consumers are going to get the
information they need as they are walking into purchase these
converter boxes? Is there a training program you are putting in
place?
Mr. Vitelli. We certainly will when that time is there. We
have actually not gotten into product discussions yet with any
of the manufacturers about the box.
Mr. Markey. Have you put in an order for converter boxes
from Mr. Taylor's company or from other companies that are
manufacturing them?
Mr. Vitelli. We have not gotten a formal proposal, if you
will, about boxes.
Mr. Markey. When do you expect to place your orders for the
converter boxes?
Mr. Vitelli. Normally, the cycle of an order for a new
product is about 3 to 4 months in advance of its arrival.
Mr. Markey. Will you have enough converter boxes on the
shelves of Best Buy on January 1, 2008? How many do you plan
right now on having on the shelves of your stores on January 1,
2008?
Mr. Vitelli. We haven't done that analysis yet because of
analyzing which stores they should be in, how many should we
have, how many different manufacturers----
Mr. Markey. Will they be in all stores, Mr. Vitelli?
Mr. Vitelli. It will depend on what we perceive the demand
to be.
Mr. Markey. I am not hearing you correctly. The answer to
that question is yes, they will be in all stores. Do you want
to try that one again? There are 23 million homes that don't
have a way of watching television unless they can buy a
converter box. We want to hear you say all our stores will have
converter boxes, Mr. Vitelli. Can you please say that right
now?
Mr. Vitelli. We will have boxes available for people.
Mr. Markey. In all of your stores?
Mr. Vitelli. On the assumption of when they are available
and where they meet----
Mr. Markey. No, we want them available on January 1 in all
of your stores because that is when the converter boxes are
going to be available for sale and the coupons will be in
people's hands. Will you commit that you will have converter
boxes available for sale on January 1 in all of your stores?
Mr. Vitelli. If there are converter boxes available, we
will have them in our stores.
Mr. Markey. You will have them in all of your stores? Are
you saying all or some, again?
Mr. Vitelli. You are asking me to predict----
Mr. Markey. I want you to just get an idea of the scope of
this, Mr. Vitelli. They are having an election for president in
France right now. There are 23 million homes in France. That is
all there are. There are 23 million homes in America that don't
have anything except analog TV sets. Now, imagine how big that
issue would be right now in a presidential election if everyone
France was being asked. I think that is the only question that
the candidates for president would be getting asked.
It is a big issue, huge issue, Hispanic community and they
just don't subdivide into neat little communities across
America, this Hispanic population or other communities. They
tend to live in all States, in all cities and near all Best
Buys and other retail stores. So we would really appreciate it
if you could ensure that not only Best Buy but the rest of your
industry, when we have you back here again, have put in place
the program that will give us some assurances that every
American will have access to it.
My time has expired. Let me turn to the gentleman from
Michigan, the ranking member of the committee, Mr. Upton.
Mr. Upton. Well, I thank you, Mr. Chairman, and I just want
to say to Mr. Vitelli, I very much agree that we do need
warning stickers for all of our consumers. I can remember the
story of Mr. Barton's wife going to get him a Christmas gift.
Mr. Barton. No, it was I.
Mr. Upton. Oh, you bought it? I though it was a gift from
your wife.
Mr. Barton. It was a gift, but I bought it.
Mr. Upton. All right. But that was before we actually had a
date, but we have a date now and it is important that every
consumer, whether it be this afternoon or a year from now, when
they go in, if there are analog sets, they know precisely that
if they have over-the-air, it is not going to work without a
converter box.
And I will say that in the legislation that we moved in the
last Congress, which was bipartisan, for the most part, did
include that requirement in the legislation as the House passed
it. And unfortunately, the Senate, with its parliamentary
rules, were able to knock it out, and I wanted to say this
before Mr. Markey left the room, but we had a bill that will
require that, to put it back. It is H.R. 608 and I don't know
if you have had a chance to look at it or not or the industry,
but I appreciate, maybe at some point in the next few days, you
might do that and come back in writing with a comment.
It was introduced by Mr. Barton, co-sponsored by Mr.
Hastert and myself, and it requires consumer education and just
that, so that all consumers, and I am sad to say that it was
introduced a couple months ago and we have no, other than the
two co-sponsors, Mr. Hastert and myself, nobody else has co-
sponsored and if we want to see legislation move, we want to
see a bipartisan, we want to see this requirement put back and
maybe if we are able to get Mr. Markey's support and others,
knowing that they now have the gavel, we can get this
legislation moved. But it would require that consumer education
for everyone going to any store, whether it be a Best Buy or a
Sears, to have that requirement.
Mr. Taylor, I appreciated your comment early on, saying
that we certainly do need a hard date. And as you reflect back,
you know that that was an issue that we worked on very hard for
a good number of years. We had a number of different industry
roundtables to figure out where things were and I again just
brown nose Mr. Barton here for a second. He did pick a date and
it was met with a lot of resistance. We moved the date just a
little bit, but we made it firm and some have suggested that we
delay the implementation of this, that we push it back further.
And there were efforts in this subcommittee and maybe even
the full committee, as well, to actually pick a later date than
what we ended up with and thank goodness, Mrs. Fetchet, we
defeated those amendments. And I want to tell you, from this
side of the aisle, and I think Mr. Markey and I hope Mr. Markey
and others would agree, that this date has to stick. It was a
carefully balanced date that we picked.
We didn't want the consumers not to be able to get over-
the-air TV, but we had to allow the time to really force the
broadcasters to make the $5 billion in investment, as Mr. Yager
said, to be able to get the cameras and the equipment. And 90
percent of them have achieved that, whether it be in the market
that serves my district in South Bend or Kalamazoo, or a larger
market, as well. And we were successful because we did push the
broadcasters, screaming a little bit, but they are going to
make this date and that, then, allows us to take that 24 MHz
and give it to the first responders.
And through the sale of the analog spectrum the minute we
were able to pursue to provide assistance for the first
responders so they can, in fact, purchase the equipment down
the road and I got to tell you, I want to thank Mrs. Harman,
who is here. She was a leader. She worked with my colleague,
former colleague now, Mr. Weldon, on the act and even though
they had an earlier date, I think we all were convinced that
this date works and I want to assure you that we will not allow
that date to slip.
I think we are in store to see this transition come
somewhat seamlessly and we do need an education effort and I
will just plug my bill one more time in the remaining 7
seconds, actually, Mr. Barton's bill. H.R. 608 does exactly
that and we have now 18 Republicans I am told that have
cosponsored the legislation. No Democrats.
Mr. Barton. That is fast work.
Mr. Upton. Well, you got to put them in. You got to put the
names in, but it does do a lot of things for education and
reminds people that those analog sets need the converter box.
We need to push the industry to make sure that they are
available in every store around the country and I think that it
can work and we appreciate very much your meaningful testimony.
I yield back.
Mr. Doyle [presiding]. Thank you, Mr. Upton. The chair now
recognizes the chairman of the full committee, Mr. Dingell.
Mr. Dingell. Mr. Chairman, thank you. These questions are
for Mr. Vitelli. I think, for the most part, Mr. Vitelli, you
could answer yes or no. Do you believe that information on the
coupon program should be widely available through retailers?
Mr. Vitelli. Yes.
Mr. Dingell. Now, you have already distributed hundreds of
thousands of DTV tip sheets, is that correct?
Mr. Vitelli. Yes.
Mr. Dingell. Now, given your testimony about the importance
of DTV education, do you believe that the retailers of the
country should see to it that there would be distribution of
the coupon application forms inside every store that is going
to deal with these kinds of sales of televisions?
Mr. Vitelli. Yes.
Mr. Dingell. Will Best Buy do that?
Mr. Vitelli. Yes, we will.
Mr. Dingell. Thank you. You are certainly to be praised for
that and that is a commitment I think is of great value to the
consumers of the country. Thank you. Now, I am concerned here,
again, that retailers may be tempted to sell Americans
expensive digital televisions rather than letting them know
that they can buy coupons or rather, they can obtain coupons
for low cost converter boxes. Is that a concern for you and for
Best Buy?
Mr. Vitelli. It is not a concern for me and Best Buy. Best
Buy is a customer relationship selling environment, not an all
pressure sales environment, so we engage with the customer, try
to understand what their needs are and get them the best thing
for their needs.
Mr. Dingell. What should a responsible retailer do to
prevent consumers from then being forced into buying more
expensive and unnecessary digital televisions when they only
need a converter box?
Mr. Vitelli. As I just described, what we do is try to
engage with each customer and understand what they are trying
to accomplish and based upon that, give them the best thing for
what that experience is and if all that experience is to get my
analog TV to work, then that box is the number one thing that
they need.
Mr. Dingell. So you are trying, then, to see to it that the
information is readily available in the stores to make that
choice clear to your consumers and customers, is that right?
Mr. Vitelli. As soon as those boxes are there, that will be
part of our education process to make sure that we are giving
the right information to all of our customers.
Mr. Dingell. Now, do you think that retailers should
maintain a sufficient supply of boxes at all times throughout
the coupon program so that consumers are not being put in the
position of being unable to redeem the coupons due to an
inadequate or insufficient or nonexistent supply of retail
outlets?
Mr. Vitelli. Absolutely. The point I was trying to make
earlier, I was struggling to make, is that air shipping a box
from a central location can be just as effective as having it
dispersed over stores. In some cases, it can be more effective
because you can have an imbalance of where the inventory is, so
the mechanics of getting somebody what they need quickly, there
are multiple ways to do that. One answer might be have it in
all stores. Another answer might be to air ship them the next
day. There is multiple ways to solve the same thing, which is
get people what they need.
Mr. Dingell. Thank you. Now, I assume that the education
programs that a responsible store would conduct would be to
have prominent in-store signs and displays that would inform
consumers of this situation and their choices?
Mr. Vitelli. Each retailer does it a little bit
differently. Signage is an important part of our stores. In our
stores, the human interaction is probably the highest. In
stores that have less sales people, signage could be, so it is
going to be a mix, depending on individual retailers and how
they engage with their customers.
Mr. Dingell. But there should be an attempt on each
retailer to see to it that the customers are properly informed
of these matters?
Mr. Vitelli. Clearly.
Mr. Dingell. And that is more than just a slip by the cash
register, something like that, is it not?
Mr. Vitelli. I agree with you. It is more than that. Best
Buy and the consumer electronic retailers have been talking
about the DTV transition for some time.
Mr. Dingell. Now, will there be point of sale symbols or
logos that will denote converter boxes which are eligible for
the coupon program should that be the case?
Mr. Vitelli. I am not sure exactly what your question is,
but I think the actual packaging of a converter box, saying
that it is eligible for the coupon program would probably be a
good idea because it is one of those products that will be
available and it will be very visible and maybe designing the
packaging that way could be a good way of communicating, as
well.
Mr. Dingell. Thank you. You have answered that question
very well. Is Best Buy going to see to it that there is
information about the coupon programs and eligible converter
boxes in its advertisements and direct mailings?
Mr. Vitelli. When the timing is right and we understand the
sequencing, I would say absolutely, yes, and making sure that
that is very clear. I think all retailers will look to do that
during that timeframe.
Mr. Dingell. Thank you, Mr. Vitelli, and thank you, Mr.
Chairman.
Mr. Doyle. Thank you, Mr. Chairman. The chair now
recognizes the ranking member of the full committee, Mr.
Barton.
Mr. Barton. Thank you, Mr. Chairman. We have talked a
little bit about H.R. 608, which is the bill that Mr. Hastert
and Mr. Upton and I introduced back on January 22 to put into
law those parts of the educational program in the DTV
transition that were stripped out by the Byrd rule in the
Senate several years ago.
This bill does six things. It would require retailers to
display signs near analog-only television sets on their
shelves. It would require cable and satellite operators to
provide DTV billing inserts explaining to their customers what
is going on; require broadcasters to file regular FCC reports
detailing their consumer education efforts, such as the airing
of public service announcement over their stations. It would
ask the FCC to create a public outreach program, including a
DTV working group. It would require the NTIA to establish
national energy standards for converter boxes so that the State
regulations don't hinder the manufacture of efficient low-cost
converter boxes. And it would ask that the FCC submit progress
reports to Congress on the FCC, the private sector education
efforts, the NTIA to submit progress reports to Congress on the
coupon distribution and redemption effort.
According to the bill, this would all start, some of these
education efforts are supposed to start by May 1, 2007, which
is only 2 months from now. Does everybody on the panel support
this type of legislation--if not this particular bill? Is there
anybody that doesn't support this? How many do support it? OK,
let the record show nobody supports it.
Mr. Taylor. May I?
Mr. Barton. Yes, Mr. Taylor.
Mr. Taylor. Many of those things are already under way. I
should say that the consumer electronics industry had a
voluntary labeling effort that started last year. If you were
to buy an analog LG television set and we didn't have too many
models left, but those that were available at retail starting
last year had a label in English and Spanish that explained,
once we had a hard date we were able to label it, which was
very helpful.
It explained that if you were going to use this for over-
the-air television, you would need a converter box in 2009, so
some of us are doing that. Regarding the energy standards that
I believe is included in the NTIA rules, this product, in order
to be certified by NTIA to be sold for the coupon program, must
have a 2 watt standby power and auto power down after 4 hours
of nonuse, so that has been addressed. I mean, I think that we
are making progress in a lot of these areas.
And I have to tell you, as one who has been involved in the
formation of the DTV transition coalition, the passion and
commitment on the part of all the parties is unparalleled.
Everybody is really committed to moving forward with or without
legislation.
Mr. Barton. Anybody else want to comment?
Mr. Yager. Let me just say that it is very difficult for
broadcasters to commit to a May start date on a program where
promoting converter box when the consumer cannot get them at
Best Buy or any other retail outlet. We are planning a full
scale, full blown campaign to make the public aware, but
setting it on a specific date, before we have a product for the
consumer to actually purchase, I think would create tremendous
confusion.
Mr. Barton. What date would you recommend?
Mr. Yager. Well, if the converter boxes aren't going to be
available until the 1st of January 2008, I would recommend that
we go to some time in November. You need a little lead time to
ramp up the campaign, but May 1 is going to create tremendous
confusion. I don't want to create panic in the marketplace
early. But we do think we have a real job to do in educating
the leadership in our communities through speakers, bureaus and
other things, up until the point we get there. With all good
reference to Best Buy, we have a lot of education to do at the
retail outlet, itself.
Mr. Barton. Mr. Britt, do you have any comment?
Mr. Britt. Yes. I think four of us are involved in this
coalition and through that coalition we support everything that
is in the bill. Education is really the key, most important
thing that has to happen here and I think we need to do all of
the things you mentioned plus some more, so we do support that
effort. Whether it needs to be legislated or not is something
for all of you, but we do need to do the education.
Mr. Barton. Well, I think Mr. Yager made that the May 1
date is too early and we are very open on that. There seems to
be concern, and I would even go so far as to say a legitimate
concern that there needs to be a fairly comprehensive,
coordinated, massive outreach program to make sure the public
knows what is happening.
We had these things that were in the law, in the bill that
came out of the House, but got stripped in the Senate. So I am
going to ask Mr. Dingell and Mr. Markey to hold a hearing on
our bill and if we need to make some changes, fine. I think it
would be helpful to have legislation that is supported just so
that we know what the ground rules are. Mr. Hastert and myself
and Mr. Upton are not trying to be cute about this.
If we don't have it right, this is a bill that we are very
open and flexible on, I will be asking Mr. Dingell and Mr.
Markey to schedule a hearing specifically on the bill. If there
are changes that need to be made, like Mr. Yager's that
recommend action that those can be incorporated. I have several
other questions, Mr. Chairman, but I will just submit them for
the record.
Mr. Vitelli. I just have one comment to your question.
Mr. Barton. Sure.
Mr. Vitelli. And I can't speak to every one of our
competitors' inventory situation, but by May 1, plus or minus
some days, there won't be any analog TVs inside of Best Buy.
Mr. Barton. That is a moot point. OK.
Ms. Fetcher. I just wanted to say we reach out to our
constituents on a weekly basis. We send out a weekly newsletter
and actually publicize a lot of what is going on here in
Washington. We would be happy to do that. But I would also have
you think about September as preparedness month and you have a
Government agency, Ready.gov and FEMA and others that you might
be able to publicize through them, through the American Red
Cross, through some of the emergency planning, the police
department, the fire department.
Because I think the way that you frame the message is going
to be so critical. You don't want to frighten the general
public. You want to explain why this is being done, how it is
being done and work with the coalition to coordinate the launch
time and put a timeframe in place so you are working together
with the private and public sector.
Mr. Barton. Thank you. Thank you, ma'am.
Mr. Doyle. Gentleman's time is expired. The chair
recognizes the gentlelady from California, Ms. Harman.
Ms. Harman. Thank you, Mr. Chairman. I want to second that
suggestion that Mary Fetcher just made. September is Emergency
Preparedness Month and there are programs in many States,
including in California, to teach emergency preparedness in
schools. It is a perfect opportunity to communicate a message
without creating fear in those who are receiving it and I would
recommend we would consider that.
I also want to thank Mr. Upton for some of the comments he
has made, including the one that he will not let this deadline
slip. I am missing the mark up of the authorization bill for
the Homeland Security Department right now because I feel so
strongly that we cannot, we cannot violate, really, a sacred
trust to those who died on 9/11 and I will do whatever it takes
in this committee and in that committee to make certain that
this deadline does not slip.
A week before 9/11, my oldest son, I have four sons and a
grandchild now, spent that week in one of the Trade Towers in
the New York office of his San Francisco based investment firm.
He was then 26. Brad Fetchet was 24. I don't know what floor he
was on, but I do know that he could easily have been there on
9/11 and I think any of you could tell a story like that, that
someone you know, one of your family members could easily have
been there on 9/11 and could tragically have suffered the fate
that Brad Fetchet did.
I don't know how Mary can listen to that tape. I am not
sure I could listen to that tape. But I hope all of you felt a
pain in your hearts when you heard that tape. A young child,
one of the Fetchet's three children, who loves his parents,
wanted to calm them down, never suspected that he would be in
harm's way, in a place, at a time when had we had adequate
interoperable communications, his life might have been spared.
Let me ask the panel, did any of you have family members or
dear friends who perished on 9/11, either in the Trade Towers
or in the Pentagon or on those airplanes? Nobody? Did any of
you know or do any of you know people whose family members
perished? Yes. Well, OK, Mr. Vitelli, let us talk to you for a
minute. I understand all the problems at Best Buy and I really
know it is a massive chain. In fact, one of my other sons
worked there for a summer, it is a very capable outfit. We shop
there. But I don't care how many problems there are with this.
If you had lost a family member or thinking about your friend,
putting yourself in that friend's shoes, does that change
anything about the testimony you just gave?
Mr. Vitelli. There is no question in my mind that,
actually, testifying after Mrs. Fetchet was very difficult.
Ms. Harman. I would bet.
Mr. Vitelli. And it does indeed make a lot of the things
that we talk about seem very trivial.
Ms. Harman. Thank you for that answer. It surely does to
me, too. In another lifetime I was a corporate attorney. I get
it, that all of this is hard. Some of my best friends are
broadcasters, et cetera, but I think that nothing is harder
than losing a family member needlessly in a future 9/11-type or
natural disaster because we weren't ready. Does anyone think
that that is less hard than the problems you all have been
talking about?
OK, so I think I am going to yield back the remainder of my
time. I really am too emotional about this to ask detailed
questions, but I would just say to this committee that we
should stop at nothing to get this right. I am planning to
review the Upton bill that has been discussed. I haven't seen
it and I am going to study it. I think bipartisan cooperation
is absolutely necessary here and a firmness of view that
nothing, and I mean absolutely nothing, will cause this date to
slip. I yield back the balance of my time.
Mr. Doyle. Chair thanks the gentlelady. Chair now
recognizes the gentleman from Oregon, Mr. Walden.
Mr. Walden. Thank you very much, Mr. Chairman. I have a
couple of questions for our witnesses and Mr. Taylor, let us
start with you because you are the maker of the box, right? Or
one of the makers of some of the boxes. Can you guarantee you
will have an adequate supply of boxes available in time for Mr.
Vitelli to have them on sale in his store by January 1, 2008?
Mr. Taylor. We do plan to have sufficient quantities
available by January 2008. We are in discussions with our
retailers right now and preparing the launch plan.
Mr. Walden. And Mr. Vitelli, isn't one of the issues you
have is that you have got to make sure they have the boxes
before you can commit that you will have them in your stores?
Mr. Vitelli. Yes, that is true. And someone mentioned
earlier, and I don't remember exactly who it was, it might have
been Mr. Green, but I am not sure, but the idea of some
preorder process.
Mr. Walden. Right.
Mr. Vitelli. To estimate the actual requirements. That
actually sounded interesting to me when I heard it.
Mr. Walden. Is that something you have done a rollout
before of a new product?
Mr. Vitelli. Generally not, because manufacturers have a
certain amount of supply they can come up with and if it is
hot, it is usually----
Mr. Walden. Like Xbox, where people are camping out all
night.
Mr. Vitelli. I was just going to say, yes.
Mr. Walden. Mr. Taylor, is there an opportunity, have you
ever engaged in a preorder process? Do you think that would be
necessary here?
Mr. Taylor. We would be happy to look into that, sure.
Mr. Walden. OK. I want to ask another question, Mr. Taylor.
The coupons that are going to be available, you referenced that
this box you have on display here is a simple dumb box, if you
will let me use that term. It is very bright inside, but all it
does is convert digital to analog, right?
Mr. Taylor. It has other features, but that is the main----
Mr. Walden. OK. And I can use my coupon for that. Can I
upgrade to the smarter box with the recording capabilities and
I will still use that $40 coupon to reduce the cost of that
box?
Mr. Taylor. You cannot, under the law nor the NTIA rules,
use the coupon for anything beyond a basic box.
Mr. Walden. A basic box.
Mr. Taylor. But we expect many consumers will buy that
upgraded box. In fact, we have on the market right now DVD
recorders, DVD/VCR combos with the built-in digital TV tuners.
I can't speak for others in the room, but I probably wouldn't
partake of the coupon program. I would probably want to get one
of those higher end boxes to use with that set in my bedroom.
Mr. Walden. You are a consumer, just like I am and I sat
here thinking the same thing. That is why I asked the question.
And I can see where consumers, I don't know what lid I am
opening on what box here, but consumers say why can't I use
that $40 any way I want as long as I am getting a D-Day
converter? So I don't know if that is something we are going to
revisit or not, but Mr. Vitelli, I share the concern of some of
my colleagues.
I know when we debated this issue in this committee last
year, 2 years ago, the notion that retailers might still be
selling TVs that are destined to be antiques here pretty
quickly or at least require a set top box, and I would
encourage you, too, and I feel bad for you, actually, today
because you are representing one company but you are really
representing the whole industry and so we shouldn't be picking
on Best Buy as some sort of problem here.
But I think you understand a lot of us are concerned that
without labels, without warnings, we are going to have
consumers buying sets without the knowledge they are going to
need one of those boxes and I just tell you, if I were on your
end I would understand why you want to clear out analog TVs.
Sure, you have got them or you are buying them or whatever, but
I think, too, that in the long run, for consumer satisfaction,
there will be a lot of grumpy folks a year from now or 2 years
from now when they discover they have got to buy yet another
component, so I hope we can, Mr. Ranking Member, get a hearing
on your and Mr. Barton's bill.
And I don't understand why we can't get that scheduled,
given the importance of this issue to consumers and I know that
the chair and the other chair are both gone right now, but I
would certainly hope that we can get H.R. 608 up for a hearing,
a markup, and include it for movement here in the near future.
Mr. Yager, I guess I would like to ask you and the other
panelists here, I am concerned about the rollout and the
education portion of this program. As you know, I had concerns
about the hard date and catching consumers unprepared or the
industry, the makers of the boxes, unready to help consumers.
Is there anything we need to do, other than those who call for
more money, is there anything we need to do or you need us to
tell you to do to educate consumers that you are not already
going to do?
Mr. Yager. I think it is going to be a willingness,
Congressman, to participate in the program. That is, those
mailers you send to your constituents to part of the program.
Mr. Walden. But I mean for broadcast. At one point there
was a requirement to force you to run ads, a certain number a
day during certain day parts. Do you need us to do that or do
you anticipate the industry is----
Mr. Yager. No, I don't think we need you to do that. Other
than Ms. Fetchet, nobody has a more vested interest in making
this transition work than the over-the-air broadcaster. I mean,
we are talking about our audience here. We are talking about
our life blood. We have got to make sure these sets work come
February 2009, so in trying to say we are going to mandate
spots be run here or spots be run there gets a little
difficult. We have a station in Marquette, Michigan that does
70 shares with its newscast. Three spots on that station a week
will reach the whole Marquette audience. I have got some other
stations that 30 spots a week are going to require to reach the
same kind of saturation point. I think you have got to leave
this to the broadcast stations and the individual market.
Mr. Walden. But you and the cable and everybody else are
committed to getting this word out? That is what I want to
know.
Mr. Yager. Broadcast industry is serious, totally committed
to getting the word out and I would assume cable is.
Mr. Walden. And Ms. Fetchet, I can't----
Mr. Doyle. The gentleman's time has expired.
Mr. Walden. I just want to express appreciation for all you
have done, Ms. Fetchet, to move this forward and I realize I am
extended, but thank you.
Ms. Fetchet. If I could say, too, if you could, if the
Government could send out information to your constituents, I
think that would be helpful and also the Government Web sites
would be another way to just distribute information.
Mr. Doyle. Thank the gentleman. Now the chair recognizes
the gentleman from Michigan, Mr. Stupak.
Mr. Stupak. Thank you, Mr. Chairman. I have been in and
out, but I watched you a little bit in my office. I had a
meeting with constituents. Every member of this committee
supports a hard date. In our bill that we ran that ended up in
a close vote on committee here, on the Democratic side, our
hard date was April as opposed to February and there is a
number of good reasons for it, since a lot of this is in rural
areas that are affected the most and February, we are worried
about getting out of our driveway, not what station we are
getting on the TV.
And I am glad that we have so many converts to
interoperability. We don't have to wait for a hard date to do
interoperability. What we need are the resources to put in
there. There are patches that are available, as the hearing
last week showed us about. Problems where the interoperability
on Hurricane Katrina could have been done. If the
administration would get behind interoperability instead of
moving money, taking money, moving money, taking money.
In fact, the $1 billion you see cut out of the cops grants,
we have it in interoperability, so you are taking money out of
cops to put it in interoperability. It is sort of a shell game
and I hope we get away from it and really put a sincere effort
into interoperability instead of all these excuses about hard
dates and who has got this date and that date.
And Ms. Fetchet, I hope we don't leave it to the Government
to try to educate people, because we have not done a very good
job. I hope we do leave it to the broadcasters, because they
know what they are doing and they are much more effective in
communicating what needs to be done as opposed to the
Government.
But Mr. Yager, if I may ask you this question. Satellite is
not here, I wanted to ask them. But let me ask you a question
because it comes up oftentimes in rural areas and since you
have a station in my district, Marquette and Traverse City and
a couple others, let me ask you this. Many people assume that
if a consumer has cable or satellite, they will be just fine on
their DTV transmission. Some consumers that depend on satellite
TVs, other on cable, but I am concerned that not all satellite
viewers will be fine. I wish satellite was represented here
today, as I said, but let me ask you.
According to the latest FCC filings, Equastar has local to
local service in 170 television markets, while DirecTV has
local into local service in 142 television markets. There are a
total of 210 television markets. That leaves at least 40
markets where satellite is not carrying the local broadcast
channel. One of these, without local into local, is of course,
Marquette, Michigan in our district, and you own that station
up there. So will consumers in Marquette DMA, who have
satellite, need to purchase a box to receive their signal over
the air?
Mr. Yager. They would have to purchase a box if they have
an analog set. When Marquette starts transmitting in digital,
which I mean, they are transmitting now in digital, but they
also have an analog signal they are transmitting. When they go
totally digital, they will have to have a box that would
convert it to analog so that they can get a picture.
Mr. Stupak. OK. In 1999 Congress allowed satellite
companies to do local into local, but it did not require it.
Later, Congress did a curious thing and mandated local into
local in Hawaii and Alaska, but not the rest of the country.
Mr. Yager. And we wish you would have in the Upper
Peninsula.
Mr. Stupak. I do, too. So do you thing the DTV transition
provides an opportunity for satellite companies to roll out
local into local nationwide to all television markets? And
broadcasters have a date certain to switch to digital, February
2009. Do you support a date certain for local into local
rollout?
Mr. Yager. Well, I certainly would support a date certain
for local into local rollout. I think it is kind of unfair that
the smallest markets in this country; Kirksville, Missouri;
Marquette, Michigan do not have local to local service.
Mr. Stupak. Correct. Thanks. Mr. Taylor, thanks for your
testimony. Let me ask you this question. Who certifies the
boxes that you make?
Mr. Taylor. There is a self-certification process not
unlike FCC's certification.
Mr. Stupak. Self-service. Who does it, though?
Mr. Taylor. The manufacturer.
Mr. Stupak. OK, so manufacturers are putting forth these
standards.
Mr. Taylor. But there is also a process where the boxes are
submitted to the NTIA.
Mr. Stupak. OK.
Mr. Taylor. And there is a stop gap measure there. If there
is any inkling that there may not be the performance levels
required, there is a closed loop.
Mr. Stupak. So has NTIA approved this box, then?
Mr. Taylor. Not yet. The rules just came out several weeks
ago, so we are finalizing the design, but this box, we believe,
will be compliant and we plan to do our testing in the near----
Mr. Stupak. Do you have to submit it to FCC for any kind of
approval or their guidelines?
Mr. Taylor. I think there might be an FCC piece to this,
but I have to admit I don't know that part of the rules.
Mr. Stupak. OK. When do you anticipate these boxes being
available so we could, like, run them to our district, see if
they are going to work?
Mr. Taylor. They will be available at retail in early 2008.
I have a few prototypes. If you want to borrow one, we could
talk after the meeting.
Mr. Stupak. Thank you.
Mr. Doyle. Gentleman's time has expired.
Mr. Stupak. Thank you, Mr. Chairman.
Mr. Doyle. Thank you. The chair now recognizes my friend,
the gentleman from Illinois, Mr. Shimkus.
Mr. Shimkus. Thank you. It is great to be here. Thank you
for the panel. I have been in and out, as you can tell,
conducting most of my meetings right in the hallway, so I
appreciate you all coming. It is an interesting issue. My
opening statement talked about dollars and cents and based upon
NAB's survey and information about how many people are
connected to satellite and cable and stuff, I think the $990
million is enough.
But if it is not, in the provision there is 450 million
additional dollars to get rolled out to cover. And if it is
not, then we can readdress that. It is not an issue that we
want to stop this process. And first of all, Mary, thank you
for coming and testifying. I co-chair the e-911 Caucus and so a
lot of my work has been on 911 issues, working with the same
communities that you work with.
Just highlight for us again, as much as we got our big
corporate titans here dealing in billions of dollars, we have
to really remember that the issue here for us is interoperable
communications, first line responders and ability to help that
transition. I am going to give you a few minutes just to tell
us again how important that is.
Ms. Fetchet. Well, spectrum, I know that that is what we
are talking about today and I am so happy to hear the
panelists, but that is only one area that we have to look at.
We have to look at equipment, we have to look at community
planning both on the local, State, regional and Federal level.
I was one of the family members that pushed for the creation,
the commission, and met with several of your offices over the
last 5 years plus. My background, I know nothing about
politics. I am a clinical social worker, so this was a new
forum for me and so I went into it very naively.
But I remember the caucus and thinking about, after the
report came out, about how critical it was to prepare our
communities and I was just so struck, reading this final
report, and when you look at the description in the World Trade
Center in 1993 and the problems that they had with first
responders not being able to communicate floor to floor, it
just seemed like you could change the dates and it would be the
same story.
I do think there is a sense of urgency. I am concerned that
we are going to have a nuclear attack here in the United States
and I do think to respond to something like that, the response
is much different today. People are not going to rush into an
emergency. They have to be prepared. They have to have the
right equipment and more importantly, they have to be able to
radio out to the emergency response team and so I think the
spectrum is an important part of it. Certainly having the
equipment and then having the planning on the local, State and
Federal level.
Mr. Shimkus. I appreciate that. I do think of all the
failures that we have done throughout the years I have been
here, Katrina really highlighted a failure to move more rapidly
and listening to the panelists' testimony, you understand MHz
and moving and local interest, but you do bring a compelling
interest to keep us to push forward and keep a hard date and
move this forward so we don't have another experience like
September 11 or Katrina where our first line responders cannot
talk to each other. I really appreciate you being here.
Mr. Taylor, can you talk about the sets that are being sold
now with digital receivers? Part of the calculations that I
used really didn't address that things were being rolled out
now. Is that true?
Mr. Taylor. It is hard to find an analog television set
today, not that anyone would want to, but I have to tell you
that when you see the very attractive pricing on digital
television receivers of all shapes and sizes, the overall
prices of flat panel displays came down by 40 percent last year
on top of 40 percent reduction the year before. They are really
hitting the mainstream. The install base of digital television
receivers continues to rise.
There was probably 50 million sold in the last 5 years and
another 50 or 60 to be sold in the next 2 years, so America's
love affair with the automobile has been transferred to
television and high definition is the big driver these days and
now that there is lots and lots of programming that is driving
the market, it is not, I think many, many consumers are not
going to wait to retrofit their old analog television set; they
are going to replace it now.
Mr. Shimkus. Thank you very much. I will just end by saying
I like multiple pipes. I think digital transmission and
receiving over the air gives the consumer one more choice
versus cable and satellite now over the air and I am very
excited about it. I yield back.
Mr. Doyle. Gentleman's time has expired. Chair recognizes
the gentleman from Virginia, Mr. Boucher.
Mr. Boucher. Thank you very much, Mr. Chairman, and I also
want to say thank you to our panel of witnesses for today.
Sorry I didn't get to hear your prepared statements. I was
unavoidably detained at another meeting.
Mr. Yager, I have several questions for you. And welcome
back to the committee, by the way.
Mr. Yager. Thank you, sir.
Mr. Boucher. Nice to see you again. I heard statements from
a number of individuals earlier about the number of analog sets
that are not connected either to cable or satellite. These
would be sets that are over-the-air dependent. And some of the
estimates suggested that that number of sets might be in the
range of 20 million. Now, I think you might have a higher
number because the 20 million sets probably would encompass
those that are in households that do not have a cable or
satellite connection. But even in households that do have a
cable or satellite connection, there are sets that are not
connected to cable. These would be perhaps on the second floor
of the house where the wires don't run. And I recall from
earlier hearings that we have had on this subject, that the
number of sets in total that are over-the-air dependent is many
multiples above 20 million, in fact, maybe as many as 70
million. Is that consistent with your numbers?
Mr. Yager. That is very consistent with our numbers. We
estimate 19.6 million sets are TV-only sets, which would
conform to your 20 million, but there are another 45 million
sets that are second, third and fourth sets in a household that
are not connected to a multiple distribution system that are
analog only. So yes, the answer is yes.
Mr. Boucher. Well, I think it is important to make that
point and for the record, clearly to reflect it for the benefit
of those who are operating under the assumption that the total
universe of sets that we need to be concerned about is in the
category of about 20 million. That obviously is not true. We
are concerned, really, about the entire universe of
approximately 70 million sets.
And that is why it is very important that the NTIA
regulations not restrict the eligibility for the digital to
analog converter boxes just to those who live in homes that do
not have cable or satellite subscriptions. And it is my
understanding that the regulation will, in fact, provide for
that broader eligibility. But the money that will be required
will be necessary to go to the higher number potentially, not
just to the 20 million level, so thank you for your
clarification.
The next question that I have of you relates to the public
education campaign that we all now need to cooperate in
mounting in order to make sure that TV owners across the
country are aware of this impending transition. I am pleased to
be joining with Mr. Walden, on this committee, in launching the
Congressional HDTV Caucus.
In that effort, we will be communicating with members of
the House of Representatives, all 435 Members, providing
information about the impending transition and then suggesting
to them that they help educate their constituents; in town hall
meetings, by putting information in their newsletters about the
impending transition so that people will know that if they are
going shopping now, they certainly want to buy a TV set that
has a digital tuner. They have to be sure they are doing that.
And second, that they have become aware of the converter
box program and the availability of vouchers. So while we are
doing that here in Congress, I think the broadcasters have some
things they need to be doing, to. And let me just suggest some
of those to you. I think it would be very appropriate for
broadcasters to have public service announcements that are
carried on local broadcast stations informing the television
viewing audience of the impendency of this transition.
I would hope that those public service announcements would
begin, perhaps, in December of this year because the converter
boxes will be available in January of 2008. People need to know
that they are going to be available and PSA announcements on
behalf of broadcasters would really help. So my first question
to you is do you think the industry, generally, is planning to
run these PSAs and if so, when will they start?
Mr. Yager. The answer is absolutely we are planning to run
the PSAs. We are planning to have a national campaign of PSAs
plus very localized PSAs with the talent of our various
television stations trying to explain to many of our viewers.
They have the credibility in our market; our weather people,
our anchors, so we will do both and December 2007 to start the
PSAs is not too soon. We have got to balance this when the
converter boxes are really available to the public because, as
I said earlier, there can be nothing worse than to have demand
for a product that a consumer cannot purchase.
Mr. Boucher. Well, Mr. Taylor, if the broadcast industry
across the country starts PSAs in December 2007, are there
going to be converter boxes available pretty soon after that
January date when the vouchers are going to be available?
Mr. Taylor. Our plan is to have the boxes available at the
first of the year.
Mr. Boucher. OK. That is great. Well, do you think, Mr.
Yager, that the broadcast industry, generally, will start those
PSAs this coming December?
Mr. Yager. I can almost assure you of that. At least, we
have already started, in our group, with the educational
campaign at local level and I would volunteer the NAB digital
task force to work with you and Congressman Walden in making
sure that the message you get out is adequate.
Mr. Boucher. That is very helpful. Thank you. One other
question. In Berlin, where they undertook a similar kind of
transition several years ago, in advance of the transition
date, the broadcasters there ran a scroll on the bottom of the
television screen announcing the impending transition. Now, you
have to be artful, obviously, in how you do that. There is not
a lot of room there if you are going to watch a program, but
there can be some contact information, a phone number or
something provided and I am just wondering if any thoughts have
been given to doing that?
Mr. Yager. A lot of thought has been given to that,
Congressman, and it is a good idea. The problem is we have
closed captioning right now on the bottom of our screens and
that is, Mr. Nogales talked about the need for serving that
community, so we are thinking about a scroll on top of the
screen. It is not an undoable.
Mr. Boucher. I think the top is good, as long as the scroll
is what counts. Mr. Britt, let me spend the rest of my limited
time here with you and I am what I am asking about is what kind
of signal the cable subscriber in the home is going to receive
after the transition date? I asked a similar set of questions
on February 17, 2005 to Mr. Michael Wilner, the CEO of Insight
Communications. He basically said the following.
Let me just ask a leading question by asking you if you
agree with this. He said that every home would receive an
analog signal after the transition so that if individuals
wanted to keep their analog sets in operation through a cable
connection they could do so. That would be either through a
headend conversion with the signal sent to the home or the
conversion of the set top box level with the industry providing
the box. Do you agree with that? Is that still the industry's
plan?
Mr. Britt. Yes, I do.
Mr. Boucher. OK. Question No. 2, a lot of people have now
invested lots of money in high definition and they bought very
nice sets. Can they rely, after the digital transition, in the
full high definition signal that is being broadcast by the
local broadcaster being passed through on cable to the home
viewer?
Mr. Britt. Yes, our plan is to carry high definition
signals. As you know, there are many definitions of what that
is, but we do plan to carry those and we carry many today
already.
Mr. Boucher. And can the viewer rely on those signals being
provided to him on whatever tier service he happens to be
subscribing to so that he would not have to subscribe to the
higher tier of service just to get the high definition signal?
Broadcasters provide this for free. Seems to me the cable
subscribers ought to be able to get those on whatever tier they
subscribe to. What would your answer to that be?
Mr. Britt. In our case, we haven't fully addressed one part
of that. In our case today, if you buy digital service, which
does cost more than basic, and if you then want HD, we don't
charge any extra for it. Most of the other cable and satellite
companies do charge extra, by the way. We have not addressed
yet somebody who buys basic only who might want HD. My guess is
there aren't very many of those people.
Mr. Boucher. We will have further discussions on that.
Thank you, Mr. Chairman.
Mr. Markey [presiding]. Gentleman's time has expired.
Gentleman from Nebraska, Mr. Terry.
Mr. Terry. Thank you very much, Mr. Chairman, for again
holding this series of these important meetings or hearings.
First of all, Mary, I want to join my colleagues in thanking
you for being here. You provide an important perspective in
that the reason for the hard date and moving forward on this is
public safety. The end result is that a major part of the
spectrum will be used for public safety and that is our
ultimate goal, so thank you for reminding us, as we get bogged
down into the nuances of stickers on boxes.
That may sound rather silly to you and your focus is much
deeper and emotional than that, and to my friend from Best Buy,
I do buy there, as well, not just Nebraska Furniture Mart. In
fact, your store manager at the Village Point store in Omaha
has become very close to my wife. They are on a first name
basis. I can't remember a name. But it is really neat to see a
store manager greet people at the front when they walk in and
even using their names on occasion, so you have got a good one
at Village Point.
With that, I want to jump back, then, Mr. Taylor, since he
is the master of the box right now, are you able to tell us,
without violating any LG insider secrets about pricing, what do
you expect that box to retail for next year when it is released
en masse?
Mr. Taylor. Well, retailers actually do set the prices, but
we----
Mr. Terry. Well, your manufacturing price.
Mr. Taylor. We anticipate that it will sell in the $60
range at retail.
Mr. Terry. OK. And our coupon is estimated to be $40 so the
consumers still have a $20--is there a way to engineer that
down to $40 or is the NTIA requirements so high that you can't
do that?
Mr. Taylor. Very difficult to do. There is already very
little margin in here for the manufacturer or for the retailer,
but it is the right thing to do, to make it as--our goal, in
designing the box, was always to make it as affordable as
possible, but at the same time, make sure it had the features
necessary to take full advantage of digital and most
importantly, to have the performance.
Mr. Terry. I don't think that really answered my question
about whether the NTIA set their requirements too high to have
an affordable box that will match the coupon price.
Mr. Taylor. I don't think, as far as we are concerned, we
don't think it was ever contemplated that there would not be a
co-pay on the part of consumers.
Mr. Terry. OK. Mr. Yager had mentioned about 69 million
unconnected television sets. Just in my own personal world, we
have one TV that is not hooked up to cable because that is the
one hooked up to the Xbox and we don't use it for TV at all, so
I wouldn't use a coupon for that TV set even if you gave it to
me. So I want to ask John, it seems pretty high to me that we
are talking about 69 million TV sets that are going to need a
converter box. Do you agree with that number? Does CEA agree
with that number?
Mr. Taylor. According to the Consumer Electronics
Association, about 30 million television sets are used solely
with video games and DVD players, so unless the consumer wants
to hook an antenna up to them, they would not need a box, so
that kind of comes right off the top. There are lots of numbers
floating around out there. We think there is going to be a
market in the tens of millions of units for these, but again, I
would point out that millions of consumers, tens of millions of
sets will be purchased over the next 2 years that have the
digital tuner built in.
Mr. Terry. Mr. Yager, very quickly, I appreciate a quick
answer, your testimony suggests that we should be sending
consumers two coupons to be able to get to these secondary
tertiary level of TVs that aren't hooked up to cable.
Mr. Yager. And that is the NTIA's recommendation, as I
understand it.
Mr. Terry. OK, and that is the National Association of
Broadcasters' suggestion, as well?
Mr. Yager. That is correct.
Mr. Terry. OK. Just for the record, I will join Mr. Shimkus
in saying that I think we need to have some level of fiscal
responsibility in here and you also mentioned that there is not
enough money set aside to do two for each household.
Mr. Yager. Well, the law provides up to a billion and a
half dollars for the converter boxes. What we don't know is
what the demand is going to be and I am not trying to mislead
you in terms of what we think the demand will be. When the
television campaign begins to say that converter boxes are
available, I think you are going to see a totally different
dynamic on the part of the public because we believe television
works and we believe we can sell a product and it would put----
Mr. Terry. Well, my time is up, but I appreciate your
restating that for the record and Mr. Chairman, if you would
give me 5 seconds, I still stand by my original position that I
earn $160,000 here. I have one TV set that is for a game. I
don't need a coupon and it is almost insulting to this
Government that we are going to send me or others in like
positions multiple coupons.
Mr. Markey. The gentleman's time has expired. The chair
recognizes the gentlelady from California, Ms. Solis.
Ms. Solis. Thank you, Mr. Chairman. I want to begin by
thanking Mary Fetchet for coming and talking so eloquently
about what we need to do here in the Congress to enter into
more discussion and debate about interoperability. And I say
that in all sincerity, because when you hear about the impact
of what we are talking about with respect to all the witnesses
today, if people, a large number, millions of people don't even
have access to, say, the digital components and equipment and
television and what have you, that is soon to come, that is
even going to be even more disastrous when there is, say,
perhaps another disaster.
And California is a prime area for that. We have
earthquakes, we have fires. If people, for example, that don't
speak English are in a remote area and don't have access
because they are going to be cut off, how do we communicate
with them? How do we keep those lines of communication going?
So my question, I guess, for Mr. Yager and Mr. Britt, and I
thank you all for coming, is you mentioned the kind of outreach
programs that you are prepared to do, but I don't hear about
any concrete efforts where you have a plan of action, because
this is coming so soon, a strategic plan. Have you gone out,
have you talked to people from the various communities that are
going to be most heavily impacted and what kind of plan is
that? And I will go to Mr. Yager first.
Mr. Yager. The answer is yes, we have. In our own company,
we have a station in Texas on the Texas-Mexican border where we
are fully intending to do our PSAs in Spanish. It is a very
strong Hispanic market. We have been advised by the NAB, in
response to Mr. Nogales's question about a Web site. There will
be a Spanish language Web site up on the conversion, probably
within the next 2 weeks. Every general manager in our company
is charged with getting to the leadership of their community to
explain to them first what is going to happen. It is amazing to
us how little is known about the conversion, even in Congress,
other than the House Commerce Committee.
Ms. Solis. Just quickly, is there any attempt to also put a
1-800 number with individuals who speak the language, other
than English?
Mr. Yager. Absolutely.
Ms. Solis. OK, then. For Mr. Britt I would also ask you
what efforts you have underway?
Mr. Britt. Yes. We have a very direct relationship with our
customers. We send them bills every month. Many of them call us
every month. And we operate in communities where people speak
many languages, including Spanish. And we always have people
who are able to speak those languages and we have people who
write materials that are culturally sensitive so it is not just
English translated. So we are going to use those skills in this
education effort, which is very important.
Ms. Solis. I would just like to bring to Mr. Yager and to
your attention, Mr. Britt, that just reading your testimony,
you mentioned you have advisory groups that you are talking to
about planning for all of this and I noticed that you mention
the leadership conference on civil rights, but I see no major
Hispanic national organization involved. Can you please make an
effort to do that immediately? And then my next question is for
Mr. Nogales, because you have traveled so far. What have we
missed here that we should probably highlight or underscore in
terms of how we really reach these niche markets that are out
there that we still have not uncovered?
Mr. Nogales. Thank you very much for the question. I have
been sitting here very patiently hoping to get into this. I
think we all understand that the security concerns of this
country are paramount, but the other part of what we are
supposed to be doing here is transitioning a population from
analog to digital.
I think that relying on the broadcasters, the cable
companies, the satellite, everybody else, that they are going
to help us and they are going to somehow bridge all the
differences is wrong. I think that community based
organizations can do a much better job, especially when it
comes to niche markets, such as the Latino community.
I haven't really heard anything that we are working with
the community based organizations to get the word out to our
population. If 7 million of the people that we are looking at
that need transitioning are not going to be included because
community based organizations are not going to be part of the
equation, I don't see how that is going to be done. So with all
due respect to everyone here, I say that we have to invest
monies to make sure that community based organizations are
really involved in helping our population transition over,
otherwise it is not going to happen.
Ms. Solis. And just lastly----
Mr. Markey. Could I, just only because we have 10 minutes
left to go here and I would like to have the remaining members
ask questions, if that is all right.
Ms. Solis. That is fine.
Mr. Markey. I thank you. gentlelady's time is expired.
Chair recognizes Speaker Hastert.
Mr. Hastert. I thank the chairman and I thank you for
bringing these witnesses before us. I think your testimony,
Mrs. Fetchet, about what happened on 9/11 really puts us into
focus, why we are doing this--is to make sure there is spectrum
available for a new dynamic way that people can talk to each
other and so we can prevent the kind of disasters, at least
after the fact, that happened on 9/11 so that our responders
can respond and do the job they have to do.
So I thank you very much for being here and your testimony.
I listen to this and think about all the things that are going
to happen before February 17, 2009. Congress will stand for
election and be sworn in to the 111th Congress before then, so
we have to go through all that process. We are going to elect a
new President. He will be elected, he will be sworn into office
before all this. Americans will pay their income taxes twice
before all this happens, so in our minds we have a lot of
things we have to do.
And probably guys like me have an old black and white TV in
my little townhouse in Washington with two rabbit ears. Let me
tell you how old it is. It has got Magnavox on it, so anyway it
is going to be February 18 and I am going to turn that TV on to
get the morning news and all of a sudden it is not going to
work. So I will probably go down to Best Buy or someplace and
say ``hey, have you got any of those boxes left'' and I won't
have the coupon and I will be paying $60 or $70. Well, I hope
you got boxes left after February 17.
But the fact is people who tune it to your TV stations and
they are your customers, aren't they, in a sense? Is that
correct?
Mr. Yager. That is absolutely correct.
Mr. Hastert. And if you are not making sure that you have
those people still in your system, you lose them, right?
Mr. Yager. Shame on us if we do.
Mr. Hastert. And in a sense you lose revenue. Some of them
might be subscribers but the other people are people that buy
from your advertisers.
Mr. Yager. That is correct.
Mr. Hastert. So in a free market sense, it is really
important that those people go out and do the things that they
have to do because you are going to lose a customer, right?
Mr. Yager. Absolutely.
Mr. Hastert. So you are probably going to do whatever
announcements you have to make beforehand, remind people that
if you have an old black and white set, like me, maybe I will
have to get----
Mr. Yager. Well, I may get this box for you, right here.
Mr. Hastert. Oh, thank you. Mr. Taylor, these people in a
sense are your customers, too, right?
Mr. Taylor. Absolutely.
Mr. Hastert. And if they aren't warned beforehand the type
of product that they are going to buy, whether I walk into the
Wal-Mart store that is just down the road from me, I am out in
the country, or a Best Buy or whatever, if people aren't told
the truth about what they are buying, retailers and your
industry suffers, isn't that true?
Mr. Taylor. Absolutely.
Mr. Hastert. So it is really in your best interest.
Mr. Taylor. There aren't very many analog sets left on
retailers' shelves, thankfully.
Mr. Hastert. Do you have any black and whites?
Mr. Taylor. No more black and whites, sorry to say.
Mr. Hastert. Out of luck.
Mr. Taylor. But even those that are, manufacturers did
voluntary labeling a year ago, when we had the hard date, to
make sure consumers understood that when February 2009 rolls
around, you would need an additional piece of equipment to be
able to receive over-the-air----
Mr. Hastert. I don't even have a TV hooked up for an Xbox.
I don't know what an Xbox is. But that happens. I know we have
a vote and I want to extend my appreciation to the chairman for
allowing me to take a couple minutes and testify, I think the
free market is working and I think, to the extent that
Government can help it, we will. And just the fact that these
coupons are going to be available to people that need it.
Again, Mrs. Fetchet, I thank you for your testimony and for the
cause of this, why this is really happening. And I will yield
back my time.
Mr. Markey. Gentleman's time has expired. The Chair is
going to recognize the gentleman from Pennsylvania, the vice
chair of the committee, Mr. Doyle. There are 6\1/2\ minutes
left for four votes out on the House floor. I will leave it to
his discretion as to adjourning the hearing.
Mr. Hastert. Mr. Chairman, before we close. Will you accept
our opening statements?
Mr. Markey. Without objection, all of the statements will
be included in the record. I yield to the gentleman from
Pennsylvania.
Mr. Doyle. Thank you, Mr. Chairman. Mrs. Fetchet, I just
want to echo my colleague's sentiments that the questions we
have for the rest of the panelists today pale in comparison to
our responsibility to make sure first responders have
interoperability and you have my personal commitment that there
will be no backtracking on the date and that we will do what we
can to do that as soon as possible.
Now, Mr. Taylor, apparently you are not the person to ask
what this set top is going to cost because you are not the
retailer, so Mr. Vitelli, let us ask you, can you tell this
committee, with any degree of certainty, that these set top
boxes that people are going to come in with coupons for are
going to cost around $60? Is that what you see happening at
Best Buy?
Mr. Vitelli. How much are they going to cost, John?
Mr. Taylor. Around $60.
Mr. Vitelli. It will probably be close to that because we
have products today that we sell at low margins. We have
products that we sell at different points and they are all over
the map.
Mr. Doyle. So when Mr. Taylor says he expects the box to
retail at around $60, are you going to sell it to him for $60
and have him sell it for free? Is that it, Mr. Taylor?
Mr. Taylor. That is what we would consider the
manufacturer's suggested retail price, but it is up to
retailers to set the actual----
Mr. Doyle. OK, so is $60 a real number?
Mr. Vitelli. I don't know. I have not gotten a proposal
from anyone specifically yet.
Mr. Doyle. So we don't know what the real number is?
Mr. Vitelli. I don't, yet.
Mr. Doyle. And Mr. Taylor, you say you are going to have
boxes ready at the beginning of the year. How many boxes do you
anticipate, not a sufficient quantity, I am not going to hold
you to an exact number.
Mr. Taylor. I don't have a number today. We will work that
number out with our retailers in the coming months.
Mr. Doyle. Just wing it for me. Three million?
Mr. Taylor. Way too soon to say. Just don't know yet.
Mr. Doyle. So we have got these 23 million customers. Let
me just ask that one question. I think there is going to be, by
the way, to my friends on the Republican side, I don't think
there is going to be plenty of money because I think there is
going to be so much up-selling going on here that we are going
to see very few people come in with that coupon and leave the
store with one of those kind of boxes. I think they are going
to be, I don't want to call it bait and switch, but I think
there is going to be a lot of up-selling. Mr. Vitelli, is it
your opinion that at your Best Buy stores that there is going
to be an effort to try to get these consumers to buy TV sets or
fancier boxes or when they come in with that coupon are you
just going to hand them the set?
Mr. Vitelli. As I mentioned earlier, what we do at Best
Buy, we do not have a pressured sales environment. We talk to
the customer about what they are trying to accomplish and what
they are trying to do and if they come in with the coupon and
they want to buy a box, they will get a box.
Mr. Doyle. OK. At this time I want to yield to my friend,
Mr. Inslee, for the balance of my time.
Mr. Inslee. Thank you. I just want to ask about the
frequency, the penetration of the PSAs that people will
receive. When we run for office, the people who do our media
tell us there are a certain number of points that you have to
have until a message is actually received. How many points will
people receive as a result of the efforts, either of the
Federal or private enterprise on these PSAs?
Mr. Yager. Points are referring to a rating point and
normally, they are broken down. A rating is that percentage of
the total audience that is viewing television at any given time
and in any given market. We always recommend about 150 to 200
rating points a week if you are trying to sell a product or a
commodity to a viewer. We think we will probably far exceed
that. You have got to remember that again, our vested interest
in making this transition kind of seamless for the viewer is
absolutely critical to the television industry.
Mr. Inslee. So how many points throughout the course of the
campaign would a person be exposed to?
Mr. Yager. That is really going to depend on how fast the
demand develops for the boxes. If the demand is great for the
boxes in the early part of 2008, obviously toward the end of
the year, the points will go down. If it continues strong, I
mean, if it continues and the demand is not there, we will
continue to promote right up until February 17.
Mr. Inslee. So has the industry made any commitment that
any of us can count on that enough points will be put out on a
PSA to make sure all those coupons are used?
Mr. Yager. I don't know how we could do that, make a
commitment in terms of points to get all the coupons. What we
can commit to is creating the demand for the coupons and making
sure the public understands the need to have a box to operate
an analog set after the 17th of February 2009.
Mr. Inslee. Let me just express, and I am not sure you can
solve this, but one of the frustrations we have here is we are
very concerned, I have been very concerned. I still don't think
that our approach to these coupons is adequate to the Americans
that are going to be very frustrated by this experience and we
think it is very important this information be obtained by
Americans. And we are trying to get a handle on what people
will really see and it is pretty amorphous. I hear the industry
saying they have good intentions, which I appreciate, and I
think it is sincere, but is there anything you think you could
give us more to sort of have more real parameters on what it
will really look like in real life?
Mr. Doyle. And I would advise my friend that we are down to
54 seconds on our vote.
Mr. Yager. I don't think I can answer the question in 54
seconds, but we are committed to using the talent and the
personnel of our television stations who have the credibility
in the local markets we serve to advise the American public
about what is the whole transition.
Mr. Inslee. Thank you.
Mr. Doyle. And I want to thank the panelists. It is the
chair's intention to adjourn this hearing at this point. Mr.
Taylor, I would just leave you with one thought. When people
call that toll-free number on your set top box, could there be
a human being on the other end of the phone, please?
Mr. Taylor. There will be in Huntsville, Alabama.
Mr. Doyle. Thank you. Thank you. This meeting is adjourned.
[Whereupon, at 1:00 p.m., the subcommittee was adjourned.]
[Material submitted for inclusion in the record follows:]
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
STATUS OF THE DTV TRANSITION--PART 2
----------
WEDNESDAY, OCTOBER 17, 2007
House of Representatives,
Subcommittee on Telecommunications
and the Internet,
Committee on Energy and Commerce,
Washington, DC.
The subcommittee met, pursuant to notice, at 9:40 a.m., in
room 2123, Rayburn House Office Building, Hon. Edward J. Markey
(chairman)
Present: Representatives Doyle, Gonzalez, Inslee, Rush,
Eshoo, Stupak, Green, Solis, Dingell, Upton, Stearns, Deal,
Shimkus, Radanovich, Terry, Ferguson, and Barton.
Also present: Representative Blackburn.
Staff present: Amy Levine, Colin Crowell, Tim Powderly,
Maureen Flood, David Vogel, Philip Murphy, Neil Fried, Courtney
Reinhard, and Garrett Golding.
OPENING STATEMENT OF HON. EDWARD J. MARKEY, A REPRESENTATIVE IN
CONGRESS FROM THE COMMONWEALTH OF MASSACHUSETTS
Mr. Markey. Good morning. Welcome to the Subcommittee on
Telecommunications and the Internet. This is the subcommittee's
second in a series of oversight hearings on the status of the
digital television transition. Unfortunately, prior oversight
hearings have left this subcommittee with a DTV picture that is
fuzzy at best. Our goal going forward will be to get better
reception from the Federal Government, industry and community
groups about how they might work better in concert to ensure
that millions of Americans do not lose free over-the-air
television after the transition from analog to digital
broadcasting on February 17, 2009.
I am encouraged by some recent Government efforts to help
consumers navigate the transition successfully. After our last
hearing, the Commission required retailers to inform consumers
when television equipment only has an analog tuner by
displaying a Government-mandated consumer alert near the
device. Not only does such a notice assist consumers in making
fully informed decisions before bringing home an analog-only
TV, it also serves to educate consumers about the DTV
transition itself.
The Commission has rigorously enforced this rule. Seven
retailers are facing almost $3 million in fines. In addition,
the Commission also has assessed penalties against
manufacturers for importing TVs lacking digital tuners. I
commend FCC Chairman Martin for sending a strong message that
the Government will not tolerate the TV equivalent of war
profiteering.
I encourage the Commission to vigorously monitor and assess
the transition as it proceeds. For instance, the FCC could send
employees into participating stores to make sure that retailers
are sufficiently stocking and selling the converter boxes
subsidized by the coupon program, and not just hocking the $500
digital TV sets. The Commission should also spot-check digital
devices, including converter boxes, to make sure they include
mandatory pro-consumer technologies. Like the V-chip and closed
captioning and those other features, we have to ensure that
they actually function properly for consumers.
I also want to applaud Assistant Secretary John Kneuer for
NTIA's decision to hire IBM to manage the Digital-to-Analog
Converter Box Coupon Program. IBM and its subcontractors appear
to have the expertise and proconsumer orientation necessary to
implement a successful coupon program if other elements and
entities in the transition work in concert and do their part.
The most critical component of a successful DTV transition
is consumer education. Ultimately, the Federal Government is
responsible for making sure that more than 300 million
Americans are adequately informed, not the industry or consumer
groups. It is, after all, Government mandates that will render
obsolete millions of analog TVs. Both the FCC and NTIA have
been preparing consumer advisories, creating Web sites, holding
forums and meeting with public- and private-sector groups. The
current plan relies heavily on the good graces of industry and
the voluntary efforts of committed consumer and community
groups to get the job done. However, because the amount of
money available to the Commission and to the NTIA for consumer
education for their respective aspects of the transition is
highly limited, more must be done.
Affected industries appear to be stepping up to fill some
of the void. Thus, recent commitments by the cable industry,
broadcasters and public television to air millions of dollars'
worth of messages about the transition on TV will be critical
to the success of this effort. But all of those efforts are
purely voluntary.
As Chairman Dingell and I suggested to Chairman Martin
earlier this year, there is value in mandating a minimum level
of compulsory consumer education on the part of industry,
particularly given that these requirements can be monitored and
enforced. I am pleased that Chairman Martin took our suggestion
to initiate a rulemaking, and I hope he adopts those rules
expeditiously as the deadline draws near.
This leads me to the aspect of the DTV transition that
needs greater clarity and coordination. According to the report
being prepared at my request by the Government Accountability
Office, no single organization has assumed responsibility for
the overall transition. It is as if we have a team of able
running backs and receivers running around the field searching
for the end zone, but no quarterback running the plays. Indeed,
according to the GAO, there is no comprehensive DTV transition
plan, no monitoring and no contingency plan.
I want to commend the GAO for their excellent work in
preparing for today's testimony, which provides us with an
Emergency Broadcast System alert about challenges ahead with
sufficient time to take corrective action. It is my belief that
while NTIA has responsibility for the consumer coupon program,
the FCC has primary responsibility for the overall digital
transition. Chairman Martin, I think that makes you Tom Brady
for our DTV purposes.
Mr. Upton. A good Wolverine, I want you to know.
Mr. Markey. That is where Mr. Upton and I really feel good.
We are Michigan and Boston bond on this Tom Brady issue. And
giving you this mantle, Mr. Chairman, is the highest accolade
that can be bestowed on a bipartisan basis in this committee.
Mr. Upton. Hail to the victors, right?
Mr. Markey. You are the Nation's DTV quarterback, and we
will be counting on you and the Commission for the leadership
to coordinate the various aspects of the transition, which is
so important for public safety, economic growth, innovation,
consumer welfare and the future of television itself. I look
forward to hearing from today's witnesses.
Let me turn to recognize the ranking member of the
subcommittee, the gentleman from Michigan, Mr. Upton.
OPENING STATEMENT OF HON. FRED UPTON, A REPRESENTATIVE IN
CONGRESS FROM THE STATE OF MICHIGAN
Mr. Upton. Thank you, Mr. Chairman. Good morning to all.
I would like to thank the witnesses for testifying today on
this very important subject. This is not our first hearing on
the topic, and, given the importance, I don't think it will be
the last.
Still a year and a half away, the DTV transition is an
issue that continues to generate an outstanding amount of
attention. And I am absolutely confident that as we move closer
to February 2009, an even brighter spotlight will shine on the
DTV transition, so much so that the transition will be a
success, and consumers will not be caught off guard.
We should certainly commend the cable and the broadcast
industries for stepping up to the plate to help educate the
public about the digital television transition. We still have
more than a year to go. Their already outstanding efforts and
commitments are sure to increase as the deadline approaches.
Specifically, local broadcasters are to be commended for their
proactive initiatives to educate Americans on the transition to
DTV. It is comforting to know that the broadcasters understand
the critical importance of educating Americans on this issue so
that a seamless transition can take place in February 2009.
Individually each local broadcaster has already had to invest
significant sums, millions of dollars to move the transition
forward, and had it not been for their hard work and sacrifice,
that transition would not be possible.
The fact remains it is in the financial interests of the
broadcasters, pay-TV companies, manufacturers, retailers to
make sure that each TV viewer in the household knows about the
DTV transition. The last thing the industry wants to do is lose
viewers, and I am confident that they will do everything
necessary to ensure that that does not happen.
Some of the industry's plan is similar to a measure that I
introduced with Mr. Hastert and Mr. Barton in January, H.R.
608. Similar provisions would be law today had it not been for
the Senate procedural rules that stripped the consumer
education provisions from the original DTV legislation that was
enacted in the last Congress. And if any of my colleagues on
either side of the aisle have doubts or concerns about the
industry's resolve to educate consumers, I would ask them to
cosponsor our bill, H.R. 608.
Much of the focus has been external, looking at industry
and the NTIA and the FCC; however, there is much that we can do
as Members of Congress to educate our constituents. My Web site
already has information about the DTV transition, as well as
links to external sites with information about the DTV
transition. In the next few weeks, I plan on launching a new
Web site with even more comprehensive DTV education.
Congressional franking rules also permit Members to include
information about the transition through our constituent mail.
Everyone has a role to play, and I would urge my colleagues to
do their part.
Additionally, the cable industry has taken a significant
step forward in promoting an orderly transition by voluntarily
agreeing to carry the broadcasters' digital and analog signals
for the next 3 years, which mirrored what this committee passed
last year, and which the FCC recently adopted.
Chairman Martin has also proposed a new multicast must-
carry mandate on cable operators, and I happen to believe that
imposing that standard at this point would perhaps threaten an
orderly transition, and I look forward to hearing more about
that as the question-and-answer period moves forward.
Lastly, I would like to again recommend the auctioning of
white spaces. The market is much better than we regulators at
determining the value of and the best use for the spectrum.
There are likely a number of possible areas, and one that has
recently been raised is an alternative to special access. All
potential providers and services should be given an opportunity
to compete for that spectrum in a fair auction. Licensing would
also have the added benefit of protecting against any
interference with digital TV should it arise. The recent test
results released by the FCC demonstrate that that might be a
problem.
At a minimum FCC testing is needed, and I am glad that that
is going to happen. It is too important to risk with the use of
unlicensed devices. Further, it has and will demonstrate the
tax for value in auctioning the spectrum.
I look forward to hearing from the panel this morning.
The 9/11 Commission understood the importance of ensuring
that our first responders have the equipment and the spectrum
necessary to communicate in times of emergency. I am proud that
we were successful in not only passing the DTV transition in
the last Congress, but provided a helping hand to enable our
first responders to better protect all of America.
I also have a letter from Chairman Martin indicating that
the number of exclusively over-the-air homes has once again
dropped and now is only at about 13 percent. The letter also
indicates that the legislation, H.R. 608, that we introduced in
January would help reduce litigation over the FCC's authority
to impose consumer education requirements. I have three letters
from the Cable Association, the Broadcast Association and
Univision concerning their recent announcement to launch about
$1 billion to combine the consumer education. And I would ask
unanimous consent that these documents be placed in the record.
Mr. Markey. Without objection.
Mr. Upton. And with that, Mr. Chairman, I yield back the
balance of my time.
Mr. Markey. The gentleman's time has expired.
The Chair recognizes the gentleman from Michigan, the
chairman of the full committee, Mr. Dingell.
OPENING STATEMENT OF HON. JOHN D. DINGELL, A REPRESENTATIVE IN
CONGRESS FROM THE STATE OF MICHIGAN
Mr. Dingell. Mr. Chairman, I thank you for your courtesy. I
commend you for holding this hearing. It is a matter of great
importance to the country as we are going to find out as the
event comes near. The digital television transition might well
be the most important telecommunications issue before this
committee.
I want to express my appreciation to the panel for being
with us this morning. Gentlemen, thank you. We appreciate your
help, and we need it, and we look forward to it.
This oversight hearing is the second in a series regarding
the DTV transition. The transition promises great benefits to
consumers, including more and higher-quality over-the-air
programming, new advanced wireless services, and by use of the
analog spectrum currently reserved for broadcast television,
first responders and other public safety communications. We
must, however, make sure that the Government and industry have
done all they can to ensure that no consumer wakes up on
February 18, 2009, to find their television screen has gone
dark, and also to find that we are incapable of providing them
with the proper information for the switchover.
Much work remains to be done for a successful transition,
and, quite frankly, I am not satisfied that we know what that
might happen to be. First and foremost, there has to be
Government leadership. As our GAO witness will testify, there
is currently no clear leader in the transition. That must be
defined much more clearly. The Federal Communications
Commission should be the agency spearheading this transition.
The NTIA, or the National Telecommunications and Information
Administration, has a distinct, statutorily defined role in
administering the converter box coupon program, and it is an
extremely important role, but appropriately the FCC should be
leading the transition and working with NTIA and others to
coordinate these many efforts.
I urge the FCC to consider an interagency task force to
facilitate a smooth transition, similar to the one that was
established to address Y2K. That interagency task force spent
nearly 2 years on its missions with a clear priority and a
sense of urgency to prepare the Nation for any effects that
might be brought about by the arrival of the year 2000. We need
a similar approach to the problems now before us. We face a
shorter timetable for the DTV transition, and I believe that
the administration must approach the DTV transition with the
same diligence as the previous administration employed for Y2K.
The converter box coupon program is a critical element.
Each and every consumer who will need a converter box to view
over-the-air programming must have one. Coordinating the
logistics of this program and the distribution of coupons for
converter boxes presents a tremendous challenge, one on which I
am not satisfied that we have properly conducted our inquiries
or arrived at our conclusions.
I look forward to the testimony of IBM, the vendor selected
by NTIA to implement this enormous undertaking, about its plans
to carry out a very important job. We will also receive
testimony from consumer groups about the various constituencies
that should be informed and educated about the transition. Many
at-risk populations, such as the elderly, the economically
disadvantaged, people with disabilities and those who live in
rural and other underserved areas and communities will need
particular attention.
As I noted before, digital television holds great promise
for the country, and we all look forward to its potential being
fully realized, but at this moment it is uncertain that it will
be fully realized or will be realized without a great level of
pain, discomfort and inconvenience. We must also ensure that
all Americans will enjoy the benefits that can follow the end
of analog TV on February 17, 2009, and the institution of the
digital system that we look forward to.
I want to thank our witnesses again and observe that each
of them has an important role here today. We are here to help
you facilitate a successful transition, and I look forward to
working with you over the next 16 months.
Mr. Chairman, I thank you for your courtesy to me.
Mr. Markey. The gentleman's time has expired.
Mr. Markey. The Chair recognizes the gentleman from Georgia
Mr. Deal.
OPENING STATEMENT OF HON. NATHAN DEAL, A REPRESENTATIVE IN
CONGRESS FROM THE STATE OF GEORGIA
Mr. Deal. Thank you, Mr. Chairman.
I thank our witnesses for being with us today. And I would
like to raise several issues relating to the DTV transition
with you.
First of all, I would like to address the FCC's recent dual
carriage order which deals with the broadcast carriage
obligations of cable operators after the digital transition in
television. The order requires cable to pass along the digital
signal of must-carry broadcasters in both digital and analog
formats to their subscribers. Unfortunately it does not provide
an exemption for small operators. Rather, it allows cable
systems with limited capacity to file for a waiver to relieve
them of this obligation.
I am concerned with this decision as it essentially
acknowledges the dual carriage rule will be burdensome for
small cable providers due to their unique technological
limitations. It seems ill-advised for the Commission to enact
rules which force small rural cable operators with limited
means to go out and hire a DC lawyer simply to navigate the
FCC's often unpredictable waiver process.
In the same vein I would like to comment on proposals at
the FCC to impose multicast must-carry requirements on cable
operators. I have long advocated for less regulation and more
free-market principles in the video marketplace. I find
proposals to impose more must-carry requirements disturbing. It
is important that consumer preference, not Government mandates,
determine what viewers watch. In addition, by implementing new
must-carry mandates, the Government is creating a video market
with little or no incentive to develop or produce high-quality
programming. I would urge the Commission to avoid a path of
increased regulation.
Lastly, I would like to briefly comment on the ongoing
testing of white-space devices at the FCC. I understand and
agree with the need to conduct additional testing to ensure
that no interference to broadcast or wireless microphone
services, and commend the Commission for its willingness to
continue working on this issue. Television's white spaces hold
a potential for great innovation, including low-cost rural
wireless broadband service and the wireless distribution of
content within the home and office. For entrepreneurs, white
spaces provides nearly boundless possibilities for development
and exploration. It is important for us to build on the initial
FCC tests which prove that the concept that white-space devices
can detect and avoid both digital television and wireless
microphone signals, and I thank you for continuing to test
those devices.
Thank you, Mr. Chairman. I look forward to hearing the
Commissioners, and I yield back my time.
Mr. Markey. The gentleman's time has expired.
Mr. Markey. The Chair recognizes the gentleman from
Pennsylvania Mr. Doyle.
OPENING STATEMENT OF HON. MIKE DOYLE, A REPRESENTATIVE IN
CONGRESS FROM THE COMMONWEALTH OF PENNSYLVANIA
Mr. Doyle. Thank you, Mr. Chairman.
Mr. Chairman, just a few hours ago the tiny U.K. town of
Whitehaven and the surrounding area just began its DTV
transition. It is the canary in the coal mine, so to speak, and
I hope that we will be able to learn something from the switch
that is happening over there today.
That said, back over here I am worried that we are not
doing enough to educate and inform consumers of the switch. Mr.
Chairman, Procter & Gamble spent $128 million in 2004 to market
the Swiffer broom to American consumers, and GM has pledged
$100 million to promote its new Malibu. But NTIA has only $5
million to inform American consumers that they don't need to
spend too much out of pocket to keep their TV sets working
after the Government mandates the transition to digital TV. And
the FCC has a total of $1.5 million to help talk about the
transition as a whole.
Now, compare that to the city of Berlin, a city which has
only 3.4 million residents. They needed to spend $1 million; or
the U.K., which is spending over $400 million to educate their
country.
Mr. Chairman, it is not that America has not had to educate
our people on this kind of a scale, but we have never done it
on a shoestring like this. Instead America has chosen to
encourage the private sector to step up to the plate.
Because we are relying so much on the private sector to
educate and inform the American public, we have to remember
that these guys are competitors. Now, that is a good thing, but
I want to make sure that the vigorous competition doesn't harm
the need for clear, useful and informative messages.
Back before the turn of the 21st century, FCC Chairman
William Kennard reached across the aisle and chose then-
Commissioner Michael Powell to be in charge of the FCC's
preparation for Y2K. Now, Y2K went off without much of a blip.
And, Mr. Chairman, I hear that people are only now beginning to
finish the canned goods they socked away in their basement. I
think it would be useful to work through a Commissioner. They
would be able to help the industries and the associations
involved work better together.
Chairman Martin, they say making policy is like baking a
cake. I have read your testimony, and I have to say I hope the
details of your proposed consumer education order are as sweet
as the frosting looks. But we should not be distracted by
unrelated and irrelevant policy goals. DTV should not be an
excuse so that people throw anything on the wall to see what
sticks. And just like DTV shouldn't be a windfall for
regulators, it should also not be an unfair windfall to
retailers and manufacturers.
Now, I love my big-screen HDTV, and I am glad I have other
flat panels at home, too, but I can afford them, and I wanted
the better picture quality. But a study published by U.S. PIRG
suggests that retailers aren't telling their staff the right
information about the transition. The transition's first line
of defense, the retail sales clerk, often weren't aware of
affordable converter boxes coming to the market soon, much less
that there will be a coupon to compensate them to keep their TV
working.
Mr. Chairman, I look forward to hearing the testimony of
Ms. Fazlullah on this issue, and the other witnesses, and I
yield back.
Mr. Markey. The gentleman's time has expired.
The Chair recognizes the gentleman from Oregon Mr. Walden.
OPENING STATEMENT OF HON. GREG WALDEN, A REPRESENTATIVE IN
CONGRESS FROM THE STATE OF OREGON
Mr. Walden. Thank you very much, Mr. Chairman. Thanks for
having this additional hearing on the DTV transition.
I want to welcome the Secretary and the Commissioners and
others who testify today. Unfortunately I am going to have to
step out, but I will take your testimony and read it later.
Four hundred eighty-nine days from today it all happens.
Millions of Americans will be affected, and our phones will
ring off the hook. As chairman of the Congressional Digital
Television Caucus, along with my colleague Rick Boucher, I am
pleased that the subcommittee is having this hearing today, and
we are doing everything we can as a caucus to educate our
colleagues and others not on this committee about what lies
ahead. We have got to get this right, and we have to work
collaboratively to ensure a smooth transition.
I appreciate the fact that the cable industry and the
broadcast industry together are spending more than $900 million
to air English- and Spanish-language advertising on cable and
broadcast stations. I have already begun to see those ads. I
think that is essential to educate consumers about what lies
ahead. Certainly it will complement the $5 million that NTIA
has on hand to spend on consumer education. But clearly the
bulk of the heavy lift here will be done by cablecasters,
broadcasters and satellitecasters. The NAB says that their
efforts will reach some 98 billion audience impressions over
the course of the campaign, and I applaud the commitment of all
who are involved.
I also think it is important to recognize the Digital
Television Transition Coalition. It is a broad-based group that
is comprised of business and industry groups as well as grass-
roots organizations that share an interest in a smooth
transition.
I am pleased to hear that the coupon NTIA is putting out
will actually look like a gift card. Indeed it is. And
consumers are familiar with gift cards, and it will make it a
lot easier to use when they go to get the converter boxes.
It is important we not take our eye off this ball. We have
to carefully consider the feedback of our witnesses today in
order that we get a transition that is as smooth as possible,
and that consumers are both educated about what is coming
toward them and have the ability to connect appropriately so
that they don't lose contact with the digital TV world.
Mr. Chairman, thank you again for this hearing and for the
work that you and the subcommittee are doing, and we look
forward to a smooth transition in 2009.
Mr. Markey. The gentleman's time has expired.
The Chair recognizes the gentleman from Texas Mr.
Gonzalez.
Mr. Gonzalez. Waive opening.
Mr. Markey. The Chair recognizes the gentlelady from
California Ms. Eshoo.
OPENING STATEMENT OF HON. ANNA G. ESHOO, A REPRESENTATIVE IN
CONGRESS FROM THE STATE OF CALIFORNIA
Ms. Eshoo. Thank you, Mr. Chairman, for holding this second
DTV hearing. It is an important one.
And welcome to the witnesses.
I think that we all know that digital transition holds
great hope for both broadcast television and wireless
broadband, and the members of this committee know it very well
because it is obviously our jurisdiction. We have worked on
this for a long time. We kind of know the language that
surrounds the issue, and we drill down almost every time we
meet on something that has something to do with the issue.
There are, I think, important and noteworthy efforts that
have taken place in the private sector to provide guidance to
customers for the transition, but I think that we are assuming
that it is penetrating and that it is understandable. I, for
one, think that we are falling short. The good news is I think
we have time to do something about it, and I think that a very
well coordinated, comprehensive DTV transition plan really has
to be taken seriously and implemented.
I want to tell a story of something that occurred when I
was home this weekend. I heard from a number of constituents
both at town hall meetings and when I went to Mass on Sunday. I
attend Mass at a place where the retired sisters, the Religious
of the Sacred Heart, live. Now, they are all Ph.D.s, former
college presidents, RAND, some of the most prestigious
institutions of learning in our country. So this is not a slow
group. The only thing that might be slow is their walk now
because they are retired.
Well, they had received a notice that they were not going
to have C-SPAN anymore. And I have to tell you, to be
surrounded by almost 60 nuns after Mass waving these cards, I
don't know about you, Mr. Chairman, or anyone else, but that is
a tough audience. So it said to me that even the message that
is going out is kind of written in someone else's
telecommunications language.
And that may seem anecdotal and a sweet story, but I think
that we need to pay attention to that. We know the language,
and we think we have a handle on how this is going to work. But
that TV set and what comes across it and what it means to fill
the hours and to inform people in our country or to entertain
them, whatever the purpose might be, is very, very important.
So this transition has to have relevancy to it. People need to
know what the actual steps are. Is it going to cost them more?
Do they have to get a box? Who do they call? Why do they have
to pay more?
So I think we have a ways to go. At one time I offered an
amendment here with a former colleague now, Mr. Bass, that the
local PBS stations would be in charge of at least some of the
education on this to people in communities across the country.
Now, I know that about $5 million has gone to the NTIA. I think
that has gone to a PR firm. I think $5 million is a drop in the
bucket. If something has been carried, I don't watch TV all the
time, in fact very little of the time, but I have never picked
up on anything, and I am not the important one. The people that
we represent are.
So I think we have a ways to go on this, and I think that
Commissioner Adelstein has made a very important recommendation
that we have a transition task force. And it needs to be
coordinated, it needs to be clear, it needs to be relevant. And
do you know what? How about some simplicity to it so that
people understand it?
So thank you, Mr. Chairman. I look forward to the
witnesses. And don't forget the story of the Religious and the
Sacred Heart.
Mr. Markey. The gentlelady's time has expired.
The Chair recognizes the ranking member of the committee,
the gentleman from Texas, Mr. Barton.
OPENING STATEMENT OF HON. JOE BARTON, A REPRESENTATIVE IN
CONGRESS FROM THE STATE OF TEXAS
Mr. Barton. Thank you, Mr. Chairman. It is good to see our
friends here today and the first panel and then our second
panel also. It is good to have another hearing on the digital
transition, which, as we all know. Is coming next year or year
after next, in February 2009. The exact date is February 17,
2009.
For those of you that wonder where that date came from, I
don't know that I have ever said this publicly, but Mr. Markey
and Mr. Dingell had a lot to do with it. I wanted a shorter
date, and they pointed out that we probably need to get the
presidential election out of the way and the Super Bowl and
that that would be a good day. So for those of you that wonder
how legislation is done, this was a bipartisan negotiation
where Mr. Dingell and Mr. Markey convinced myself and Mr. Upton
that that was a good date. And I am happy to say that in all of
these hearings that we have had and the public comments, that
date has held.
Our manufacturers are moving to have the set-top converter
boxes and the TVs with the digital receivers in them, and the
private sector is gearing up to do the public outreach, which
we are going to hear more about today. And our friends in the
Government that have to implement the program are moving ahead
with their program.
So we think we have enough money. We set aside $1 billion
to go to the first responders for their interoperable
communications equipment after the auction is held in January
2008. We also set aside up to $1.5 billion for the converter
box program. And those converter boxes are beginning to be
manufactured as we speak.
Mr. Upton and myself sent a letter to Chairman Martin not
too long ago asking him for his comments about how many people
might have to use those converter boxes. He replied recently in
a letter that the FCC predicts only about 13 percent of the
television sets in America on that date will actually be rabbit
ears or antennas and need some sort of a box. We all know that
the market is changing and that there is every reason to
believe that by the time that date gets here, that that number
will be even less.
There is also some question about how many people will
actually feel like they want to use the coupon. Again, just as
a personal aside, Mr. Markey and myself, I should say Chairman
Markey, I have got to call him Chairman Markey now that he is
sitting there with the gavel, we did a contest to see who had
the most obsolete TVs, and I thought I won with 13 TVs in
various domiciles here and in Texas. But Mr. Markey won the
contest for the most obsolete TV. He claims he has a little old
black and white portable that he shaves by. So we will get a
converter box for that for him and put a gold label on it, the
first one issued or something, so that it gets converted.
We are very happy that the private sector is beginning
their public outreach program. We don't have a witness from the
National Association of Broadcasters here today, but they said
earlier this week that they are going to spend up to $700
million in public education to show their viewers if they need
to be prepared for the digital transition.
Mr. Chairman, I have got quite a bit of boring commentary
in my written statement that I will put into the formal record,
but let me end up by saying that if we need to do more
legislatively, Mr. Upton, Mr. Hastert and myself have
introduced H.R. 608, the Digital Television Consumer Education
Act of 2007. We had a number of consumer education provisions
in the House bill when this became law in the Deficit Reduction
Act, but because of the Byrd rule, those are considered
nongermane in the Senate and were stripped out on a
technicality. So at some point this year if we need to do more
legislatively, I would recommend to the committee and the
subcommittee that H.R. 608 would be a good place to start.
With that, Mr. Chairman, thank you for the hearing, and I
yield back my time.
Mr. Markey. I thank the gentleman very much.
My little screen is about 6 inches wide and about 25 years
old, and it has just been looking at me at my eye level.
Mr. Barton. Does it still work?
Mr. Markey. Oh, yes, as I shave in the morning.
Unfortunately, the converter box is probably going to be three
times as big as this little TV, so it is going to become a
logistical problem.
Mr. Upton. Make sure you don't plug it in next to the sink.
You might get a little shock.
Mr. Markey. We do need warnings not only for nuns, but for
Congressmen as well. It is really going to be a tricky
transition.
The Chair recognizes the gentlelady from California Ms.
Solis.
OPENING STATEMENT OF HON. HILDA L. SOLIS, A REPRESENTATIVE IN
CONGRESS FROM THE STATE OF CALIFORNIA
Ms. Solis. Thank you, Mr. Chairman.
I would like to thank our ranking member and also the
witnesses and panel that are going to be speaking here today.
We only have 75 more days before we actually implement this
program. That is not a long time. So I know that we have a lot
to cover during our session here, and I hope to hear some
innovative ideas of how we can fast-forward the information
that is going to be so sorely needed in many of our
communities.
And one example I would like to point out is recently
Univision, one of the largest Spanish-language networks,
actually rolled out PSAs and is also promoting radio ads and a
1-800 number operated with the FCC and NTIA for Spanish-
speaking consumers. That is a good start. I would hope that
other major Spanish-language networks, as well as Asia
networks, will also contact you and we have that rollout
happening as soon as possible.
I want to applaud also the cable industry and the
broadcasters also for stepping up to the plate and putting in
funding to also provide for PSAs and outreach. But one thing I
am still concerned about is the fact that there is still so
many people that don't know about this change that is going to
be occurring, and the fact that so many of them are in
communities of color, low-income, disadvantaged, elderly. In my
case in my district, this is the situation where we still have
rabbit ears that dominate many of the households in East Los
Angeles and the San Gabriel Valley.
So I am looking for leadership, and I am hoping that the
FCC will take that leadership on and will help to provide
clarity so that everyone is on board, and we really, clearly
understand what it is that we are doing. And I raise that issue
because in a commentary that I sent to the FCC, I asked for
clarification on just language usage in terms of how you talk
about a converter box, and we found that there were several
different translations, and some that I wasn't aware of that,
to be honest, are not words that are easily understood by many.
And I think someone who went to college understands a little
bit better than, say, maybe a grandmother who only has maybe a
sixth-grade education.
So I think there has to be clarity. I think there have to
be standards at some point. And I think that the stakeholders
have to be brought in and told and somehow directed as to what
it is we are going to be doing.
So I would ask the FCC to please become more engaged in
this effort and provide the kind of leadership that is so
sorely needed. We talk about converter boxes. There are
different words you can use in Spanish to explain what that is.
It is very confusing. And I know you stepped in and helped to
weigh in and clarify that, but I think that is just one little
instance. There is going to be more of that happening. And I
would just hope that we could work together to see how we can
provide that clarification.
So I look forward to hearing your testimony and also
working with you and also other stakeholders in this process.
Thank you. I yield back.
Mr. Markey. The gentlelady's time is expired.
The Chair recognizes the gentleman from New Jersey Mr.
Ferguson.
OPENING STATEMENT OF HON. MIKE FERGUSON, A REPRESENTATIVE IN
CONGRESS FROM THE STATE OF NEW JERSEY
Mr. Ferguson. Thank you, Mr. Chairman. I thank you and Mr.
Upton for holding another hearing on the status of the DTV
transition with less than a year and a half to go. This
subcommittee can play a key oversight role, and it is in both
the Government's and the industry's interest that the DTV
transition proceed smoothly and efficiently and that no viewers
are left behind.
To that end I want to commend the industry's timely
efforts. Both the broadcasters and cable have stepped up to the
plate, presenting comprehensive and multifaceted DTV education
campaigns that aim to ensure that all Americans, whether they
subscribe to cable or receive over-the-air signals, will be
educated to help make a seamless transition to digital
programming.
We in Government have an important role to play as well,
from Congress to the NTIA to the FCC. We have to all work
together to make sure that the transition is a success. And
while we wait with interest for the FCC to rule on the DTV
consumer education initiative, I urge this subcommittee to move
the Digital Television Consumer Education Act, which will
provide the Commission with additional authority to expand
their capabilities for education and outreach.
In the meantime, as the Commission proceeds with their
order, I also want to strongly urge that it stay focused on
educating our constituents and making the DTV transition a
success, and to refrain from pursuing anticompetitive
policymaking. We heard Mr. Doyle before talk about throwing a
lot of things at the wall and to see what sticks. I would say
we have to keep that in mind specifically when I refer to the
continuing discussion at the FCC of multicast must-carry. I
sincerely hope that the FCC does not allow itself to get
sidetracked by a proposal that is not only unnecessary, but it
is anti-free market, and, frankly, it is constitutionally
suspect. The Commission already adopted a dual carriage
requirement in September. Adding a multicast must-carry
obligation to that at this critical point in time is an
unwarranted distraction and could even be viewed as
irresponsible. I strongly urge the Commission to continue its
cooperation with NTIA and their good work in educating the
American public and to focus on a successful transition rather
than needless Government mandates and regulation.
I want to thank you again, Chairman Markey and Mr. Upton,
for holding this hearing. I thank our witnesses for attending.
I look forward to hearing from them and getting their
perspectives and updates on the status of the DTV transition,
because this is something all of us clearly want to and need to
get right.
Thank you, Mr. Chairman. I yield back.
Mr. Markey. The gentleman's time is expired.
The Chair recognizes the gentleman from Texas Mr. Green.
OPENING STATEMENT OF HON. GENE GREEN, A REPRESENTATIVE IN
CONGRESS FROM THE STATE OF TEXAS
Mr. Green. Thank you, Mr. Chairman. And I would like to
thank you for holding this hearing on the digital transition.
I welcome our witnesses and look forward to their
testimony.
As we approach a start date for the converter box coupon
application and distribution, it is important we bring in all
involved parties to assess the situation and address the
shortcomings that might occur anywhere in the process. It seems
the transition is coming down to the tracks like a train at a
full speed, and preparations are not keeping pace, especially
education outreach efforts. I am very concerned that there have
been no coordinated campaign to educate people first and
foremost that the transition is coming, much less why they need
a converter box, or that coupon program exists and they may
start applying in January.
I have seen a few commercials on the transition, but they
have not been very clear and straightforward. If someone is not
familiar with the transition, I doubt the commercials I have
seen will give them any indication of what is going to happen.
The toll-free number set for the converter box program, the
800-DTV-2009, provides only limited recorded information. It
doesn't offer an opportunity to speak to an operator about the
transition.
The Government's consumer education efforts would greatly
improve by adding a national DTV call center and hotline where
consumers could call in and ask questions of live staff who
speak multiple languages and can help the elderly and people
with disabilities. It appears that a lot of the outreach and
education efforts are Internet-based. This is not going to
affect inventory in vulnerable populations, such as the elderly
and non-English-speaking households that typically rely heavily
on the over-air reception and access to the Internet at low
percentages than any other population. I understand there is
going to be efforts to work with groups like AARP, the VA and
other organizations that represent potentially vulnerable
populations. But we are only 2-1/2 months away from the date
applications for converter boxes can be submitted. This process
seems to be moving much slower than it should.
Monday's commitment by the National Association of
Broadcasters to spend $700 million on DTV education and
advertising is a promising sign that broadcasters nationwide
are committed to ensuring there is a successful transition. And
the cable's industry commitment of the $200 million in
advertising is promising as well. I hope to see similar by all
involved parties.
The second issue I am extremely concerned about is
retailers taking advantage of customers when they bring in
their coupons for converter boxes. The FCC did a commendable
job enforcing the analog labeling requirements by issuing 262
citations to retailers who were not in compliance with the
labeling order. I hope a similar proactive approach is taken
with regards to consumers going into stores with coupons to
pick up their boxes. It would be easy for a retailer employee
to take advantage of a consumer who did not know the specifics
of the converter box program or what other viewing options are.
With the Consumer and Governmental Affairs Bureau and several
FCC field offices across the country, I think it should
seriously consider sending employees to stores to determine
that these types of deceptive practices are going on.
I am also aware of the DTV education notice of proposed
rulemaking and hope you are able to move forward with that
order quickly, especially with the language requiring employee
training by participating retailers. Again, I want to thank our
witnesses in having visited a few retail outlets over the last
6 months. Earlier this year there was no information at all,
but within the last month there is more information in a lot of
the big-box retailers. At least there is information of that
source so they don't end up buying an analog TV that was
available, and, frankly, it was available last February and
March, and now we are seeing that changed. But hopefully those
folks who bought that analog TV and got a good deal on it
understand that they are still going to have to have a
converter box.
With that, I yield back my time.
Mr. Markey. The gentleman's time has expired.
The Chair recognizes the gentleman from Illinois Mr.
Shimkus.
Mr. Shimkus. Mr. Chairman, I will waive. And I think Mr.
Terry was before me anyway.
Mr. Markey. The Chair recognizes the gentleman from
Nebraska Mr. Terry.
OPENING STATEMENT OF HON. LEE TERRY, A REPRESENTATIVE IN
CONGRESS FROM THE STATE OF NEBRASKA
Mr. Terry. Thank you.
Just to start off, I do think this is an important hearing,
and we have had a series of hearings on the digital TV
transition. And I think the folks in front of us in the
audience can understand that we are nervous about the
transition and how it is going to roll out because it has the
potential, as one of my colleagues said, to really make our
phones ring.
Now, I have had a series of meetings with FCC officials on
this subject, NAB, our local TV stations in Omaha, and I feel
fairly comfortable where we are at. As Greg Walden said, we are
400 and some days, a year and 4 or 5 months out. So on the
timing issue of how and when we press it, I think is something
worthy of discussion, because if you do it too early, you are
going to create--I don't want to say a panic, that would be an
exaggeration, but a concern too early. You want to do it at the
right time where people can actually go out and get their
boxes, get the coupons. You need to do it a little bit in
advance. But if you are going to do it a year and 5 months
early before coupons even come out, then I think you have
mistimed the communications.
And in regard to the discussions about how much money is
being put up at the Federal level, again, I am not so concerned
about that, because when I meet with the local officials, I am
pretty impressed that each one of the TV stations in my
district have a plan. And it is fairly aggressive in doing
PSAs. And when I asked what programs; yes, they are going to
run it, the Matlock rerun in the afternoon. They aren't just
going to run these at 2:00 a.m. They want to make sure that
their viewers have the information necessary; that if they rely
on over-the-air TV, that they will get their set-top box and
not miss a day.
They have also agreed, and I don't know if this is just
unique to Nebraska, but they are working with the United Way to
make sure that they communicate with the various groups,
whether it is the disabled community, deaf community, senior
population, minority population, whatever. We are working, our
TV stations are working, with United Way and the Office on
Aging and other groups to make sure that the message gets out.
So I see a pretty good plan out there. And I think the issue is
not just about money, but about the effort.
And I yield back.
Mr. Markey. The gentleman's time is expired.
The Chair recognizes the gentleman from Washington State
Mr. Inslee.
OPENING STATEMENT OF HON. JAY INSLEE, A REPRESENTATIVE IN
CONGRESS FROM THE STATE OF WASHINGTON
Mr. Inslee. Thank you. I would like to address, we had some
previous discussion about white spaces. I just was reading an
article today I thought was kind of interesting in one of the
Hill documents here, pointing out there has been some
discussion about interference. And it was pointing out that
Dell, HP and Philips are major retailers of high-definition
sets, which would mean if there was going to be interference
from white spaces, that they would be undercutting their own
business model, if you will. And I thought it was an
interesting comment, because I think it indicates at least
three major players whose business model would be damaged if
there was interference want to see movement forward to continue
testing and continue to develop our white spaces solution. And
I hope that would be the direction that we move.
There also has been a suggestion that that become auctioned
and that we allow folks to camp on spectrum. And I don't think
that that is the most useful use of this spectrum. I hope that
we are moving forward with continued testing in this regard to
maximize use of this. I keep talking to folks who are ready at
the gate to start access to these new technologies. I hope we
are moving in that direction and look forward to discussion of
that today. Thank you.
Mr. Markey. The gentleman's time has expired.
The Chair recognizes the gentleman from Florida Mr.
Stearns.
OPENING STATEMENT OF HON. CLIFF STEARNS, A REPRESENTATIVE IN
CONGRESS FROM THE STATE OF FLORIDA
Mr. Stearns. Thank you, Mr. Chairman and Chairman Martin. I
appreciate your forbearance here as we go through these opening
statements. I think we are in pretty good shape here.
Mr. Terry mentioned that he feels pretty confident about
where we are at, and I sort of feel pretty confident myself,
especially because the consumer electronic industry. Now, these
are the ones that are going to be actually selling the boxes.
Now they predict demand for subsidized boxes will be closer to
8 million, and I think the FCC estimates over-the-air cable and
satellite homes and broadcasters, estimates of interest, there
should be a demand for 22 million subsidized converter boxes.
So we have quite a discrepancy between the 22 million and the 8
million. And according to recent reports, fewer consumers will
be using these analog television sets with over-the-air
antennas by February 17, 2009. So perhaps fewer still will need
the subsidy.
As Mr. Barton mentioned, the Nielsen estimates that only 13
percent of TV households, representing about 14 million homes,
will rely exclusively on over-the-air antennas on January 1,
2008. So I think that is all good news. Furthermore, under the
FCC rules, all television receivers manufactured since March 1,
2007, must be able to receive digital signals over the air.
So the combination of the new predictions, the combination
of the FCC rules that are stated, I think when this actually
occurs, there will be fewer consumers in need of this analog
box because there will be less analog TV signals. And so I
think that is all good news.
Not to mention that the National Association of
Broadcasters has a great amount of, shall we say, something at
stake here. They recently announced a $700 million PSA campaign
for the DTV transition. This effort will encompass a broadcast
network and 95 TV broadcasting companies and include TV spots,
educational programs and banners on TV Web sites.
In addition, my colleagues, last month the cable industry
announced it was launching a $200 million English- and Spanish-
language TV advertising campaign that will run until February
2009. Spanish-language broadcaster Univision has begun airing
30-second PSAs explaining the DTV transition on its TV network,
local TV stations, radio stations and online sites.
So, my colleagues, these examples demonstrate that market
and nongovernment solutions to the DTV transition exist, they
are working. The estimates are showing that it is coming down
from the discussions we have had over a year ago. And I think
that is all good news. But, as Mr. Barton, the chairman, talked
about, if the Democrats want, they could move H.R. 608, the
bill that he and Mr. Upton and Mr. Hastert introduced to
replace consumer education requirements that were stripped from
the original legislation by Senator Byrd in the Byrd rule. So
we have a fallback. It is time to move on. The 24 MHz and 1
billion for public safety is too important to be squabbling
about. So I think we have good news in the offing with the
combination of the National Association of Broadcasters, these
new estimates that are coming in, and the FCC's ruling, and I
look forward to their testimony.
Thank you, Mr. Chairman.
Mr. Markey. The gentleman's time is expired.
The Chair recognizes the gentleman from Michigan Mr.
Stupak.
OPENING STATEMENT OF HON. BART STUPAK, A REPRESENTATIVE IN
CONGRESS FROM THE STATE OF MICHIGAN
Mr. Stupak. Thank you, Mr. Chairman, and thank you for
holding this hearing on the status of digital transition
television or digital television transition. It is important
that we stay on top of this issue as we are just 16 months away
from the hard date deadline for the transition from analog to
digital across America.
More than 14 million households in the United States are
completely dependent on free, over-the-air television. An
estimated 41 percent of these households do not have the access
or economic resources to switch to cable or satellite. Sixteen
months is a very short time to handle such a significant
transition. By relying so heavily on individual private
interest to carry out the public service of consumer education,
I believe we risk confusing Americans without uniformity in how
the transition message is delivered.
Consumer education is only part of the problem. Once they
are properly notified, how will consumers in rural areas
receive these converter boxes? Unlike Mr. Green, we don't have
these big box stores that he speaks of. Rural communities like
the district I represent cover a lot of territory, are sparsely
populated, and are disproportionately dependent on analog
transmission. If the experience of broadband deployment is any
indicator, corporations driven by profit will not take into
account the needs and challenges of rural consumers.
Despite my concerns, I also realize that transition from
analog to digital television holds tremendous promise if
properly implemented. By freeing up the spectrum, hopefully
rural America can begin receiving broadband where none exists
thanks to new wireless technologies. Entry into the market will
be less cost-prohibitive, and we can begin closing the digital
divide. In addition, first responders will be able to move into
the newly unoccupied spectrum, which they will use to work
towards interoperability. However, the equipment for this
transmission is expensive, with costs estimated to be over $20
billion. But once completed, it will make our Nation safer.
I have introduced H.R. 3116, the Public Safety
Interoperability Implementation Act, which would create a trust
fund for public safety agencies from the spectrum auction
proceeds. Public safety is far too important and for far too
long have been shortchanged. And so with the spectrum, but
without proper equipment and infrastructure, there really is no
value to law enforcement. I look forward to working with the
Chairman in advancing my legislation.
Mr. Chairman, thank you for holding today's hearing. I look
forward to the testimony of our witnesses. I know many of us
will be jumping back and forth because the FISA bill is on the
floor today. I look forward to participating in this hearing as
much as possible. Thank you, Mr. Chairman.
Mr. Markey. The gentleman's time has expired.
We also have with us the gentlelady from Tennessee Mrs.
Blackburn, who has joined us, although she is not a member of
the subcommittee. Would you like to make an opening statement?
Mrs. Blackburn. Mr. Chairman, I will waive.
Mr. Markey. Then the gentlelady will waive her opening
statement.
But I see arriving is the gentleman from Illinois Mr. Rush.
And I would inquire as to whether or not he would like to make
an opening statement at this time.
Mr. Rush. Mr. Chairman, I will waive.
Mr. Markey. The gentleman from Illinois will waive as well.
Any additional statements for the record will be accepted
at this time.
[The prepared statements follow:]
Prepared Statement of Hon. Edolphus Towns, a Representative in Congress
from the State of New York
Thank you, Chairman Markey and Ranking Member Upton. I am
very pleased that the subcommittee is holding this hearing.
These oversight hearings allow us to keep the pressure on and
make sure the DTV transition is handled smoothly because the
benefits of transitioning are enormous, opening up desperately
needed spectrum for first responders. I believe my constituents
will support this transition if they are properly educated on
how to keep their TV signal, if they feel they are treated
fairly, if they know their Government is behind them, and they
know why it's important. I look forward to hearing from our
witnesses on how they plan to handle the operations and
contractors carrying this complicated effort out and on what
other ways government or industry can take to prepare us.
I would like to welcome all of our witnesses today and
congratulate them on their commitment to public service. I also
want to make certain they know that this transition is a time
in their careers when they can really shine. A smooth
transition would be a crowning achievement that they could hang
their hat on all their lives. Government agencies, industry,
and public interest groups should work hand in hand so that
they all have the right information they need to target the
populations that are most vulnerable. I am particularly
concerned with making sure seniors have the help they need to
make the transition.
I am pleased to learn of the efforts of local broadcasters
and cable companies to begin educating millions of American
television viewers on the transition to digital television.
They play an important role in providing my community with
timely news and information and it is imperative that viewers
not lose access to such a critical service.
Thank you, and I yield back the balance of my time.
----------
Prepared Statement of the Hon. Lois Capps, a Representative in Congress
from the State of California
Mr. Chairman, thank you for holding this important hearing
and for keeping our subcommittee focused on the continued
oversight of the digital television transition.
All of us on the subcommittee are fully aware of what will
take place on February 17, 2009--but unfortunately our
constituents are not.
For those constituents who hear of the transition and
attempt to make inquiries, the answers they receive can leave
them even more confused.
That said, for the purposes of this hearing I would like to
focus on the need for a comprehensive DTV transition strategy,
the need for accountability, and the need to promptly address
the concerns of the deaf and hard of hearing.
As GAO has reported, the lack of a comprehensive plan--or
planning body--to oversee and implement various facets of the
transition leaves our most vulnerable consumers at risk.
Over 20 million households will need to purchase at least
one converter box, and yet if a consumer walked into a retailer
today with questions about the conversion they would likely be
given misinformation.
Where is the comprehensive plan to educate our consumers?
Or to provide appropriate accountability mechanisms so that
consumers are protected from misinformation and any potential
glitches in the transition?
Lastly, I want to be sure that we do all that we can to
ensure that populations with hearing and vision impairments are
not left behind in this transition. To this end, I look forward
to the testimony of Mr. Stout and to hearing his
recommendations in this area.
Thank you again, Chairman Markey, for holding this hearing.
----------
Mr. Markey. Let us turn to our very, very distinguished
panel. First of all, I would like to apologize to you for the
number of Members who have arrived, kind of in historic
numbers, to make opening statements before the beginning of a
hearing. You are wondering what is going on, I am sure, and it
is very simple. ``congressional expert'' is an oxymoron. It is
a contradiction in terms, like Salt Lake City night life. I
mean, there is no such thing as a congressional expert compared
to real experts.
However, on this one subject, a relationship between
television sets and their constituents, Members of Congress are
experts. This is one thing we all understand in our bones. And
every Member wants each of you to understand how deeply we are
immersed in ensuring that this digital television transition
does not affect our constituents in a way that is adverse. And
so we apologize to you, but that is something that you should
understand in terms of how this panel, I think every
Congressperson, will view this issue.
So we will begin with John Kneuer, who is the Assistant
Secretary for Communications and Information at the National
Telecommunications and Information Administration from the
United States Department of Commerce. We welcome you back, Mr.
Kneuer. Whenever you are ready, please begin.
STATEMENT OF JOHN M.R. KNEUER, ASSISTANT SECRETARY,
COMMUNICATIONS AND INFORMATION, NATIONAL TELECOMMUNICATIONS AND
INFORMATION ADMINISTRATION, U.S. DEPARTMENT OF COMMERCE
Mr. Kneuer. Thank you, Chairman Markey and Ranking Member
Upton, members of the committee, for the opportunity to appear
again before this committee.
I am pleased to report that NTIA is making great strides in
accomplishing the task Congress laid out in the Digital
Television Transition and Public Safety Act of 2005. As you
know, the DTV Act required NTIA to establish and implement a
program allowing eligible U.S. households to obtain up to two
$40 coupons to be applied towards the purchase of digital-to-
analog converter boxes. Now, when I last testified before this
committee, NTIA's converter box program was in its earliest
stages, and members of this committee appropriately asked
important questions about how the program would ultimately
unfold. Specifically members wanted to know who would be
responsible for issuing coupons to consumers. Would
manufacturers produce boxes to meet consumer demand? Would
enough retailers participate in the program so that boxes would
be widely available? And, most significantly, how could we
possibly educate the American public with the $5 million made
available for consumer outreach under the statute?
Today I am pleased to report that NTIA, in coordination
with other Government agencies, and in collaboration with a
broad array of market participants, service organizations and
consumer advocacy groups, has made enormous strides to ensure
that the converter box program is run effectively, that
consumers will have widespread access to coupon-eligible
converter boxes, that the television viewing public is well
informed about the transition, and that those members of our
society with special needs could access the assistance they
need to continue to have access to over-the-air television
after the transition.
On August 15, NTIA awarded a contract to IBM to manage
three broad functional aspects of our coupon program--systems
processing, financial processing and consumer education and
communications. Under the contract, IBM is leading a team of
partners that includes Corporate Lodging Consultants, which is
responsible for retailer management, coupon distribution,
coupon redemption and payment; Epiq Systems, which is handling
coupon distribution and consumer support; and Ketchum, Inc., a
global public relations firm that is leading the consumer
education program. Each of these companies has extensive
experience in each of the functional areas and has successfully
implemented large and complex national programs.
NTIA is on schedule to meet its obligations under the act,
and beginning January 1, 2008 and continuing through March 31,
2009, consumers will be able to request two $40 coupons per
household to purchase an approved DTV converter box.
We have also adopted rules to provide guidance to converter
box manufacturers regarding the submission of test results and
sample equipment for evaluation and certification. Pursuant to
our regulations, certified converter boxes will possess
performance features based on industry-accepted DTV standards
as well as on FCC requirements for other television products.
The regulations required, for example, to NTIA-certified
converter boxes comply with the FCC's parental control or V-
Chip rule, emergency alert system rules, and closed-captioning
requirements for converters. NTIA has certified Digital-to-
Analog Converter Box models from multiple manufacturers, and
equipment from other vendors is currently being evaluated and
tested.
I am pleased with the number of manufacturers that have
filed notices of intent and test submissions. I suspect more
boxes will be certified over the weeks leading up to the
transition, and a list of certified converter boxes, including
make and model numbers, will be distributed with consumers with
their coupons. We have also worked diligently with retailers to
assure that consumers will be able to easily obtain converter
boxes during the transition period.
NTIA is actively working to make the program accessible and
attractive to a full range of retailers in order to gain
participation not only from large chains but from regional
outlets and small, independent local stores as well. This month
alone, we will send out approximately 25,000 mailings to
smaller retailers so they can be made aware of the program and
they can have information on how they can participate.
At our public meeting and Expo on September 25th, Radio
Shack, with 4,400 company-owned stores and 1,600 franchisees,
announced they intend to participate in the program. In
addition to stocking converter boxes, Radio Shack will train
its sales associates on the coupon program, as well as engage
in consumer education efforts both in the stores and on its Web
sites. I expect other retailers will follow that lead.
With regard to consumer education and outreach, to maximize
the value of our $5 million in consumer education funds, NTIA
has been working through partnerships to leverage support from
a diverse range of stakeholders. In particular, the industries
most directly affected by the transition--the broadcast, cable
and consumer electronics industries--are actively informing
their viewers, subscribers, and customers about the February
17, 2009 transition date and the variety of options that
consumers have to respond to it.
Last month, the National Cable and Telecommunications
Association announced a $200 million campaign to raise consumer
awareness. On Monday, the National Association of Broadcasters
launched its marketing campaign, valued at nearly $700 million,
which was intended to generate 98 billion discrete impressions
with consumers. The Consumer Electronics Association is running
radio spots and has developed consumer-friendly tools,
including a video that helps consumers understand their
options.
In addition to the broad public education campaign, NTIA
recognizes that certain segments of society are more directly
impacted by the DTV transition and may be least equipped to
manage it on their own. Accordingly, we have identified five
target groups for particular consumer education efforts:
seniors, the economically disadvantaged, rural residents,
people with disabilities, and minorities. These groups depend
on over-the-air television to a greater extent than does the
general population, and NTIA will carefully design and market-
test its consumer education materials to ensure the materials
are accessible to and can be easily understood by these target
communities.
In addition, we are working in partnership with trusted
intermediaries for these groups in order to get the word out
and to provide help in obtaining and in installing converter
boxes. By educating those groups and service organizations that
already reach and assist these targeted communities, we will
maximize available resources to ensure that DTV transition
assistance gets to those who need it most.
Working together in a broad public-private partnership,
including NTIA, the FCC, more than a dozen Federal Government
departments and agencies, market participants, and literally
hundreds of nonprofit and service organizations, I am confident
that we as a nation will conclude this transition smoothly,
that consumers will be well-informed, and that financial and
other assistance will be available to those who need it.
Thank you, and I will look forward to your questions.
[The prepared statement of Mr. Kneuer follows:]
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
Mr. Markey. Thank you, Mr. Kneuer, very much.
Our next witness is the Chairman of the Federal
Communications Commission, Kevin Martin.
We welcome you back, and we enjoy working with you, and we
thank you for being here today. Whenever you are ready, please
begin.
STATEMENT OF KEVIN J. MARTIN, CHAIRMAN, FEDERAL COMMUNICATIONS
COMMISSION
Mr. Martin. Good morning, Chairman Markey, Ranking Member
Barton, Ranking Member Upton, and all of the members of the
committee. Thank you for inviting me to be here today to talk
about the digital transition.
Thank you, Chairman Markey, for the favorable comparison to
Tom Brady. Except for, hopefully, my wife, I think you are the
only person who might compare me to Tom Brady, but I appreciate
the comparison nonetheless. With my athletic prowess, I thought
a more apt comparison or analogy might be to our Red Sox
manager, Terry Francona, but after last night's loss for our
team, I am not sure that that is as good a comparison today.
I certainly am as mindful as you are that February 17, 2009
is only 16 months away, and I appreciate the opportunity to
tell you what the Commission has been doing to try to prepare
for this unprecedented event. I believe a successful completion
of the digital transition depends upon minimizing the burdens
placed on consumers and maximizing their ability to benefit
from it. The Commission has taken some important steps to that
end, but there is still more we need to do. Our efforts to date
have been threefold:
First, we have been focused on getting the right policies
in place to facilitate a smooth transition.
Second, we have been actively enforcing our roles to
protect consumers.
Third, we have been promoting awareness of the transition
through our consumer education and outreach efforts.
Through all of our activities, the Commission is committed
to ensuring that no American is left in the dark. Now, our top
priority has been to implement policies that will minimize the
burden borne by consumers and maximize their opportunities to
benefit from this upcoming transition.
First, the Commission acted to dramatically reduce the
number of consumers who would need a converter box to view
broadcast signals after the transition.
Second, we are resolving the main technical issues.
Third, we are employing our authority and industry's
resources to conduct a far-reaching effort to inform consumers.
Finally, it is my hope that the Commission acts to
encourage and to facilitate broadcasters' abilities to offer
free additional changes so that DTV transition is a benefit
rather than a burden to consumers.
The Commission recently adopted an order that guarantees
that all cable customers will be able to watch all of the
broadcast stations after the digital transition. Specifically,
the Commission took action to ensure that cable operators
continue to make signals of all broadcast stations viewable
after the transition, as the must-carry statute requires. With
this action, we were able to significantly reduce the number of
Americans potentially needing a converter box to watch
broadcast stations post-transition.
Making sure that the almost 35 million households that
subscribe to analog cable are taken care of allows us to focus
all of our energies on assisting the nearly 15 million
households that rely exclusively on over-the-air signals.
Now, in August of this year, the Commission also adopted
the final DTV table of allotments. This order provided over 99
percent of the full power television stations across the
country with their final digital channel assignment. Today, 95
percent of all television stations are already broadcasting in
digital.
In April of this year, the Commission also adopted a
labeling order that required sellers of analog-only televisions
to disclose that at the point of sale. Retailers must state
that the TVs include only an analog tuner and, therefore, will
require a converter box to receive over-the-air broadcast
television signals after February 17, 2009.
At the suggestion of Chairman Dingell and Chairman Markey,
we initiated a DTV education notice of proposed rulemaking
earlier this year. I recently circulated to my colleagues an
order that would require the following: Broadcasters would use
PSAs and screen crawls throughout the day to inform viewers
about the transition. Broadcasters would also publicly report
on these education efforts on a quarterly basis. MVPDs, cable
operators and satellite operators would provide monthly inserts
about the DTV transition in their customers' billing
statements. Manufacturers of television receivers and related
devices would provide notice of the upcoming transition to
consumers when they are selling their equipment. All of the
Commission's DTV partners would provide quarterly updates on
their consumer education efforts. Finally, we would continue to
work with NTIA to ensure that the retailers participating in
the converter box program are appropriately training their
employees and informing their consumers.
Finally, I believe that one policy action in particular
could fundamentally change for the better the course of the
digital transition. Broadcasters should be able to and be
encouraged to use their digital spectrum to send multiple
television signals to consumers for free. Right now, a
broadcaster using analog technology transmits one programming
stream, which we think of as a television channel. With the
digital spectrum, broadcasters can put out not just one
programming stream but several, so a broadcaster could
broadcast two or three channels at the same time--for instance,
a movie channel, a 24-hour news channel or a sports channel--
with no additional cost to the consumer and no need for
additional spectrum.
In short, multicasting enables broadcasters to provide
consumers with more free television programming. I believe that
the ability to view new broadcast channels would facilitate the
transition by providing people with an incentive to get a
converter box.
As things stand today, over-the-air consumers have the
burden of purchasing a converter box just to maintain the
status quo. This burden is probably why a majority of those
aware of the transition think that the Government is on the
wrong track, according to a recent APTS survey. The message we
have been sending is simply not appealing: You need to buy a
new box or you will lose your TV altogether.
But what if we had a more positive message: If you get a
new digital television or a converter box, you will be able to
watch a wide array of new, free programming. Then what was a
burden will become a meaningful benefit. The opportunity to
enjoy more programming choices would give consumers an actual
incentive to be excited about adopting digital technology, and
the faster they get that technology, the fewer Americans there
would be at risk of being left behind in the dark in the
digital transition.
Now, this proposal is how it worked in Germany. In Berlin,
the opportunity to receive more free channels drove people to
proactively purchase converter boxes instead of viewing the
need to do so as a burden. Before the transition, over-the-air
viewers in Berlin received only 12 channels, but after the
transition, they received 27. A German Government report
analyzing the transition concluded that the switchover resulted
in less protests than they had anticipated, in part because of
the added value of receiving more services and channels.
Indeed, the GAO has also analyzed the Berlin transition and
has made similar findings. Mr. Goldstein, who also has done a
study on Berlin, concluded that the government industry and
consumer representatives with whom we spoke mentioned several
factors as contributing to the success of the Berlin DTV
transition. These factors included the following:
The DTV transition provided enhanced consumer value for
Berlin households as the number of channels available through
terrestrial television increased from approximately 11 to 27,
and it included an electronic programming guide. These new
channels were available through terrestrial television,
following the DTV transition, and they existed on cable and
satellite systems. And there was good cooperation between the
Government officials and industry, which helped ensure that the
consumers all received these additional channels.
I believe that what worked in Germany could work here as
well, and I have circulated a proposal to my colleagues that
will help facilitate multicasting and will require cable
companies to carry these additional multiple streams as free
programming to consumers. And I am hopeful that a majority of
the Commission will soon realize the potential benefit of this
policy for the DTV transition.
Now, the Commission's DTV enforcement efforts have also
focused on protecting consumers from the unknowing purchase of
TVs without digital tuners. We are enforcing three rules: the
requirement to label analog-only televisions; the prohibition
on shipping analog-only televisions; and the requirement that
the V-Chip function with digital technology.
With respect to labeling, our staff has inspected nearly
1,280 retail stores and Web sites, and we have issued nearly
280 citations, notifying retailers of violations. We have
circulated among the commissioners notices of apparent
liability against 14 retailers, for a total of over $3.5
million. We have also issued NALs against two companies for,
apparently, shipping only analog televisions, receivers and
equipment.
Finally, thanks to information referred to us by Chairman
Markey, we have circulated NALs against three manufacturers for
violating our V-Chip rules as well. The fines total over $11
million. One company had failed to include a V-Chip in the
digital television altogether, while two others had made TVs
whose V-Chips were not capable of being updated and adjusted to
changes going forward.
The swift enforcement of all of our DTV-related rules is
critical to protecting consumers, and our activities in this
area will continue to be a priority.
Now, in addition to our policy and our enforcement
activities, the Commission has been actively promoting consumer
awareness of the upcoming transition. Given our current
resources, we are prioritized, reaching consumers who are the
least likely to be aware of the transition, including senior
citizens, non-English speaking and minority communities, people
with disabilities, low-income individuals, and people living in
rural and tribal areas. We have focused our efforts on three
primary activities: presenting DTV information at conferences
and events; disseminating information via the news media; and
partnering with industry, consumer and other groups to help
facilitate the message.
Now, with respect to conferences and events, the Commission
staff has been distributing DTV education materials at as many
conferences as possible. In the last few months, we have
attended or have participated in 30 conferences. Earlier this
month, I spoke about the digital transition at a technology
summit that was part of the Congressional Hispanic Caucus
Institute, and we plan to participate in at least 30 more
events this year. We are also utilizing the agents in the
Commission's field offices around the country to expand the
scope of our consumer education efforts. Representatives in
each of our field offices have been targeting communities that
risk getting left behind in the DTV transition. Through the
work of our field agents, we are able to reach consumers in 36
States. We have distributed information to over 1,400 senior
centers, senior organizations, community centers, and groups,
and have given nearly 50 presentations.
Mr. Markey. Mr. Chairman, you are going to get a lot of
questions. Is it possible that you could summarize?
Mr. Martin. Sure.
We anticipate providing information to over 2,000
organizations and making another 350 presentations just this
year.
Obviously, I would ask that my full statement be entered
into the record. With all of the rest of the activities that we
have had ongoing, I think we are committed to devoting
significant resources in facilitating the transition,
continuing with our three-pronged approach of policy making,
enforcement and consumer outreach, and we intend to take
whatever actions are necessary to minimize the potential burden
of the digital transition on consumers and to maximize the
ability of consumers to benefit from it.
Thank you.
[The prepared statement of Mr. Martin follows:]
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
Mr. Markey. Thank you. Your entire statement, which looks
voluminous, will be included in the record in its entirety.
Our final witness on this first panel, Mr. Mark Goldstein,
is the Director of Physical Infrastructure Issues for the U.S.
Government Accountability Office.
We welcome you, Mr. Goldstein. We appreciate your work on
behalf of the subcommittee. Whenever you are ready, please
begin.
STATEMENT OF MARK L. GOLDSTEIN, DIRECTOR, PHYSICAL
INFRASTRUCTURE ISSUES, U.S. GOVERNMENT ACCOUNTABILITY OFFICE
Mr. Goldstein. Thank you, Mr. Chairman. I will be brief in
the interest of time. I know you have a lot to do this morning
yet.
Mr. Chairman and members of the subcommittee, I am pleased
to be here today to report on our work on the progress made in
the Nation's transition to digital television. We have a
detailed report on the public and private sector efforts
underway to implement the transition; that will be issued in
November 2007. The findings that I am reporting to the
subcommittee today are based on our draft report and,
therefore, are preliminary.
In my testimony today, in particular I will discuss the
progress made by Federal entities in conjunction with other
stakeholders in facilitating the transition; the progress made
in educating consumers about the transition; the progress made
implementing a subsidy program for converter boxes; the
technical issues facing the broadcast industry in meeting the
transition; and the future work on the progress of the
transition that we plan to undertake in the next 16 months.
In summary, No. 1, the FCC and the NTIA, in conjunction
with other stakeholders, have taken steps to facilitate the
transition. For example, the FCC has conducted periodic reviews
to report on transition progress, and NTIA has issued a
contract for administrating a converter box subsidy program. In
addition, private sector industry have begun preparing for the
transition. Despite public and private sector interaction
designed to help facilitate the transition, however, we found
that no comprehensive plan exists for the DTV transition.
Without such a plan, meaningful guidance for coordinating
responsibility and for measuring progress might not be
available to the private or public sector.
Two, several Federal and private sector stakeholders have
begun consumer outreach and education campaigns with both
independent and coordinated efforts underway. The FCC and NTIA
have developed informational materials and have begun direct
outreach to consumer groups. In addition, private industry
stakeholders have created the DTV Transition Coalition and are
voluntarily conducting outreach efforts. However, these efforts
are in the planning stages for the most part, and challenges
remain. An expert panel that we convened identified potential
challenges in key practices for our consumer education
campaign, such as defining goals and objectives and
establishing metrics to measure success.
Three, NTIA has made progress in implementing the converter
box subsidy program, but the program's outcome depends on the
voluntary participation of retailers and manufacturers. The
retailers we contacted expressed concerns about the possibility
of a redemption system that would affect their point-of-sale
systems, and they stated they would need more information on
IBM's technical solution before they could assess the impact on
their systems and whether it would affect their participation.
With limited or delayed retailer participation, consumers might
face difficulties in redeeming their coupons for eligible
converter boxes.
Four, although most television stations already transmit a
digital signal, technical and coordination issues such as
antenna replacement and tower construction may present
challenges for broadcasters in preparing for the DTV
transition. In addition, cable and satellite television
providers must coordinate with broadcasters to ensure that they
can continue to receive and to transmit the digital broadcast
signals after the transition. Further, select stations that
retransmit television signals, known as ``translator
stations,'' are not required to cease analog broadcasting.
These stations may choose to retransmit a digital signal or
they may convert the digital signal to analog and continue to
broadcast in analog after February 2009.
Five, we plan on reporting on the progress of the DTV
transition, including public and private efforts in
facilitating the transition; the status of consumer education
and awareness about the transition; IBM and NTIA's
administration of the converter box subsidy program; and
industry technical preparations throughout the upcoming
transition period.
For example, we will continue to monitor consumer education
programs and plan to conduct a series of consumer surveys
throughout the year prior to the transition date. The surveys
we conduct will be aimed at determining the population that
will be affected by the transition and the public awareness of
the transition. Throughout the transition process, we will
continue to monitor Government and industry consumer education
efforts, and will analyze the efforts compared with key
practices for consumer outreach. In addition, we plan to survey
broadcasters on the technical issues that must be addressed
prior to the transition date.
Mr. Chairman, this concludes my statement. I would be happy
to respond to any question that you or any member of the
subcommittee may have.
[The prepared statement of Mr. Goldstein follows:]
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
Mr. Markey. We thank you, Mr. Goldstein, very much, and we
thank each of our witnesses.
The Chair will now recognize himself for a round of
questions. I am going to begin with you, Mr. Goldstein.
You have testified here this morning that the Federal
Government lacks an overall DTV transition plan, that it has no
plans to monitor the transition and has no contingency plan
should the transition run into problems.
What in your judgment is the biggest threat to the overall
success of the transition that could be mitigated if the
Federal Government engaged in comprehensive planning?
Mr. Goldstein. Mr. Chairman, we felt with respect to the
overall planning that there were not strategic goals, that
there were not strategies and resources that were defined, that
there was not an identification of key stakeholders, that there
was not a risk mitigation plan that would have included
understanding the alternatives, should issues arise that had
been undeveloped and unprecedented, and so that really
concerned us.
We are not advocating that the Government take over control
or be a czar, but the Government, particularly the FCC in its
role of being in charge, essentially, of the Government's
spectrum and of the airways, we felt had a broader
responsibility to be able to ensure that the risks in the
transition be mitigated as best as possible, because otherwise
the challenges that we talk about in our testimony in all of
its aspects, whether it is consumer education, whether it is
the ability to have a box, whether it is some of the technical
issues related to ensuring that the footprint of the analog and
digital airwaves that people are still able to receive even if
they--even if you go out and you get a box and you have that
box, if the broadcast companies and the cable companies have
not had sufficient conversation to determine whether or not
cable head-ins can still receive the broadcast signal, you are
still going to have consumers who are in the dark.
So there are still plenty of issues that need to be dealt
with. And we think that greater coordination and greater
communication at all levels are necessary. And this can be
done, we think, best through having a more comprehensive
planning process that the Government at least ensures gets
underway with the private sector involved.
Mr. Markey. Thank you, Mr. Goldstein, very much.
We do not want to make anyone a czar either. The Russians
killed the czar. We want to make them Tom Brady. That is our
goal and our effort.
Let me ask you this, Mr. Kneuer. As I understand it, the
NTIA will not reissue a coupon if a consumer's coupon expires
after 90 days. So tell us what would happen in the following
situation:
A consumer has a coupon for a converter box. On the 90th
day, the consumer goes to Best Buy to use the coupon, but Best
Buy does not have any boxes in stock. As a consumer, although I
have procrastinated until the last day, I have done what I am
supposed to do.
What happens at that point? Am I out of luck?
Mr. Kneuer. One of the things we are talking with retailers
about is precisely the circumstance you described, that a
consumer comes in--whether it is the 90th day or it is the 15th
day--and there are not boxes in the stores. It is whether or
not they can conclude that transaction with the consumer in the
store, either treat it as an online transaction for the
consumer to come back or to have it delivered to their home or
to have the consumer come back and pick it up at that time. So
we do want to make sure that consumers are not disenfranchised
in that circumstance.
The more systematic approach is to encourage the broadest
possible participation by retailers and the broadest possible--
--
Mr. Markey. It should not be a requirement, though.
Should it be a requirement that retailers have to honor
that coupon if they have walked into the store before the 90th
day?
Mr. Kneuer. That is something we can look into making an
affirmative requirement as a business case in the program. It
is not currently included in the program.
Mr. Markey. No. What I am saying to you is that I recommend
to you that you make it a requirement. That is, if the retailer
is participating in the program and someone shows up and they
are representing themselves to have these boxes, what about the
issue of then should the retailer then have to ship it free of
charge to the consumer if they did not have it in the store?
Mr. Kneuer. I do not think we have authority to require
additional subsidies if it is part of their normal mail order
process. If they do things free of charge or if they charge for
the mailing of it, I do not think that in our program we would
have the authority to require that----
Mr. Markey. But do you have the authority to require them
to have boxes in stock?
Mr. Kneuer. No, we do not have the authority to require
supply chains. We do not.
Mr. Markey. So what do you get for participating? They can
represent that they have them. People show up. ``We do not have
them, but we have this wonderful digital TV set here. Why don't
you buy the digital TV set? We do not know when we are going to
have those converter boxes that we advertised in the newspaper
saying that we have.''
So how do we handle that situation? It is rife with
potential for a bait and switch.
Mr. Kneuer. Sure. Sure. That is sort of obvious consumer
fraud, a classic bait-and-switch campaign where they advertise
``We are your DTV coupon eligible box headquarters,'' and they
do not have boxes; they just have $500 TV sets, and they are
doing hard sells on consumers.
Our vendor, who has responsibility for the retailer
relationship, for certifying retailers, is going to be doing
spot checks in stores to make sure that they are educating
their consumers, that they do have----
Mr. Markey. But what conditions can you put on retailers in
order to make sure, if they are going to represent they have
these boxes, that they have them and, if the consumer shows up,
that the retailer will provide them to the consumer and that
there is no extra charge if they are out of those boxes at that
time?
Mr. Kneuer. If we found evidence of a retailer that was
consistently out of stock, there may, in fact, be times that a
retailer does run out of boxes, but if we had reports or
evidence that there was a consistent pattern, we would have the
ability to decertify those retailers.
Mr. Markey. Right. So, again, the coupon has expired; there
is no box; it is not the consumer's fault; it is the retailer's
fault. What are we going to do for the consumer?
Mr. Kneuer. Irrespective of whether it is the 90th day or
the 15th day, in our outreach and in our conversations with
retailers we are raising this issue with them. Can you execute
the point-of-sale transaction----
Mr. Markey. But what do you do if they do not comply? What
if they don't? What are you going to do?
Mr. Kneuer. If they do not agree to have those sorts of
processes in place?
Mr. Markey. Yes. What are you going to do to them?
Mr. Kneuer. Those are the sorts of things that we are
working through on a business case with the retailers.
Mr. Markey. Yes. I think the retailers have to know up
front what you are going to do to them, and then they will
comply. If they think you are going to be counseling them at
the 90th day, just talking to them, then unfortunately there
are going to be too many consumers out there who will be
walking around a store, without any converter box being in it,
now being counseled by this salesman, ``You know these new
digital TVs only cost $350. You should get one of these anyway.
Why wait?''
So why don't we try to figure out some way of having a real
set of sanctions that can be imposed upon them and that they
know about it and that they are being told very clearly what
will happen to them if they do not honor that coupon as it is
being presented.
Mr. Kneuer. Throughout our relationship with retailers and
in designing this program, we want to balance those sorts of
requirements on retailers with also having it be a program so
that we have a very broad cross-section of retailers. There may
be rural stores or smaller retailers that are not part of big
chains and that do not necessarily have the capability to do
shipping and transactions of that kind. So we want to make sure
that we are doing everything we can to make sure the retailers
are educating consumers and that retailers that participate in
this program are not engaging in those sorts of fraudulent
activities. But we also want to make sure that we are not
raising burdens that exclude classes of retailers that may
serve people in other communities other than the large----
Mr. Markey. OK. Again, what I am saying is, in my district
where we have all big stores, I just want them to know that
there is going to be a penalty. Now, it sounds like you want to
make a rural America exception, that rural Americans can be
treated differently, those consumers. Then if you have got a
separate set of protections for rural Americans that is not as
stringent as for urban and suburban, I would like to hear that.
But I think where there are big stores, there should be.
Mr. Kneuer. No. We absolutely will have sanctions. If there
are retailers that are actively misleading customers and that
are consistently out of supply, and we have evidence to the
fact that they are using this simply----
Mr. Markey. I am saying even beyond consistently.
I am talking about that consumer who is standing there.
They do not know anything, and they have to have some
protection. The store manager has to be there to say, ``But we
are going to honor it. Do not worry. We will get it for you in
a week.''
Mr. Kneuer. That is why we are in discussions with
retailers, to find out what their capability to do that is. It
is certainly something that we want them to be able to do, to
make it as easy for consumers and to not disenfranchise
consumers when they show up at the end of the expiration date.
Mr. Markey. OK. Well, I think there have to be very firm
requirements that are placed upon these stores.
My time has expired.
The Chair recognizes the gentleman from Michigan, Mr.
Upton.
Mr. Upton. Well, thank you, Mr. Chairman.
I have a number of questions as well, and I just want to
say that as I and as Chairman Markey have indicated, do not get
between us and our TVs. We all have our own MOs as we watch the
programming that we do, and I for one have already seen the ads
that have been on my cable company a number of times over the
last couple of weeks. In fact, I know, based on some
constituent conversations, that our constituents are beginning
to get a glimmer of the changes that are there, and it is not
too early for this process to begin because they want to be
ready. Particularly for those with over-the-air broadcasts--of
which, though, I have cable at my home in Michigan--clearly
those questions are starting to be asked. And I think that it
is important for folks to realize if they have--I made a speech
this morning at breakfast. If you have a set with cable or
satellite, really you do not need to worry about getting that
cable box.
The question, Mr. Chairman, that I have for you is: as
people are beginning to watch these ads, they are beginning to
say, ``Where do I need to get the box?'' it is my understanding
that they are going to be available in many retailers after the
first of the year.
Where are we in terms of the number of boxes that are
certified? How many do you think that we will have certified
and ready to go to the store shelf by the first of the year?
I understand that--I think behind Mr. Kneuer--oh, there it
is. Is that bigger than your TV?
Oh, Markey left. I do not know if that is bigger than Mr.
Markey's is. Is that bigger than your TV? Do you see the
converter box over here? You are not going to electrocute
yourself.
John, hold it up for him to see.
Mr. Kneuer. I think this is, in fact, the very first box.
Mr. Upton. Has that been certified?
Mr. Kneuer. This is a certified box. We have certified
multiple boxes from multiple manufacturers. We have a huge
expression of interest from lots of manufacturers.
The way the system works is in order to get certified, they
need to submit boxes to us for testing. We are working under an
MOU with the FCC and are using their labs, but we test them to
make sure that they perform the function for which they are
designed, which is the digital----
Mr. Upton. So how many have been certified already, how
many different boxes?
Mr. Kneuer. We have multiple boxes from multiple
manufacturers. I think we have three.
Mr. Upton. Three so far? How many do you expect that we
will have ready by the end of this calendar year?
Mr. Kneuer. I would not hazard or make a guess as to the
total number, but we have had boxes submitted by major
manufacturers and have a very large expression of interest from
multiple supply sources.
Mr. Upton. Of those that have been certified, are they
already in production, then? Are they getting them ready in the
warehouses to be shipped out?
Mr. Kneuer. That is my understanding, yes.
Mr. Upton. Mr. Goldstein remarked in his testimony that he
was aware that perhaps some of the major retailers were not
quite ready for the boxes. Have you found that? Have either of
you--I know this is probably more of a question for, I guess,
IBM, and we are going to have another hearing later on this
month. What have you heard?
Mr. Kneuer. One of the things that we focused on in putting
out our request for a proposal was how would you deal with
retailers and how would you make this a program that would be
nondisruptive to the ordinary retailer operation.
As to the point-of-sale issues that Mr. Goldstein was
talking about, in fact, it was IBM's experience in point-of-
sale and back-office software sorts of issues that that was one
of the stand-outs of their proposal. In fact, the retailers
that we have spoken to are very comfortable with the IBM point-
of-sale system. In fact, IBM has designed point-of-sale
operations for large retailers, so it is a system that----
Mr. Upton. So you have talked to Best Buy and to Radio
Shack and to Sears?
Mr. Kneuer. CLC, our vendor who has responsibility for the
retailer outreach, is in negotiations and discussions with a
large number of the top, I think, 50 largest retailers. Like I
said, then we are also reaching out to small, local retailers.
We are sending out 25,000 letters to those small retailers.
Mr. Upton. Do you see any distress signs thus far?
Mr. Kneuer. No.
Mr. Upton. Again, I know it is going to be the focus of
another hearing.
Mr. Goldstein, where did you get your information? Which
retailers seem to be posing some problems or not having the
right information?
Mr. Goldstein. Congressman, we talked to a number of
different retailers, and I would be happy to provide that
information to you later on. We can tell you which ones and the
like.
We did talk to IBM just the other day, because we are
continuing our work, of course, and in our discussions with
IBM, they did indicate that they are in serious negotiations
with 23 large retailers right now. But they do not have a
target date right now as to when they are going to be ready to
redeem the coupons, and they are seeking input from the
retailers for this.
Mr. Kneuer. I think part of that disconnect may have been
that the retailers had yet to have those conversations with
IBM. And I think as they are having those conversations, they
are getting a very high degree of comfort that the point-of-
sale issues are going to be very miniscule.
Mr. Upton. What I have heard from the retailers that I have
talked to is that they are excited about this new product
because they are going to have a new product that will bring
people to their stores, and that they are anxious to get it on
the shelves so that, in fact, they can begin to redeem--I mean,
it is a product that they want and want to be able to sell.
Mr. Kneuer. When we deliver the coupon to consumers, we
will send them not just the list of certified eligible boxes by
serial number, but the name of retailers and the locations of
those retailers by their Zip Codes. So, if you request a coupon
and it gets sent to your Zip Code, there will be a geographic
range saying, These are the stores in your community that you
can go to. And I think retailers will want to be on that list.
Mr. Upton. OK. I yield back.
Mr. Doyle [presiding]. Thanks, Mr. Upton.
The Chair will now recognize himself.
Mr. Kneuer, I just want to follow up on something Chairman
Markey asked you about.
Now, your contractor has the ability to track these
individual coupons through the system from issuance to
redemption; is that correct?
Mr. Kneuer. That is right.
Mr. Doyle. It seems to make sense to me that if they can be
tracked, you can also track to see if someone's coupon expires,
and you will know if someone used it.
Mr. Kneuer. That is right.
Mr. Doyle. So I can think of many good reasons, in addition
to what Mr. Markey brought up, if someone goes to a store a
couple of times and they are out of the boxes, or someone is
deployed in Afghanistan or in Iraq, or some senior citizen's
grandkids are going to hook up the box and are not going to
come until Thanksgiving. There are just a lot of reasons.
If you can track these coupons and you can see when they
have expired, why not err on the side of the consumer and just
put them to the back of the line and reissue these coupons?
Mr. Kneuer. The statute says that consumers may request up
to two coupons and that they expire within 90 days. So I think
the statute constrains our ability to reissue coupons, to issue
more than two coupons, or to allow them to go beyond 90 days.
Mr. Doyle. Why not fix the statute? I mean why not make
this consumer-friendly? If we can track these coupons through
the system, and we have the ability to do that, I mean why not
just change the statute and make it more friendly to the
consumer?
Mr. Kneuer. I would defer to the Congress on the change.
Mr. Doyle. Yes, I think maybe we should think about doing
that because it should be more consumer-friendly.
Chairman Martin, we do not want a czar, but what is wrong
with a benevolent dictator or a guru or something like that?
Why not have someone at FCC quarterbacking this thing to make
sure that all of the various private sector groups that are
going to be doing this outreach and information are coordinated
in those activities? Why not have someone making sure that the
message that is being put out there is clear?
Mr. Martin. Oh, I do not think I have any problem with--and
I think the Commission is involved in trying to quarterback a
lot of these issues, as you would say.
I think that the issues that we are discussing from GAO's
standpoint involve technical issues, policy issues and
education issues that are related to the box program. And I
think the Commission is very involved in trying to set
frameworks, timeframes, and goals for us to reach on the
technical issues and on the policy issues.
I think that the consumer education issues and the DTV box
program are ones that are not solely in the FCC's control. That
is something that we work on jointly with NTIA, and I think
that the Commission is actively working on coordinating those
efforts. Some of the resources that Congress decided on should
be provided NTIA to coordinate the DTV box program. They should
be responsible for $5 million in the education budget.
As you indicated in your opening, we do not even actually
have the $1.5 million. That is in this year's budget request.
We requested money last year, and we received none from
Congress on doing DTV education.
So I do not have any problem at all with the Commission's
taking an active role and trying to be involved in these
issues, and I think we are.
Mr. Doyle. As to what you have just said, NTIA is going to
spend $5 million which is a drop in the bucket of what needs to
happen. I mean the bulk of the real money that is going to get
spent educating consumers is coming from the private sector. It
is going to be the cable industry's spending however much they
are spending and the broadcasters' spending however much they
are spending. As I said in my opening statement, we have to
remember these people are also competitors, and so the question
is: What kind of message--predominantly, the message consumers
are going to hear is going to be the $200 million cable message
and the $500 million, whatever that figure was, broadcaster
message. The $500 million NTIA message--we run campaigns here,
and we know what rating points are. If I am spending $50,000 on
my message and Mr. Upton is spending $5 million on his, people
are going to hear his message, not mine, and he is going to
win. So the message that our consumers are going to hear is
really going to be a message of the broadcasters and the cable
industry who are competitors, and not the government that does
not have a vested interest in the message.
So how do we make sure who on the Government level, whether
it is NTIA or the FCC, is sort of watching all of this and is
making sure that consumers are getting a clear message?
Mr. Martin. Oh, I think it is going to relate to the coupon
program. I think NTIA has to be the one that is watching it to
make sure that those messages get to consumers about their
rights and their responsibilities related to the DTV coupon
program. I think that has to be NTIA. That program is a part of
their responsibility.
On the general DTV transition, I think the Commission would
end up being the one watching to make sure that those messages
are not misleading and that they are informing consumers in an
appropriate way.
Now, I am hesitant to say that we would be editing those
messages ahead of time. And I think that that is what you were
saying about you are not sure that there is a need for a czar,
so to speak, of this. But I think the Commission is involved,
and should be, in working with the industry to make sure that
the messages that they are going to put out are going to be
targeted to be the most effective.
I think that in addition to the voluntary efforts that the
industry has put forth, we have proposed, as Chairman Dingell
and as Chairman Markey have suggested to us, that we have
certain requirements for certain kinds of messages that should
be put out. For example, a PSA campaign in scrawls that would
be put out by broadcasters to inform their viewers, we would
dictate that it would have to be done during certain day parts,
and it would increase in frequency as we approach the
transition.
On those messages that we are requiring, I think that we
would have a more direct role in supervising them, just like in
the message that we require the consumer electronics
distributors to put out for the tuners to say, ``Here is the
message you have to tell consumers if you are selling a
television without a digital tuner.'' Similarly, I think we
will be involved in the message when we are requiring the
industry to actually put that forth. It is different from the
voluntary messages that they are putting out.
Mr. Doyle. So, if you see messages coming out of the
broadcasters or out of the cable industry or out of the private
sector that you think are not clear messages to the consumers,
the FCC will step in and take action?
Mr. Martin. Yes. I think that if they were not clear or
they were misleading messages, I think, yes, we would step in.
Mr. Doyle. OK. I see my time has expired.
I will now yield to the ranking member, Mr. Barton, from
Texas.
Mr. Barton. Thank you, Mr. Chairman.
A point of full disclosure. When we designed this program 2
or 3 years ago, we could have gone either way. We could have
had a regulatory model telling the Government exactly what to
do, and when to do it, and who has got to do it; or we could
kind of set a loose framework, provide some funding and trust
in markets. We decided on the latter, to do the market.
I say that because I have listened with interest to what
Chairman Markey and Congressman Doyle have said when kind of
painting these worst-case scenarios. And I would have to say
that if we used the same analysis in each of our campaigns,
every member of this committee and in the Congress gets here
because we get elected. We get elected every 2 years, in
November.
If the GAO went down to the sixth district of Texas, which
I represent, and did an investigation of my campaign today,
they would find out I am not doing any advertising; I do not
have my volunteers manning the polls; I am not actively out
doing advertising on radio or TV or in the newspapers. I do
have $2 million in the bank. I know when the election is, and I
am comfortable that when the appropriate time comes, I will put
the campaign together, and hopefully the voters will reelect
me. But I am not doing it today.
Now, to go to Mr. Markey's question to Mr. Kneuer, I do not
know how it is going to work in everybody's households. But in
my household, what will probably happen is, sometime around
Christmas of 2008, my wife will say, ``Joe, you know that DTV
conversion is coming up. Have you got the converter boxes?'' I
will say, ``No, Terri, but I will get it done.'' And I will not
do it. Then on February the 19 or whatever the exact date is, I
will get up and I will turn the TV on, and I will say, ``Darn,
the TV is not working.'' Terri will say, ``Well, Joe, did you
go get the converter box?'' I will say, ``No, I did not.'' She
will say, ``Well, you had better go get it.''
Now, I do not plan ahead, so I will just go to the nearest
place, which I think is a Radio Shack, and I will walk in with
my little coupon that has been provided to me by mail--or the
debit card--and I will say, I want my two converter boxes.
Now, let us say that there has been a run on converter
boxes at that Radio Shack. They will say, ``I am sorry, Mr.
Barton, but we are out of converter boxes.'' I am not going to
call Mr. Markey or the FCC, I am just going to go to Wal-Mart.
Now, my wife would call ahead. She would say, ``Do you have
converter boxes?'' but oil is only $90 a barrel, so I will just
hop in the SUV, and I will drive around until I find one.
I do not think we need a regulatory model where there is a
penalty if Radio Shack does not have the converter boxes.
Somebody will have them at Best Buy, Circuit City, K-mart or
Wal-Mart. You can get them on the Internet. Somebody will have
a converter box for the Joe Barton household, you know?
I am just not concerned as much as the chairman and as some
of my friends on the majority that this thing is all going to
go to heck in a handbasket. Because I trust markets, I trust
self-interest, I trust the ability of people to visually become
cognitive that something different is going to happen and to
take active steps to make sure that they are ready for it. I
just believe that.
Now I want to ask you, Mr. Kneuer: Do you think that you
have got adequate funding to provide the coupons for the
converter boxes that will be necessary? Do you think the money
that is in the law is sufficient?
Mr. Kneuer. I do. If you go by the various estimates that
we have been quoting here this morning, on demand, if we access
the entire $1.5 billion, we have the ability to fund more than
30 million coupons, and that is in excess of any of the
predictions of demand that we have seen.
Mr. Barton. I will ask Chairman Martin. Do you feel the FCC
has got a handle on the technical issues that are involved with
the down conversion at the cable head? I know there has been
some concern about that. Do you feel like your staff and the
experts at the FCC can work with the cable industry to make
sure that works OK?
Mr. Martin. Yes, I do. I think that we have been working on
that, and that was one of the important issues we tried to
address just recently in September when we made sure that we
were working on the requirements to make sure that the cable
consumers, including the analog consumers, are still able to
watch those----
Mr. Barton. I see that my time has expired, so here is my
last question.
Forget all of the concern about everything else. I want to
ask each of you three gentlemen: On a personal basis, do you
feel that you have enough time to convert your television sets
by February 2009, or is there something the Government needs to
do to help you get ready to do that in the next year and a
half?
Mr. Kneuer. I am all digital.
Mr. Barton. You are ready.
What about you, Mr. Martin?
Mr. Martin. I am ready.
Mr. Barton. What about you, Mr. Goldstein?
Mr. Goldstein. I am ready as well.
Mr. Barton. All right, that is three. OK. I think we are
going to make it, Mr. Chairman.
With that, I yield back.
Mr. Markey [presiding]. I thank the Chair.
The Chair recognizes the gentleman from Texas, Mr.
Gonzalez.
Mr. Gonzalez. Thank you very much, Mr. Chairman.
My questions will go to Secretary Kneuer and to Chairman
Martin.
When we had a hearing back in March, in our staff memo--we
need to commend that, by the way. Their memos are so excellent.
Let me read something here.
By law, the coupon program must begin on January 1, 2008
and run through March 31, 2009. For the initial $990 million
minus up to $100 million in administrative expenses, all U.S.
households will be eligible to apply for up to two such coupons
worth $40 each. If the initial funds are not adequate, the ad
permits NTIA to certify that the program needs additional funds
up to $510 million, bringing the cap total for the coupon
program to $1.5 billion, minus up to $160 million in
administrative fees. For these additional funds, the NTIA has
chosen to restrict eligibility to exclusively over-the-air
households. Households that subscribe to cable or satellite but
that also have over-the-air television sets will not be able to
receive coupons for this portion of the funding. Consumers
requesting coupons during this stage will have to self-certify
to NTIA that they do not subscribe to cable, satellite or other
pay television services.
Now we fast-forward, and I will read from today's
memorandum, because that was March. Come September, the FCC
does issue a ruling, and--if I can find the relevant part here.
This is from today's memorandum:
It has long been assumed that cable operators would
accommodate their subscribers with analog television sets by
down-converting broadcasters' digital signals to analog, and
the head-in are providing subscribers with set-top boxes that
down-convert a digital program into analog. Though, there was
some concern * * *
and it goes on about a couple of areas
* * * in September, the FCC adopted rules to ensure that
all cable television subscribers, including those with analog
equipment, can receive all local broadcast television signals
after the DTV transition. Approximately 35 percent of all
television homes, or 40 million households, subscribe to analog
cable.
It seems to me that, if we had had that in place, maybe we
would not have had that memorandum, Mr. Kneuer, as to how we
would proceed with the first portion of the money and then
proceed to the second. Please educate me on this. It appears to
me that you probably, as a result of the FCC's ruling in
September, have captured a huge audience.
Will you now have a situation where people who have no need
for the converter boxes--and you are going to say, ``Why would
they go and get one if they do not have any need?'' that is
because certain things reside in the hearts and souls of
certain people in this country. They would go over there,
redeem the coupons, the vouchers, and get a converter, when in
fact they have an analog TV, but because the cable company is
obviously reconverting at the head-in, there is no need. So why
in the world would you do that? Well, because they know that
Mr. Markey and Mr. Barton are probably right, that there are
probably going to be additional outlets for boxes, black
markets and such, because the only ones who would have had to
certify that they truly needed it would have been that second
batch of individuals that seemed to be, really, the total
universe that we are going to be mostly concerned with.
What are the consequences of the September accommodation or
ruling by the FCC on the original plan on how we were going to
divvy up the monies? That is the first part of the question.
But time goes on, and I want to give everybody enough time. So
that is the first question to both the assistant secretary and
to the chairman.
Then the second question, Mr. Chairman, is going to be--and
I appreciate what you are doing regarding the multicast aspect
of it. I am just going to assume something. Correct me if I am
wrong.
If we allow the reconversion of digital to analog at the
head-in, what does that do to capacity? What does that do to
the ability of the cable company to actually free up that space
where we can have additional channels?
Now, I may be totally wrong on the technology, and I do not
understand it, and I do want you to educate me on that because
I know I have checked with my Time Warner people in San Antonio
and, in essence, I think one digital signal is the equivalent
of, I think, six analog signals, the same space. And I am not
really sure if that is an accurate description. How does that
impact your vision regarding multicast? And then you predicate
it on additional space. I always try to reduce it to the most
simple analogies.
So the first part of the question: What are we going to do
with all of these people who really do not need boxes, but they
purchase them? Let us just say that could happen.
Mr. Kneuer. When we designed the program and looked at that
issue, looking at the legislative history and the record that
we developed, we always expected that cable households would
continue to have television in one form or another after the
conclusion of the transition. There was also the realization
that many cable households and satellite households have
additional television sets that may not be hooked up to their
service provider. The conclusion was that this transition was
going to have a very broad impact across households and across
American consumers. So we wanted to make the availability of
financial assistance very, very broadly available, so we had no
restriction on eligibility for the first $1 billion. If you are
a cable household and you have additional sets that are not
hooked up to the service provider--you have got Mr. Markey's
set in the bathroom that you use in the morning--you ought to
be able to get financial assistance if that is what you want.
We wanted to shift the focus with the second $500 million
to make sure that if demand started to outstrip the capacity of
the program, that we would focus the resources to make sure
that no household would completely lose access to television,
without financial assistance. So those cable households would
still have access to television after the conclusion of the
date. Households that rely exclusively on over the air would be
most at risk of losing television altogether, so we wanted to
make sure the money went as far as it could possibly go to
serve those consumers who most need it. And I would not change
our decision based on the action that they took in September.
Mr. Gonzalez. Chairman Martin.
Mr. Martin. The action that we took in September was in
doing our best to protect as many consumers as possible so that
the analog cable consumers who subscribe to analog cable today
will be able to watch broadcast TV the day after the
transition, just like they did the day before.
Some of those consumers may have other televisions that are
not hooked up to cable. And I think that is what Secretary
Kneuer was referring to, that they might still want to apply
for a coupon. I would leave it up to the discretion of NTIA to
determine how to utilize their limited resources to prioritize
who should be at the top of and in the front of the line. What
we are doing is trying to make sure that we can do everything
we can to put the burden as less as possible onto consumers.
As to the second question----
Mr. Gonzalez. And I misspoke. It is one digital equals six
analog.
Mr. Martin. It is actually--there are disputes about how
many digital signals can fit within what used to be the
capacity of taking up an analog channel on cable. Some people
say six; some people say up to 20. There is something in Comm
Daily today that says up to 20-some, people claim. But
regardless, when you switch over the cable system from an
analog channel to a digital channel, you can fit in a lot more
channel capacity. So I think that even if you just required
carriage of the multi-casted signals on the digital tier, there
seems to be significant amount of capacity on the cable
systems. They could end up taking that on, and it will have a
significant positive impact on the reach of those additional
broadcast stations.
Mr. Gonzalez. Thank you very much.
Mr. Markey. The gentleman's time is expired. The Chair
recognizes the gentleman from Oregon, Mr. Walden.
Mr. Walden. Thank you, Mr. Chairman. I appreciate the
opportunity to ask just a couple of questions. I just want to
make sure, for the record, coupons are due out and available by
January 1 2008?
Mr. Kneuer. January 1, 2008.
Mr. Walden. And how would somebody get that coupon?
Mr. Kneuer. Either by phone, by mail, by fax, over the
Internet. They can call on the phone and give their
information. They can get on the Internet, and there will be a
form available. There will be forms in hard copy generally
available from a variety of sources. And so they can either
mail that in or fax that in.
Mr. Walden. How many people are likely to apply?
Mr. Kneuer. In January?
Mr. Walden. Total number available to apply, you estimate?
Mr. Kneuer. The eligibility is for all U.S. households. And
a variety of different sources are coming up with different
predictions on demand. We are doing some polling and things on
that as well.
Mr. Walden. And what do you think?
Mr. Kneuer. Fewer than the 30-plus million that we have an
ability to fund.
Mr. Walden. The reason I ask that is that I am assuming it
is going to be in the $15 to $20 million range, I don't know. I
am kind of pulling a number out of the air, as we all probably
are right now. I remember going through the signup for Medicare
prescription part D. There was an overwhelming of the phone
system. There was a problem with the Internet system, all of
that, as consumers tried to sign up for prescription drug
coverage. You might want to talk to your friends at HHS about
their lessons learned from that process as you go into,
especially the dial-up part. Because of the waits on phones
were very long and very frustrating, obviously, for folks. So,
January 1, the coupons should be available to apply for. And
how long would it take for a consumer to get that coupon back
after they apply, if they go online? What are your folks
telling you?
Mr. Kneuer. For the very early phases of the program, we
are going to manage the distribution of the coupons that we get
requests for based on the availability of boxes and the
availability of retailers. So if there is not widespread
availability of boxes and widespread retailer participation in
early days of 2008, we probably wouldn't send those coupons out
until we had that visibility. But once the full system is in
place, it will be a matter of days on the turnaround getting
into the mail from the time we receive the request.
Mr. Walden. It strikes me that that is going to be a
frustration point for consumers who apply and don't get it. And
maybe they were going to go 60 miles away outside of their Zip
Code to get a box, and they can't do it.
Mr. Kneuer. We have the ability to adjust the program in
lots of different parameters throughout the entire part of the
program. So the early forms will probably indicate expect a
number of weeks for delivery. Or if you call on the phone, they
will say the coupon will be there in a couple of weeks. Later
it will be adjusted to match up with the supply. We don't
anticipate in all of the research that we have done and the
visibility we are getting from our vendors, we do not
anticipate a large volume in the early days of 2008.
Mr. Walden. What about the rollout of the boxes themselves?
You brought a prototype there.
Mr. Kneuer. This is actually a for market. It is not a
prototype. This is a certified box.
Mr. Walden. And are there any certified boxes available
today in a retailer that you are aware of?
Mr. Kneuer. Not coupon-eligible boxes. There are some
digital-to-analog conversion devices that are integrated into
other devices, DVD players and such.
Mr. Walden. And when do the manufacturers tell you they
will have these boxes ready to actually roll out and in the
stores in the retailer outlets?
Mr. Kneuer. Throughout our management of the program, it is
going to be collecting information from the participating
retailers, from manufacturers to the extent we can. A lot of
this is very business, proprietary and sensitive information,
so they don't want to put into a public record, we are shipping
X number of units to the following stores because that can
dictate competitive behavior by others. But we are working with
the retailers who are certifying and getting a sense from them,
because, like I said, when we deliver a coupon, we are going to
deliver a list to the consumers, the certified boxes, here is
where you go to get them.
Mr. Walden. And I am thinking in my district, which is very
rural--and I live in one Zip Code and people not too many miles
away live in another--there is no retailer in that Zip Code. So
are you going to pull multiple Zip Codes?
Mr. Kneuer. We are working on the best way to deal with
that scenario.
Mr. Walden. Like within a 20-mile or 50-mile radius?
Mr. Kneuer. It may not be exclusively Zip Code specific. We
have the Zip Code of the consumer because that is where we are
mailing the boxes. And then we may say it may be a geographic
within 10 miles, within 15 miles. We are working through what
we have the capability to do.
Mr. Walden. I hope those of us, especially in rural areas,
you will look at how big a swath you need to reach out to. It
may be 100 miles. I have parts of my district that are at least
100 miles to the nearest stop light, and I am not exaggerating,
and 5 miles to the nearest freeway. And so what works in an
urban area, as you well know, won't work in a rural area. Can I
beg your indulgence?
Mr. Markey. Only that the roll call is about to break, and
I want to allow the members. I apologize to you.
Mr. Walden. I remain deeply concerned about the rollout of
the boxes, would be the one point I would leave you with.
Mr. Markey. I thank the gentleman. Just to make sure as
many members can ask questions.
The gentlelady from California, Ms. Eshoo.
Ms. Eshoo. Thank you Mr. Chairman. All the members have
asked really terrific questions. I think the gentleman from
Oregon has really asked some practical ones. The answers give
me some pause, but you still have time to work on them. Now,
Mr. Kneuer, you spent some time, I think in your written
statement, certainly in your spoken statement, about the
message. Now, you are responsible for coordinating it. What is
the message that you have approved with the various
organizations? Do you know it off the top of your head? Is
there a tag line that then has some of the details? What is it?
What is the campaign to inform people?
Mr. Kneuer. What we are spending the most money on of our
$5 million is coming up with tailored messages for tailored----
Ms. Eshoo. Do we have them yet? Do you have them?
Mr. Kneuer. They will be market tested and polled so that
people understand them as best they can for those particular
constituencies.
Ms. Eshoo. I would really like to know what they are when
you come up with them.
Mr. Kneuer. Sure.
Ms. Eshoo. Because I think that it is very important. Now,
let me ask about something that you had in your written
statement about the solution to the challenges of the education
program. You said it is not the establishment of a single
digital transition authority or single Government mandated
message but that a multiplicity of messages and sources of
information is critical to a well-informed consuming public.
Now, the GAO, in their latest report on the transition,
stated that there isn't any comprehensive education plan, and
without one, there are no defined goals, objectives or metrics
for measuring success. So have you developed a metric? How are
you going to measure what you are doing?
Mr. Kneuer. We have the ability throughout the program,
like I said, to measure the trends for request of coupons, for
redemption of coupons in different areas.
Ms. Eshoo. I'm sorry, I didn't hear you. You do have a
metric by which you are going to measure?
Mr. Kneuer. We will measure in real time the geographic and
demographic request for coupons or redemption of coupons. The
point of the testimony was that consumers have lots of
different choices on how best to effect the----
Ms. Eshoo. I understand that you said that you are going to
do that. I am asking you how you are going to measure your
objectives? Just to say that you are going to do it doesn't
mean that it is going to be successful. So once you put it in
place, how are you going to measure it?
Mr. Kneuer. There is going to be----
Ms. Eshoo. That is irritating; isn't it? I know.
Mr. Kneuer. All of the different----
Ms. Eshoo. You feel like someone is banging on your head.
Mr. Kneuer. We are going to do a measurement on the request
for and redemption of coupons. We are working very broadly on a
public-private partnership with the other Federal agencies,
with other service organizations, with the broadcasters and
with the cable companies. They are doing polling to get
information on what the level of awareness is by demographic,
by geography and then focusing their education based on that
polling. We then are working with them to make sure as they are
making them aware that they are also making them aware of the
availability of our program. So it is, lots of different market
participants and constituency groups that have an interest in a
successful transition working together, like I said, in this
very broad public-private partnership.
Ms. Eshoo. I think that when you develop these ``messages''
that your PR people, or however you are coming up with this, I
think it would be interesting to have it brought back to the
committee. This is essentially a campaign.
Mr. Kneuer. Absolutely.
Ms. Eshoo. I think the people up here know something about
developing a message and having it be effective and having it
be relevant so people really know what is coming and what they
need to do themselves.
Chairman Martin, one of the commissioners has recommended,
as you know, a DTV task force. Do you support that? Do you
think it would be helpful? Do you think that there is another
way to go? I have a sense where you are, but for the record.
Mr. Martin. I am happy to end up coordinating as much as
possible with the other Federal agencies. What one of the other
commissioners has called for is for there to be an
intergovernmental task force like there was in Y2K. That was
actually established by an Executive order. The FCC itself
didn't establish the Y2K task force. It was an Executive order
that established an interagency task force. And so that is not
something that I can end up even controlling. But I am happy to
end up continuing to coordinate with Chairman Kneuer.
Ms. Eshoo. So where is it, though? Is it going to be that,
or it is not?
Mr. Martin. I don't anticipate that there is going to be a
further DTV task force that will be established across
different agencies. I think that we will already end up
coordinating. We have memorandums of understanding on issues,
and we can continue to do that. But that is within our
authority.
Ms. Eshoo. Well, first, it is going to be in the pity in
terms of how it works with the American people.
Mr. Markey. I thank the gentlelady.
We have time for one more questioner. Then we are going to
break and come back after three roll calls on the House floor.
I would ask the witnesses to please wait because there will be
other members who will be returning to ask questions.
And at this time, I will recognize the gentleman from
Georgia, Mr. Deal. He will be our last questioner at this
point, and then we will break and come back after the roll
call.
Mr. Deal. Mr. Chairman, since my colleague Mr. Shimkus has
been here the whole time and I have had to leave, would it be
proper to defer to him, and then I will be back after the
break?
Mr. Markey. It will be proper for you to defer, and it
would also be a good example for other witnesses as to how
somebody keeps getting reelected and understand how politics
works.
So I recognize the gentleman from Illinois, Mr. Shimkus.
Mr. Shimkus. Thank you, Mr. Chairman. I want to thank my
colleague. I didn't ask that. He was just very gracious. I will
just make a couple quick points.
I am a supply guy. I am more supply and energy and really
more supply for the consumers. And the thing that gets lost and
the great thing about the digital transition in DTV, it gives
the consumer another choice. And I think it was talked about in
the opening statements, about more channels. So if we can
phrase the debate of buying the converter box and you get more,
that is good. We want cable. We want direct satellite. We want
free over-the-air. We would like to see broadband deployment of
video services. That competition will be great.
So I am excited about this. And I am a market person. The
market can do this. And I think the market already is. The
question was asked about how many coupons. Different
associations have their own opinion. I think the broadcasters
think 23 million. The communication electronics association
thinks 8 million. In its first 24 hours on sale, Mr. Doyle has
left, but he would appreciate this, ``Harry Potter and the
Deathly Hallows,'' the seventh and the first--and final
installment of the book, in 24 hours sold 8.3 million books.
Surely we can get, whether it is 8 or 23 million, digital
converters out if we allow the market to do it.
I can guarantee you that the Government could never get 8.3
million books out in a 24-hour period. I can guarantee you
that. So let us set some high standards. Let us trust the
market. Let us check it. But the market wins over Government
providing goods and services hands down lowest cost, quickest
response time, day in, day out, bar none.
Chairman Martin, there are a couple concerns, though. One,
the multi-cast must-carry order will affect some small cable
companies, and there is a waiver process that I know of that
exempts some of these companies. Can you describe this process
as to how many waivers have been granted as of today?
Mr. Martin. I think you probably are referring to the
viewability order where we said that they have to down convert
the digital signals and continue to carry them in analog to
their analog customers. There actually haven't been any
requests for a waiver yet. We just adopted that ruling in
September, so there haven't been any requests yet.
Mr. Shimkus. Mr. Kneuer, there is also concern about the
household issue and senior citizen centers, and how are we
going to deal with the definition of a household when you have
a community under one roof in essence?
Mr. Kneuer. It depends on the community and on the senior
citizen facility. I know many of them are actually more like
apartment buildings, is the way they are viewed from the postal
service, so that they actually have their own address and their
own household, and they would be able to participate. The sorts
of facilities that don't have that, that are much more closer
to a hospital-like facility, I think for most of those
television is supplied as part of that. But that is, again, the
reason that we are working with these trusted intermediary
groups, the sorts of organizations and service groups that
provide assistance to people in those sorts of facilities
making sure they understand the program, they understand the
transition and that they can make assistance of the DTV
transition part of the overall assistance they provide.
Mr. Shimkus. Thank you.
Two last things. One is advertising does work. We are all
examples of that. And I know the industry that wants to sell
things will want to do advertising, and that is where I am
going to put my faith and trust in over the Government doing
the advertising.
The second thing is, if the chairman, with the indulgence
and because my ranking member is not here, for some brownie
points, I would like to submit into the record Ranking Member
Upton's editorial published in The Hill on October 16 on white
spaces.
Mr. Markey. Without objection, it will be.
Mr. Shimkus. And that is all I have, Mr. Chairman. I yield
back.
Mr. Markey. The gentleman's time is expired. There are 6
minutes left to go to vote on the floor. So, at this time, we
will take a brief recess. It will actually be approximately 20
to 25 minutes, and then we will reassemble. This hearing now
stands in recess.
[Recess.]
Mr. Markey. The subcommittee will reconvene. And we welcome
you all back. I think we are going to have a bit of an
uninterrupted stretch right now. The Dalai Lama is going to be
receiving a Congressional Gold Medal. And I honestly do wish I
could be over there, but in a way, we are going to make sure
that poor people and minorities are protected if we can get
this hearing to work in good shape.
Let me turn and recognize the gentleman from Georgia, Mr.
Deal.
Mr. Deal. Thank you, Mr. Chairman. And I will try to be
quick.
First of all, let me follow up, Chairman Martin, with a
question asked by Mr. Shimkus with regard to the dual-carriage
issue as it relates to small cable companies. I believe you
said you had not received any request for waivers at this time.
One of the concerns we have heard expressed is that they are
concerned that, if they file a waiver and it is denied, as to
whether they would have sufficient time then to go back and
become compliant, have you given thought to that issue and have
you taken any steps in that direction? Maybe for example how
long a timeframe would it be from the time a waiver request is
submitted until a determination is made? Could you elaborate on
that please?
Mr. Martin. I haven't given any thoughts to the timeframe,
but I certainly will to make sure they are given that
opportunity to make sure they come into compliance. But I would
point out, and I think this is important in the context of
talking about whether small cable operators who are saying that
they need a waiver process, right now all of these same small
cable operators are required and are successfully carrying
broadcast channels to all of their viewers. And all we are
saying is that, the day after the transition, they should have
to do the same thing the day after as the day they are doing
before; that all of their customers should still continue to
get broadcast channels and that the digital transition for
broadcasters should not be an excuse that a cable operator can
remove a broadcast channel from the tier of channels that they
are currently providing them to. So they are not going to be
required to do anything additional, which is one of the reasons
why I was skeptical of their concern in the expression that
they have about why this is going to take up additional
capacity. Because right now, they are already required to
deliver those signals to their customers in an analog format,
because they have analog customers. So they are not going to
take up any capacity on their systems than they are doing
today. So I am happy to end up looking at individual small
operators if they say this is going to be an additional burden.
But I am not sure I understand how it is an additional burden
because, right now, the law requires them to deliver a
broadcast system to an analog cable customer the day after the
transition. All I am saying is and the commission said is, the
day after that transition, they still have to deliver a signal
to that analog customer. So it shouldn't be any additional
burden than it is the day before. But we will take a look at
the waiver process. But I think we have to put in context the
digital transition should not be an opportunity for cable
operators to disenfranchise consumers from the broadcast
stations they receive today.
Mr. Deal. Of course, I think their concern is they will
then be in the dual-carriage capacity.
Mr. Martin. But our rule did not require dual carriages.
Our rule requires it to be viewable by everyone. If they have
digital customers, they are required to deliver it in digital
format today. And if they have analog customers, they are
required to deliver in analog to customers today. They have
chosen to do dual carriage by the design of their system. The
rule is no different after. So if they have, if they want to
provide set-top boxes to allow for their customers to watch
analog signals so that their digital customers can still watch
analog signals, some cable systems design their system that way
and deliver their signals and meet their must-carry
requirements in that manner, and they would still be able to do
that. It is not a dual-carriage requirement. Dual carriage in
the commission when we considered that was a debate about
whether we should require the cable operators to carry both the
analog broadcast signal and the digital broadcast signal. That
would have been two broadcast signals they would have been
required to carry to all of their homes. This is not dual
carriage. We did not require that.
Mr. Deal. Mr. Secretary, I believe you stated previously
that you believe that allowing unlicensed devices to operate in
the white spaces would be an efficient use of the spectrum. Do
you still believe that, and if so, would you elaborate on your
position on that?
Mr. Kneuer. Sure. The President launched a spectrum
initiative for the entire administration back in 2003. And one
of the activities we have been undertaking as part of that
initiative is identifying efficiencies in spectrum use. We in
the 5 gigahertz band were trying to find a way for unlicensed
Wi-Fi like devices to operate in the same spectrum that is
allocated to Government radar systems those sorts of sharing
arrangements, different services using the same allocations of
spectrum, present really powerful efficiencies and are a good
way to use the spectrum. It is not easy. When we did it at five
gigahertz for Wi-Fi like devices, unlicensed devices to co-
exist with Government radar systems, we didn't solve those
technical issues with the first attempt or the second or the
third. It took an awful lot of hard work kicking the lawyers
out of the room, getting the engineers in the room and working
out these issues. I am confident that innovators and
technologists can find these sorts of efficiencies. But the
predicate that we had to allowing them into the band was
demonstrating that it was on a non-interference basis and that
it was technically sound. So I certainly support efforts to
improve the efficient use of the spectrum by having the
spectrum that is otherwise lying foul of being put to use. But
you need to do the hard technical work up front. And I think
the commission is working on that and the industries are
working on that. And all I would say is, if at first you don't
succeed, try, try, because you can achieve these efficiencies,
but you have to do the hard technical work.
Mr. Deal. Thank you.
Mr. Markey. The gentleman's time is expired.
The Chair recognizes the gentleman from Nebraska, Mr.
Terry.
Mr. Terry. Thank you, Mr. Chairman.
Chairman Martin, I am not going to ask you a USF question.
I know that is unusual. But I will ask you something completely
different now, an issue that is of concern to several of my
small businesses back home that, as you know has a call center
capital. And one of the questions or issues I have been working
on is the clarification whether you can call a cell phone that
has been left as the primary phone number to use, for example,
if they have missed a payment or debt collection or something
like that. If I recall from the letter I received back, is that
FCC is exploring that, perhaps an order on that issue. I was
just wondering where that is in the process? And I know you
didn't come prepared to answer that question today, so if you
need to get back to me on that, I would appreciate it. But all
I want to know is where it is in the process.
Mr. Martin. Absolutely. And if I could, I would prefer to
make sure I give you the most accurate information and get back
to you on it.
Mr. Terry. I would appreciate that. Now, it has been pretty
thoroughly discussed, but the one issue that I really wanted to
go through is the supply of these set-top boxes starting in
January when the coupons become available. This committee went
through pure hell on the part D rollout. And we had CMS in
front of us look us straight in the eye blinking 100 percent
confidence, that they had it all under control and there was
going to be no issues on the rollout. And it was one of the
biggest fiascos that we have been put through because they did
not anticipate that on the first day of eligibility to sign up
that there would be a mass of people signing up. The system was
not prepared. The vendors weren't prepared. CMS wasn't prepared
for that. And I just want to cover, once again, what the
process is when people are going to, or in January 2008 when
the coupons first become available, what the protocol or the
system to make sure that there are adequate number of boxes
sitting on the shelves. So, Mr. Kneuer and Chairman Martin,
that falls in your jurisdiction. Again, set out how we are
going ensure that there is enough set-top boxes on the shelves.
Mr. Kneuer. The statute calls for us to be ready to begin
processing coupons in January 2008. Everything we have done is
to encourage as much market participation by the market actors
to be engaged as early as possible. The way I think we are
going to manage January 2008 is syncing up the public education
campaign with the availability of boxes and retailers. There
has not been a very large public education campaign as of right
now driving people to our program. And that is one of the ways
that we coordinate in this public and private partnership with
NAB and others, the broadcasters, the cable industry and others
to say link it up as the availability comes up.
Mr. Terry. So if I am interpreting somewhat sarcastically,
if they don't know about it in January, they won't go get a
box?
Mr. Kneuer. That's right. So we want to manage consumer
expectation. If we have visibility into the supply chain from
both the retailers and the manufacturers that we hear from
large national chains that actually, do you know what, we are
ready January 1, then we will start driving the public
education campaign to make sure that people are taking
advantage of that. While we don't have those levels of
commitment. We haven't heard from a major retailer saying, let
them know we have got a warehouse full of these things today,
and we have got our point of sale done, and we are ready to go
January 1, 2008. I haven't heard explicitly otherwise either.
While the vote was going on, I just got an announcement from
Best Buy. They had removed all analog sets from their
inventory. They are all digital. They have announced their
intent to take part in our program and to have coupon eligible
boxes in their stores in early 2008. They haven't said January
1; they said early 2008. So everything I have seen from
interest from manufacturers, from the certifications we have
been doing, from the expressions of interest that our vendors
are having and the discussions they are having with retailers,
we are going to have broad availability of retailers, broad
availability of boxes with plenty of time for consumers to take
advantage of this program before February 2009. If it is not
necessarily January 1, 2008, we want to sync up our consumer
education activities so we don't misalign their expectations.
But we are ready on January 1, 2008.
Mr. Markey. The gentleman's time has expired. So Best Buy
announced today they are not going to sell any more analog TV
sets?
Mr. Kneuer. That they have removed them all from their
inventory was the announcement.
Mr. Markey. It is like announcing you are not going to sell
any more black and white TV sets since October 2007. So, thank
God. Maybe other companies will. Because we will have a hearing
here by the way. We will be having a hearing here like in the
middle of January 2008, like 15 days in so that we can see how
close it is to CMS. And so that will be a big moment. So Best
Buy is at least trying to start to move where they are going to
be hopefully by that date.
Let me turn and recognize the chairman of the full
committee, the gentleman from Michigan, Mr. Dingell.
Mr. Dingell. Mr. Chairman, I thank you.
Gentlemen, thank you for being here. I am going to make
several statements, and then I am going to ask you if you agree
or disagree. It is vitally important that the DTV transition
proceed smoothly. It is important that consumers be fairly
treated, properly informed and prepared for the transition, and
that there must be close cooperation amongst the different
Federal agencies. Is there any disagreement with that
statement?
Mr. Martin. No.
Mr. Dingell. Gentlemen, yes or no, do we need an
interagency task force focused on the transition in order to
see to it that the responsibilities of the different agencies
are properly carried out? Beginning on the right with NTIA.
Mr. Kneuer. I don't know that we necessarily need a
formalized task force in practice and day in and day out. We
are coordinating with the FCC, with 13 other Federal agencies.
So I think we have the functional equivalent of a task force in
place.
Mr. Dingell. All right.
Mr. Martin. I don't know that we need a task force. I
certainly think we need coordination, and I think we are
working hard at doing that with NTIA and FCC today.
Mr. Dingell. All right, sir.
And Mr. Goldstein.
Mr. Goldstein. We haven't recommended a task force. We have
recommended much greater comprehensive planning, as I
indicated, so that you do have better risk mitigation so we
understand the kinds of issues that may crop up and how to deal
with them at this point.
Mr. Dingell. Now, Mr. Martin, I believe you told Ms. Eshoo
that certain agreements amongst Federal agencies and
departments have been made concerning the DTV transition. Is
that so?
Mr. Martin. Yes.
Mr. Dingell. Would you see to it that the committee is made
privy to those agreements, that copies are submitted to us for
purposes of the record and that we understand what is in them?
Mr. Martin. Yes.
Mr. Dingell. What are those agreements and with whom are
they made and what do they do?
Mr. Martin. We have an agreement with NTIA to test the
converter boxes to make sure that our engineering labs can test
them to make sure that they can function appropriately. And I
believe that either--I know that that memorandum of
understanding, the existence of it I have made public before in
either questions to this committee or to the Senate Oversight
Committee, but I haven't provided the actual memorandum of
understanding but of course I will.
Mr. Dingell. Now, Mr. Goldstein, would the FCC need
additional statutory authority to convene a task force to
accomplish the proper coordination amongst the different
departments that are going to be addressing these questions?
Mr. Goldstein. I don't believe so, sir. I believe that they
have that authority today.
Mr. Dingell. You think it can be done under existing
authority. Now, would anybody disagree that the lead agency in
addressing these questions should be the FCC? Yes or no.
Mr. Martin. I wouldn't agree that it should be addressing
all of these questions. I certainly think we have an important
role. But certainly, in the converter box program and the
education in the spending of the $5 million that Congress gave
to NTIA to spend on education, NTIA has to be the lead agency
on those two because that is what Congress determined that they
should be.
Mr. Dingell. Now, Mr. Martin, this question. You have been
given $2 million for DTV consumer education that is up from
$1.5 million that the FCC had requested. The In Berlin, The
German Government spent $1 million on consumer education in
just one city with 3.4 million people. There are over 300
million people in the United States. Do you have enough money
to provide the necessary education and public information on
this matter? Yes or no.
Mr. Martin. No. If we are solely responsible for educating
all the consumers, I think additional money would be necessary.
Mr. Dingell. And I think that, Mr. Goldstein, you would
agree that the FCC could do a better job with more money?
Mr. Goldstein. We haven't looked at it, sir, specifically.
Mr. Dingell. How much money does the FCC need to conduct a
proper information and education program for the people on what
is going to happen when this DTV changeover takes place? Could
you give us that answer either now, Mr. Goldstein, or could you
tell us at some future time in response for purposes of the
record?
Mr. Goldstein. I can't give it to you today, sir.
Mr. Dingell. Would you please submit that answer for the
record?
Mr. Martin, what is the amount of money you in fact need?
Mr. Martin. I can provide that to you, although I am not
sure I can provide in public the amount of money we requested
this year in our budget, but I will provide that to you.
Mr. Dingell. I would like to have the answer, then, for
purposes of the record.
Mr. Martin, I believe you have asked for more money than
you have been given by either the OMB or the Appropriations
Committee. What is the amount you asked for?
Mr. Martin. That I am happy to end up providing. I am not
sure I am able to provide the amount.
Mr. Dingell. Please submit it. This is a congressional
committee. We have jurisdiction over your affairs. We are
entitled to have this information. It should be public. I
expect to get it. I hope that you will cooperate in seeing to
it that we do so. And I would assure you that this committee
will have the answer. And I am requesting that you submit it
for purposes of the record.
Mr. Martin, if you would then please inform us, if you
would receive additional funding, how would you use these
funds? Would you please submit that for the record if you
please?
Mr. Martin. Sure, of course.
Mr. Dingell. Mr. Chairman, I have a number of other
questions to ask. I will defer until the proper time. But I
would like to know about the coupon funding and a number of
other matters related to that. And I commend you for this
hearing. And thank you. And to our witnesses, I also say thank
you.
Mr. Markey. The chairman could have more time if he wants,
of course.
Mr. Dingell. If the Chair would be so gracious and I would
not offend any of my colleagues, I have just a couple more
questions.
Mr. Markey. Would any of my colleagues be offended if Mr.
Dingell is given more time? The Chair hears no objection, Mr.
Dingell. I think the objection might come from the witness
table.
Mr. Dingell. I have great respect for my colleagues, and
the last thing I want to do is to affront them.
Gentlemen, this is a question for the GAO and for NTIA.
NTIA has $1.5 billion to operate the converter box coupon
program. The program is being launched, I understand, in two
phases. First, $890 million for any consumer who wants to take
advantage of the program. The last $450 million is reserved for
analog-only over-the-air households. I understand we expect a
surge in coupon requests at the end of the program in late 2008
or early 2009. Would you, Mr. Martin or Mr. Kneuer, give us the
answer, do you expect those surges, and is that a fair
statement? Yes or no.
Mr. Kneuer. I would expect that the demand for boxes will
increase as we get closer to the date as the education campaign
ramps up, as consumers become aware that actually this date is
rapidly approaching.
Mr. Dingell. Thank you. I am transgressing on the time of
my colleagues, so I have got to hold these answers very short.
Mr. Martin, your comment.
Mr. Martin. I expect that Secretary Kneuer is correct, that
it would ramp up as we got closer to the date.
Mr. Dingell. Now, I would like to ask each of you
gentlemen, is it possible that some people who need a coupon
will not be able to get one because there will not be enough
money provided? Starting with Mr. Kneuer and then Mr. Martin
and Mr. Goldstein. Is the answer to that yes or no?
Mr. Kneuer. No, I don't think there will be anybody left
behind for want of resources. All the demand estimates we have
seen we have got adequate resources.
Mr. Dingell. Mr. Martin.
Mr. Martin. I guess I am not as confident in that. I would
have to look at all of the figures that they have seen.
Because, as I understand it, there is a cap on the amount of
money the program can provide, and the demand could exceed that
cap. So, yes, I think they could exceed that cap.
Mr. Dingell. Mr. Goldstein.
Mr. Goldstein. I am not as confident either, sir. I think
it is unclear how many people at this point will try to redeem
coupons.
Mr. Dingell. Have you performed any studies, beginning with
Mr. Kneuer, Mr. Martin and Mr. Goldstein, to tell us what the
answer is? Do we have every reason to believe there will be
sufficient money on the basis of any study or not?
Mr. Kneuer. We have been looking to studies from market
participants and other enemies. And as I think there have been
testimony earlier this morning, those estimates range from----
Mr. Dingell. Have you performed a study?
Mr. Kneuer. We have not performed a proper analysis.
Mr. Dingell. Has anybody, to your knowledge, performed a
study?
Mr. Kneuer. Yes. Industry and market participants.
Mr. Dingell. Who?
Mr. Kneuer. The consumer electronics industry, as well as
the public broadcasters.
Mr. Dingell. Would you please see to it that your
communications with the consumer electronics industry are
submitted to the committee so we may know what has been
accomplished, sir?
Mr. Goldstein. As part of our work ongoing for the
Congress, we are going to be doing a survey to try to undertake
and understand much better what the demand is going to be, how
many households are out there and what the awareness is.
Mr. Dingell. Would you see to it that anything relevant to
that and to the question asked is submitted for the record
please?
Mr. Goldstein. Yes, sir.
Mr. Dingell. Mr. Goldstein, could NTIA use more money to
fund the coupon program or not? If so, why and how much?
Mr. Goldstein. We don't know yet, sir. I think it depends
on how much we expect demand to be. And as I indicated, that is
something we don't know yet.
Mr. Dingell. As a student of these kinds of matters, Mr.
Goldstein, would you tell us whether adequate study and thought
has been given by the two agencies, the FCC and the NTIA, as to
whether the funding in the programs are adequate?
Mr. Goldstein. I would like to try to answer that for the
record. I am not sure that I could do it off the top of my
head. Let me get back to you, sir.
Mr. Dingell. Would you submit then a proper answer to that
question for purposes of the record.
Mr. Goldstein. Yes, sir.
Mr. Dingell. Mr. Chairman, you have been very gracious, and
my colleagues you have been very gracious. Mr. Chairman, I
would like to submit a letter to the three agencies asking a
number of questions. And I would ask that the record remain
open so that that may be submitted to the agencies if you
please.
Mr. Markey. Without objection, the questions will be
submitted to the witnesses and their answers will be included
in the record. Without objection, so ordered. The gentleman's
time has expired.
Mr. Martin and Mr. Kneuer, have you met on this issue in
person in the last month?
Mr. Kneuer. We have spoken on the phone about it. I don't
know that we have gotten together. Maybe in the park with our
kids, but mostly on the phone.
Mr. Markey. You talk about DTV in the park?
Mr. Kneuer. On occasion. That is the kind of life that we
do in fact live.
Mr. Markey. I would recommend that the two of you meet.
Mr. Kneuer. But also I would be remiss not to point out
that, on September 25, we had a public forum that Chairman
Martin was gracious enough to address our group. Ours was
coordinated with theirs, which was the next day, and our staff
was there. I was unable to be there because of other
commitments.
Mr. Martin. We were together on September 25, but we have
spoken several times on the phone.
Mr. Markey. Excellent. And I think the committee would feel
good if we knew you were meeting over the next 3 months in
person.
The Chair now recognizes the gentleman from Michigan, Mr.
Stupak.
Mr. Stupak. Thank you Mr. Chairman. And welcome again to
our witnesses.
Chairman Martin, if I may, I know Mr. Deal asked some
questions about the small cable operators, but let me ask you a
few questions if I may. Just last month, the FCC issued an
order requiring cable companies, large and small, to pass along
a digital signal of must-carry broadcasters in both digital and
analog formats to their subscribers. It did not provide for an
exemption for small operators. But cable systems with limited
capacity may file for a waiver to relieve them of this
obligation. I am troubled with this, especially as I reflect on
my district, as I have some of the smallest mom-and-pop cable
operators in the country with a subscriber base as small as 133
subscribers. Now, the further notice of proposed rulemaking
stated it would examine the impact of this requirement on small
and midsize cable operators. So what steps do you plan to take
in your further notice of proposed rulemaking to take into
account the limited financial resources of small rural cable
operators?
Mr. Martin. Well, first, I would like to start out by
correcting what the rule did last September that we adopted. It
didn't require them to always pass along both a digital and an
analog signal. It required them to make the signal viewable to
all of their subscribers just as it is viewable today.
Mr. Stupak. So they have to carry two of them, right?
Mr. Martin. No, not necessarily. It could be a system that
only had analog customers. They would only have to carry an
analog. Or it could be that there are set-top box converters
that actually have an analog tuner included so then all viewers
would still be able to view all of the signals. So it depends
upon the design of the system. But the important thing to
remember is that those mom-and-pop cable systems in your
district are required today to make sure that the analog
broadcast signal is carried so that it is viewable by all the
subscribers. All we are saying is that the switch from analog
to digital broadcasting by broadcasters should not result in
the removal of any of those signals from the cable system.
However, they are delivering them today; they have to continue
to deliver them. And that shouldn't require any additional
capacity on the system because they are required to be
delivering them today, and they are doing so successfully. What
I would imagine us doing is understanding how a cable operator
in your district is going to have the amount of capacity they
have to dedicate to this increase when they are successfully
delivering it today. So today they are taking an analog----
Mr. Stupak. Why don't you just waive for these small cable
operators? If it is a signal they have always been using, why
can't they just continue to use that same signal as opposed to
having to come back for a further notice of proposed
rulemaking, which is expensive and time-consuming for small
cable operators?
Mr. Martin. Because waiving the rule would mean that your
constituents who are served by those subscribers would no
longer get access to broadcast signals. Today a broadcaster
puts out an analog signal, the cable operator takes the analog
signal and delivers it to all of its subscribers. That means
that he has analog subscribers that he delivers it in an analog
format. All our rule says is that because we are requiring the
broadcaster to switch from analog to digital broadcasting, the
cable operator must deliver that digital signal's content to
those analog homes. And they should not be able to stop
delivering it only because the broadcaster was required to
switch from analog to digital. Some of the cable operators
wanted to reclaim capacity and no longer use it for broadcast
signals and, in effect, stop providing broadcast signals to
their customers. And what we said is, you can't do that. The
digital transition is not an excuse to reclaim capacity and
stop delivering broadcast signals. They can do it exactly as
they are doing it today, so there is no additional burden
whatsoever.
Mr. Stupak. So you can craft a rule in which these small
operators were exempt from this? I just think, when you have a
133 subscriber base, it is very expensive to keep coming back
to the FCC.
Mr. Martin. If we exempt them from that that means they
will not receive their broadcast signals and that will increase
the demand on the set-top box converter program, and then that
will increase the problems associated with the DTV transition.
So I don't see why we should have the digital transition be an
excuse for cable operators to no longer carry broadcast signals
they were already required to be carrying.
Mr. Stupak. I guess we will disagree on this. Let me ask
you this one then. As you know, not all broadcasters are making
the DTV transition on February 17, 2009. I am referring to the
low powered television stations, class A stations and
translators. Consumers in those markets might have different
viewing options and therefore might require different consumer
education efforts than the consumers in the rest of the
country. In fact, the GAO points out in their report perhaps
the hardest group to educate is a group of consumers who have
to do nothing for the DTV transition. So how are you addressing
these consumers as a larger part of your consumer education
program?
Mr. Martin. Well, when Congress established the hard
deadline, they did exempt out certain kinds of broadcast
stations that weren't required to make that transition. While
you are right they are not required, those consumers are not
required to get a converter box at the same time, those
stations are still going to have to go through a digital
transition. So these consumers still trying to go get access to
converter boxes is important.
Mr. Stupak. Well, do you have any kind of hard date set?
Mr. Martin. No. We have allowed those stations to
transition at the same time if they want to, but we haven't
established a hard date to require them to.
Mr. Stupak. Do you have any plans to speed the transition
for these broadcasters, or it will allow them to broadcast on
analog indefinitely, because most of them are on analog?
Mr. Martin. Most of them are on analog. And we have allowed
them all to transition, if they would like to, to digital at
any time, but we haven't required it because of the expense
that they would incur. And it was actually as I said Congress's
judgment that they decided that a hard date would not
necessarily apply to those new stations.
Mr. Stupak. If we exempt out the class A stations and the
low-power ones, it seems to me it would have been easier to do
it with the small cabler operators on my previous question. I
don't deal any more with congressional direction, but it would
have been easy to do it, too, because of the same factors.
Thank you.
Mr. Markey. The gentleman's time has expired. I don't see
any other members who are on the subcommittee. And so the
gentlelady from Tennessee, Mrs. Blackburn, who faithfully
attends all of our telecommunications hearings, even though she
is not a member of the subcommittee, and sits through all of
the eye-watering detail in a way that would put her in the
upper percentile of most attentive members, is recognized for a
round of questions.
Mrs. Blackburn. Thank you, Mr. Chairman. I appreciate your
courtesy to continue to follow this issue. I enjoyed my service
on the Telecommunications Subcommittee and continue to work on
these issues. Secretary Kneuer, from the hearings we have had
in the past, I honestly believe the market is going to take
care of a lot of this information with the public and the
retailers such as the move made by Best Buy today. They are
going to do what is in the best interest of their customers. We
know that that is going to take place. But I have found it so
interesting, Mr. Goldstein, the survey that you referenced, the
NAB survey that you referenced in your testimony, in which they
found only 57 percent of over-the-air only customers were not
aware of the DTV transition. And as you look at that and reread
it, you realize their finding was that 43 percent of all of
those customers know that that transition is taking place and
have an awareness of that. And I find that a remarkably high
number. And being here on Capitol Hill, I do not know if you
walked around out here and randomly conducted that survey if
you would find 43 percent of those that you encountered aware
that this transition is taking place. So I would love to hear
from you a little bit more about that survey, about the
methodology that was used, how they came to the universe that
they surveyed. Do you have that information or can you get that
to share with us?
Mr. Goldstein. I would be happy to get that information for
you. It is a NAB survey, not our own, so I would like to work
with them a little, and I will be happy to supply that
information to you.
Mrs. Blackburn. I think as background for that statement
that it would be interesting to us. Because so many of our
questions have centered around the awareness that people have
and people knowing the steps to take, the time line to follow
to make certain that they are not left in the dark and that
they are still receiving some transmission. Also, Chairman
Martin, the Intergovernmental Advisory Committee that was
rechartered in June, it is made up of your 15 representatives.
And what I would love to know is how often this group is
meeting, what the results are that have been yielded to that,
the recommendations if those are going to be public
recommendations. And the chairman touched briefly on
interfacing with the NTIA, what you all are doing there. And I
think the Secretary, you and the Secretary mentioned that. And
the other component of that is to know if you all are taking
this information to local governments? Because we all know as
this transition becomes imminent that the city halls and those
city commissioners are many times going to be the ones that
pick up that phone and take that call. So I would like to know
a little bit more of the detail that is surrounding that
process, if you will please, sir.
Mr. Martin. Sure. The Intergovernmental Advisory Committee
as you referenced, the commission just adopted an order
reconstituting that organization. We just recently announced
what the parties were going to be, who the individual
Government representatives were going to be on that committee.
When we reconstituted it in the spring, we actually asked for
applications who wanted to be a part of it. We just announced
who are those people that will be a part of it. Asked them to
meet and actually asked them to address this very issue. How do
we incorporate the local governments into this process? Just as
we have done on the consumer side where we have already met
with consumer organizations and gotten feedback from them on
how we can better integrate their ideas and those organizations
into our information process. And we have done things
successfully at the local level like on the American Library
Association, but we haven't at the local government level,
which is what we have asked that group to look at.
Mrs. Blackburn. If I may interrupt just a moment then, so
with this group you do have a plan of action for moving forward
with local governments?
Mr. Martin. Yes.
Mrs. Blackburn. OK.
Thank you, Mr. Chairman. I yield my time back.
Mr. Markey. Thank you. And we thank the gentlelady for
participating. We are going to complete this panel.
Chairman Martin, if you could let the committee know when
you are going to finalize the technical rules for the
transition that would be very helpful to us. You can do it in
writing or you can just give us the----
Mr. Martin. Sure. Most of the technical rules have actually
been completed. We released the final DTV table of allotments
in August. There are several recompetitions. Some people didn't
like the channel assignment they got and have come back in and
asked. And we also had several waivers for people that missed
the original deadline that then went to the bottom of the list.
But we released the final DTV table of allotments. We have got
some recompetitions that we will be dealing with in the next
few months. But 99 percent of the channels have already been
dealt with. We have also got one final order on the
maximization of replication issues that is due out by the end
of this year.
Mr. Markey. If there is anything remaining to be finalized,
please do so. And we would also request that you also work with
Secretary Kneuer on this issue of retailers taking advantage of
people who might not fully understand that they are being moved
over to a digital TV set when they actually qualify for a
converter box that would work very well with their old TV set.
So if you could have a partnership with Secretary Kneuer to
accomplish that goal.
Mr. Martin. Sure.
Mr. Markey. Thank you. This has been a very productive
hearing. What I would like, at the indulgence of the members,
just to give each one of you to give us the 1 minute you want
us to remember from your testimony as we are finishing right
now. Just give us your 1 minute summary, here we are nearing
the end of October.
Mr. Goldstein.
Mr. Goldstein. I think, Mr. Chairman, that the transition
is moving along. We have seen a lot of progress. And I think
the other witnesses have told what a lot of that progress is.
However, we are concerned still that there are a lot of things
that are left to be done, a lot of which is voluntary. It is
not required by private industry that they participate. A lot
of private industry will participate. And there is already
evidence that it is doing so. But this is a very big
transition. And to leave it all or mainly to voluntary
participation and to some planning, but not extensive planning
that really analyzes all the potential problems and loopholes
and the like, I think we feel is probably not in the best
interest of the Government at this point in time. And so we do
think there is additional work that the Government, principally
FCC in conjunction with NTIA, still needs to do.
Mr. Markey. Thank you Mr. Goldstein, and thank the GAO for
their good work.
Chairman Martin.
Mr. Martin. I think we have made significant progress on
the technical policy, on the technical policy issues.
Additional work needs to be done on the educational front. But
I think the single most important thing that we can end up
doing is changing our message from a negative one, that if you
don't go buy a converter box, we are going to take away your TV
signal, to a positive one, which says that if you go buy a
converter box, you will get something additional out of it. And
I think that the most important thing we can end up doing there
is facilitating multi-casting so that over-the-air homes can
have access to multiple broadcast signals without having to go
and take advantage of the digital transition, without having to
go buy an expensive HDTV set.
The over-the-air homes are disproportionately lower income.
Telling them that the only way they will get advantage of this
is to go buy an expensive HDTV set is I think a negative
message for them. And I think if we are going to expect them to
go out and purchase over-the-air converter boxes, even with the
coupons that have been provided, they should be getting
something for it. And I think to do that, we have got to
facilitate multi-casting.
Mr. Markey. Thank you.
Secretary Kneuer.
Mr. Kneuer. It may look like we are down 3-1, but the
series hasn't started.
Mr. Markey. I like that analogy.
Mr. Kneuer. The efforts that some view as voluntary are
actually being driven by enormously powerful market self-
interest, and I expect them to continue. And we have got a
program that has been put in place and is going to be run
effectively and efficiently for the American people.
Mr. Markey. Thank you.
And we thank this panel. It has been very helpful to this
committee. Thank you.
And now we will just take a brief moment here while we
allow the first group of panelists to move on. And we will have
the second group of witnesses come up and sit in front of their
names.
So we welcome our second panel. We apologize to you for
the length of the first panel, but obviously these issues are
very important to the American public. And this panel is
equally as distinguished as the first and is critical in our
ability to understand the issues.
We will begin with Claude Stout. He is the executive
director for telecommunications for the Deaf and Hard of
Hearing, Incorporated. He is testifying on behalf of the
Coalition of Organizations for Accessible Technology, which
promotes the development of accessible communications devices
for people with disabilities.
We welcome you, Mr. Stout. Whenever you are ready, please
begin.
STATEMENT OF CLAUDE STOUT, EXECUTIVE DIRECTOR,
TELECOMMUNICATIONS FOR THE DEAF AND HARD OF HEARING, INC., ON
BEHALF OF THE COALITION OF ORGANIZATIONS FOR ACCESSIBLE
TECHNOLOGY
Mr. Stout. OK. Thank you, Mr. Chairman.
Chairman Markey, Ranking Member Upton and members of the
House Subcommittee on Telecommunications and the Internet, I am
honored to have this opportunity to testify on an issue that
affects millions of television viewers with disabilities.
My name is Claude Stout, and I am the executive director of
telecommunications for the Deaf and Hard of Hearing, Inc., also
the Chair of the Deaf and Hard of Hearing Consumer Advocacy
Network. I am pleased to offer my testimony today on behalf of
the Coalition of Organizations for Accessible Technology, COAT.
This is a coalition of more than 130 national, regional and
community-based organizations.
If all goes well, digital TV captioning would be the best
invention since, hmm, analog TV captioning. You see, when I was
young, I could not understand why my family was laughing while
they were watching Jack Benny, Lucille Ball, Johnny Carson, as
well as other comedians. Now I understand because of the DVDs
that are out today with captions. And it was only when I
entered Gallaudet University in the late 1970s that I was able
to watch the ABC World News Tonight, not at 6:30 p.m. with
everyone else--at dinnertime--but past my bedtime, at 11:30
p.m. Today, with grateful appreciation and tinged with anxiety,
we are about to take the next step towards full integration in
television.
The COAT Coalition represents more than 31 million
individuals with hearing loss, 10 million individuals who are
blind or who have vision loss, and millions of other
individuals with other disabilities who benefit greatly from
accessible television programming. Along with access to
televised news, information and entertainment, access to
televised emergency information enables these populations to
understand and to appropriately respond to warnings of
hazardous weather and other emergency conditions. COAT
affiliate members are excited by the promise of digital
television--the better television quality and multicasting.
Like most consumers, we look forward to the benefits of
technological advances. Unfortunately, in the history of
technological advances, people with disabilities are often left
behind. In fact, we are already witnessing this phenomenon with
digital television. Increasing numbers of individuals are
seeking to purchase digital television sets or components and
systems that provide digital video programming, and
distributors are offering expanded digital programming. At the
same time, we are receiving increasing reports of significant
technical difficulties with the pass-through and the display of
closed captioning. Time and again, our constituents report
disappearing, delayed, garbled or otherwise unintelligible
captioning on television shows that previously provided
relatively problem-free captions.
A major difficulty for us in the DTV transition experience
is determining the cause of these closed-captioning problems.
For example, the failure to receive captions can be the fault
of the local TV station or cable TV service that has begun
broadcasting or offering digital programming, the inability to
pass through captions on the program distributor's set-top box,
or a failure in the equipment used to receive and display the
DTV programming, such as the receiver or its connecting
components.
In addition to these technical difficulties associated with
the DTV transition, there is some dispute over the extent to
which TV networks now covered by the captioning rules are
obligated to continue providing captions as they shift to
digital programming.
When a standard definition analog network, whose
programming has already been captioned, converts to or creates
an HD channel with a similar programming lineup, the new HD
channel should be held to the same closed-captioning obligation
as its analog predecessor. However, some broadcasters and cable
networks have taken the position that their new HD channel is
a, ``new network'' that qualifies for an exemption from the
FCC's captioning rules during the first 4 years of the
network's operations.
If this interpretation were to be upheld, consumers would
find themselves having to wait an additional 4 years to see
captioning on programming which, but for its HDTV status, would
already have to be captioned. This new network interpretation
of the captioning rules violates Congress's intent to ensure
the uninterrupted provision of closed captions with the onset
of advanced technologies. It is commonplace for television
viewers to select their channels and other TV settings from on-
screen menus, but if you are blind or have low vision, you
cannot access this information through a point-and-click, if
you will, remote control or even use these menus.
Nevertheless, individual manufacturers have already
demonstrated the technical feasibility of incorporating
accessible user interfaces. When accessible user interfaces are
required on all video devices, the incremental costs of adding
these features will become negligible.
Caption viewers have also reported considerable problems
navigating menus, some of which are hidden to activate captions
after connecting the receivers, the monitors, set-top boxes and
recording play-back devices that compromise their digital
equipment. Often the interface that controls captions is buried
several layers into an on-screen menu that is difficult, if not
impossible, to find.
We know from experience that most manufacturers will not
incorporate accessible user interfaces on their television sets
or components unless mandated to do so. Virtually all
technology-related access features have come about only after
they were mandated by Federal law; for example, televisions
with built-in closed captioning decoders. This is because the
disability market still is not large enough, forceful enough,
or wealthy enough to impact the manufacturer product design. No
manufacturer wants to be the only one putting resources into
accessibility features.
Consumers with disabilities have also encountered
significant barriers when attempting to contact distributors of
video programming and manufacturers of DTV equipment with
concerns about accessing closed-captioning or video
description. Customer service representatives or technical
support personnel are often unfamiliar with closed-captioning
and video description. Furthermore, many consumers with
disabilities remain unaware of their right to file informal
complaints with the FCC or the Commission's ability to mediate
and to resolve their problems. Additionally, even consumers
with disabilities who may be aware of the complaint procedures
often choose not to use those procedures because they find the
complaint process too difficult to navigate. This is because
the process for filing informal closed-captioning complaints
with the FCC requires consumers to first notify distributors
responsible for the delivery and the exhibition of the
programming.
In summation, in order to smooth the transition to digital
television for people with disabilities, COAT urges Congress to
take the following steps: Direct the FCC immediately to clarify
that it is the responsibility of broadcasts and other networks
to continue captioning programs on their HD digital networks
and show precaptioned programming with captions at all times.
Number 2, reinstate the FCC's video description rules.
Number 3, direct that digital televisions be designed so
that individuals with vision and other disabilities can access
all their functions.
Number 4, direct the FCC's complaint procedures so that the
consumers with hearing loss and who are having difficulty
accessing closed captions on DTV have a user-friendly means of
seeking assistance and resolution from the FCC.
I am going to jump to the end. Remember, just as colors
bring out extra meaning in video, captions or video description
gives us a complete experience in television viewing.
I want to thank you, and I would like to leave my oral
statement for the record with you as well. Thank you.
[The prepared statement of Mr. Stout follows:]
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
Mr. Markey. I thank you very much, Mr. Stout, and all of
your testimony will be included in the record in its entirety.
I will note that I see Karen Strauss sitting right behind
you. And you might have noticed me limping in and out of the
committee hearing room, but that is because I actually had an
Achilles rupture while playing basketball with nine 20-
somethings outdoors, and that included her son, Jeremy, which
is something I probably will not be doing again.
Ms. Strauss. I hope you feel better.
Mr. Markey. Thank you. I appreciate it.
The next witness will be Amina Fazlullah, who is an
attorney for the U.S. Public Interest Research Group. The U.S.
PIRG recently conducted research into DTV consumer education
efforts by retailers.
So we welcome you. Whenever you are ready, please begin.
STATEMENT OF AMINA FAZLULLAH, STAFF ATTORNEY, MEDIA AND
TELECOMMUNICATIONS, U.S. PUBLIC INTEREST RESEARCH GROUP
Ms. Fazlullah. Thank you, Chairman Markey, Ranking Member
Upton and members of the committee.
My name is Amina Fazlullah, and I am a media and telecom
staff attorney for the United States Public Interest Research
Group. U.S. PIRG is the Federation of State Public Interest
Research Groups, a nonpartisan, nonprofit public interest
advocacy organization that is based in 30 States.
On behalf of our members across the country, I want to
thank you for the opportunity to testify at today's hearing on
the upcoming digital television transition.
It has been nearly 2 years since Congress established the
official transition date from analog television broadcasting to
digital. Yet, virtually no U.S. consumer knows what will happen
on February 17, 2009. I know that there was a 46 percent number
that was out there, but I think that there are plenty of
consumers who are still out there who are not aware. On that
date, television broadcasters will switch from analog to
digital signals.
The transition offers the country the return of a valuable
``beachfront property'' spectrum, that can be used to enhance
emergency communications, to spur innovation, and to improve
broadband connectivity.
One other thing will happen on February 17. Every consumer
who watches over-the-air television with an analog set will
have their set go dark, including the estimated 22 million
customers in this category, or 8 million households, with at
least one member who is older than 50.
The Government is, of course, at least aware of this
problem, and Congress has allocated funding for an education
program. The relevant agencies have required that manufacturers
stop producing new analog televisions and that retailers
properly label their remaining analog televisions at the point
of sale, a problem that we find in the stores to still be
occurring.
Congress has also allocated funding to provide coupons to
help consumers pay for the necessary converter boxes to get
their analog television sets to work again. Yet, based on
preliminary U.S. PIRG research which we will discuss today,
neither the Government nor the retailers are adequately
preparing consumers for the impending DTV transition.
Industry stakeholders have made substantial promises to
inform the public, and I am heartened to hear today of moves on
behalf of Radio Shack and Best Buy.
While U.S. PIRG agrees that this transition cannot be
successful without the support of industry, we believe that
industry's participation must be mandated and closely monitored
to ensure that consumers receive full protection throughout the
transition.
As of August 2007 and, actually, as recently as the end of
September, U.S. PIRG completed preliminary studies that
surveyed the top five electronic retailers in the DC Metro
area. As a quick update to our study, we are starting to push
those studies into 10 different States across the Nation to
follow up on our preliminary results.
Our initial findings in the DC area were based on
interviews with clerks and supervisory personnel, and they are
alarming. They show that despite industry promises to educate
and prepare personnel, all five top retailers have personnel
who provided inaccurate or even misleading information.
Our surveyors found that, when asked, retailers did not
acknowledge the existence of converter boxes or the coupon
program. In many cases, the retail staff told surveyors that,
to continue to receive broadcast signals, that their only
choice would be to buy a brand new television set or even an
upgraded HDTV--a more expensive, high-definition television--
which is not necessary to receive digital television signals.
In the Virginia area Wal-Mart, our surveyors were told that
their only option was to buy a brand new HDTV or sign up for
cable service. In a Virginia area Best Buy, our surveyors were
told that the upcoming transition meant that signals would now
all be HDTV signals, and consumers would have to buy a brand
new HDTV to continue getting their over-the-air television.
In another Virginia area Best Buy, our surveyors were told
that to continue receiving television signals after the
transition, they would have to purchase a useless HDTV tuner,
which would have cost them at least $170.
In a Virginia area Target, our surveyors were told of
converter boxes, but were told that there were no discounts,
that there was no Government program, and that a brand new
digital television set would actually be cheaper than the
converter box program at initial cost.
In almost every store surveyed, we found a number of analog
television sets on the shelves, sometimes labeled on the box or
on the shelf; but in all stores, it could be easy for consumers
to miss the warning labels. Throughout this fall and this
year's holiday shopping season, it is crucial that bargain
hunting shoppers are not duped into purchasing a slightly
discounted analog television set when they will have to
purchase a converter just months later.
Our surveys were designed to account for a lack of boxes on
the shelves and the--at that time--unknown manager of the
coupon program, but Best Buy was the only store at that time to
provide print information in both Spanish and English.
Unfortunately, their store representatives had clearly not read
the brochure and were unable to repeat or even reference the
brochure.
We have only a few months to ensure that the benefits of
the transition do not come at a cost to our most vulnerable
consumers. And while the return to Spectrum holds exciting new
opportunities for nationwide, broadband or wireless service, we
have got to make sure that we put efforts into the transition
and efforts into research and into preparing consumers.
Thank you.
[The prepared statement of Mr. Fazlullah follows:]
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
Mr. Markey. Thank you. We very much appreciate it.
Mr. Markey. Our next witness is Michael Benjamin. He is the
executive director of Family, Career and Community Leaders of
America. That is a national nonprofit student organization that
will participate in a grassroots campaign to educate consumers
about the DTV transition.
Welcome, sir. Whenever you are ready, please begin.
STATEMENT OF MICHAEL BENJAMIN, EXECUTIVE DIRECTOR, FAMILY,
CAREER, AND COMMUNITY LEADERS OF AMERICA
Mr. Benjamin. Thank you very much, Chairman Markey, Ranking
Member Upton and members of the committee. We thank you for the
opportunity to provide you with the information about the role
that Family, Career and Community Leaders of America will play
in this transition event that will take place on February 17,
2009.
As the executive director of Family, Career and Community
Leaders of America--and I will refer to ourselves as ``FCCLA''
for it is just too long of a name--I am pleased to be
representing an exemplary youth organization that will be
involved in assisting citizens throughout the United States to
become more aware of the analog to digital television coupon
program.
As you mentioned, FCCLA is a national nonprofit student
organization that helps young men and women become strong
leaders in families, careers and communities through family and
consumer sciences education programs. FCCLA has been in
existence since 1945, and for most of you, it looks as though
you are older than 25. So up until 1999, it was known as the
Future Homemakers of America, FHA. So in 1999, we changed our
name to reflect the changes that obviously were taking place in
society.
FCCLA members are students in middle schools and high
schools who are organized by local chapters in school settings.
FCCLA membership is open to students of all races and religious
beliefs and can be found in public, private and homeschool
settings. Family and consumer science teachers serve as FCCLA
chapter advisors. Throughout the United States, we have more
than 225,000 students and nearly 7,000 local chapters in all 50
States, Puerto Rico and the Virgin Islands. FCCLA is one of the
largest career and technical student organizations as endorsed
by the U.S. Department of Education, the Office of Vocational
and Adult Education.
For over 60 years, FCCLA members have been achieving
positive student outcomes and successes through national
programs based on identified community needs. One example of a
FCCLA program that has addressed a youth-related concern is
what we call STOP the Violence. It is students taking on
prevention. STOP the Violence was created in 1999 following the
Paducah, KY school shooting after the local chapter president
was injured. The STOP the Violence program empowers youth with
attitudes, skills and resources to recognize, report, and
reduce youth violence. The program was funded by the U.S.
Department of Justice and the Office of Juvenile Justice and
Delinquency Prevention until 2006. During that period of time
from 1999 through 2006, FCCLA trained 38,000 individuals in
almost 6,000 chapters with this program.
So why is FCCLA involved in this program? We have labeled
our campaign ``Keep Your TV On.'' For this initiative, FCCLA
has partnered with the Best Buy Company, Inc. and Geek Squad
and has involved NTIA and other partners, including media
outlets, to increase awareness of FCCLA and the digital
television converter box coupon program.
NTIA provided the opportunity for FCCLA to connect with
partners involved in the transition. Project ideas were being
made available to FCCLA advisors to integrate this campaign
into their classrooms. Best Buy Company, Incorporated, and Geek
Squad have provided FCCLA with $50,000 to be used as incentive
awards and publicity for the campaign. FCCLA youth leaders will
take the lead on this consumer education, grassroots effort
that will benefit communities nationwide, utilizing the Best
Buy ``blue shirts'' and Geek Squad agents where available.
We will begin promoting this full-time campaign at our 2007
national/regional meetings at which over 9,000 students and
their advisors will come together in four cities throughout the
United States: Atlanta, GA and Buffalo, NY on November 9
through the 11th; Denver, CO and Minneapolis, MN on November 16
through the 18th.
Following the campaign kickoff in January 2008, Keep Your
TV On Awards will be given out each month between January and
May, and each month up to 10 chapters will receive $500 gift
cards from Best Buy. In June, all national winners will be
enrolled in a grand prize contest of $3,000. The contest and
campaign will be highlighted in our various publications, such
as Teen Times, and through our various networks to our teacher
advisors.
Mr. Chairman, FCCLA is involving youth across the country
in community engagement by doing its part to help raise
awareness of the analog-to-digital transition and the converter
box coupon program. We appreciate the opportunity to appear
before your committee and to provide you with this update on
how FCCLA will be involved in this effort.
Thank you.
[The prepared statement of Mr. Benjamin follows:]
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
Mr. Markey. Thank you, Mr. Benjamin, very much.
Our next witness, Nancy Zirkin, is the vice president and
director of public policy for the Leadership Conference on
Civil Rights. LCCR is one of the Nation's oldest coalitions of
civil rights organizations, and it is a founding member of the
DTV Transition Coalition.
We welcome you. Whenever you are ready, please begin.
STATEMENT OF NANCY M. ZIRKIN, VICE PRESIDENT/DIRECTOR OF PUBLIC
POLICY, LEADERSHIP CONFERENCE ON CIVIL RIGHTS
Ms. Zirkin. Thank you very much, Mr. Chairman, and thank
you for inviting me to actually testify today.
As the chairman said, I am Nancy Zirkin, vice president and
director of public policy for the Leadership Conference on
Civil Rights. LCCR is the Nation's oldest and most diverse
coalition of approximately 200 national, civil and human rights
organizations.
Imagine for a moment that it is February 17, 2009. You are
an ordinary citizen--a mother or a grandpa from Kalamazoo--and
you turn on your TV to see the weather, and it is blank. You
did not get the message that our Government has mandated that
all signals had to be digital.
The great switch from analog will have a profound impact on
millions of Americans, especially seniors, the poor, the
minority community, people with disabilities, and those whose
first language is not English. But the reality today is that
everybody needs a TV, not just for entertainment but for the
news--what is happening locally, nationally and worldwide.
Imagine 9/11 without TV coverage, and you understand how
important having a working television is to the 21 million
American households who now rely solely on free analog TV.
LCCR believes that access to all communications in the 21st
century is not a luxury but a fundamental right of every
American. And the challenges involved in preparing Americans
for the digital TV transition are of such magnitude that a
strong congressional response is required, for in the end,
voters will look to Congress if their TVs go dark.
LCCR applauds Congress for recognizing the need for
Government support to help consumers know about the coupon
program, but we are as troubled as Mr. Doyle is. The $5 million
allotted by Congress to educate consumers about the coupon
program is a tiny amount to support the kind of public
education effort that is required. Since the goal of the DTV
public education campaign is to research everyone in each
State, it is not unlike State Senate campaigns; and to put it
in perspective, California, Ohio and Pennsylvania have a
combined population of about 21 million households, and the
combined cost of last year's Senate campaigns in these States
was $22 million. Five million dollars to educate all 50 States?
I don't think so.
Our fear is that people who will be most affected by the
change will not hear about it and will not have access to any
of the coupons. We are also concerned that our most vulnerable
populations will be the least likely to receive the first-come,
first-served limited number of coupons for the converter boxes,
leaving them with only unaffordable options. Congress can help
make sure that that does not happen by actually determining
that the coupons go to those who need them most. We urge you to
consider the following unmet needs as you assess the status of
the DTV transition.
First, there needs to be sufficient funding appropriated to
ensure a smooth transition, including funding private
charitable groups that work directly with the populations most
at risk.
Second, there needs to be a comprehensive plan in place to
attract how the education effort is progressing. It should
include research, outreach and rapid response to ensure that
those who are most at risk of losing service know about the
transition and how to obtain getting a coupon.
Finally, there needs to be coordination among all Federal
agencies on educational outreach, with the replication of these
efforts at the State and local levels.
Finally, let me say that LCCR, through our member
organizations representing over 60 million Americans, will do
our part to educate consumers. But we and the DTV Coalition
cannot do it without additional help and oversight from the
Congress and from NTIA.
Thank you, Mr. Chairman.
[The prepared statement of Ms. Zirkin follows:]
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
Mr. Markey. Thank you, Ms. Zirkin.
Our final witness is Tom Romeo, who is the director of
Federal Services for Global Business Services, IBM Corporation.
Mr. Romeo directs IBM's contract from the Federal Government to
manage the Digital-to-Analog Converter Box program.
We welcome you, sir. Whenever you are ready, please begin.
STATEMENT OF TOM ROMEO, DIRECTOR, FEDERAL SERVICES FOR GLOBAL
BUSINESS SERVICE, IBM CORPORATION
Mr. Romeo. Thank you, Chairman Markey and members of the
subcommittee, for the opportunity to testify before you today.
My name is Tom Romeo, and I am the director of Federal
Servicess for IBM's Global Services Business for the public
sector. I am here today to talk about IBM's role in
implementing the NTIA Digital-to-Analog Converter Box Coupon
Program.
As you know, NTIA awarded IBM the contract to provide
services for the coupon program on August 15, 2007. IBM and its
business partners--Ketchum Public Affairs, Epiq Systems, and
Corporate Lodging Consultants--will provide services in four
areas: consumer education about the converter box coupon
program; coupon distribution and redemption; support for retail
store participation; and financial processing to reimburse
retailers to maintain records and to prevent waste, fraud and
abuse. Let me explain our goals for the program.
IBM designed the coupon program to be consumer-focused,
easy to use, and to provide maximum choice and access for both
consumers and retailers. Our goal is to successfully
communicate the details of the converter box program to
targeted consumers, to distribute coupons and to complete the
redemption process with minimal waste, fraud and abuse.
The IBM team brings a diverse set of business process
skills to the project. IBM will act as the system integrator
and will provide overall project oversight. The team includes
three primary partners, with extremely relevant experience
supporting key elements of the program.
Ketchum is a global public relations agency IBM has worked
with for more than 10 years. They will provide consumer
education and outreach. Epiq Systems has deep experience in
executing consumer programs with geographically dispersed,
hard-to-reach populations. They will staff the critical
consumer-facing help desk and manage coupon distribution to
consumers. Corporate Lodging Consultants, CLC, will work with
retailers through the certification process and financial
processing to reimburse retailers.
Now, let me briefly describe the four areas of service. For
the consumer education program, we have four primary work
streams. First, we are developing messages and materials that
educate consumers about the coupon program. Secondly, we are
building on the outreach that NTIA has already done to over 150
public and private sector partners. Third, we have created a
strategy to leverage earned media across TV, radio, print, and
online outlets. Fourth, we are establishing metrics to
determine the saturation of the message. This will allow us to
adjust both messaging and target audiences over the course of
the coupon program.
Consumer support begins with the coupon application. The
application and distribution process is simple, consumer-
focused, and provides multiple channels for access. Consumers
can apply for coupons via the phone, Web, or by picking up a
paper application available in their community, and mailing or
faxing it in to the Consumer Support Center. Web and phone
support will be available 24 by 7, in six languages in addition
to English, and will include support for those in need of
hearing-impaired access. Consumers can expect to receive their
coupons within 2 to 3 weeks after the order. The coupon is
plastic and resembles a gift card, something familiar to
consumers, and is easy to use. Information about where to
purchase a coupon-eligible converter box in their local area is
included with the mailing.
Our retailer program has a two-pronged approach to recruit
both national retailers and smaller local retailers to
participate in the program. The Retailer Support Center opened
on October 1 with live operators. The system provides multiple
channels for both large and small retailers to certify their
eligibility and enroll. All participating retailers will
receive training about the coupon program. Making sure the
sales associates are knowledgeable about the program will help
achieve the best possible consumer experience.
The coupon redemption process is also designed to maximize
retailer participation and to minimize waste, fraud and abuse.
Six different redemption options are offered to retailers. All
are based on real-time coupon authorization at the point of
sale. For smaller retailers, Internet and automated telephone
options are also available and will operate in realtime, making
a telephone the minimum technology required to participate in
the program.
In a typical chain-store experience, the consumer will
present the coupon card, which is then swiped at the cash
register just like a credit card or a gift card transaction.
The system authorizes the transaction. The consumer pays any
cost above the $40 value of the coupon, and leaves the store
with a converter box. Authorization data is then matched up
with sales data and audited before the information is
transferred to the U.S. Treasury for retailer reimbursement.
In conclusion, the NTIA coupon program requires innovative
thinking, leading technologies and cooperation among retailers,
broadcasters, Government agencies, and many community-based
organizations.
The IBM team is pleased to be part of this vital program
and recognizes there are many challenges along the way to
February 17, 2009. Our team is ready to meet those challenges
and to work to ensure that consumers across the United States
have continued access to free television broadcasting,
including educational, entertainment, emergency, and homeland
security information.
Thank you for the opportunity to testify, and I am happy to
answer any questions.
[The prepared statement of Mr. Romeo follows:]
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
Mr. Markey. Thank you, Mr. Romeo.
So that completes the opening statements from the
witnesses. The chairman will now recognize himself for a round
of questions.
Ms. Fazlullah, you are bringing very troubling findings to
our committee. People in your organization went out to stores,
and they found out that people were not being given the
accurate information by those who worked in these stores.
Target has already been fined for not properly labeling their
analog TV sets.
Are you concerned that in January, Target will be how that
store views a consumer walking into the store, as someone who
might be moved up to an HDTV set that costs $500 or $1,000,
when all they need is a converter box for their analog TV set
in order to be able to receive a digital signal?
Ms. Fazlullah. Yes, definitely. I think any of the top five
retailers still have personnel in their stores who are not
aware of the appropriate pieces of the transition, and as a
result, upselling is a serious problem.
We do not make any conclusions in our report as to whether
or not it is on purpose or anything like that. I think there is
a lot of confusion out there in terms of what the details are.
What we find troubling is that, when you go to a store
representative, you expect them to have some expertise on the
question or, at the very least, be able to guide you to the
appropriate resources.
Mr. Markey. So you are not sure they are taking advantage
right now?
Ms. Fazlullah. I would say that what they are doing in the
stores right now definitely takes advantage of consumers, but I
cannot say if it is on purpose or for just a lack of training.
Mr. Markey. Ms. Zirkin, do you think that there is a real
risk here that these retail stores will take advantage of
consumers?
Ms. Zirkin. I absolutely do. And for our communities, Mr.
Chairman, the problem is that a TV is a total luxury; 48
percent, I believe--and I can check on that--of all over-the-
air households have an income of under $30,000 a year. So, for
them, it is a real stretch even to be able to afford what they
would have to put up in terms of the coupons, and that is why
we are so concerned.
Mr. Markey. Thank you.
Mr. Stout, I share your concern that the closed captioning
is not adequately supported by new digital television
equipment, even though the manufacturers have a legal
obligation to ensure that that function is included. The FCC
just circulated a consumer advisory on closed captioning. Does
that alleviate your concern?
Mr. Stout. I have not read that consumer advisory that was
just released yesterday, but I will give you our feedback to be
added to the record at a later date.
Mr. Markey. OK. Please do so. I have been working with
Karen and with everyone associated with you going back to the
late 1980s in terms of closed captioning being built into the
law, and I would like to ensure that we do everything to
maximize the accessibility for your community.
I also want to make sure that everyone knows that Karen's
son, Jeremy, was not covering me when I ruptured my Achilles
tendon. Just so that is clear for the record.
Mr. Romeo, I am concerned that retailers are not opting
into the converter box program. Many of the retailers argue
that the system upgrades they must make to process coupons are
too onerous to implement before the Christmas rush.
How difficult are those system upgrades? Can they be
accomplished before this holiday season so retailers can stock
boxes in January 2008 when the coupons become available?
Mr. Romeo. Sir, we are just starting to engage now in
conversations with those retailers, but they have happened very
quickly. We have talked to 23 of the largest retailers.
Mr. Markey. Is it a big deal? How hard is it?
Mr. Romeo. We have given them six options to participate.
Mr. Markey. Is it a big deal? Is it hard to do?
Mr. Romeo. It is not a big deal. It is not hard to
participate. With the simplest option, they can send paper,
too.
Mr. Markey. So if they do not have it done on January 1,
they will have no excuses?
Mr. Romeo. If they choose an option which is more automated
for them, they would have to make a modification to their
system. And during the Christmas season, they may choose to
defer that until later next year, but I expect that we will
have very broad participation by the retailers.
Mr. Markey. Yes. I mean my feeling is that since this
program is not very difficult for retailers to participate in,
my expectation would be and the committee's expectation would
be that they would be ready on January 1 to deal with this rush
of consumers who would be coming to their stores. And we are
going to be making that very clear to the retail community.
I will now turn and recognize the ranking member of the
committee, the gentleman from Michigan, Mr. Upton.
Mr. Upton. Well, thank you, Mr. Chairman.
I am sorry I missed some of the testimony, but I was glad
to get pieces of it, and I have got a couple of questions that
I want to ask.
First of all, Ms. Fazlullah, you indicated in your
testimony a couple of retail stores. I just wondered if they
were in my neighborhood when you mentioned Target and Best Buy.
They all seem to be together in my neighborhood right off Route
1 in Alexandria. Is that where they were?
Ms. Fazlullah. Those were some of the stores that we went
to, yes.
Mr. Upton. How long ago was it that you were there? My son
seems to want to go there every week for something, so----
Ms. Fazlullah. Actually, we went to those stores, I
believe, at the end of September; but we also visited them over
our preliminary survey, which was in August.
Mr. Upton. In August. The ads, at least as I have seen them
as a consumer, have just started to run, and NAB is beginning
to run their ads, I believe, this week, right? This week. So
the word is now, unless you were in line in this committee room
to get in over the last number of months, I would venture that
most consumers do not know yet about the change, and that
information is going to get out there.
I understand, Mr. Chairman, that we are going to have
another hearing in a couple of weeks, right? At the end of
October?
It will be in 2 weeks with a lot of the consumer groups,
with the retail association, and we will be anxious to see the
progress that they have made. But I will be checking with my
folks, and I will visit some of those stores and see what is
going on to make sure that they, in fact, have the information.
One of the concerns that I have heard already from a
consumer who saw the ad was ``I want to get my box now,'' but
because they are not ready yet--they are not actually
delivered--there is a reason why the cards have not been
shipped out yet for people then to actually go get them. As we
have seen in the demonstration, one of the selling points--and
I have urged the NAB to do this--is that consumers will
actually get a better picture when they convert it to digital
than on their analog sets, so there will be an advantage to
them to, in fact, get a better reception with the card.
Mr. Benjamin, in your testimony, one of the concerns that
has been expressed is how hard or how difficult it will be to
reach certain segments of the demographic groups that are out
there. What is your reach of the organization, both in terms of
geography and demographics, in terms of communicating with
folks who may hear that message?
Mr. Benjamin. I would say, of the 225,000 members who we
have had over this past year, a large percentage of those are
located in the Midwest and southern region parts of the United
States, which tend to be more rural than, perhaps, other
sectors of the country. In fact, in many of our cases, we have
chapters in schools that have 150 students in the high school,
which, really, is indicative of the size of that community. So
we think that we will have a significant outreach into the more
rural areas of the country. Although, we are in, as I
indicated, all 50 States.
Mr. Upton. Well, again, as I have sat down with my local
broadcasters--and my district is the southwest corner of
Michigan, so we get Chicago over-the-air TV, but we rely a lot
on South Bend, Kalamazoo, and Grand Rapids. We have some fairly
rural areas in my district, but that is why it is so important
for the broadcasters themselves, now that they have the message
and now that they have the ads, to beam it into those of us who
watch in order to get our attention and so that, in fact, those
with just over-the-air will get that message, and then we need
to obviously follow through with them to make sure that they
get the card and are able to install the converter boxes as
they become available.
Mr. Romeo, do you suspect that there will also be, in
essence, mail order or Internet sales of the boxes through the
retailers in addition to individuals just going to Best Buy or
to Target or to Sears or wherever?
Of the retailers that you have talked to initially, are
they planning to do the same thing? Is it going to be in a
catalog?
Mr. Romeo. Yes. So online retailers are we talking about?
Yes. We believe there will be strong participation on that
front.
Mr. Upton. As they get that card, that gift card that they
otherwise would swipe, will there be a number there to identify
on the Internet so that they will be able to claim the credit?
Mr. Romeo. There will be.
Mr. Upton. I yield back.
Mr. Gonzalez [presiding]. Thank you very much.
Let me just ask the witnesses: How much will the consumer
have to pay for that converter box that has been approved and
that is the genuine article? They are going to get a coupon for
$40. What is it actually going to cost, do we know?
Mr. Benjamin. I heard the cheapest one is about $70,
somewhere in that area, but I believe it is going to be more
than the $40 coupon.
Mr. Gonzalez. Yes. I am under the impression--and members
of the committee and, I know, Mr. Markey would probably have
the answer--that it is anywhere from $50 to $70, which means it
is more like $70 to $100 or whatever. But I am not sure that
the consumer is aware that it is going to cost more than the
$40 coupon when they get up there. I think that is actually an
important piece of information.
Ms. Zirkin, you pointed out something that is so important
because it is my concern, but I do not know what we are going
to do about it, and that is that the coupons should go to those
who need it the most. My fear is, the way it is set up, it is
the least likely scenario, and that is not going to be the
result, because I do not think we have any priorities, and let
me explain, and then I will ask you what we do about it.
Let us say we have someone who has cable access at home but
that not all of their televisions are cable-connected, and so
they need the box for the other TVs. The cable companies,
obviously, at the head-in are going to reconvert, and they are
fine, all right? That person probably is the best informed of
any because we have the broadcasters, and we have the cable
industry out there bombarding them with the information, so
they are probably going to constitute the greatest number of
coupon redeemers.
Then I have got somebody who has got a vacation home and
decides, ``We do not have cable or satellite out there, and I
will get one for my vacation home.'' Then we probably have the
person who needs it the most, that person who truly has the old
set--analog--and so on. Quickly, because I have a question for
Mr. Romeo: What do you propose we do? Because it does not look
like that particular category of consumer is going to be really
a priority.
Ms. Zirkin. And the other thing about that particular
community is that they do not have Internet access. So that all
of the fancy things, they are not going to get. I mean we
believe we are looking at a disaster for these 21 million
households, and what we are proposing at LCCR--and we cannot do
it alone because all of our organizations are all public
interest. Many of our organizations have conventions, have
workshops. We can penetrate with the materials if we can get
help, which is why we have stressed over and over again that $5
million for public education is simply not enough.
Mr. Gonzalez. Ms. Zirkin, I am going to try to get this
question in real quick to Mr. Romeo there.
I do not know if you can address this, because the person
who is doing all of your outreach--is it Ketchum? What is the
name?
Mr. Romeo. Ketchum, yes.
Mr. Gonzalez. All right. Do you know what partnerships they
are actually entering into? It might be with Mr. Benjamin's
group or so on. But what I am saying is that it is a noble
effort and we need to do it. But what is obvious to me is: What
does everyone have in common who may have an analog television?
That is, it has got to get plugged in, right? So they have to
have electricity. That means they have to have utilities. That
means they are probably getting a utility bill.
Are we thinking in terms of how we are going to piggyback
on other governmental entities at the Federal, State and local
levels, and especially utility companies?
You all may have already thought this through, and you are
going, ``Wow, Charlie, you are a genius,'' but are you aware of
anything like that? Because that is the only way you are going
to get into that house.
Mr. Romeo. Sir, we are working closely with NTIA to take
advantage of existing relationships, but I know there are
discussions with all of the other Federal agencies to use their
outreach to take advantage and to get the consumers that way.
Mr. Gonzalez. I will really suggest, sir, that that effort
is at the local government and utility level and, if we have
any obstacles/impediments, that we start figuring out what that
is now because tomorrow or January 1 is basically here.
Really quick, Ms. Fazlullah. I go into the electronics
store. I have got a $40 voucher, and I have got a salesperson
who says, ``Hey, for another $100 or another $150, I can get
you something that converts to signal but also allows you to
play a DVD. For another $150, I can get you something that
converts a signal, plays a DVD, and you can even record.'' What
can we do about that?
Ms. Fazlullah. I think it is important that the Government
step in and set actual guidelines as to what retailers are
saying to the consumers about the DTV transition. Having set
guidelines that put down on paper, ``These are the pieces of
the DTV transition that need to go into the hands of your
personnel so that they can then say the correct things to
consumers'' is important.
Then, on the other side, if there are retailers that are
actually upselling, then we have got to have a process in place
to actually punish them for that.
Mr. Gonzalez. Fine.
Ms. Fazlullah. I do not know if that is really adequately
in place.
Mr. Gonzalez. I do not think we are going to be able to do
that, but I appreciate it because I think it is a real
quandary. My time is up. Thank you very much for your testimony
today.
At this time, I recognize Mr. Walden.
Mr. Walden. Thank you, Mr. Chairman.
I just have to follow up on this. Are you really saying
that, if a clerk says to me when I go in, ``Here is what your
coupon is good for, for this converter box.'' Or, ``Mr. Walden,
we also have these other options available to you,'' that
somehow that retailer should be punished for upselling? That is
what I heard you say in response to Mr. Gonzalez's question.
If they say, ``Oh, and this one has got a DVD player, and
this one will do that and has,'' you know, ``a big, new
picture,'' you said we have got to take care of that and have a
script. Are you serious?
Ms. Fazlullah. Well, I am serious about the fact that we
need to have adequate information for consumers in these
stores. I think it is a really confusing process.
Mr. Walden. That is not my question here.
My question, though, was this went further than just
somebody's scamming a customer and a bait and switch and a
fraud, which I am with you all the way on. If they say ``Yes,
come in and use your coupon'' and then they do not happen to
have boxes for, oh, a year, that is a different deal. But what
I heard was we have got to regulate from the Federal Government
what a salesperson says in terms of other options a consumer
might want to take advantage of.
Ms. Fazlullah. I don't think that--I'm sorry if that is
what it appeared. But I would actually like a process for fraud
and upselling, which I think is very confusing. In
conversations that I have had with the FCC and with the FTC, it
is unclear what you do with consumer fraud situations with
upselling. Do you go to the NTIA when there is a problem with
the coupon program, or do you go to the FCC when there is a
problem with the----
Mr. Walden. I am reclaiming my time because there is a
difference between bait-and-switch and upselling, I think, as I
understand it, which is offering consumers other opportunities
and choices. Is that a problem? Do you call that a fraud?
Ms. Fazlullah. I would say maybe my definition of upselling
is actually where you don't provide the adequate information
about the converter box program or alternative situations as
opposed to just jumping ahead and trying to sell an HDTV.
Mr. Walden. I think you need to train, and I think you need
to make sure that the customer representatives know the whole
deal on the consumer box. I fully agree with that. But if we
start trying to write scripts for every salesperson in every
retail outlet in America and then have the speech police come
in and decide, I can't tell you that that TV has a converter
box and a DVD player, and by the way, this one also has a
stereo or whatever in it, and these are your options, then I
think we have got a problem.
I am going to go to Mr. Romeo. Tell me how the process is
going to work if I am a consumer and I apply for a card in
January? I heard earlier today from the Secretary that they are
going to delay the rollout of those cards commensurate with the
product rollout. Now, what I want to get at is an issue that I
apply. I live in a little town, but it is 60 miles from a major
city in Oregon--Portland. Tell me how this database is going to
work where you are going to list the stores I can go to that
will have these converter boxes? How do you know where I shop
or where I want to shop, and am I going to be limited? I know I
can use that coupon anywhere. But let us say, on January 10, I
am ready to go celebrate my birthday by getting my coupon that
I ordered and going into Portland to a Best Buy and buying one
of these converter boxes because I know they have them when
perhaps the Radio Shack in Hood River doesn't. Who is going to
decide for me when I get that coupon?
Mr. Romeo. If you order the coupon, so we are working with
NTIA on the rollout details. But in that scenario, we haven't
talked about--we have the information from where you live when
you order the coupon. We have your address. We have a list of
certified retailers throughout the country. So we can send you
the list of certified retailers in your geography. And that
could be Zip Code or much broader than that. We are still
working with NTIA on that.
Mr. Walden. And I concur that is a good idea to get the
list or at least allow me somewhere where I can go and get a
list. I have a district that is 70,000 square miles. It would
stretch from the Atlantic to Ohio. It is an enormous district.
And so when you limit to a Zip Code or a 15-mile radius or
something----
Mr. Upton. If the gentleman will yield just for 1 second.
But you are also going to be able to get them through a mail
order house or on the Internet where they can actually get them
delivered.
Mr. Romeo. And those would also be listed on the mailing,
that you can order online. If there are retailers who provide
the box online, they would also be listed.
Mr. Walden. I guess I am just trying to get to where
consumers have as many options at their disposal as possible to
get a coupon whenever they want to get it, get it returned to
them, and then they make the decision. Because the Government
doesn't always know--I know I am slightly over. I am kind of
like the last one here, other than Mr. Terry. But anyway, I
will quit. Thank you.
Mr. Gonzalez. And to follow up on Mr. Walden, in my
discussion, I don't mean to infer that someone is going to be
able to get credit for the $40 on the upgrade. But I am also in
the real world where I can see $40 rebates being offered by
certain sellers when they do go and they upgrade.
Mr. Walden. So what would be wrong with that? If it is not
the taxpayer subsidizing, it is some other company.
Mr. Gonzalez. I am just saying that if you have somebody
there with a $40 coupon, the consideration for the consumer is
that they are getting credit for the $40. If they upgrade, they
are not going to be able to apply that $40 credit. Therefore, I
think what would happen is simply, it would be replaced by what
would be, again, a $40 rebate just to go ahead and address the
$40 that they are not going to be able to actually, I guess,
cash in on. I do see a problem with that. I think people are
going in there with the intention of what is a Government
mandated arrangement, and it is not bait-and-switch, but
definitely you have a captive audience, and you have certain
individuals. I don't know the degree of sophistication. But I
think you are going to run into some problems, and you need to
anticipate it. To the extent that we educate individuals I
think will go a long way. But I am saying, Mr. Walden is not
wrong to say there is only so much we can do to protect any
consumer.
The Chair at this time would recognize Mr. Terry from
Nebraska.
Mr. Terry. I appreciate that Mr. Gonzalez.
Mr. Romeo do you realize that it all stops with you.
Mr. Romeo. I do.
Mr. Terry. Everything we are talking about is going to be
put on your plate. And I was asking some of my colleagues
earlier on an issue that kind of bothered me. We talked a
little bit about the bait-and-switch and the consumer or
potential fraud on the consumer. I want to switch the
discussion now, since we have discussed that, to fraud on the
program. Because it seems by, just the system as it has been
described to us, you sign up for this voucher, the debit card.
You get it. You take it to your electronics retailer and get a
box. It seems to me that it is ripe for fraud in a lot of
different areas. And the first is asking for the debit card.
What would prevent me from going up and down my block in my
neighborhood knowing that every household is entitled to two,
and you go up and down most blocks. And frankly, in Omaha, no
matter what part you go to, even in the poorer section, you are
going to find that most houses, every TV is already hooked up
to cable. So they will sit there and say, I will give you 20
bucks, you give me your two vouchers or give me your access to
these two vouchers. Or likewise, developing a black market in
some way for the equipment. I see a lot of different ways to
turn this into cash for people at the expense of the program.
Has IBM thought through this? How are they going to stop? Where
do you anticipate potential fraud? Because, believe me, this
will turn into fraud. There will be stories on it. Have you
thought through the points that are most vulnerable, and what
are you doing to prevent it?
Mr. Romeo. Yes we have thought through many of the points
of fraud. The coupon itself will only be redeemed. So the
financial payment for the coupon will only be made when it is
matched to a certified box sold at a retailer. And the retailer
will get that money directly. So having a large value of
coupons means that you will have to go to a retailer and redeem
those coupons for certified boxes in that retailer. We also
will look for patterns. So if there were a neighborhood that
just ordered a tremendous volume of coupons and they were maybe
redeemed in another State, we would see a fraud pattern in that
and start to turn that over to NTIA for investigation.
Mr. Terry. I am not sure that gives me a great deal of
confidence. What type of system do you have in place to track
whether you see a bump in what you would determine as
fraudulent activity besides just out-of-State activity with the
coupon?
Mr. Romeo. Without getting into too much detail on the
security, protections on the system, this is a credit card
provider using the system that they use for credit card
transactions. And they have a variety of methods to ensure that
they are not defrauded from the use of their cards. So we are
employing a lot of the pattern recognition that they would
employ in their credit card systems today.
Ms. Zirkin. If I could say something, Mr. Terry. I think
you have a very good question. And I think that there are two
issues here. Fraud is one. But who is getting the boxes? And it
is going to be very important in our opinion that the Congress
with GAO track where it is going. Because it has to be an
independent tracking. Nobody wants to wake up on February 17,
and you all are going to be called, not me. And so I think it
is in everybody's best interest to have the tracking done by
the Congress and GAO so that you can see patterns.
For instance, in Detroit, if you see in the inner city that
really many fewer coupons are being redeemed, then you have to
think about or ask what is happening in terms of the public
education. Or, in New York City, 10024 Zip Code, if there are a
lot of them being redeemed, what is happening here? So I think
the fraud point is important, and who is getting it is very
important. Thank you, sir.
Mr. Terry. That is a very good suggestion. And I will then
suggest to our chairman that we follow through on those.
Mr. Markey. And I will follow your suggestion.
I will now turn and recognize the gentleman from Illinois,
Mr. Shimkus.
Mr. Shimkus. Thank you, Mr. Chairman, and I appreciate you
all for being here. You are competing with the Dalai Lama,
which is big competition, but I believe, on February 17, 2009,
the Dalai Lama is not going to have a complaint about whether
his TV goes dark, but we will be receiving some of those. So
thank you for your interest obviously and being here during
this period.
A couple quick questions, if you will. And Mr. Romeo first.
I was talking to one of my staffers. IBM administers one of the
welfare programs in Indiana. Is that correct? Is that the right
State?
Mr. Romeo. It is.
Mr. Shimkus. And successfully?
Mr. Romeo. Right.
Mr. Shimkus. And it is credited with obviously providing
the services in a timely beneficial manner. I wish I knew all
the details, but I just put the connection together. So you
have experience in dealing with stuff like this.
Mr. Romeo. We also run a very large portion of CMS's
financial reporting, so depending on claims for CMS.
Mr. Shimkus. So it is probably safe to say that you have
confidence you are going to be able to track the supply of the
converter boxes as well as the coupon demand and redemption to
ensure that the program runs smoothly?
Mr. Romeo. Yes.
Mr. Shimkus. And I think the track record speaks to that so
far. But we are pretty gun shy. We had a very successful
Medicare prescription D program now. But the implementation of
it led a lot of us to have concerns about that the first couple
of months. So if there is skepticism, that is kind of the short
term where Members have had to deal with that.
Mr. Benjamin, the question is, won't your program have
consumer education benefits on multiple levels? First, you will
be educating your 225,000 student members. Second, they will
likely educate their parents. And third, they will be able to
educate their communities. And doesn't this show how a simple
grassroots idea can be used to leverage awareness.
Mr. Benjamin. Yes. We are looking at a multiplier effect.
And you are absolutely correct. Starting with the individual
members--and let me just say that, even though we talk about
225,000 members, that usually translates more or less into a
10-1 ratio because those are members; they are not students in
a class who may not be members but who will be getting this
information. So it starts in the classroom. Then it works to
the school. They have student body rallies and what have you.
So there it would be at the school level, then the parents and
then, of course, connecting with the community. And we are
working with the various partners, the National Association of
Broadcasters, so that hopefully we would be linking up with
local television stations as well. So it is a tremendous
multiplier effect that we hope to see out of this effort.
Mr. Shimkus. And actually more than I would have even
imagined. But we do know that it is the youth that really push
technology. I remember going to a communications electronics
show, and the MP-3, they were just rolling it out. And I was
amazed at how just the demand for music really driven by
current kids was really pushing technology. So I imagine these
kids are going to be saying, hey, mom, dad, we better be ready.
Mr. Benjamin. The other thing that is going to drive, I
think, our chapters to be involved is the fact that they will
be able to get some of these electronic gadgets, if you will,
as a result of the prizes that will be offered. And they do
love competition.
Mr. Shimkus. That they do. And I will try to finish on this
last question. Ms. Zirkin, your concern is this first-come,
first-served nature of the converter box. I kind of mentioned
that, in the first panel, with the 8.3 million books sold, the
Harry Potter books sold, which I stood in line for and bought
three with my two sons, so I am very aware. And some of those
came in a bookselling beforehand. This is a tradition of the
Shimkus family now. I am glad the series is over. But where we
stood in line for a couple hours at midnight, bought our two
books, went to bed at 3:00 in the morning, got up whenever and
about 10:00, another book came in the mail. So we had, in
essence, three books, but we did the pop culture thing to do.
And the NTIA, we talked about the numbers, about what is
projected. The CEA says 8 million, broadcasters think, what,
23. The budget that is in place is for about 33.5 million
coupons. And so we are pretty comfortable with that. But
shouldn't we have focused on a--we had a debate when we moved
the bill about doing a means testing. Should we have addressed
a means testing as to really those who can't afford it deal
with the coupons versus a coupon for everybody even if they
don't need it?
Ms. Zirkin. I think your Harry Potter analogy is very, very
good, and that goes to my concern. Harry Potter, unless you
have been under a rock for the past 8 or 10 years, everybody
knows about Harry Potter. Not everybody, my concern, is going
to know about this. And that is why, in my testimony, I really
stressed the whole public education effort. I think that if
people know about it, people are going to go get it. My concern
is reaching those people, many of whom are poor or working
poor.
Mr. Shimkus. Shouldn't we have means tested the coupons?
Ms. Zirkin. I can't speak to that.
Mr. Shimkus. We will probably find out. If we have enough,
there won't be an issue. If we don't have enough, it might have
been part of the debate that we should have addressed.
Ms. Zirkin. I think NTIA attempted to in the last half
billion dollars that is allocated. But I am not sure how that
is going to work. And that is why we really are advocating
oversight, which Chairman Markey is doing and others. But I
think it is going to be critical. Because if there is a problem
and if we see problems next year in terms of who is getting
them, then I think Congress is going to have to step in at some
point so that this is not a disaster.
Mr. Shimkus. I think Chairman Markey will do a great job of
oversight.
Ms. Zirkin. I do, too. Thank you.
Mr. Markey. Thank you. And I thank the gentleman from
Illinois.
Mr. Shimkus. H.R. 608. I yield back.
Mr. Markey. Anyone watching this has no idea what H.R. 608
is.
Mr. Walden. Maybe we should have a hearing on it.
Mr. Markey. We will have a hearing, by the way, in another
couple of weeks with industries that are responsible for making
this work. And by the way, this thing is coming this
Thanksgiving; it is coming in 5 more weeks, 6 more weeks.
People are going to be in department stores all over America in
4 or 5 weeks. And this is going to be a big moment where these
stores better be ready to give people the honest information
they need. The broadcasters, the cable industry, they better
have already explained to people that they may be walking into
a trap; they may be walking into situations that are going to
be very dangerous for them as they purchase their new TV set.
So let us do this. Let us have each one of you give us your
best 1 minute for what it is that you want the committee to
remember about your testimony. So I will begin with you Mr.
Romeo.
Mr. Romeo. Thank you. I just would like to say that IBM is
in a position with our partners to execute the program in a
successful manner. And we will be ready and operational on
January 1. And we have designed the program to ensure that both
the consumer and the retailer have a satisfactory transaction
in the process.
Mr. Markey. Ms. Zirkin.
Ms. Zirkin. At the risk of repeating myself again, I urge
that the Congress provide intense oversight with the General
Accounting Office and be ready to actually step in so that
nobody's TV goes dark. Because remember who folks are going to
be coming to on February 7, 2009.
Mr. Markey. Who is that?
Ms. Zirkin. I think it is every Member of Congress. It
might be every Member of Congress. It is certainly not going to
anybody at this table. Thank you, Mr. Markey.
Mr. Markey. Thank you. I appreciate it.
Mr. Benjamin.
Mr. Benjamin. I think FCCLA with its 225,000 students,
7,000 chapters, will be prepared to engage in larger
communities with our keep your TV on campaign.
Mr. Markey. Thank you for your work, Mr. Benjamin. Do you
guys give out merit badges? Is there something you can win for
doing this?
Mr. Benjamin. Well, they do give competitions. And in this
case, the chapters, depending on how they stack up with other
chapters, will get $500 coupons to purchase electronic
equipment from Best Buy.
Mr. Markey. That is excellent. For turning in Best Buy,
they will be able to get a certificate to go into Best Buy.
That is great.
Ms. Fazlullah.
Ms. Fazlullah. I think one of the most important statements
that is in our testimony is that we need to have a coordinated
effort from Government on this. And I think the GAO noted this
earlier, that there isn't really a leader. And we need have
coordination among the different pieces of Government that are
acting on this so that there can be a guiding hand for the
retailers, for the public interest folks and for the consumers
at large.
Mr. Markey. Thank you.
And finally, you, Mr. Stout.
Mr. Stout. OK. I just wanted to clarify one part with you.
Earlier you had asked me about the consumer advisory that was
sent out yesterday. And I had just talked with some of my
staff. And they said that the advisory doesn't address any of
the issues that you had. In closing, I just wanted to
emphasize, just in 1996, Congress finally mandated the FCC and
the industry to provide us with closed captions. And it is one
thing that you would get access to; it is also another thing to
see the access continued. We have experienced the change from
analog over to digital programming. We want to be able to
experience complete accessibility there. We are like all other
Americans; we deserve full TV access. Thank you.
Mr. Markey. Thank you, Mr. Stout.
And this committee agrees with you, and that is why we have
consistently passed legislation to accomplish that goal. And we
will take whatever action it takes in order to ensure that that
happens in this area as well.
So today's hearing has given us an emergency broadcast
system alert that the transition to digital TV is fast
approaching, and several challenges loom. We have established
that the FCC is the quarterback of the transition, but we need
to see better coordination, better planning and contingency
work being done, as the GAO recommended in their testimony here
today. We obviously have consumer groups and hard-to-reach
citizens for whom a comprehensive consumer outreach and
education program is the top priority.
In 2 weeks, we will have another hearing to obtain
testimony from key industries. We will have an opportunity to
assess industry announcements regarding outreach and education
at that time. And we then will about 3 weeks before
Thanksgiving and the Christmas sales season opens have a real
idea of where we are. This has been an excellent panel. We
thank you for your testimony. The hearing is adjourned with the
thanks of the subcommittee.
[Whereupon, at 2:35 p.m., the subcommittee was adjourned.]
[Material submitted for inclusion in the record follows:]
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
STATUS OF THE DTV TRANSITION--PART 3
----------
WEDNESDAY, OCTOBER 31, 2007
House of Representatives,
Subcommittee on Telecommunications
and the Internet,
Committee on Energy and Commerce, Washington, DC.
The subcommittee met, pursuant to notice, at 9:35 a.m., in
room 2123, Rayburn House Office Building, Hon. Edward J. Markey
(chairman) presiding.
Present: Representatives Doyle, Harman, Gonzalez, Inslee,
Boucher, Towns, Eshoo, Stupak, Engel, Green, Capps, Solis,
Dingell, Upton, Hastert, Stearns, Wilson, Radanovich, Walden
and Barton.
Staff present: Amy Levine, Mark Seifert, Tim Powderly,
Colin Crowell, Maureen Flood, David Vogel, Philip Murphy, Neil
Fried, and Courtney Reinhard.
OPENING STATEMENT OF HON. EDWARD J. MARKEY, A REPRESENTATIVE IN
CONGRESS FROM THE COMMONWEALTH OF MASSACHUESTTS
Mr. Markey. Good morning, ladies and gentlemen. We welcome
you to this very important hearing on the digital television
transition. As all of our Members can see, we have the single
largest panel ever gathered to testify on any one subject in
the history of the United States Congress, and in order for us
to be able to accomplish this goal, beginning with the
chairman, who is going to limit himself to 1 minute, I am going
to ask if each of the members of the subcommittee would also
limit themselves to 1 minute in their opening statements so
that we can get to these witnesses and end it before the
children begin trick-or-treating this evening. That would be my
goal.
And so I will begin by recognizing myself. Happy Halloween.
In a little over a year, millions of American consumers will
find out if the digital television transition is a trick or a
treat. Will stores trick them into buying equipment they don't
need? In February 2009 will they see their screens summarily
turn as black as a Halloween cat? Will they long for the old
analog signal even with its friendly ghosting; or conversely,
will it be a wonderful treat? Will it be a bag full of digital
delights, including the eye candy of a better pristine picture,
breathtaking high-definition programming and perhaps multiple
streaming of new sources and channels?
Nothing is scarier this Halloween than the prospect of
millions of consumers disillusioned and upset with a
Government-mandated transition that has gone awry. For this
reason we are holding today yet another digital television
oversight hearing.
We obtained testimony just 2 weeks ago from consumer
groups, the chairman of the FCC, the head of the NTIA, as well
as important testimony from the GAO about the status of the
transition and suggestions for improvement.
Today we have an expert panel of witnesses, of industry
stakeholders to inform the subcommittee about their
perspectives of the transition with just over a year to go
prior to the hard date and just 2 months before the Government
converter box coupon program begins. We will be working with
the FCC and the industry on these issues. I want to thank the
witnesses for their willingness to testify today and sincerely
hope that this hearing goes well.
The Chair recognizes the gentleman from Michigan, the
ranking member of the subcommittee, Mr. Upton.
OPENING STATEMENT OF HON. FRED UPTON, A REPRESENTATIVE IN
CONGRESS FROM THE STATE OF MICHIGAN
Mr. Upton. Thank you. I will try to be as brief as well. I
just note that the clock didn't start until you were well into
your statement.
I am just glad that daylight savings time has not switched
until Sunday with trick or treat, so our trick-or-treaters
tonight have that extra hour of sunlight, one of the things
that you and I worked on together in the last Congress as the
2005 bill, so that hopefully we won't have as many accidents
today.
Mr. Markey. And I want to congratulate you on that, Mr.
Upton.
Mr. Upton. We worked together. It was a good thing.
I thank you for holding this hearing on the transition to
DTV. We welcome our panel and our many witnesses that are here
today.
I would just note that in February 2006 President Bush
signed into law the legislation that designated midnight
February 17, 2009, as the date to complete the transition from
analog to digital TV broadcasting. The transition from analog
to digital television represents the most significant
advancement of TV technology since color TV was introduced
decades ago. And I would remind all of us here that there was
legislation introduced early on in this Congress, H.R. 608, the
Barton-Upton-Hastert DTV Consumer Education Act, which goes a
long way to assure folks that, in fact, we will see that
transition move in an orderly way.
Who will be affected once the proverbial switch is flipped?
Cable, satellite and TV companies will take steps to continue
providing service for their TV subscribers. These consumers
will not be noticeably impacted by the DTV transition. The
cable and broadcast industries have already stepped up to the
plate to help educate the public about digital TV transition
with still more than a year to go. Thank you. By introducing
public education campaigns that will total nearly a billion
dollars, B as in big, it is comforting to know that industry
understands the critical importance of educating Americans on
this issue so that, in fact, a seamless transition can take
place in February 2009.
Mr. Chairman, I am going to ask my full statement be part
of the record. I look forward to interacting with our
distinguished panel today to make sure that, in fact, this is a
success, and not only today, but at the end of the day. And I
yield back.
Mr. Markey. The gentleman's time has expired.
The Chair recognizes the gentleman from Pennsylvania,
Michael Doyle.
Mr. Doyle. Thank you, Mr. Chairman. And my treat to you
today will be to waive my opening statement so we can get to
our witnesses. I yield back.
Mr. Markey. The Chair recognizes the gentlelady from
California, Jane Harman.
OPENING STATEMENT OF HON. JANE HARMAN, A REPRESENTATIVE IN
CONGRESS FROM THE STATE OF CALIFORNIA
Ms. Harman. Thank you, Mr. Chairman.
I would point out that if our witnesses were female, it
would take far fewer of them to communicate this information.
That is not part of my opening statement.
Good morning, Mr. Chairman, and welcome to our witnesses.
Our lengthy witness list today is ample evidence that a broad
range of industries, not to mention 300 million Americans, have
a stake in the DTV transition. Six years after the 9/11
attacks, first responders still cannot communicate horizontally
or vertically on a national basis.
My views are well known. The 700 MHz TV spectrum should
have been cleared by 2006. Any delay beyond February 2009 is
totally unacceptable and dangerous. February 2009 is less than
16 months away. Half of all Americans are clueless about what
the DTV transition is. Education efforts by industries
represented here today must hit the streets now.
I am fond of saying that perfection is not an option, but
failure to complete this transition is not an option either.
When we are attacked again, sadly that is my prediction, we
will be measured by our response. A national, integrated, fully
interoperable network is the indispensable requirement.
I yield back the 13 seconds remaining.
Mr. Markey. The gentlelady's time has expired.
The Chair recognizes the gentleman from Texas Mr. Gonzalez.
Mr. Gonzalez. Waive opening.
Mr. Markey. The Chair recognizes the gentlelady from
California Ms. Eshoo.
OPENING STATEMENT OF HON. ANNA G. ESHOO, A REPRESENTATIVE IN
CONGRESS FROM THE STATE OF CALIFORNIA
Ms. Eshoo. Thank you, Mr. Chairman, for holding yet another
hearing on this important issue.
There are several points that I wanted to make. I am going
to drop some of them, but I do want to say this: Last week the
committee heard the testimony of the FCC Chairman Martin in
support of a multitasked must carriage. The chairman, of
course, believes that cable providers must be mandated into
carrying all five digital channels. The theory purported by the
chairman asserts that if carriage is mandated, broadcasters
would produce the content on their extra channels.
Right now in my district, not one commercial broadcaster
produces additional content on these extra channels except some
who air the weather radar 24 hours a day. But public television
stations across the country are using additional channels. In
my district KQED has five new channels they are broadcasting,
and they have a channel that is dedicated to children's
programming and another 24-hour Spanish-language channel.
So what I would like today is to hear from the broadcasters
and have them explain to the committee why commercial
broadcasters are not producing content for these extra channels
and why public television is able to do so and air this content
while commercial broadcasters are leaving these channels
fallow.
I think there is a lot of work to be done as we roll out
this transition. I think it needs to be coordinated, both by
industry and the Government. And I look forward to hearing the
comments that our witnesses are going to make today.
Thank you, Mr. Chairman.
Mr. Markey. The gentlelady's time has expired.
The Chair recognizes the gentleman from Oregon Mr. Walden.
Mr. Walden. Thank you, Mr. Chairman. I am going waive my
opening statement.
Mr. Markey. The Chair recognizes the gentleman from Texas
Mr. Green.
OPENING STATEMENT OF HON. GENE GREEN, A REPRESENTATIVE IN
CONGRESS FROM THE STATE OF TEXAS
Mr. Green. Thank you, Mr. Chairman, for holding the
hearing. I welcome our panel.
This is the third hearing specifically on DTV this year, as
well as the issue brought up when we had the FCC Commissioners
in front of our subcommittee this year. And I will keep my
remarks less than 1 minute.
In previous hearings we have yet to hear convincing
testimony that there is a concerted effort to coordinate
consumer education campaigns and make sure Americans know that
DTV transition is coming, let alone what will be happening in 2
months when they can start applying for the converter box
coupons. It is troubling that the NTIA and the FCC outreach
efforts of an Internet base is not going to help groups such as
the elderly and non-English-speaking households that typically
rely heavily on over-the-air broadcasts, that do not access the
Internet at high rates. I look forward to the testimony and any
efforts that Congress, the FCC or NTIA need to implement to
ensure the smooth transition.
Last Monday's commitment by the National Association of
Broadcasters has spent $700 million on DTV education and
advertising, a promising sign that broadcasters nationwide are
committed to ensuring there is a transition; the cable
industry's commitment of $200 million in advertising as well.
And I hope to see a similar commitment by all the parties
involved.
And, Mr. Chairman, again I thank you for holding this third
hearing, and I am sure before February 2009 we will have many,
many more hearings.
Mr. Markey. I thank the gentleman. The gentleman's time has
expired.
The Chair recognizes the gentleman from Florida for 1
minute, Mr. Stearns.
OPENING STATEMENT OF HON. CLIFF STEARNS, A REPRESENTATIVE IN
CONGRESS FROM THE STATE OF FLORIDA
Mr. Stearns. All right. And I see it is 1 minute.
Thank you, Mr. Chairman. Thank you for holding this
hearing.
My staff has indicated we have had in the last two
Congresses--this one is not done--we have had almost 10
hearings on this subject, so there certainly is an ample
opportunity for us to comment on this.
I would like to make my full statement part of the record.
Our position, or at least my position, is a free market is
working to help the transition go as smoothly as possible.
Consumers continue to connect their televisions to video
services offered by cable, satellite and new telephone
providers. Furthermore, under FCC rules all television
receivers manufactured since March 1, 2007, must be able to
receive digital signals over the air. Moreover, many TVs not
connected to cable or satellite are sitting in people's attics
never turned on and are used only for videotapes, DVD or video
games. At least that is the case in my house. We have these TVs
all over the place. My son uses them for video games. None of
the consumers in these situations will need converter boxes.
So, Mr. Chairman, I think we are making great strides here,
and I think we are bringing ample opportunity for hearing on
this issue, and I appreciate the opportunity to talk. Thank
you.
Mr. Markey. The gentleman's time is expired.
The Chair recognizes the gentlelady from California, Hilda
Solis.
OPENING STATEMENT OF HON. HILDA L. SOLIS, A REPRESENTATIVE IN
CONGRESS FROM THE STATE OF CALIFORNIA
Ms. Solis. Thank you, Mr. Chairman. And I would like to
welcome our witnesses this morning.
I am really excited that Univision is here today because
they are one of the few broadcasters that I know of that has
already launched radio ads and PSAs to help provide information
to the Spanish-language community regarding the transition that
is going to be before us. So I want to applaud you for that,
and also say that we also have to focus in on low-power
television stations in the DTV transition. And I will submit my
statement for the record.
Mr. Markey. The gentlelady's time has expired.
The Chair recognizes the gentleman from California Mr.
Radanovich.
OPENING STATEMENT OF HON. GEORGE RADANOVICH, A REPRESENTATIVE
IN CONGRESS FROM THE STATE OF CALIFORNIA
Mr. Radanovich. Good morning, Mr. Chairman. Thank you for
holding this hearing.
I, like many of my colleagues, are primarily concerned
about consumer education on this issue. For future business
models to succeed, the private industry needs a smooth
transition, and the market forced necessary to motivate these
businesses to make that effort are obviously in place. We have
seen this thus far in the consumer education campaigns that are
already going on. Cable television, for example, was a leader
in this effort when it announced a $200 million comprehensive
consumer education campaign back in early September and has
provided a great service. Many retail stores are participating
in educating their consumers, placing signs in their stores and
alerting their consumers about the transition. Just a few weeks
ago the broadcasters announced their own comprehensive $697
million campaign, including television commercials, educational
outreach and community activities, to help inform their many
customers. You basically cannot watch TV anymore without seeing
a commercial where a very nice elderly woman tells you what is
about to happen to your TV signal.
This type of outreach is necessary. I commend you for all
of your efforts that you have made thus far, and I look forward
to the hearing in these efforts.
Thank you, Mr. Chairman.
Mr. Markey. The gentleman's time has expired.
The Chair recognizes the gentlelady from California, Mrs.
Capps.
OPENING STATEMENT OF HON. LOIS CAPPS, A REPRESENTATIVE IN
CONGRESS FROM THE STATE OF CALIFORNIA
Mrs. Capps. I will be brief, Mr. Chairman.
Thank you again for holding this hearing. Your leadership
on this issue means that media and consumers are taking note
and learning more about the digital television transition and
how it will affect them.
I want to thank Chairman Dingell and my colleagues on the
Energy and Commerce Committee for passing the 911 Modernization
Act yesterday. The recent widespread wildfires in central and
southern California were a stark reminder of why 911
modernization is vitally important. So I hope we can continue
this focus on public safety by strengthening 211 services so
that families and individuals can seek and obtain critical
services in times of need.
The wildfires have also brought to the fore that unexpected
events can have powerful consequences on the DTV transition. In
this vein it is my hope that the FCC is taking into
consideration the impact that wildfires and other disasters can
have on broadcasters that are trying to meet the DTV transition
statutory deadline.
I will submit my further statement to the record, Mr.
Chairman, and yield back.
[The prepared statement of Mrs. Capps follows:]
Prepared Statement of Hon. Lois Capps, a Representative in Congress
from the State of California
Mr. Chairman, I'd like to thank you again for holding this
hearing. Your leadership on this issue means that media and
consumers are taking note and learning more about the digital
television transition and how it will affect them.
I'd also like to thank Chairman Dingell and my colleagues
on the Energy and Commerce Committee for passing the 911
Modernization Act yesterday.
The recent, widespread wildfires in central and southern
California were a stark reminder of why 911 modernization is
vitally important.
I hope that we can continue this focus on public safety by
strengthening 211 services, so that families and individuals
can seek and obtain critical services in times of need.
The wildfires have also brought to the fore that unexpected
events can have powerful consequences on the DTV transition.
In this vein, it is my hope that the FCC is taking into
consideration the impact that wildfires and other disasters can
have on broadcasters that are trying to meet the DTV transition
statutory deadline.
I also expect that the FCC will take into consideration
stronger protections for small cable providers in complying
with the recent dual-carriage order.
I would like to extend thanks to our panel today for coming
in to testify; I am very interested to hear what actions you
all have pursued to ensure that adequate consumer protections
are in place throughout the transition.
Government, retailers, service providers, and broadcasters
are all holders of the public trust.
Some of the most vulnerable members of our society are
counting on us to guide them through this transition, and I
hope that you all will join us in ensuring that their trust in
our intentions is not misplaced.
Thank you again, Chairman Markey, for holding this hearing.
----------
Mr. Markey. The gentlelady's time has expired, and all time
for opening statements by members of the subcommittee have
expired. So we will turn to our panel, and we will begin by
recognizing Mr. Ron Bruno. Mr. Bruno is the president of the
Community Broadcasters Association and President of Bruno-
Goodworth Network, Incorporated.
Welcome, Mr. Bruno. Whenever you are ready, please begin.
STATEMENT OF RON BRUNO, PRESIDENT, COMMUNITY BROADCASTERS
ASSOCIATION, PRESIDENT, BRUNO-GOODWORTH NETWORK, INC.,
PITTSBURGH, PA
Mr. Bruno. Thank you, Mr. Chairman, Ranking Member and
members of the committee. As you said, my name is Ron Bruno,
and I am recently elected the president of the Community
Broadcasters Association. We are the trade association that
represents the Nation's class A and low-powered television
stations. I am also the president of Bruno-Goodworth Network,
as you said, a company based in Pittsburgh. We own and operate
11 class A television stations in Pennsylvania, Ohio and West
Virginia. I appreciate the opportunity today to testify.
Class A television stations were created in 1999 by
Congress because it recognized the benefit of local
programming. These stations are small businesses that boast the
largest percentage of minority ownership in the television
broadcast industry. They agree to adhere to a strict set of
regulations, one of which is to provide a minimum of 3 hours a
week of local programming every week. In fact, class A stations
are the only stations mandated by law to produce local
programming. AM stations, FM stations, full-power television
stations are not mandated by law. Class A LPTV stations are the
only stations mandated by law to produce local programming.
Simply put, Mr. Chairman, long before localism was a
buzzword in this industry, class A stations were serving their
local communities with local programming. There are 910 class A
and class A qualified stations providing local programming to
underserved communities. Despite following the same regulations
as full-power stations and providing the mandatory hours of
local programming each week, these stations are not entitled to
carriage rights with the exception of those in very small
communities. As a result of this inequality within the
broadcast industry, my flagship station in Pittsburgh, WBGN,
has recently been forced to lay off 75 percent of our staff. We
have eliminated our local news segment. We have cut all high
school sports and other programs. WBGN was once thriving with
more than 18 hours of local programming every week and drawing
tremendous cumulative ratings of 10 percent in the market. We
are now broadcasting less than 6 hours of local programming
weekly.
Mr. Chairman, if the playing field between full-power
stations and class A stations is not leveled, mandated local
programming by many small community-based broadcasters will
cease to exist in the digital world. In 1992, approximately 80
percent of the television viewers in this country watched TV
over the air with an antenna; 25 years later we are barely at
12 percent. Broadcasting exclusively over the air with no cable
or satellite is no longer a viable business model.
As a result class A stations have attempted to make private
arrangements with cable companies in an effort to obtain
carriage. The demands of these cable systems have been too
onerous, and class A stations across America are dying. In my
specific case, Comcast recently cancelled my original
arrangement to be on their system, which was I would pay
Comcast a quarter of a million dollars annually to be carried
in Pittsburgh. Their new offer was for me to pay $2.4 million
annually for carriage, which was the highest implicit rate
formula they could get out of leased access. As stated, we are
a small business dedicated to providing local programming, but
the charges demanded by Comcast for us were simply too high,
and they would be too high for any class A operator in America.
After an extended negotiation with Comcast, the result has
been that we are now carried on less than half of the Comcast
system in our market at substantially more money. The real
tragedy in all of this is Comcast isn't presenting anything on
the channel that we used to use. They just display a slide on
the screen that says ``Leased Access Channel,'' and they use a
bad font at that.
The tragedy like this is happening all across America;
California, Texas, Washington State, Oregon, Massachusetts,
Michigan, Florida, Georgia, Mississippi, New York, New Jersey--
I could go on and on--where local programming is dying, jobs
are disappearing and businesses are being destroyed.
Class A broadcasters really enjoy broadcasting, Mr.
Chairman. We enjoy providing local programming to our
communities. We know that we will be out of business unless
Congress acts to level the playing field on carriage rights,
and to that end we have put forth a proposal that is very
simple and fair and would ensure mandated local programming
from class A stations will continue to exist in a digital
world.
Our proposal calls for willing class A stations to
immediately cease analog broadcast and convert straight to
single-digital-only operations. This will expedite the
transition to nationwide digital TV service as well as free up
valuable analog spectrum for Government use or auction. In
exchange for moving directly to digital on a single channel,
these stations would be granted carriage rights within the
grade B contour on the basic tier of the digital cable system,
not the analog, the digital cable system.
Let me be clear about our proposal, Mr. Chairman. It does
not include carriage rights throughout the designated market
area. We are not trying to be superstations. We only want to be
seen to the areas that we cover in the areas that we cover
within our grade B contour, which is how far our stations
extend, no more no less.
Mr. Chairman, I appreciate this time today and sincerely
hope that you and the members of the committee will recognize
the urgency of this industry's situation and act in a manner
that benefits small businesses, local programming and, most
importantly, consumers. Thank you very much.
Mr. Markey. Thank you, Mr. Bruno, very much.
[The prepared statement of Mr. Bruno follows:]
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
Mr. Markey. Now we will turn and recognize Mr. Patrick
Knorr, who is the president and general manager of Sunflower
Broadband.
Welcome, sir.
STATEMENT OF PATRICK KNORR, PRESIDENT AND GENERAL MANAGER,
SUNFLOWER BROADBAND, LAWRENCE, KS
Mr. Knorr. Thank you, Mr. Chairman and members of the
subcommittee.
As you said, my name is Patrick Knorr, and I am general
manager of Sunflower Broadband, an independent cable business
in Lawrence, Kansas. We serve about 35,000 customers providing
advanced cable, high-speed Internet and local phone service.
I am also chairman of the American Cable Association. The
ACA is the voice for nearly 1,100 small and medium-sized cable
companies together serving about 8 million households. Our
members range from family-run businesses serving one community
to multiple-system operators focusing on smaller markets in
rural areas. In fact, more than half our system serves less
than 1,000 customers, and most serve rural communities with
only a few hundred homes.
Small cable operators are important businesses in their
communities. Along with providing broadcast and cable
programming, many of our members offer community programming
not carried by other operators. In addition to providing
competitive voice services in many smaller communities, our
members are the only providers of high-speed Internet access
and are stepping up to provide competitive voice services that
Congress has desired.
ACA and its members are committed to ensuring a successful
digital transition, and know we have a role in educating
consumers about that transition. ACA is an active member of the
Digital Television Transition Coalition working with other
businesses, trade and industry groups to ensure no customer is
left without broadcast television because of a lack of
information about the transition. Our ACA Web site features a
graphical link to the DTV transition Web site, and already some
of our members are airing public service announcements on their
system about the transition.
ACA has already hosted two events this year focused on the
transition. At our independent show, an annual gathering of
small cable operators, the ACA held an educational panel
discussing the transition. And more recently we hosted an event
in Washington, DC, where NTIA's assistant secretary for
communication and information, John Kneuer, spoke to our
members about the transition and the Digital-to-Analog
Converter Box Coupon Program.
While ACA and its members are committed to the digital
transition, we also know the switch to digital will produce
unique burdens on our systems, which, if not appropriately
dealt with, will cause harm to consumers and especially in
those small markets and rural areas. Small cable operators want
all their customers to continue to receive the same broadcast
stations after the transition, including all must-carry
stations. For this reason the ACA filed comments with the
Federal Communications Commission earlier this year seeking
flexibility to convert broadcasters' digital signals to analog
and address the lack of standards in converting high-definition
signals to standard definition, including analog, which remains
unresolved.
In September, to our dismay, the Commission adopted new
rules that effectively force many small cable operators to
offer must-carry broadcast stations in both analog and digital,
a dual-carriage obligation, after the digital transition.
For the foreseeable future it is a finance infeasibility
for many small cable operators to comply with this order
without significant harm to consumers. The dual-carriage
obligation requires operators to purchase costly equipment and
set aside additional bandwidth. Many small operators do not
generate the revenue necessary to support the expensive
equipment, and others do not have the spare capacity to carry
each must-carry broadcaster's signal twice.
While the order does permit cable systems with channel
capacity of 552 MHz or less to file a waiver from the dual-
carriage obligation, it unfairly requires systems with limited
financial resources to engage in a process with the FCC with an
unsure outcome. If an operator can't afford the equipment, what
makes the Commission think they can afford a lawyer?
The FCC plans to issue a Further Notice of Proposed
Rulemaking on this order's impact on small operators. And we
ask members of this committee to urge the FCC to devise more
flexible rules for systems with both a small base of customers
and with those with limited channel or bandwidth capacity, or
Congress should pass legislation to do so.
Finally, we urge Congress to find ways to help small
operators provide local broadcast services in digital to
consumers in smaller markets and rural areas. Let me be clear,
all small cable operators want to provide their consumers with
digital television services, but in reality, owners of small
systems can neither afford to upgrade their facilities nor
purchase the digital set-tops necessary to offer this advanced
service.
In 2005, Congress recognized the financial hardship that
low-power and translator stations face in upgrading their
facilities from analog to digital and set aside significant
funds to assist in their transition. The ACA believes a similar
program should be considered to help small cable operators.
Mr. Chairman and members of the committee, thank you again
for the opportunity to testify.
Mr. Markey. Thank you, Mr. Knorr, very much.
[The prepared statement of Mr. Knorr follows:]
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
Mr. Markey. Next we are going to hear from David Barrett,
who the is the president and chief executive officer of Hearst-
Argyle Television. He is representing the National Association
of Broadcasters here today.
Welcome, Mr. Barrett.
STATEMENT OF DAVID J. BARRETT, PRESIDENT AND CHIEF EXECUTIVE
OFFICER, HEARST-ARGYLE TELEVISION, INC. NEW YORK, NY
Mr. Barrett. Thank you, Mr. Chairman. Good morning, Ranking
Member Upton and members of the subcommittee. My name is David
Barrett. As Mr. Markey noted, I am the president and CEO of
Hearst-Argyle Television. I welcome the opportunity to
participate in today's discussion about the digital television
transition.
In just 475 days American broadcasters will complete the
most significant advancement of television technology since the
advent of the color television as we cease analog transition in
February 2009. At that point our digital signals, which provide
vastly superior video and audio quality, enhanced viewing
choices and the potential for greater program diversity, will
be available for American television consumers.
Unquestionably the transition presents an enormous
challenge for broadcasters, but the transition is a critical
business imperative for those of us in the television industry.
The livelihood of all of us in this industry depends on getting
it done and done well. Be assured that we are committed to
doing everything we can to make the transition seamless for our
viewers. Our objective and our commitment is that Americans
will be fully educated and fully informed about the transition,
and that they will understand their options that no set will go
dark due to a lack of information.
As evidence of this commitment, on October 15th NAB
announced the largest, most impressive, and the most pervasive
volunteer effort in television history to educate consumers on
the switch to digital television. Over 1,000 stations have
committed to participate in a multifaceted marketing program
valued at close to $700 million. This marketing program is
unprecedented and will far exceed the most ambitious public
service announcement programs that have ever aired in the
history of television or radio.
The program will consist of DTV action spots today
available in English and Spanish. And I would add that these
spots are already being adapted in multicultural languages in
markets like Los Angeles. All these spots will be closed-
captioned. These spots, along with the production tool kit for
local customized application, will be distributed to every
television station in America, including our friends at public
television stations across the country. Stations will air 30-
minute DTV education programs, use crawls for reminder
messaging, and feature a 100-day countdown clock to the
February 2009 deadline.
NAB's road show Trekker will visit over 600 locations
nationwide. A speaker's bureau has been established to touch
every locality at the grass roots, senior centers, high
schools, churches, rec centers and the like. And stations will
use their Web sites and are using their Web sites to inform,
educate and market our message through the transition. I will
note that there have already been over 5,000 new stories
reported about the transition, and I believe that number will
grow exponentially.
Every single television network is participating in this
campaign along with 113 broadcasting companies representing
1,078 TV stations nationwide. And this is only beginning as we
expect more to join as we move forward in the coming days.
The combined elements of this multiplatform, multifaceted
marketing campaign will generate 98 billion advertising
impressions, which is a marketing measurement for the number of
persons reached with a given message. Therefore, we in good
faith do not believe it is necessary for Congress or the FCC to
impose mandatory PSA requirements on television stations.
It is plainly in our self-interest, aside in addition to
our overall public stewardship, to make sure that American
people are fully informed about this transition. We will leave
no viewer behind, and we look forward to working with Congress,
the subcommittee, Chairman Martin and the FCC to report our
efforts periodically to make it very transparent and to work
together to assure a successful transition.
This effort only builds upon what broadcasters have already
done, including the creation of an industry and Government
coalition of over 170 groups and organizations, including the
FCC and NTIA; the launch of a Web site, www.DTVanswers.com;
delivery of DTV tool kits to every Member of Congress; and
congressional staff briefings on how Members can educate their
own constituents.
In my view, the key to making the DTV consumer information
and education effort work is to empower creative, innovative
and localized marketing by stations who know best how to
communicate with their local communities. The NAB program I
briefly described will achieve that goal.
Finally, I respectfully encourage members of the
subcommittee and the Commission not to jeopardize the success
of the digital transition by prematurely opening up the
television broadcast spectrum to personal and portable
unlicensed devices that FCC testing has found to cause harmful
interference. We share your sense of urgency and that of FCC
Chairman Martin to accelerate industry-wide consumer
information and educational efforts that will fully inform and
educate Americans about the digital transition.
Thank you, and I look forward to responding to your
questions.
Mr. Markey. Thank you, Mr. Barrett, very much.
[The prepared statement of Mr. Barrett follows:]
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
Mr. Markey. Our next witness is Michael Willner, who is the
vice chairman and chief executive officer of Insight
Communications. He is representing the National Cable and
Telecommunications Association before us today.
Welcome, Mr. Willner.
STATEMENT OF MICHAEL S. WILLNER, VICE PRESIDENT AND CHIEF
EXECUTIVE OFFICER, INSIGHT COMMUNICATIONS, NEW YORK, NY
Mr. Willner. Mr. Chairman, thank you. I have noticed--I
think this is my third or fourth hearing on DTV, and the font
on my script gets larger and larger each time I come back so I
can see it.
I would like to thank you and Ranking Member Upton and the
members of the committee for inviting me today. My name is
Michael Willner, and I am the vice chairman and CEO of Insight
Communications, and we are the ninth largest cable operator in
the United States.
The transition to digital television will make it possible
for our Nation to reclaim and reallocate valuable spectrum for
enhanced public safety communications and increased wireless
broadband services. It is critically important for all affected
industries to work with the Government in a cooperative and
coordinated manner. We need to educate Americans in what they
need to do to get ready for and how they will benefit from this
successful transition.
When I testified before the subcommittee in 2005, I
suggested that you could and should set a hard date for the end
of the transition, and I committed at that time that whatever
date you chose, the cable industry would be ready, willing and
able to ensure a smooth and seamless transition for our
customers. You chose February 17, 2009, and we are ready,
willing and able to meet that date.
We are proud to be one of the founding members of the DTV
Transition Coalition, working with the broadcast consumer
electronics industries, satellite, as well as many other
organizations to educate Americans about the digital
transition. We are committed to helping the coalition develop
and implement a unified message that can be reinforced across
multiple platforms.
In early September the cable industry launched our
extensive consumer education campaign, including English- and
Spanish-language TV advertising valued at over $200 million.
These spots are designed to reach millions of cable and
noncable viewers with useful information about the DTV
transition. The industry is now in a second round of
advertising spots focused on alerting customers to the NTIA's
coupon program for digital-to-analog converter boxes. Those ads
are scheduled to run on our systems, I know, as early as this
week.
Our commitment extends far beyond simply running television
ads, though. NTIA revamped its entire Web site, which now
focuses predominantly on the digital transition. And we have
created English- and Spanish-language Web sites linked to our
home page to provide consumers with easy-to-understand
information.
The NTIA will also distribute a communications DTV tool kit
to cable systems nationwide, which will include bill stuffers,
on-screen scrolls, telephone on-hold messaging, sample e-mails
for broadband customers, Web site banner ads for company Web
sites, employee education materials, very important, and
brochures for distribution at community events.
I would note that many of the components of our education
campaign are based on ideas that were suggested by the
leadership of this very committee, and we remain open to
additional ideas on how we can further advance the DTV
educational efforts as we move forward.
I do, however, have one area of concern regarding the
carriage of digital broadcast signals after the transition. We
are committed to provide a seamless transition to all of our
customers. We do question the constitutionality of a Government
mandate that requires cable operators to carry all must-carry
broadcast stations in both digital and analog formats.
Nevertheless, in 2005 we worked with you to include a carriage
commitment in legislation that was approved by the committee.
Although that DTV carriage provision was not included in the
final bill, we did craft a 3-year voluntary carriage commitment
with you and your staffs. The FCC approved an order 7 weeks ago
which is supposed to mirror our voluntary 3-year plan; however,
we are still very anxious to review the actual text of that
decision which has not yet been released.
And based on our information that we do have up to now, the
FCC's order is clearly deficient in one major respect as you
heard earlier today, and that is that the Commission declined
to provide an exemption for very small cable systems as the
committee did in 2005. And this doesn't affect my company or
many of the members of NTIA, but this is a serious issue in
rural America. And we hope that the Commission will be guided
by your actions in the past to use a further notice to provide
clear and unconditional exemptions for small cable systems in
its DTV carriage order.
Mr. Chairman, the cable industry has made a massive
commitment to ensure a smooth transition to digital
broadcasting. We continue to stand ready to work with you and
the members of the subcommittee and to remain a leader in
making sure that we all get it done right.
Thank you again for the time to testify before you, and I
will be here to answer questions.
Mr. Markey. Thank you, Mr. Willner, very much.
[The prepared statement of Mr. Willner follows:]
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
Mr. Markey. Our next witness is Joe Uva, who is the chief
executive officer of Univision Communications.
Welcome, sir.
STATEMENT OF JOE UVA, CHIEF EXECUTIVE OFFICER, UNIVISION
COMMUNICATIONS, INC., NEW YORK, NY
Mr. Uva. Thank you, Mr. Chairman. Good morning, Ranking
Member Upton and members of the subcommittee.
My name is Joe Uva, and I am the chief executive officer of
Univision Communications, Inc., the largest Spanish-language
media company in the country and the fifth largest broadcast
network. Our operations include the Univision Network, the
most-watched Spanish-language broadcast television network in
the Nation, reaching 99 percent of U.S. Hispanic households;
the Telefutura Network, the third most-watched Spanish-language
network; the Univision Television Group, which owns 63
television stations in major U.S. Hispanic markets, including
Puerto Rico; and Univision Radio, the leading Spanish-language
radio group, which owns 74 radio stations in 16 of the top 25
U.S. Hispanic markets, including 5 stations in Puerto Rico.
Hispanic Americans are more than our viewers. They are our
constituents, and we are privileged to inform and entertain
them. With that comes responsibility. In these past few months
you have seen us strive to meet that responsibility as never
before. You have seen it in our initiative to register Hispanic
voters in our first-ever Spanish-language Democratic
presidential forum and with the launch of our weekly public
affairs program, Al Punto, bringing Hispanic audiences into the
national Sunday morning conversation.
I am proud to say that the relationship Univision has with
its viewers is unique because people who invite this network
and its programming into their lives give back an incredible
measure of loyalty, affection and trust. This mutual trust and
commitment is the essence of the relationship Univision has
with its audiences. Our viewers consider us to be part of their
community, and with good reason. From 2004 through 2006 alone,
Univision contributed nearly $850 million in cash and in-kind
value to support the U.S. Hispanic community.
In continuing to earn this trust and meet our
responsibilities to the community, we take seriously our part
in ensuring the success of the digital television transition
and in ensuring that our Hispanic viewers benefit from its
results rather than suffer the consequences of being left
behind. The impact of the digital transition on our viewers is
a particular concern to us because nearly 28 percent of
Hispanic households and 43 percent of homes where Spanish is
the primary language watch TV only via over-the-air broadcast,
and that is according to a 2005 NAB report to the FCC.
Unfortunately most Hispanics, particularly our non-English-
speaking viewers, are not informed about the digital transition
and the impending analog cut-off date of February 17, 2009.
Unless we use the time left to educate and inform viewers on
how to prepare for the digital transition, a disproportionate
number of Hispanic viewers will no longer be able to rely on
over-the-air broadcast for critical news, weather, local
programming and emergency updates. Hispanics could be uniquely
affected, and we want to make sure that they are the best
educated segment of the population about what the analog cut-
off date means and what they can do to prepare for it.
It is therefore with pride that I can say on October 1
Univision became the first major network to launch a
multiplatform public service ad campaign preparing our Hispanic
television viewers for the analog-to-digital transition. Our
campaign will use Univision's media assets to raise awareness
and educate consumers about the digital transition, creating a
clear and positive message promoted on air and enhanced by
local community outreach.
Our efforts go far beyond 30-second public service
announcements. They will include a Web page, multiple 30-minute
television specials, local newscasts, radio PSAs, local
outreach events, and we will promote the Spanish-language toll-
free telephone number that is being set up by the FCC and the
NTIA.
Additional components of our campaign include offering our
viewers general information on digital television and how to
receive it. We will educate consumers on the NTIA's converter
coupon program to make sure that our eligible viewers apply for
and redeem their coupons in a timely manner. We will also
provide Latinos with information on the resources and services
available to assist them with the digital transition, and we
will work with retailers to help ensure that they have
appropriate Spanish-language signage and in-store materials
about digital TVs in markets where there is a high-density
Latino population. Univision will be working with the Hispanic
Technology and Telecommunications Partnership, NCLR, the
National Hispanic Council on Aging, and NALEO.
Sixteen months from now our Nation will take the final step
in moving from analog and crossing over into the digital era of
television broadcasting. While we still face many challenges,
rest assured Univision is dedicated to doing its part to inform
and prepare its viewers for that transition.
Chairman Markey, Ranking Member Upton and members of the
subcommittee, we look forward to working with you to ensure
that digital transition takes place as planned and that its
full benefits become a reality for all members of our national
community. Thank you for inviting me to participate today.
Mr. Markey. Thank you, Mr. Uva, very much.
[The prepared statement of Mr. Uva follows:]
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Mr. Markey. Our next witness is Dennis Swanson. He is the
president for station operations of the Fox Television
Stations, Incorporated.
We welcome you, Mr. Swanson.
STATEMENT OF DENNIS SWANSON, PRESIDENT, STATION OPERATIONS, FOX
TELEVISION STATIONS, INC., NEW YORK, NY
Mr. Swanson. Chairman Markey, Ranking Member Upton and
members of the subcommittee, thank you for this opportunity to
testify today on the digital television transition.
From the outset Fox has strongly supported the transition
and took the mandate to deploy digital broadcasting, especially
in high-definition, very seriously. Antiquated analog broadcast
equipment was abandoned, millions of dollars were spent,
thousands of manhours were expended to build out new digital
facilities and infrastructure. Fox worked with numerous vendors
and manufacturers to design and build new digital cameras,
production trucks, digital recording equipment and satellite
systems.
The culmination of those early months of planning and work
was the realization of an all-digital network broadcast center
which is fully HD-capable to transmit content and commercial
traffic to all Fox affiliates. Our viewers will be able to
receive network and local programming in the new digital world.
Since the fall of 2004, Fox has produced and distributed
more than 1,000 hours of sports in high definition. Our
coverage has included weekly sports programming from the NFL,
Major League Baseball and NASCAR, as well as major sporting
events such as the just-completed 2007 World Series.
Congratulations to the Red Sox and to Chairman Markey on
his team.
Being the home of prime-time hits such as House and
American Idol, we also knew that viewers would not be fully
satisfied without high-quality entertainment programming, and
as a consequence Fox has aired approximately 1,300 hours of HD
programming in prime time from September 2004 through August
2007, now including 100 percent of our scripted shows.
In addition to the operational build-out, a significant
consumer awareness and education effort is necessary to
facilitate the transition. Once again, we at Fox have pledged
to commit considerable resources in support of the industry's
collective effort to alert viewers. In order to make important
information widely available, we have committed to the airing
of public service announcements. They are already running in
prime time on the Fox network and in various day parts on each
of our 35 Fox-owned television stations.
We strongly believe that a voluntary industry plan is the
most effective way to reach the public. But why is that?
Because it recognizes that getting the message out is about
more than just PSAs. It is about all the creative things we as
broadcasters can do to reach our viewers, whether it is through
our news and public affairs programming, creative campaigns or
informational links on DTV transition on our Web site, just to
name a few. Broadcasters are in the business of reaching
viewers with both entertainment programming and important news
and information. Therefore, broadcasters are the most qualified
to determine how to reach viewers with the message about DTV
transition.
It bears restating that the transition will be successful
if benefits to viewers are maximized while disruptions are
minimized. Two issues have the potential to disrupt the
transition: an FCC proposal to allow unlicensed devices in so-
called white spaces in the television broadcast band and the
protection of broadcast content from unauthorized
redistribution over the Internet.
With respect to the white space issue, we support the use
of fixed devices, but we have grave concerns about introducing
personal and portable unlicensed devices in the television
broadcast band. We are concerned that interference from these
devices would disenfranchise millions of consumers who have
purchased expensive new digital television sets. The converter
boxes funded by the program authorized by this committee would
be subject to the same interference.
The transition could also be negatively impacted if the
broadcast flag is not adopted to help protect high-quality
broadcast programming from being illegally redistributed over
the Internet. Currently DTV stations are legally obligated to
broadcast content in-the-clear with no protection. As a result
content providers, networks and broadcasters face a grave
threat from rampant piracy and theft due to the fact that
perfect copies of digital programming can be easily captured
and retransmitted without authorization. Without the protection
of the broadcast flag, high-value content could move from
broadcast to cable or satellite, thereby threatening the future
of free over-the-air television.
In closing, we will continue to work toward our collective
goal of a bright future for digital television. Thank you, and
I will welcome your questions.
Mr. Markey. Thank you, Mr. Swanson, very much.
[The prepared statement of Mr. Swanson follows:]
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
Mr. Markey. Our next witness, Michael Vitelli, is the
senior vice president for merchandising for Best Buy Company,
and he is representing the Consumer Electronics Retailers
Association.
We welcome you back, Mr. Vitelli.
STATEMENT OF MICHAEL VITELLI, SENIOR VICE PRESIDENT AND GENERAL
MANAGER, HOME SOLUTIONS OPERATING GROUP, BEST BUY, INC.,
RICHFIELD, MN
Mr. Vitelli. Chairman Markey, Ranking Member Upton, thank
you for inviting me again before your subcommittee on behalf of
Best Buy and the Consumer Electronics Retail Coalition. I was
privileged to participate in the first part of this oversight
hearing on March 28 of this year. The last time I was here, we
had few specifics because there were few to be had. Today we
have more to report.
Two weeks ago I signed a filing in the FCC's DTV consumer
education docket, and in that filing we were much more specific
than I could be 7 months ago. We assured the Commission, and I
confirm today, that Best Buy has made the following
commitments. First, on October 1 Best Buy stopped selling
analog tuner TVs and video equipment. We explained this to our
consumers as an element of the DTV transition. The news
coverage alone of our decision has already done much to alert
the public about the transition itself.
Best Buy announced it will participate in the NTIA
Converter Box Program. We still have technical issues that we
are working on with the IBM team. We also have concerns about
some FCC policy issues and the potential for parallel and
perhaps conflicting NTIA and FCC enforcement regulations. But
Best Buy is beyond the point of no return.
Third, Best Buy will continue to train our staff to help
prepare our customers for the transition.
Fourth, we will provide information to our customers
regularly through material in our ads, video loops shown on the
TVs in our stores, our version of PSAs, in store signage and
pamphlets and educational information on our Web site, all in
English and Spanish. And soon we will have a DTV transition
notice on the back of all of our sales receipts.
Other CERC Board members, including Circuit City, Radio
Shack and Target, have made similar commitments, but there are
still items requiring attention. First we need to develop a
tenor or partnership between the public and private sectors
involved. In the DTV Transition Coalition we have established a
constructive and effective partnership with the members of
broadcasting, cable, electronics and entertainment industries
and with public interest groups such as the Leadership
Conference on Civil Rights. But in order for the transition to
be ultimately successful, we need a similar partnership with
the FCC, the NTIA and with Congress itself.
The second open item is to provide clarity on the roles of
those partners. I do have concerns about potential efforts to
extend the reaching authority of the FCC into areas with which
they have neither experience nor clear delegated authority. In
our view, doing so would likely be counterproductive to this
transition, to our very important FCC partnership, and to the
vital success of the NTIA program. It is crucial that we have
one enforcement mechanism related to the coupon program so that
expectations are clear and customer needs are met.
The third open item requiring attention is the need to
provide clarity to the participants and to consumers about the
coupon programs and the key dates. The central questions are
when will retailers be prepared to accept coupons and deliver
converter boxes? How many and when can boxes be produced by
manufacturers each month? And when should the NTIA mail out the
coupons? Obviously all these issues are linked.
We are working frequently and aggressively with the members
of the IBM team that is assigned to the retailer
implementation, and as of today, here is my best estimate and
advice. The date we have estimated to have our point-of-sale
and payment systems modified and thoroughly tested to satisfy
the NTIA regulations and to avoid fraud or consumer
disappointment is closer to April 1 than January 1. And
accordingly, my recommendation today is for the NTIA to tell
consumers who send in their coupon applications in early
January not to expect to receive their coupons before April 1.
Now, doing so will ensure that the critical systems will work,
that we will be able to provide early demand information to the
manufacturers for production to allow early application data to
help all of the participating retailers match inventory with
demand and get the product in the right place, and to provide
clear direction to consumers.
If Government and industry working together can exceed
these customer expectations, that is going to be great. What we
don't want to do is to leave the same customers and
constituents apprehensive or to set unrealistic expectations
or, worse yet, open the system up to fraud, failure or consumer
inconvenience. This would only lessen the public's confidence
in a very vital program to which we are very committed and we
think can be very successful.
In conclusion, Best Buy has become the leading consumer
electronics retailer by meeting and exceeding our customers'
expectations and needs. We want them to be Best Buy customers
for life. We face stiff competition from other retailers who
also seek their allegiance and loyalty, and this alone is a
powerful motivator to us.
We in the private sector have demonstrated that we are
capable of partnership with each other and with the Government,
and we are now reaching out to the Government to help forge a
coherent and effective solution, and in return we need
partnership, not confrontation.
I am reminded of an old fable of a contest between the wind
and the sun, and they spotted a man wearing a very heavy coat
and made a bet of whether or not they could get this coat off.
And the wind blew ferociously, and the man hugged his coat
tighter. The sun's plan worked a little bit better, and we
believe it is time to let the sun shine in on the DTV
transition.
Thank you very much.
Mr. Markey. Thank you, Mr. Vitelli, very much.
[The prepared statement of Mr. Vitelli follows:]
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
Mr. Markey. And our next witness, Jonathan Abbott, is the
president and chief executive officer of WGBH in Boston. He is
here representing the Association of Public Television
Stations.
Welcome, Mr. Abbott.
STATEMENT OF JONATHAN ABBOTT, PRESIDENT AND CHIEF EXECUTIVE
OFFICER, WGBH, BOSTON, MA
Mr. Abbott. Thank you, Mr. Chairman. Mr. Chairman and Mr.
Ranking Member, thank you for inviting me to testify about the
digital television transition. I am honored to be here today
representing not only my station, WGBH, in Boston, but also the
Association of Public Television Stations, APTS, and my
colleagues from the 364 locally owned and operated public
television stations across the country.
As the leading producer of programming for PBS, WGBH views
the digital transition as an extraordinary opportunity to
enhance our public service mission. We create content that
makes a difference in the lives of our audiences, whether it is
science on NOVA, history on American Experience, drama on
Masterpiece Theater, or literacy with Curious George and
Arthur. The digital transition will allow WGBH and public
television to provide greater access to this rich educational
content, reaching viewers through new services that maximize
the investment this country makes in public broadcasting.
My colleagues and I in public television have been strong
supporters of the digital transition from the very beginning,
recognizing the promise it holds for audiences. To educate
consumers, public television has joined with the National
Association of Broadcasters in a major commitment of airtime to
inform viewers of the analog shut-off. Across public television
the value of this in-kind communications contribution exceeds
$50 million.
I am pleased to tell you, Mr. Chairman, that WGBH is a key
participant in these efforts, using our prime-time and weekend
programming. In combination with our extensive network of
outreach to families, we will target hard-to-reach populations
like seniors and ethnically and economically diverse
households.
And WGBH is also uniquely suited to help reach people with
disabilities. As you know from your leadership in this area,
Mr. Chairman, television is a life-line service for the
millions of Americans with hearing and vision impairments. WGBH
has been a pioneer in not only providing captioning and
description services, but now in advising public and private
parties on how to do this effectively as the transition nears.
Still we realize that much more needs to be done in the way
of public education. The latest survey research from APTS
indicates that more than 50 percent of Americans have no idea
that the transition is even occurring. Even fewer have
awareness of their options to continue their television
service. Additionally, few people understand why they must make
a change. The majority of people surveyed said the Federal
Government is on the wrong track when it comes to the
transition. That distrust is even greater among people who have
the least awareness of the switch-off.
Based on this survey data and other findings, WGBH joins
with APTS in recommending the following actions by Congress and
other key players. First, Congress should make a real financial
investment in consumer education. Congress has set aside only
$5 million, which is narrowly limited to education about the
NTIA coupon program, yet the Federal Treasury is expected to
receive $12.5 billion in revenue at a minimum from the spectrum
auction. A greater investment in consumer awareness at this
time is just a sound business decision.
To fund a true grassroots campaign, we are asking Congress
to invest at least an additional $20 million towards consumer
education by public television and its partners in its
communities, and it is critical that these funds be obligated
in this appropriation cycle. Thanks to the leadership to
Congressman Eliot Engel and his introduction of H.R. 2566, the
National Digital Television Consumer Education Act, we are now
headed in the right direction. Mr. Chairman and Mr. Ranking
Member, we ask that you expedite consideration of this
important legislation.
Second, Congress and the FCC must ensure that the digital
signals of local public television stations are carried by
satellite providers. APTS has reached landmark agreements with
NCTA, ACA and Verizon to carry the HD and multicast programming
from all public stations, including the new digital channel
services, World and Create, which were developed by WGBH and 13
WNET New York.
For DBS, however, the situation is far different. Neither
DirecTV nor EchoStar are carrying the HD signals of WGBH or any
other public television station in the country, let alone our
multicasting services. However, both companies are carrying the
local HD signals of the commercial network affiliates. I admit
it was nice to watch our Boston Red Sox win the World Series in
HD, but I can imagine many public television shows that would
be similarly enhanced.
While we would prefer a private carriage agreement with
satellite, time is short. We need Congress to help ensure that
the American people have access to the public television
stations they help fund.
Finally, we urge Congress to continue to support public
television in creating the new content and services that will
drive consumer demand and interest in digital television.
Mr. Chairman and Mr. Ranking Member, in an era when media
ownership is concentrated in fewer and fewer hands, public
stations like WGBH are often the last locally owned and
operated media outlets in their communities. The key policy
goal of this transition must be the preservation of free over-
the-air television, both commercial and public. It is essential
to the health of this Nation's media marketplace and, more
importantly, to our democracy. We appreciate your enduring
support for public television and radio. We share your desire
for a successful transition. Our recommendations today are
delivered in that spirit.
Thank you. I look forward to your questions.
Mr. Markey. Thank you, Mr. Abbott, very much.
[The prepared statement of Mr. Abbott follows:]
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
Mr. Markey. And our final witness is John Taylor. He is the
vice president for government relations and communications for
LG Electronics.
Welcome, sir.
STATEMENT OF JOHN TAYLOR, VICE PRESIDENT, GOVERNMENT RELATIONS
AND COMMUNICATIONS, LG ELECTRONICS, LINCOLNSHIRE, IL
Mr. Taylor. Thank you, Chairman Markey, Congressman Upton,
members of the subcommittee, for the opportunity to testify
today.
I would like to touch on three brief issues: the overall
efforts supporting the digital television transition, the
converter boxes, and the all-important issue of consumer
education.
First, the overall effort. LG Electronics is totally
committed to the digital television transition. After all, it
is in our business interest to do so. We plan to build millions
of converter boxes. We are also committed to joining with
Government and others in the private sector. We are proud to be
a founding member of the DTV Transition Coalition, joining with
our partners in cable, satellite broadcast, and the Leadership
Conference on Civil Rights, AARP and others to help make sure
this transition is a success, but making it work will require a
concerted effort, a joint effort on the part of Government and
industry. And as you have heard today, the voluntary efforts
are making progress.
Second, the converter box. The NTIA set clear standards for
the converter box. LG designed our product to those standards,
and I am proud to announce that our box has been certified. And
beginning next week we will start production for delivery of
this converter box to retailers starting in early 2008.
We expect the box to sell for around $60, and it has the
features--as you know, the NTIA had a series of required
features and permitted features.
Perhaps of special interest to this subcommittee, the box
includes an electronic program guide to help consumers navigate
through the additional channels they will get with multi-
casting. It, of course, has V-Chip, a remote control, closed
captioning.
As an aside, 6 months ago, when we met with the disability
community and our friends from WGBH, we were doing basically
black and white captions; and we had a menu button to get to
the captions. The final implementation, thanks to that input,
has a closed caption button right on the remote control, full
digital captions that allow you to choose the colors and fonts
and size. We think that goes a long way to help improve the
overall experience of the converter box, and, finally, while
not required, a permitted Energy Star. And I am happy to report
that our box exceeds the Energy Star standards of 1-watt
passive and 8-watt active mode.
On the converter box, the Consumer Electronics Association
estimates between 22 and 28 million of these boxes will be
required. We are planning to build millions, as I said.
Moving ahead to consumer education, it is essential that
broadcasters, cable, consumer electronics industry, retailers
and others all do their part. CEA particularly has been very
active in producing informative videos, a series of Web sites
that help consumers with antennas and connections and even
creating a database that will help consumers understand whether
they have a digital television set or not and will need a
converter box.
From my company's standpoint, we think it is essential that
we communicate with our consumers as well. We stepped up our
sales training efforts. Our call center is being enhanced. We
just added another 150 agents to our call center who speak
Spanish in preparation for the launch of this product and will
be including with the product a simple setup guide--this is
actually the one from CEA; ours will look very similar--to help
consumers as soon as they open the box just hook up the product
and begin to enjoy it.
So what is left to do? Maintain the date, February 17,
2009, to provide the certainty we need, continue the
coordination between manufacturers, retailers and the NTIA to
make sure the coupon program is a success and work together to
educate consumers about the benefits of digital and the options
available to them to make a smooth transition.
Mr. Chairman, thank you again for the opportunity, I look
forward to answering your questions.
Mr. Markey. We thank you, Mr. Taylor, very much.
[The prepared statement of Mr. Taylor follows:]
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
Mr. Markey. All time for opening statements has expired.
The Chair will now recognize himself and then the other members
for a round of questions.
Let me begin then by ask you quite briefly, Mr. Abbott, you
mentioned that public broadcasting stations have yet to reach
an agreement with DirecTV and Echostar on digital carriage of
public TV. Where are those negotiations right now?
Mr. Abbott. Mr. Chairman, we do not have an agreement; and,
actually, around the country there is no carriage of local,
interlocal, high definition services, much less multi-cast.
There have been discussions with DirecTV, very little movement
with Echostar, but as yet even those discussions with DirecTV
have not produced an agreement.
Mr. Markey. Thank you for bringing that issue to the
attention of the committee. We will try to focus on that.
Mr. Barrett, Mr. Dingell and I wrote to FCC Chairman Martin
earlier this year to ask him to undertake measures to educate
consumers about the DTV transition. The NAB, and you mentioned
it, today has announced a huge voluntary public education
program.
Mr. Barrett. Yes, sir.
Mr. Markey. Nearly $700 million. But you oppose the FCC's
proposal. How does the NAB expect to mandate stations that
don't broadcast these public service ads to help people
understand about the transition to digital, force them to in
fact educate the public without some club that the FCC would
have to move those recalcitrant stations in the right
direction?
Mr. Barrett. Sir, I believe the most effective business
course of action here is to enlist the voluntary support of
this industry, and we have demonstrably done that with
commitment from all the networks and from over a thousand
stations.
It is my view that the makings of this program will
encourage innovation and will go beyond the notion of just
doing a minimum threshold campaign mandated by the FCC. This is
an exercise that is much more important than making Smokey the
Bear an icon in a PSA-driven campaign. This has to be a multi-
market campaign. It has to be creatively executed in every
local market in the country.
I would observe that there is such a large number of
stations, groups, companies that have already committed, who
are prepared to deliver a quarterly report to the FCC or to
this committee and demonstrate the execution of this program
that I would be concerned about establishing a lower----
Mr. Markey. I understand. The problem is that the NAB
always sends in their best broadcaster to testify, and so no
one is doubting that Hearst-Argyle is going to do it, but we
need the regulations for the bad guys.
Mr. Barrett. I don't believe we do, sir. There are 1,100
stations who are already committed to this; and I would
observe, based on my business experience, that in every walk of
life, in every station and every business endeavor there are
some who perform better than others.
Mr. Markey. How would you feel about the broadcasters that
shirk their responsibility?
Mr. Barrett. I think this is a matter of self-interest for
the broadcasters.
Mr. Markey. What if they do shirk it?
Mr. Barrett. If they shirk it, I think they will
marginalize their own business prospects in the marketplace.
I believe, sir, that when you are talking about 98 billion
advertising impressions that will be delivered by those that
are participating that the consumers will not be shortchanged
on this. These messages are going to reach 93 percent of
American television viewers, and they are going to hear the
messages that we broadcast some 400 times. This is a staggering
program.
Whether people are left behind, whether some bad actors in
the industry choose not to participate, that will not have a
bearing on public awareness. And I think again in every walk of
life there are some people who take a free ride. I think in a
free enterprise system that is a reality. It is a reality in
the halls of Congress, and it is a reality in our business.
Mr. Markey. I understand, Mr. Barrett. But here the
consequence is if ordinary people don't get the message is that
they pay the price. So we will have to figure out something
here to ensure that the shirkers----
I will have to ask one quick question over here of Mr.
Abbott and Mr. Uva, and that is on the disabilities aspect of
this and making sure that closed captioning will be available
on HD. Can you talk, both of you, quickly about what you are
doing to make sure that there is closed captioning and services
for other disableds, Mr. Uva?
Mr. Uva. Yes, Mr. Chairman. We fully intend to make sure
that in all of our public service messaging and in all of the
services that we will be offering over the years to our
communities there will be not only be closed captioning but
Univision is tied into a network of over 2,000 local community
organizations that we will be working with to help support
people with disabilities.
Mr. Markey. Mr. Abbott?
Mr. Abbott. Yes, Mr. Chairman.
First off, WGBH is very active in the captioning area, as a
number of those testifying have mentioned. We have actually
been working with the NAB to caption their on-air messages that
they have been developing in their toolbox, as well as work on
accessibility for their online messaging. Public televisions
messages will all be closed captioning.
Our challenge with captioning in the digital transition, of
course, is it is a bit of a perfect storm. Because there needs
to be the right commitment and coordination, not just from the
broadcasters but also from the set-top manufacturers and
others, and you heard that presentation today, to really ensure
that at the point of transition the interface with those
devices fully supports and creates real utility and ease of
access to those captions for all consumers.
Mr. Markey. Thank you, Mr. Abbott.
The Chair recognizes the gentleman from Michigan, Mr.
Upton.
Mr. Upton. Thank you, Mr. Chairman.
I just want to say in the last couple of weeks I have
already seen a number of the PSAs, and even though I have a
cable system, both the cable industry as well as I have seen
the NAB--in fact, it might have even been during the Boston Red
Sox game--reminding people that this program was going to be
available. So I am anxious to watch that pick up in the months
ahead before the coupons are ready.
Mr. Taylor, you made a good closing point about the date
and the reason that it should not slip. I have to tell you
that, as one that helped write this legislation with others on
the panel here in a bipartisan way, we want to make sure that
date does not slip. We will make every effort to make sure that
it doesn't, and I don't see any storm clouds that it will. Does
anyone here disagree with that statement in terms of the panel?
Mr. Vitelli, you say that the FCC lacks jurisdiction over
retailers; and I don't know whether you have looked at the bill
that Mr. Hastert and I have introduced with Mr. Barton, H.R.
608, but it, in essence, gives the FCC the jurisdiction if the
voluntary efforts do not go far enough. Do you think that it is
crucial that we pass that bill or do you think things will
happen on their own and you will not need it?
Mr. Vitelli. I have looked at it a bit. It is not what I do
regularly, but I looked at it before today, and the part that I
noticed specifically about retailers was about the labeling of
analog televisions. In Best Buy's case, that is a moot point
now.
Mr. Upton. Yes, you have done that.
Mr. Vitelli. They are actually gone. And I would say it is
actually a very minuscule part of the business left for the
rest of retailers. It is almost to the point that almost every
product being sold today is a digital TV. That is the only
thing being made. I think that issue will be gone rather
quickly every place in retail.
As far as education is concerned, we have in discussions
with the FCC have taken virtually every voluntary step, all the
major retailers, to do the things that are being proposed, from
putting things like this pamphlet in both English and Spanish
in all of our stores. Our Web site has the same information. We
run a text and graphics version of the DTV transition and the
three options that everyone has on our video wall six times a
day in both languages as well. So I think all the major steps
that are talked about there are actually in play.
Mr. Upton. Do you feel that your customer personnel are
well educated to tell the average consumer of the changes that
are coming their way as well? I only note that because Mr.
Barton, who is usually here, our former chairman, has the funny
tale of going and buying the biggest TV that he ever saw. And I
want to say I think he went to Best Buy, and he ended up with
an analog set. But that was about 2 years ago before things
really began to change.
Mr. Vitelli. Sure. Again, the first thing that is happening
right now is, to the point here, is we did in fact say let us
get rid of those. We don't actually have to have the education
about a TV in our store. But the bigger point is what about TVs
that people have? This is precisely what that education is.
Your three options are a converter box, to subscribe to a
service----
Mr. Upton. How many different converter boxes do you think
Best Buy will offer?
Mr. Vitelli. That is a great question. There are two that
are certified, two manufacturers certified today, several in
the works. It is very likely we will have more than one. It is
important to have multiple suppliers because the demand
projections here, both in quantities and timing, have never
happened. There's never been a product like this before. And
that is going to be, I think, the biggest challenge for both
the retailers, the manufacturers, and the NTIA in releasing
coupons, is both the production availability, when the coupons
are released, what stores do they go to around the country?
Best Buy is, on a really good day, 20 to 25 percent of the
industry. So we are a big part of it, and we are aggressively
trying to work that out with manufacturers. We need all of us
to work together.
Mr. Upton. As a Best Buy customer, I look forward to seeing
one of those come on sale. I will notice it.
Mr. Vitelli. You certainly will.
Mr. Upton. I won't need one, because I have cable, I want
you to know.
Just to follow up on Mr. Markey's question, I have to say
for the broadcasters they have every reason to put out the PSAs
because, otherwise, they will lose audiences. They don't want
to lose audiences. Whether it is in a rural or urban area, they
don't want a single customer not to know of the changes that
are coming--over-the-air TV.
Mr. Barrett. We are in a very competitive business. Our
viewership is measured on a daily basis in top 50 markets and
more to come, and it is imperative that we not leave any
viewers behind, no sets behind.
Mr. Upton. Thank you.
Mr. Markey. Leave no sets behind, that will be the motto
for this hearing.
The Chair recognizes the gentleman from Michigan, the
chairman of the full committee, Mr. Dingell.
Mr. Dingell. I thank you for your courtesy. I commend you
for the hearing.
These questions are for Mr. Barrett, and I think they are
mostly yes or no responses.
Mr. Barrett, I am sure you agree that it is important that
the maximum should be information made available to consumers
with regard to how this program for the digital switchover is
going to be conducted; is that right?
Mr. Barrett. Yes, sir.
Mr. Dingell. Now, I want to commend you and the NAB members
for the campaign that you are putting on to inform consumers,
and I applaud that.
Now, I note that, with regard to the DTV transition,
networks are going to be putting out public service
announcements, or PSAs. It is possible for local affiliates to
sell their own ads in lieu of the public service announcement;
is it not? Yes or no?
Mr. Barrett. Yes, to the extent of sponsored messages.
Mr. Dingell. It is possible to do that.
Mr. Barrett. Yes, sir.
Mr. Dingell. And that would be, I think, bad public policy
were that done, is that not so?
Mr. Barrett. I don't think it would be bad public policy.
It would be a sponsored message.
Mr. Dingell. If they are going to sell over. Because we
want the consumers to get the maximum amount of information,
and we want those public service announcements from the
networks to reach the consumers, rather than an advertisement
for a potato peeler or something like that.
Mr. Barrett. I think it depends how it is structured, sir.
If there is a 30-second DTV action spot followed by a 30-second
spot from Best Buy, I think that that is perfectly acceptable.
Mr. Dingell. Well, I applaud Best Buy, because they have
done some good things here, too.
But I would observe if the PSA is sold over with some kind
of advertisement for a potato peeler or a kitchen mop or
something of that kind, the consumer will not receive the
information that he needs to make the necessary judgment about
the change from the current practices with regard to television
to the future after the DTV transition, is that right?
Mr. Barrett. If there is an irrelevant sponsor attached to
that PSA, I would agree with you; if there was a relevant
sponsor, I think that would be acceptable.
Mr. Dingell. Now, gentlemen, this to you, Mr. Barrett, Mr.
Swanson, Mr. Abbott. Just yes or no, would you agree that much
needs to be done to make the transition work from a technical
standpoint by the Government agencies and everybody else
involved?
Mr. Barrett. Yes.
Mr. Dingell. I assume that indicates yes on the part of all
three.
Mr. Swanson. Yes.
Mr. Abbott. Yes.
Mr. Dingell. Gentlemen, would you agree that the FCC has
not completed the rules needed to allow for a smooth transition
from a technical standpoint?
Mr. Swanson. Yes.
Mr. Barrett. Yes.
Mr. Abbott. Yes.
Mr. Dingell. Now, gentleman, has each of your companies
purchased all the necessary equipment to make the move from
analog to digital broadcasting?
Mr. Barrett. If I could go first, sir, we have purchased
most, not all. There is still some antenna pending finalization
of the FCC proceedings.
Mr. Swanson. We would have the same answer. We purchased
virtually everything, but we are waiting for the final
technical specs from the FCC in the antenna, because some of
our stations will be changing channel numbers.
Mr. Dingell. So you are fully ready then for the
transition?
Mr. Swanson. We do need the FCC to complete the proceedings
on some of the technical issues so that we can finalize the
details, particularly on channels, on our stations that will be
changing channel numbers.
Mr. Dingell. Sir?
Mr. Abbott. We are very close to that. The majority of
stations are fully converted and broadcasting. We await final
clarification in a number of----
Mr. Dingell. Are all three of you in a situation where your
companies have arranged for the engineers and contractors
needed to make physical changes to towers to effectuate the
transition? Yes or no?
Mr. Barrett. Yes.
Mr. Swanson. Yes.
Mr. Abbott. Yes.
Mr. Dingell. Are you required to report your status in
completing these tasks to the Federal Communications
Commission?
Mr. Barrett. Yes.
Mr. Swanson. Yes.
Mr. Abbott. Yes.
Mr. Dingell. Now, these questions are for Mr. Taylor. In
view of the time, I have to do this in kind of a discourteous
way, and I apologize. There will be a series of questions, yes
or no. Would you disagree that the converter box coupon program
is a vital part of the smooth DTV transition? Would you
disagree that consumers should have many choices of converter
boxes available to them?
Mr. Taylor. I agree that consumers should have many choices
available to them, and the converter box convert, the coupon
program is a key element to the transition.
Mr. Dingell. Now, I think that your firm or your company
has certain patent rights, and so it is perhaps almost the sole
supplier in these matters; is that correct?
Mr. Taylor. No, sir. We expect that there will be a variety
of manufacturers on the market. My company does hold some of
the patents for the digital television transmission system, but
we are one of many patent holders. And I would add that the
royalties on this box are comparable to or lower than the
royalties for a $40 DVD player. The royalties is a minimum
issue, and we anticipate some healthy competition in the
marketplace with a variety of manufacturers.
Mr. Dingell. Now, this question is to Mr. Vitelli. Mr.
Vitelli, would you disagree that if a retailer chooses to
become certified to participate in the DTV converter box
program that the retailer should commit to having an adequate
supply of converter boxes on its shelves for purchase?
Mr. Vitelli. Yes.
Mr. Dingell. Would you agree or disagree that if a
certified retailer does not have converter boxes on the shelf
when a customer arrives to purchase one with a coupon, the onus
is on the retailer to ensure that the consumer or the customer
can use her or his coupon at the time in order to purchase a
converter box?
Mr. Vitelli. Yes.
Mr. Dingell. Now, by the way, I want to commend you at Best
Buy for the way you have been proceeding, but I do still have
some concerns.
Would you agree that when a consumer wants to use a coupon
but through no fault of the customer the certified retailer is
out of converter boxes that the consumer should not be required
to bear additional costs such as shipping and handling?
Mr. Vitelli. I think that is going to be up to each
individual retailer and the practices that they have. Being out
of stock on products, unfortunately, is a general nature of
doing business. And I also think it is going to be abnormally
and possibly prevalent here because of the difficulty in
predicting demand for this product, because it doesn't model
with anything else that has been in the consumer electronics
industry before.
Mr. Dingell. But it is fair to say that Best Buy is going
to see to it that if the purchaser can't get it at the time he
is in the store that he is either going to come back, go to
another store or to take some other step to procure it and it
won't be shipped to him at the seller's cost in the case of
Best Buy; is that a fair statement?
Mr. Vitelli. What happens typically today, if a product is
out of stock, the consumer will make an option to come back to
the store or have it shipped to them. Generally, they are
paying for that shipping if they decide not to come back, but
we make those decisions in our stores every day.
Mr. Dingell. One quick last question, Mr. Chairman. I note
that Best Buy is not going to accept coupons for converter
boxes as a part of online transactions, but you do accept gift
cards for purchases made over the Internet. That is a curious
difference in practice. Can you explain why?
Mr. Vitelli. I will, even though I am not technical, but I
will do the best I can.
The Best Buy gift card that we accept is, in a sense,
tendered to ourselves, so the ability to process that to
ourselves is doable in addition to a credit card that a
customer uses. To have two different tenders that go to
different, alternative companies--one would go in this case to
the Treasury and one going to a credit card company--we are not
able do it technically in a reasonable period of time or
financially. And that may not be true for everybody. That is a
Best Buy systems issue. I don't think it is per se an issue
with the program.
Mr. Dingell. Thank you, Mr. Chairman. You have been very
gracious.
Mr. Markey. The gentleman's time has expired.
The Chair recognizes the ranking member of the full
committee, Mr. Barton.
Mr. Barton. I am going to pass so I can get spun up on the
hearing. So I will ask some questions later on.
Mr. Markey. The Chair recognizes former Speaker Mr. Hastert
from the State of Illinois.
Mr. Hastert. I thank the chairman, and I want to
congratulate him on the stellar performance of his Red Sox.
Mr. Markey. I thank you very much. Mr. Swanson already
congratulated me, and he didn't tell us, but I think he is a
Cubs fan.
Mr. Hastert. Well, you know that I am a Cubs fan, too.
Mr. Markey. That's what I was thinking.
Mr. Hastert. Maybe the 100th year.
Mr. Markey. It feels great, by the way, when you finally
win. It is just an incredible----
Mr. Hastert. Thank you. I wouldn't know.
I would like to lay this out. The middle of February in the
year 2009, people's analog TVs go black. Everybody agrees that
is going to happen. So from that point I think it is a simple
thing that we start to work backward. The NTIA will start
issuing certificates in January, 2008, so these certificates
are going to be available.
The next issue is how you communicate to people who may or
may not have but would need, I guess, people who have analog
TVs. That has to come on the part of the publicity from the
broadcasters. Mr. Barrett, you talked about that. Do you think
that is sufficient?
Mr. Barrett. I think the kind of comprehensive program we
are talking about will do the trick. There will need to be
different kinds of messages delivered to different demographic
groups and different constituencies, and in a well-thought-out
marketing program I think we will be able to accomplish that.
Mr. Hastert. You note that somebody who or a broadcaster
who doesn't adequately do this would probably lose the ability
for people to get his ads and lose prescribers, right,
constituents.
Mr. Barrett. I think to some extent that broadcaster will
be marginalized in our business.
Mr. Hastert. Mr. Swanson, do you agree?
Mr. Swanson. Yes, I do. And I think that the way that
broadcasters reach people goes well beyond PSAs and crawls. You
know, we will use newscast, news stories. We will use our
public affairs programing.
On your morning shows it might even make sense for us to do
some sort of a giveaway of a digital television set to
encourage participation. To reach particularly the young people
under 30, so much of their information comes from the Internet
and Web sites, we will have to be aggressive on our Web pages
in that regard.
And then I think a thing that would be of primary concern
is that a lot of the people who receive their signals over the
air are in the minority communities. It would be high in the
Hispanic community. It would be high in the African American
community and also the elderly. And our diversity development
group will be working actively with community groups to make
sure that that word is disseminated to them most effectively.
Mr. Hastert. In my follow-up question I was going to ask
that of Mr. Uva, the disproportionate share will be elderly and
minority groups, Hispanic groups, African American groups.
Primarily, they keep things longer. They use it longer. Old
people like me, we probably have two or three of those analog
TV sets sitting around. My wife watches them. I don't.
But, anyway, do you think with the publicity campaign that
you can educate people to go out and apply for a certificate? I
mean, the certificates aren't just going to come to people in
the mail or come across your computer. A lot of people don't
have computers, so e-mail--these issues, to start something, is
not something, especially senior citizens' use, is there an
adequate campaign to get the reality out there?
Mr. Uva. We are very committed to not only using our
airwaves, but, as Mr. Swanson suggested, to really work closely
with grassroots organizations that we touch every day
throughout the country in high-density Hispanic markets, and
that means being able to be there, talk to them. We have even
considered helping them, educate what is an analog television
set; and we go look at them in their homes or residences and
really give a one-to-one instruction.
Mr. Hastert. Now, Mr. Taylor says that he has a product,
Mr. Vitelli says that they have a way to sell that product, so
that is how all these pieces come together. I guess we are
going to have to watch over the next several months how the
beginning starts, how we will be able to transcend through
this, but it seems to me that free market system will work on
this, and I congratulate all of you.
Thank you. I yield back my time.
Mr. Markey. The gentleman's time has expired.
The Chair recognizes the gentleman from Pennsylvania, Mr.
Doyle.
Mr. Doyle. Thank you, Mr. Chairman.
Mr. Bruno, I am concerned about the really low numbers of
women and minorities who own our local media, and I know that
many members on this subcommittee are concerned about that,
too. Among low-powering class A stations, what percentage are
owned by women and minorities compared to full-power stations?
Mr. Bruno. There are 12 percent of low-power television and
class A television stations that are owned by minorities and
women. In fact, Bruno-Goodworth Network is 37 percent owned by
Debra Goodworth.
Mr. Doyle. Mr. Bruno, if you were available on cable, what
would your Nielsen rating be? When you were available on cable
fully, what was your Nielsen rating?
Mr. Bruno. We had a 10 percent cumulative rating across the
board; and if you take the 300 channels that are on cable in
our area, that is in the top 40 stations that were there. So we
were heavily viewed.
Mr. Doyle. And if a station like yours were granted
carriage, how many jobs might be created by that?
Mr. Bruno. Well, in our area, we will probably start out--
we are at a very limited staff right now, under 10, because of
the situation that has happened to us. With cable carriage, we
would immediately go to 50. Over the course of about 36 months,
we would get up to about 100 employees; and that would happen
all across the country. I am not an exception. There are 910
class A stations around the country. We are all in the same
situation. We would all have that capability to hire those
people.
Mr. Doyle. This question is for Mr. Willner and Mr. Knorr.
I am curious of what you think about Mr. Bruno's proposal that
they give up their analog carriage and become digital only and
in return for that they gain digital carriage on the cable
stations where they are currently available over the air. Many
systems are already moving from analog stations to digital, and
you can fit at least four or five digital channels in the one
analog channel that they would be giving up, so what is wrong
with granting a local broadcaster digital-only carriage? Mr.
Willner.
Mr. Willner. There is nothing wrong with granting it if we
can determine that the programming that is being produced by
the low-powered TV station is of interest to our customers. The
problem is that there is a misconception that a 750 MHz cable
system is this vast wasteland of bandwidth that has
availability for just an unlimited use. The fact of the matter
is, all of our cable systems are either 750 MHz or 860 MHz; and
we are struggling today to try to maneuver the services that we
are already offering in order to provide competitive services
in video, in digital video, in high-speed data, Internet
service and telephone service so we are competitive in the
whole telecommunications arena. And to open up a must-carry
requirement for another thousand TV stations across this
country will just put tremendous amounts of pressure on the
limited bandwidth we have available.
Mr. Doyle. We are not talking about dual carriage. We are
talking about digital only; and it will free up an analog
station for you, which you're going to be able to squeeze four
or five or six digital stations.
Mr. Willner. Well, I don't understand how it frees an
analog to add a digital if we're not going to----
Mr. Doyle. Well, they're going to give up analog. They're
going to be----
Mr. Willner. But that doesn't mean they're necessarily--
there is no must-carry requirement now. So they may or not be
carried on analog.
We carry a lot of low-powered TV stations, and we do so
voluntarily. We do so through negotiations, based on the
programing content that the LP TV station is delivering. And if
we determine that our customers are going to be interested in
it, we want to carry it. But to mandate just blanket carriage
results in things like weather scans that commercial
broadcasters sometimes use to fill up some of the multi-streams
that they have right now which are of very little interest to
consumers.
Mr. Doyle. So you don't find Mr. Bruno's proposal
attractive.
Mr. Willner. I think right now it is impossible for us to
allocate the bandwidth at the levels that they are requesting
without breaking something else that is in the system.
Mr. Doyle. Mr. Knorr?
Mr. Knorr. I do think capacity is an issue, and I also
agree that in many cases we are not reclaiming an analog
channel under that outline. But I think if the programing is
compelling, it is absolutely something we want to carry. If it
turns out to be just a forced carriage of another shopping
network when we have limited capacity, I don't think that does
serve the public interest.
But I do think there is legitimate concern which actually
mirrors the concern of small cable where there is a big
asymmetry between large companies and small companies.
Sometimes, even if there is compelling content or a compelling
case, the free market can work against interest. And we feel
that as small cable companies working with large broadcasters
on retrans consent, and this is the inverse of that issue as a
small broadcaster who is trying to work with a large cable
operator without Government mandates to back it up. So there
would be some legitimate challenges there that need to be
reviewed, but definitely keeping in mind, as Mr. Willner said,
there is not unlimited capacity on cable systems.
Mr. Doyle. Mr. Bruno, isn't there law requirements that you
have to air a certain amount of local content?
Mr. Bruno. Yes, 3 hours of local content.
Let me point out that the 910 television stations are small
television stations. Seventy percent of the country and cable
operators will not be affected under this. Only 30 percent will
be affected. We are not that big, even with 910 of us. We are
not DMA wide. We are small stations.
Mr. Doyle. Mr. Barrett, I want to get on the record to
understand NAB's problem with unlicensed devices. This is
strictly a concern about interference. If it could be proven in
real-world conditions that unlicensed devices wouldn't
interfere with broadcast TV signals, then there would be no
objection to having these devices being sold in Mr. Vitelli's
store or elsewhere? It is strictly an interference issue?
Mr. Barrett. Sir, I think it is more than just an
interference issue, although that is of significance importance
to us. The notion of license and the notion of fixed are
important as well. I think if these are unlicensed devices that
are purported not to interfere and they are mobile to the
extent that something goes wrong, we have lost the ability to
find a remedy for the problem. We can't track a device down or
we can't correct it or shut it down if we are in an unlicensed
world with these devices. So it is very important but not the
only component.
Mr. Doyle. So is there any circumstances under which you
could not object to these unlicensed devices?
Mr. Barrett. I think if they are licensed and fixed and
demonstrably----
Mr. Doyle. But not mobile.
Mr. Barrett. I think that is the more appropriate solution.
Mr. Doyle. With my 30 seconds remaining, I just want to
comment on the coupon program. Last night, Mr. Chairman, I was
watching Charlie Brown and the Great Pumpkin. And you know when
it gets to the part where Lucy and Charlie are playing football
it made me think of something. Now what made the moment special
is that Lucy and Charlie Brown signed a contract that she
wouldn't yank the ball away when he went to kick it. If you've
seen the show, Charlie Brown rears back, and he comes running
all he can and spins through the air and lands on his head. And
then when he looks at Lucy she says to him, well, the contract
wasn't notarized.
Well, Mr. Chairman, this reminds me of NTIA. I am worried
that if a consumer coupon expires because the grandkids aren't
going to hook up their sets until Thanksgiving or somebody is
deployed overseas and can't get home to help grandma or grandpa
before the coupon expires, that they are sort of like Charlie
Brown. They are just going to be out of luck.
So, as I said many times before, there should be an
extension of these coupons if there are circumstances beyond
the consumer's control, they are out of box at the store, the
kids can't hook their sets up, and I don't want our grandmoms
and grandpops to be Charlie Brown.
And with that, Mr. Chairman, I will yield back.
Mr. Markey. That would make N-T-I-A L-U-C-Y.
Let me turn and recognize the gentleman from Texas, Mr.
Barton.
Mr. Barton. Thank you, Mr. Chairman.
If we keep doing these hearings, we won't have to have an
education program. Everybody in the country will have testified
before your subcommittee. You are a one-man education program
in and of yourself, which is a good thing, not necessarily a
bad thing.
I want to ask you, Mr. Vitelli and Mr. Taylor, I think you
represent the retailers and the manufacturers, we have
allocated enough money to produce up to 33 million of these
set-top boxes, but my staff informs me that the industry
doesn't expect to manufacture and sell more than 8 million. Is
that true, the lower number? And, if so, why so?
Mr. Taylor. Mr. Chairman, the Consumer Electronics
Association estimates between 22 and 28 million converter boxes
will be required in the marketplace.
Mr. Barton. So the 8 million number is a wrong number, a
bad number?
Mr. Taylor. I think that was extrapolated as the possible
number that would be requiring coupons. I know that CEA has
done a lot of research. I need to study it some more. I would
be happy to investigate it more and get back to you.
Mr. Barton. Mr. Vitelli?
Mr. Vitelli. The estimate of the number of people that
would potentially need a box sounds completely accurate to me.
It will be interesting to see what consumers decide to do.
Because they do have multiple options. A converter box is one,
and a large number of people will do that. I think you are
calling to point the difficulty that I think many of us are in
the industry are having, which is projecting the demand.
Mr. Barton. But nobody on the panel expects there to be a
demand for more than 33 million.
I see a lot of stares, so I am going to assume that that
means you don't expect there will be more than a need for 33
million.
I am going to ask Mr. Swanson, who is with Fox Television,
I believe in markets. I believe that people that have an
incentive, a vested interest to help themselves will help
others and for trying to help themselves. Do you believe that
the broadcast industry has an incentive to educate their
customers, consumers, viewers about the transition or do you
think that Congress needs to in some way force, encourage,
incentivize you to do more?
Mr. Swanson. I think for people in the broadcast industry,
as Mr. Barrett has already suggested, it is self-preservation
for us. We want every household to be able to receive a digital
signal on February 17, 2009.
Most of us need the ratings and need the revenue that comes
from that to continue to perform, and so we don't need to be
goaded or prodded on this. And that is why Fox has been
aggressive, not just now but clear back to 2004, in helping
educate the American public to the advantages of HDTV and to
digital television.
In this last 15 months, obviously, the efforts will
intensify, but a broadcaster who failed to participate would
only be hurting themselves, ultimately, I think. So, yes, it is
in our best interest to do this. And I think hearings like this
are beneficial, but I believe that our business is reaching
people with news and information. That is what we do for a
living; and I think if we are left to ourselves to do it, I
think we can do a good and adequate job.
Mr. Barton. I would assume that in January, in early
February 2009, as the transition approaches, that there would
be quite a number of ads on television letting people know
that. Can you give me any kind of an estimate of how many times
a day I might see a 15-second or 30-second spot telling me to
get off my bottom and go down and get my converter box or buy
my new digital TV set that last month? I would assume it would
be a lot, but maybe I am wrong. Maybe you will just run it once
a day at 12:00 p.m., at midnight, or something when nobody is
watching, but I think you will do a lot.
Mr. Swanson. Well, I think if you are home in Texas you
will see our two stations in Dallas running them in various day
parts, including prime time now; and if you watch here in
Washington you will see our two television stations here doing
the same thing. That effort is under way, it has been under way
and will continue.
It will be interesting to see as we monitor this process
over the next 15 months, obviously, a lot of Americans--that is
why the stores stay open an Christmas Eve because there is
always somebody shopping at the last minute. So I assume that
in January, February 2009 there will be stragglers, and we will
have to have an all-out effort to reach them, but that would be
the intent, yes.
Mr. Barton. I will be one of the stragglers, I assure you.
But I will be watching your ads informing me of the transition
in between watching the ads of the Dallas Cowboys getting ready
to beat the New England Patriots in the Super Bowl that year.
Mr. Markey. What year is that?
Mr. Barton. 2009.
Mr. Swanson. I think they already settled that this year.
Mr. Barton. We will have another crack at them.
I yield back, Mr. Chairman.
Mr. Markey. The gentleman's time has expired.
The Chair recognizes the gentleman from Texas, Mr.
Gonzalez.
Mr. Gonzalez. Thank you very much, Mr. Chairman.
I want to associate what I feel about the Super Bowl with
my colleague from Texas; and that first game is just a warm-up,
a scrimmage. It meant nothing in the big picture.
First of all, I know that there is a time and a place for
further discussion on white space, dual carriage all of that,
and it is important. Where I want to go immediately is going to
be--and even pass over the education part of what we will be
doing in less than a year, but I want to comment Mr. Barrett,
Mr. Uva and Mr. Swanson, for what you all are doing on the
education part. Because I think it has been pointed out by Mr.
Abbott that the Federal Government is not going to help you
that much for whatever reason, so thank you for whatever you
are doing on your own initiative.
My question focuses on the testimony by Mr. Vitelli and Mr.
Taylor, the manufacturer and the retailer. We had an
interesting conversation I guess a couple of weeks ago when we
had the last hearing, and I believe Mr. Walden is here, and he
may follow up on it. My question goes to this converter box,
Mr. Taylor. First of all, you indicated this will sell for
about $60 retail; is that correct?
Mr. Taylor. That is correct.
Mr. Gonzalez. We have been hearing between $50 and $70 and
were a little concerned. How many of these converter boxes, the
one that you have before you, do you anticipate manufacturing?
Because you are going to have competition, and there's been
different numbers--22 million, 30 million, 8 million--so you
have got to have some idea how many you plan on manufacturing.
Mr. Taylor. We do. For competitive reasons, I can't give
you a specific number, but we anticipate building millions of
these boxes. And, in fact, production begins next week.
Mr. Gonzalez. But after, let's say, the first few months or
the year of the program and such that we have it in place,
those boxes are pretty well useless as far as merchandise being
carried and available by the retailers?
Mr. Taylor. I'm sorry, at the end of the transition?
Mr. Gonzalez. Sure. The shelf life of this thing is really
at the outset. Best Buy will not be carrying these in a few
months, so you have to factor that in. So my next question
would be how much additional cost would it be for you to
manufacture to add a feature like the ability for that
converter to play a DVD? And please excuse me if I am getting
all the technology confused or whatever, but I am just assuming
that you can add a feature on there.
Mr. Taylor. We make those products today, sir, and they are
not eligible for the coupon because of the way the statute was
written. That is only for the basic boxes, but we have products
on the market today that are DVD recorders----
Mr. Gonzalez. No, no, no, I am very familiar. Do you have
any plans at present to maybe manufacture something that will
be priced much lower than what you have with the DVD players
and recorders that you have out there, which are really
wonderful machines, but I am talking about something that may
coincide right at the same time and be priced pretty close to
the $60 that will have some added feature like--not recording,
because I know that is expensive, but the playing of DVD.
Mr. Taylor. If you included a DVD player, it would be
excluded from the coupon program.
Mr. Gonzalez. Oh, no, no, no, forget about the coupon.
We're going to be talking about upselling, and that was--I am
just wondering where all this is going to end up.
Mr. Taylor. For now, we anticipate just for this product
and introducing the basic converter box, but I would add for
the analog consumer this is a big benefit because they move
from that scratchy analog picture into the digital world and
they get new features.
Mr. Gonzalez. No, no, no, I have no complaints about what
you have been able to pack into it as far as the quality. We
had a demonstration yesterday, and I appreciate your effort.
Mr. Vitelli, I don't believe that Best Buy or any retailer
is going to be the converter box policeman on the beat, you
know what I mean? But your testimony reads as follows: If a
customer has no over-the-air antenna and does not expect to use
one, the customer likely has no need of CECB; and it would ill
serve the customer, as well as the NTIA program and Congress
and the FCC, for us to try to sell one to the customer.
That is totally out of your hands, though. You can't police
that. When someone comes in with their little credit card
voucher and they want one, you are not going to quiz them as to
whether they really need it or not. You are going to have to
sell it to them, is that correct?
Mr. Vitelli. Well, certainly we would sell it to them if we
had no contact with them.
My point of that comment is, if someone had a coupon that
inevitably they don't need and they buy that box, because we
have had no discussion with them about whether they need one or
not, they go home and they find out they actually don't need it
and several weeks or months later they will want to come back
and return it and then that coupon disappears from the world
and the box has already been used and now with we have a used
box that we need to deal with--so it is in our best interest
and the interest of the program that a person who is getting
the coupon and a person redeeming a coupon actually has a need
for the box.
Mr. Gonzalez. Mr. Vitelli, I understand that, and I
appreciate that, and I think it is necessary, but then it leads
to what we have here as far as the testimony of Marc Pearl,
Consumer Electronic Retailer's Coalition: If a customer is
interested in obtaining a CECB to service an existing TV, VCR,
et cetera, this will be the focus on the sales discussion and
transaction. If the customer is interested in upgrading to the
new digital TV or an HDTV display to better experience or enjoy
watching DVDs or high-definition DVD or in receiving digital
broadcast in a new TV or recording product, this will be the
focus of the transaction.
So I assume once you get the threshold question about why
are you here that you will probably lead into other choices. I
am not saying that is evil or bad, and I think Mr. Walden and I
had a discussion after the last hearing, and he may follow up
on it. All I am saying is that I am not sure that this program
was ever intentioned to be somewhat of a windfall for retailers
to be able to upsell. If that happens, I have no idea if that
is a bad or good thing. Because, on the good side, why
shouldn't the consumer be advised that there are better choices
closely associated with the expenditure that they are going to
make in buying something that is of a basic design? I
understand that the voucher does not apply, but creative
merchandising would have something in the way of a rebate or
something to make up for that $40 that they would be investing
in the base machine.
So, one, I don't think you will be the police officer over
there and you are going to basically restrict people to buying
the base product. But how do you find this balance? And your
sales personnel, I don't know how you stop a salesperson. I
don't know if you pay them by commission or not. That will
simply be moving in that direction.
That is going to be an issue, and Mr. Walden may take that
up. I am just saying I would like to anticipate that situation
and see how we can address it.
Mr. Uva, I have got about 47 seconds, but TV stations,
broadcasters along the southern border of the United States,
what is the special situation that you find yourselves in?
Mr. Uva. Congressman, we need to really focus on the
stations in those communities, more so than any other part of
the Hispanic world, simply because if they are left behind and
Mexico not converting to digital, they will be receiving analog
broadcast from Mexican border stations and will be deprived of
important emergency service information as well as global news.
Mr. Gonzalez. As the situation exists now, Mexico will be
broadcast in analog.
Mr. Uva. Will remain in analog past our transition in
February 2009.
Mr. Gonzalez. Thank you very much, Mr. Chairman.
Mr. Markey. The gentleman's time has expired.
The Chair recognizes the gentleman from Oregon, Mr. Walden.
Mr. Walden. Thank you very much, Mr. Chairman.
Mr. Barrett, I want to, first of all, thank the NAB and
others for yesterday's demonstration for Members of the House
and their staff on the DTV conversion. I understand about 170
staff turned out and about two or three Members. Do you think
that Congress should by rule require all Members and staff to
show up for events like this so that Members of Congress are
actually fully informed so they can help their constituents?
Mr. Barrett. I would like to see all the Members of
Congress be fully informed, but I will stop short of a mandate.
Mr. Walden. That is good. I just thought I'd ask.
I do have a serious question--well, I have a lot of them,
actually; and I will try to move rapidly.
Translators--I represent a district, 70,000 square miles. A
lot of our viewers over the air rely on translators to be able
to see their television, whether they are analog or digital.
Can you give me some sort of idea of what you see happening
with translators making this shift from analog to digital in
terms of timelines?
Mr. Barrett. I think it will be very challenging. We have
challenges, the company, with the amount of translators we have
in the State of New Mexico, and there will be some small
pockets of that State where it is economically not feasible for
us to expend the money to build out into a full digital
facility there, and we are working with the satellite providers
to see if we can provide a solution for those small number of
homes.
Mr. Walden. Are there any remaining issues at the FCC as
far as frequency allocation goes for those translators to be
able make the conversion and come up on air on a digital
channel?
Mr. Barrett. I believe until the FCC finalizes its table
that remains an open issue.
Mr. Walden. Will that table be finalized, do you believe,
before February 17, 2009?
Mr. Barrett. I believe it is imperative that it is
finalized.
Mr. Walden. I would draw the chairman's attention to this,
because I think it will be a real issue in rural areas where
you are not served by the main signal of the broadcast station.
And, in fact, a lot of communities are served by translators,
that they may not have the opportunity of a digital box to be
able to watch over-the-air TV; is that not accurate?
Mr. Barrett. That is the theoretical potential, yes, sir.
Mr. Walden. Mr. Vitelli, I want to commend you and what
your store is doing and that of other retailers.
I will follow up on Mr. Gonzalez's point about how we
market products in America, and I don't think you want this
committee micromanaging every sales transaction with penalty or
there would be no reason for you to bother to offer these boxes
to begin with. On the other hand, I don't think we want bait-
and-switch tactics; and on that point I think all of us would
agree.
What happens today when a consumer comes into a Best Buy
and wants to buy a new washer or dryer that has an Energy Star
rating and perhaps a rebate associated with it versus one that
doesn't have that sort of rebate and they walk in the store and
want a washer and dryer? Do your sales clerks also say, gee,
there is also this model has a rebate with it, it is more
energy efficient, and you evaluate what the consumer wants or
needs?
Mr. Vitelli. Sir, I would like to add to that. I'd like to
add to Mr. Gonzalez's question. Best Buy is a noncommission
environment, and our key training that we talk to all of our
salespeople about is to understand and then meet that
customer's unique needs. That's what we do.
Mr. Walden. Right.
Mr. Vitelli. Asking those questions, contacting the
customer, asking the lifestyle questions of what they are
interested in and what is important to them and then
recommending the right product for that situation and
encouraging the sale of that little acronym of CARE is how we
train our sales people everyday.
So, in your example there, the conversation would be
aligned--would be, around in the appliance department, OK, you
came in for this. Are you aware of Energy Star? Are you aware
of the benefits that it brings to you and indeed to all of us
by using less water, using less electricity?
Mr. Walden. My example is an analogy here. If I come in
saying I need this consumer or the set-top box to do the
conversion, I would want somebody to say, gee, here are
alternatives. Now, you don't get the coupon here or the $40
rebate, but these are also options if you are thinking about
upgrading your television.
Mr. Vitelli. That is the explanation we are running on our
video wall that goes six times an hour. It is already running.
You have three options: You are going to get a converter box,
you are going to subscribe to another way, my colleagues are
here that have another way to do that, or you are going to buy
a new digital television.
And it is also important to understand there is a lot of
talk about the expensive digital televisions. That is because
of what has been going on with high-definition television and
flat-panel TVs.There are standard-definition digital
televisions that are low cost that are in our stores right now.
So those three options will be presented saying here is
where you came in and here are your three options. Wherever you
want to go, we can help you.
Mr. Walden. Mr. Barrett, I want to go back to follow up on
a question the chairman raised about sponsored public service
announcements. Are those not a standard in the industry anyway
for drunk driving PSAs and Halloween safety public service
announcements? Isn't that a frequent situation where there are
industry groups or businesses who want to sponsor a message
because it is both in the public good and in their own good?
Mr. Barrett. Yes, sir. That is a widely practiced matter in
most respects. And I think of in Baltimore, at our station
there, WBAL, if it is involved in the Susan Coleman Cancer Run,
Hopkins may want to be a sponsor of that. I believe it enhances
the message.
Mr. Walden. And, actually, it may add more messages on the
air than you are planning to do for free through the public
service announcement strategy. So it is actually an industry-
wide effort to add to the message, not detract.
Now, I understand the chairman's comment about potato
peelers or Pocket Fishermen or something maybe being Ginsu
knives, I don't know, being not necessarily what you would put
in place with that. I think the reference was it would be
irrelevant to have some of those people sponsor it. Do you
think it would be irrelevant if a Member of Congress's campaign
sponsored one of those messages? Would we be considered
irrelevant to that process?
Mr. Barrett. I would like to take that under advisement.
Mr. Walden. You may want to consult.
The final point I want to make--and it is really not
necessarily to this panel, because we don't have anybody here
from the satellite companies, but we may later--there are still
pockets in America where over-the-air broadcasters are having
difficulty getting local-into-local signals set up on the
satellite systems. I have that in my district, and Ben Dorigan
with KTVZ is having a real problem with that. It is a growing
frustration for them and for viewers I think in these local
markets.
That was part of the deal, was to have local into local;
and some of us are running out of our patience in terms of the
excuses on why that can't take place in an analog environment,
let alone in the digital environment. And that is an issue I
continue to pursue.
Mr. Abbott.
Mr. Abbott. If I can second what you are saying.
Mr. Walden. I also have this problem in public broadcasting
in southern Oregon, too.
Mr. Abbott. Absolutely. And we have in that our model of
supplementing the Federal investment in public television in a
public-private partnership with significant support from the
community to support programs. As I was mentioning in my
testimony, we are greatly concerned in rural areas that local
into local move forward, high definition move forward and the
range of new digital services that are available to every
station to localize in their communities are established
through satellite carriage, because that creates the service
that then communities respond to and make an investment in
public television.
Mr. Walden. I am going to steal back my last 5 seconds to
make a point to the chairman that in a future hearing if we
could address this translator issue vis-a-vis the FCC's
rulemaking and the allocation of those signals I think it would
be real important to this conversion success.
Thank you, Mr. Chairman.
Mr. Markey. Done. Thank you.
There are three roll calls that will be held on the House
floor beginning in about 10 minutes. So I think that gives us
time to recognize the gentlelady from California, Ms. Solis,
for her 5 minutes of questions. Then we will recess, and then
we will return to let other members be recognized.
The gentlelady from California is recognized.
Ms. Solis. Thank you, Mr. Chairman.
I just wanted to get a response from Mr. Vitelli and Mr.
Taylor. I have information before me where U.S. PIRG did I
guess kind of a random study here in Washington, DC. And they
visited several of our local stores, five electronic retailers.
And in interviewing clerks and supervisors many of them were
not aware, were giving inaccurate, misleading information,
didn't know about the converter box program. Some didn't even
know about the coupon.
Can you please respond to that, Mr. Vitelli?
Mr. Vitelli. Yes. As I said earlier in my testimony, there
was very little information other than--and what our training
includes today--that there will be a converter box and there
will be a coupon. That is what is in our training today.
I think we are at a point now we can begin to take that
training to the next level of this is the various converter
boxes that will be available, this is the date that they will
be available, and this is when the coupon application process
will all begin to start. And that will happen after the holiday
when we get into 2008.
The training that we do today in our stores is generally
focused on the questions that people are coming in and asking
about today. And the majority of people that walk into our
stores right now are talking about high-definition TV, flat-
panel TVs; and that is the preponderance of our training right
now. That is going to change and ratchet up as we get closer to
the transition.
So I would say as we get into the application process,
which will happen the early part of next year, and certainly as
we get into January and February of next year with the
transition, that both the training, the messaging in our store,
the messaging in our advertising will ratchet to meet the
response that the customer is going to have.
Mr. Taylor. We agree. At LG Electronics we have been
increasing our sales training activities surrounding the
digital transition generally. We think it is a little too soon
to be start talking about the boxes, because they aren't yet
available. But we are preparing and in fact just this week met
with 800 of our dealers, and a huge module of that was the
discussion about the transition and the converter box coupon
program.
Ms. Solis. But we just heard that there are commercials and
PSAs that are already going out. So there could be some
confusion amongst our consumers that is maybe unintended, but
it is there. So I am just cautioning that maybe we need to have
some quality control here and maybe know exactly what it is we
are telling our staffs to tell people. In fact, I understand
that some people weren't even told that they had to purchase a
converter box. They were actually trying to sell them higher-
end equipment. So that is something that Mr. Gonzalez brought
up earlier. So I would be concerned about that, just
misleading; and it may not be intentional, but it happens.
One of my questions, too, is I worry about those senior
citizens that live in convalescent homes, whose children bring
them their old television set or they bought them when it is
already old and the fact that many of the convalescent homes
don't allow them to have digital or their own cable set-up.
What are we doing to reach those kinds of particular areas?
Because that is a very different population, and not all of
them are going to go sit in front of the big plasma TV during
lunchtime. Some are immobile. How do we handle that?
Mr. Abbott. If I might comment on that, that is an area of
great interest and focus, of course, for public television,
where many of the elderly residents in all of our communities
care greatly for the range of programming that we provide. It
is a relationship that has been fostered over time. It is why
in my testimony I offered the expressed interest in
supplementing the messaging that we can do on our television
stations with on-the-ground education and outreach. And in our
communities and communities across the country, senior centers,
convalescent homes, in addition to libraries, facilities tied
to Ready to Learn and Head Start programs, those are the ways
on the ground we know we can experience some success in having
people really understand the transition.
One of our concerns is that a 15-second or a 30-second
message is the beginnings of awareness. It presents the
beginning of awareness but not necessarily a way of talking
through the most productive and prevalent solution.
Ms. Solis. Mr. Chairman, I don't have a lot of time, so I
want to submit questions also for the record.
But I do want to say that one of the greatest concerns I
have is that, again, the coupon is worth $40. If the converter
cost $60, how many chances will a family member get to use the
coupon? Is it just one per set or how does that work?
Mr. Vitelli. It is one coupon per one converter box.
Ms. Solis. So it will affect just one?
Mr. Taylor. And each household can apply for two coupons.
Ms. Solis. That might be another question to revisit.
Mr. Markey. The gentlelady's time has expired.
The gentlelady from California, Mrs. Capps, says that she
does not mind if she has less than 5 minutes, so we will
recognize her for that purpose.
Mrs. Capps. And I am going to presume that I can run really
fast to the floor and not miss the vote. But I thank the
chairman for allowing me. I am not able to come back after the
series of votes, but I wanted to--and I just am going to ask
very brief questions of two people if I could, Mr. Knorr and
Mr. Willner. Some of the other concerns I have have been
addressed, and I am going to assume they are going to be
followed through.
Mr. Knorr, parts of my district are serviced by very small
cable providers. I am concerned about how FTC's dual-carriage
order will affect cable and broadband service for my
constituents. Can you tell me--can you give us an idea of how
many small cable operators are likely to be affected by this?
Because it will have a direct impact on my constituents, I am
sure.
Mr. Knorr. Absolutely. It is very similar to the translator
issue. We estimate as many as 1,000 communities served by
analog-only cable operators serving just a few hundred
customers. And we think that a mandate to deploy digital where
there is no financial justification similar to translators to
be able to afford that upgrade to digital, very likely, almost
with economic certainty, will drive many of these operators out
of business, in which case there is no one to provide that
service possibly to a retirement home.
Mrs. Capps. I hear you. And that is a big concern of mine,
and we will go further into it another time, I hope.
Finally, Mr. Willner, I am concerned that as the DTV
transition nears some consumers may feel they have to switch to
more expensive digital cable in order to continue viewing
certain programs because the channel on which the program airs
has been moved to the digital tier. Does cable have any plans
to move certain channels or networks to its digital-only tier?
I want to be assured for my constituents again.
Mr. Willner. The agreement that we have reached that did
not make it into the bill but we did a voluntary agreement was
for carriage of the analog and the digital signals of all
broadcasters, the must-carry broadcasters.
Mrs. Capps [presiding]. Now I am supposed to gavel you down
and run to vote.
Until after the series of votes, we will be in recess.
Thank you.
[Recess.]
Mr. Markey [presiding]. The hearing is reconvened; and, as
you can see, there are many members who continue to have an
interest in this subject. There is just no end to the number of
hearings that we can have on this issue.
And the gentleman from Texas, Mr. Green, is recognized.
Mr. Green. Thank you, Mr. Chairman.
I would like to thank our panel again for being here.
Mr. Taylor, I know in your testimony you said that
converters would be available some time in early 2008 for about
$60; and I was going to follow it up with Mr. Vitelli from Best
Buy. Is that pretty well what you expect, that the converters
will be in Best Buy, for example, or even your competitors? I
know you are at 25 percent of the market. But if you have them,
I am sure your competitors want to have them also. Is there a
broad range of dates? How early in next year? Because if those
coupons are sent out in January, people will sit there, and
they will show up at the retail operations.
And I know you said because of the deadline on those
coupons they would be able to use that coupon and get one when
it is delivered, so they wouldn't worry about the date on that.
Do you know if your other retailers or other competitors are
using that same scenario or has the FCC said anything about
that is what they would like to see done?
Mr. Vitelli. The complexity of the dilemma that you just
described is why we made the recommendation that, as the
applications start to come in starting in January to the NTIA,
that the NTIA should say to consumers, don't expect your coupon
before April 1. What that is going to allow to happen is the
multiple--hopefully, multiple approved box manufacturers to be
able to state what their production capacity is by week and by
month. And then we will know, OK, here is the production
capacity. NTIA should then release coupons against weekly and
monthly production capacity.
They have also--we have been working with IBM--will be able
to tell us and other retailers here are the coupons that are
being issued by Zip Code. So as we try to figure out of the
10,000 retail locations in the country here is where to put
them. So that supply chain process that you described is very
complex. It happens every day, but it happens in a more
predictable model of how consumer demand for goods are.
This is very different, and the actual coupon issuance
needs to match up with the product availability, which is going
to need--the industry as a whole is going to need to understand
production capacity by month and then issue coupons against
that so retailers can order those quantities and all three of
them match.
Mr. Green. So they could control the distribution of the
coupons once they receive the applications to somehow fit with
the distribution chain for the retail operations.
Mr. Vitelli. And that will be the best thing to do to avoid
customer disappoints.
Mr. Green. Do you think we are going to be that well
organized to do that?
Mr. Vitelli. I think--with several key manufacturers and
several key retailers and IBM at the center with NTIA I think
it can be done.
Mr. Green. One of the other concerns I have--and I know it
was mentioned by some of my colleagues--is the availability of
those coupons and how broadly they are going to be distributed.
Are they going to be available to the public, for example, at
Best Buy or Circuit City or someone else? Or are they just
going to be Internet based?
And again in an area that--I have a very urban area in
Houston that has less cable penetration, but they also have
less computer access and Internet penetration. So what are the
suggestions on how those applications would be distributed?
Mr. Vitelli. We have committed that we will have
applications in all of our stores. So if someone comes in and
says I need an application in January, we will have it. I think
it would be great if all of the consumer electronic retailers
that are participants in the coupon program have the
applications available.
Mr. Green. Mr. Chairman, one of the concerns I have, and I
think my colleague, Congresswoman Solis, talked about the
impact on Hispanic cable viewers, because I have the same
situation, to make sure that we have those. I was thinking,
because in every newsletter we send out we put a little blurb
in about the DTV transition, and I don't know what we would
need to take, but I know some of us over every few years will
send out a voter registration application bipartisanly. If that
would be possible for--maybe it comes from our committee--to
say that Members of Congress could actually put that in their
newsletters and their application or however we could make it
available, just like for retail operations. But we could do
that.
Mr. Markey. I think that is an excellent idea. I think we
should pursue that and maybe recommend it to the other Members,
maybe with your leadership.
Mr. Green. I will talk with what we call the mayor of
Capitol Hill, our House Administration Chair, and see if that
is something we could work with.
Mr. Markey. Excellent.
Mr. Green. Thank you. And thank our witnesses.
Mr. Markey. The gentleman's time has expired.
The chair recognizes the gentleman from Virginia, Mr.
Boucher.
Mr. Boucher. Well, thank you very much, Mr. Chairman; and I
also want to join with you in welcoming our panel of witnesses
and thank each of you for your enlightening testimony here
today.
For Mr. Willner, Mr. Barrett and Mr. Vitelli, as I
understand the statute that authorizes the distribution of
vouchers for these converter boxes, the vouchers will expire 90
days from the date upon which they are issued; and I am
wondering if there is any justification for retaining that
provision. I have heard Mr. Vitelli say that we should make
sure that we issue vouchers in accordance with the availability
of converter boxes and that they be issued in that kind of
parity. But I am wondering if an outright repeal of this
provision might be preferable. Is there an argument for
retaining this 90-day limit?
Mr. Barrett. Mr. Boucher, I would agree with you. I think
that this is not the right solution, and it is going to pose
more problems going forward. I don't think there is logic to it
at this point to stick to a 90-day date.
Mr. Boucher. The concern, obviously, is that someone will
get a voucher in January or February of next year and
potentially delay going to the store in order to get a box
until the voucher expires. And then that voucher recycles back,
and I suppose somebody else could have it issued to them at
some later point in time. But that individual who has been
disenfranchised, I am not even sure that person is eligible to
go back and reapply. I don't know the answer to that. So that
person potentially could be disenfranchised.
The more common situation might be where the individual
receives the voucher, goes to a store and the kind of parity of
voucher issuance and device availability Mr. Vitelli talks
about somehow fails, and the store simply doesn't have the box.
He goes back 2 weeks later, the store doesn't have the box, and
he gives up, and his voucher expires. He is rendered, I guess,
ineligible from getting another one.
And in the face of that uncertainty it just seems to me
that repealing this 90-day provision might be the better course
to take; and, Mr. Chairman, I would suggest that we consider
that and possibly put forward legislation in order to do it.
The reason I am raising the question is just to see if
anybody has a justification for retaining this 90-day
expiration, and I am not hearing any.
Mr. Vitelli.
Mr. Vitelli. I actually have two thoughts of why it is a
good idea.
Mr. Boucher. Why what is a good idea?
Mr. Vitelli. The 90-day expiration is a good idea. And I
will try them. Because I understand the dilemma that it is
creating. One is that there is another scenario that all the
coupons are issued and everybody waits until February 18 to get
the box and there is 22 million people lined up outside of all
the stores and there actually isn't any linear production and
issuance of these boxes and getting them into homes. That is
almost untenable for retailers and manufacturers.
So the perfect scenario would be that 2 million a month of
these converter boxes, the coupons were issued, they were
manufactured, they were sold, and people came in in an orderly
fashion over the course of the 15 months. So that is one reason
I actually think it is good. As the coupon comes in, you have a
motivation to go to the retail outlet and get a box. You may
not install it that day, but now you physically have it.
Mr. Boucher. Well, I understand the ideal situation, and I
agree with you. If the world works as nicely and cleanly as you
suggest that it may, that will solve the problem. But I don't
have that level of confidence that it will work with quite that
level of efficiency, and then I think people are going to get
caught in a crunch.
But let me move on to another area where I have a question.
Mr. Willner, I realize it is difficult for you to speak for
every cable system in the country. But you speak with authority
on cable issues, and you are here this morning representing the
industry, so let me pose this question to you.
I am looking for a level of comfort in terms of what the
cable subscriber is going to receive in the home when the
digital transition has been accomplished, and so I am going to
ask three questions about what that cable subscriber will
receive.
Question No. 1, will he get an analog signal delivered on
the cable system so that he can keep his analog sets in
operation without having to buy a converter box? Yes or no?
Mr. Willner. Yes.
Mr. Boucher. Question No. 2, will he get a full digital
signal on the cable system so that his new digital set operates
efficiently with digital feeds coming off the cable system?
Mr. Willner. Yes.
Mr. Boucher. Question No. 3, when the local affiliate of a
network, television network is broadcasting in high definition,
will the cable system be carrying that full HD signal into the
home?
Mr. Willner. Well, are you talking about must-carry?
Mr. Boucher. For the must-carry stations, that is correct.
Mr. Willner. Yes.
Mr. Boucher. So the answer is yes.
Mr. Willner. Yes.
Mr. Boucher. So the answer is yes to all three of those.
Mr. Boucher. Yes.
Yes, sir. I see your hand being raised, and I can't read
your sign. I'm sorry.
Mr. Knorr. Patrick Knorr. I'm chairman of the ACA. We
represent the smaller cable company.
Mr. Boucher. And what is your answer to those questions?
Mr. Knorr. And my answer to those questions, the first one
is yes. But the next two are a little bit more complicated for
smaller operators.
If they are required to carry HD signals for the smallest
of operators, it is very akin to the translator problem that
broadcasters have of if you are a mom-and-pop cable company
with two people running a cable system serving 100 customers in
a small rural community, 100 customers does not support the
investment in HD. There is probably not as much demand there,
and there is alternatives for those people in that community
that do get HDTV sets.
But the business model doesn't support it. And if there is
a Government mandate to provide an HD signal, chances are that
cable company is going to cease to exist and their customers
are not going to get the HD signal or the analog signal. And
that is a really major concern that we think may affect up to
1,000 communities in this country if that is not very well
thought out. And the current policy that the FCC has released,
combined with the must-carry mandates that are already in
place, really leave grave concerns for what will happen with
small cable companies.
Mr. Boucher. Thank you very much. My time has expired. And
thank you, Mr. Chairman, for your indulgence.
Mr. Markey. Thank you. I appreciate it.
The gentleman from Michigan, Mr. Stupak, is recognized.
Mr. Stupak. Thank you, Mr. Chairman.
Mr. Knorr, the third answer to Mr. Boucher's question,
would you care to clarify on that one?
Mr. Knorr. Clarify which?
Mr. Stupak. Your answer to his third question there.
Mr. Knorr. I'm sorry, the HD signals.
Mr. Stupak. Yes, with regard to high-definition signals.
Mr. Knorr. Correct. Any member, just like the education
issue, we all have a huge stake, a market incentive, to be as
competitive as possible. We want to serve our customers. We
want to provide our customers with HD signals. It is really a
matter of economic ability for the very small operators, which
is really where we are asking for allowances to be made for
systems that are very small or very limited capacity.
We used to have 30,000 customers in Lawrence, KS. We are
going to be providing an HD signal, we are going to be
providing a digital standard definition signal, we are going to
be providing an analog signal for every single broadcaster in
our market. We want to do that for competitive reasons.
But, again, if you are a 100 subscriber system, even 1,000
subscriber system, that is a mathematical impossibility to
finance the equipment required to do that.
Mr. Stupak. In the last hearing, I asked Mr. Martin about
it, when the FCC was here, about the dual carriage; and he said
there was not that obligation, that you can go one way or the
other, you don't have to have the dual-carriage license.
Mr. Knorr. Well, there is a definite lack of clarity. For
one is that written order has not been made available, and it
doesn't exist. Martin may know that, but he hasn't published to
the rest of us. We haven't read it. We don't know that to be a
fact.
And there are other rules that are also in place besides
the FCC mandate that require must-carry to carry the native
signal, and those go back to 2001.
Mr. Stupak. In your September order, they also allowed you
to--or not ``you'' but I mean small cable operators have an
option of asking for an exception to that order they put out in
September. But you make a point in your testimony that, well,
look, if we can't afford equipment, what makes you think we are
going to be able to afford an FCC lawyer? No disrespect to
lawyers, but what kind of costs are we looking at here?
Mr. Knorr. Well, the costs are really uncertain. The
process for the set-top box waivers for the security ban prove
to be very burdensome where the FCC did not even follow their
own rules of response where they said they would respond within
90 days. In many cases, it was 6 months, sometimes as long as a
year before that response came out.
So, again, with all due respect to lawyers, something that
takes a year process can be very costly versus something that
has a very finite response and that is lived to. We have not
seen that from the FCC, so there is grave concerns that that
would take time to navigate.
And, again, when we are talking about a mom-and-pop system,
if someone tries to navigate that process on their own, if two
people are running a small cable system, the phones don't get
answered, service calls don't get run, they can't operate their
business.
Mr. Stupak. Well, I asked them about one with 133 customers
on there. Anyway, I am following up with Mr. Martin with
further questions on his testimony last week or so when that
was, so I am glad to share that with you when I get some
response.
Mr. Vitelli, if I may--and to all the witnesses, thank you
for being here. I was listening in my office in between
appointments, and Mr. Dingell was asking you about the coupon
program. And the way I understood your answer was like, well,
you can come in and purchase it from Best Buy, and Best Buy
accepts their own coupon or gift card, but yet they won't
accept by mail or e-mail a coupon from the Federal Government
for these converter boxes, right?
Mr. Vitelli. We were talking specifically about
BestBuy.com, the Web site. Up until very recently, we weren't
able to even accept our own gift cards. The only option you had
was a credit card. It was a single tender option. We have been
able to, as I said just recently, just a few months ago been
able to add a Best Buy gift card online; and it is because of
the transactions, if you will, of the Best Buy gift cards stay
within the Best Buy system. To add a second outside tender is
economically and technically not feasible within the timeframe
of the program. So our intention is to have them in all of our
stores and to be able to take orders over the phone.
Mr. Stupak. So they have to call Best Buy then.
Mr. Vitelli. In the store or call Best Buy.
Mr. Stupak. But then how are you going to accept a coupon
then? They are going to have to bring the coupon in and an
extra $20. If it is $60, you get a $40 coupon, you are going to
have to send in 20 bucks plus the coupon and then you are going
to ship it to them?
Mr. Vitelli. That's correct.
Mr. Stupak. Plus they are going to pay for the cost of
shipping?
Mr. Vitelli. Depending how we work that out, yes.
Mr. Stupak. See, my concern is, in my district, there are
no Best Buys. Even Radio Shack is probably 100 miles away from
most of my cities. We are just going to be running back and
forth. So all this improper testimony, make sure you get the
right box and all this, it would sure be a lot easier if we
could go online, redeem online, do that last 20 bucks on the
credit card and get it shipped to us and ask the questions
online.
I find it hard that you just won't accept the Federal
coupon. You got to have some kind of markings or readings on
these coupons to allow you to do that.
Mr. Vitelli. We would love to do it. It is not that we are
not trying to do it. I have been told by my IS/IT people that
it is not technically doable in our system. I said I don't
believe that that is necessarily a broad problem, and hopefully
out of all the other retailers that are part of the Consumer
Electronics Retailer Coalition there is going to be more than
one that will be able to do it online.
Mr. Stupak. We have done your retail coalition in my
district. Very few are in my district. So how are we going to
access it, besides driving a couple hundred miles or, I guess,
over the telephone?
Mr. Vitelli. Telephone is one. But I would predict--and I
don't know this. I would predict there are going to be other
retailers that will be able to do it. I was talking
specifically about Best Buy and our inability to do it. I don't
think that is going to be broadly the case.
Mr. Stupak. Thank you.
Mr. Markey. The gentleman's time has expired.
What we can do, if the members would like this, we could go
to a 3-minute round if members have additional questions that
they would like to follow up on; and the Chair will recognize
himself.
I want to go back to Mr. Barrett, Mr. Swanson and you, Mr.
Uva; and that is that earlier question that I was asking about,
the FCC's PSA minimum and whether it is a minimum or not that
undermines what the broadcasters are seeking to do voluntarily.
Could you address that question, each of you?
Mr. Barrett.
Mr. Barrett. Perhaps I should have better characterized
that. Rather than we are in opposition to that, we think there
is a better solution. And my concern as a broadcaster and a
business executive is that we not create a standard that
applies to the lowest common denominator here and in effect
gives stations a disincentive to do the kind of multi-marketing
things that will drive the success of this program.
I think that is just an imperative to understand that this
can't just be about PSAs. And if we have an environment that
the Government wants 4, 8 or 12 PSAs a day, if stations believe
that that is all that needs to be done, we will not be as
successful as we need to be in this endeavor.
Mr. Markey. Mr. Swanson.
Mr. Swanson. Well, I would echo what David Barrett just
testified. I think the most effective way is to enhance on what
is discussed with PSAs and crawls; and that is to use our news
programs, our public affairs programs, our morning shows, our
Web sites. And I think that--and on Fox we want to use our
diversity development group to go after the community
organizations in the African American communities, the Hispanic
communities, the senior citizens. It is going to take a lot
more than just PSAs to do that, and we are prepared to do that.
We are doing that. And I think if we let broadcasters do what
we do, we broadcast, we know how to reach people, I think we
can do it effectively.
Mr. Markey. Mr. Uva, I want to follow up on something the
GAO highlighted for us in its testimony 2 weeks ago and that is
the technical operational difficulty of actually getting the
switch done. Can you and Mr. Swanson and Mr. Barrett say with
certainty that at midnight on February 17, 2009, that 100
percent of analog signals will be turned off and digitally
fully on?
There are a limited number of construction crews in the
northern States. In February, there is icy weather. The FCC has
not acted on all of its construction permits. And aside from
consumer education programs, how concerned are you about these
technical challenges?
Mr. Uva. We are very concerned about some of the technical
challenges, but we are constantly vigilant of trying to be
ahead of those dates so that we are able to comply and to fully
switch over on February 17, 2009.
Mr. Markey. Mr. Swanson.
Mr. Swanson. Well, with a transition of this size and
magnitude, there are going to be outstanding technical issues;
and we would be hopeful that the FCC would move and move
quickly on some proceedings that we need in the technical area
so that we can refine what we need to do in terms of equipment,
purchase and installation.
Mr. Markey. Mr. Barrett.
Mr. Barrett. I would echo what Mr. Swanson said.
I think there are two proceedings that I believe the
Commission is close to concluding, the reconsideration on the
final DTV table and their third periodic review of the DTV
rules. Absent the wrap-up of those proceedings, there will be
some stations that will be challenged to order and have
fabricated antennas and the like to accomplish this to the
precision of 100 percent delivery on the date in February,
2009.
Mr. Markey. Thank you. My time has expired.
The Chair recognizes the gentleman from Michigan, Mr.
Upton.
Mr. Upton. Thanks.
I just have one additional question I am going to ask Mr.
Taylor, Mr. Knorr and Mr. Willner. Isn't it true that converter
boxes will enable the old analog TVs to receive digital multi-
task programming over the air for free? Since that is so, there
will be some 8 to 24 million TV sets using these converter
boxes, not to mention the more millions of digital TV
receivers. Doesn't that indicate that there is more than an
adequate business model for quality multi-cast programming?
Mr. Willner. I would think that is an ample amount, and
that also helps to create the content that gives cable
operators incentive to carry additional streams as well.
Mr. Knorr. I would echo that. And just as Mr. Willner said,
if it is quality content that is being generated in addition to
those boxes, cable operators want to carry multi-cast signals
that have valuable programming. So we will increase that
business spot.
Mr. Taylor. We agree. In fact, we think it is going to be a
key selling point for converter boxes to talk about that
capability.
Mr. Upton. And the other thing, of course, as many of the
staff saw yesterday, you actually get a better signal. And for
many folks when they first--that was the real reason why they
went to cable in the first place 20 some years ago, because you
got a better signal. You didn't have the number of programs or
number of channels that were there, you actually had a better
picture. And so that will be yet another selling point.
So with that type of answer then, obviously, it would seem
that we don't need more regulations to mandate multi-cast must-
carry. Would you come to that conclusion?
Mr. Knorr. Yes.
Mr. Willner. I vote in favor of the motion.
Mr. Upton. And that is for all cable companies, is that
right, Mr. Willner?
Mr. Willner. For everybody.
Mr. Upton. I yield back. Thanks.
Mr. Markey. The gentleman's time has expired.
The Chair recognizes the gentleman from Virginia, Mr.
Boucher.
Mr. Boucher. Thank you very much, Mr. Chairman.
I just want to focus for a moment on the public education
campaign to advise TV set owners that the digital transition is
coming. I think it is very interesting. In the United Kingdom,
there are 60 million residents. We have about 300 million
residents. The United Kingdom is planning to spend on its
public education campaign 200 million pounds. That is about
$400 million. We are planning to spend $5 million here. And for
a country that is one-fifth the size of ours, almost 100 times
as much will be expended. So who is getting it right? Is the
United Kingdom right or are we right about this?
And a second aspect of this question is whether the very
commendable commitment that has been made by broadcasters and
cable together, totaling about $800 million for their own
public education efforts, offsets the positive public funding
or whether we really need more public funding? And if we do,
what level would the members of the panel suggest?
So who would like to respond?
Mr. Abbott. I appreciate the opportunity to speak to that.
I think, actually, if you look at the character of the
questions today and sorting through what that experience in the
12 months prior to the cut-off is going to be like, where the
device is, how do I get them, how do I install them, what are
my choices, clearly, there is a sequence of communications that
needs to be executed effectively at the retail side, on the
manufacturer's side.
But I think in the questions we have had today it is more
than abundantly clear that a 30-second announcement of the fact
that the transition looms is just the tip of the iceberg, and I
think what you see in the Great Britain program is a
recognition that people who don't live their lives thinking
about how to connect devices to televisions need more guidance
than that.
We just opened a brand new facility, a new home for WGBH,
just 2 weeks ago; and I had 4,000 contributing families come
through over the course of a Saturday. And I stood in front of
our master control operation, and it was fascinating to me, all
of the questions. Many of the questions were about these new
digital services and how do I get them and what is this thing I
am beginning to hear about. Will my old television set work?
And the thought that I would have had to figure out how to say
in 30 seconds all they needed to know to have them effectively
bring the television services into their homes was beyond
imagining. So I learned a lot that day about what is really
required to give people a sense on the ground in their homes
what is going to be required to adequately connect to these
marvelous digital services.
Mr. Boucher. So you would agree we should be spending more?
Mr. Abbott. I think Great Britain has it right. To really
connect with folks who have questions who are not in the
industry, a more significant investment is required. That is
why we spoke to the bill that Congressman Engel has put
forward.
Mr. Boucher. Does anyone disagree?
Mr. Barrett. The reality, sir, is that we are dealing with
a limited amount of funding that has caused the broadcasters
and the cable industry to step up in a very aggressive way. And
I would submit that the kind of comprehensive program that only
the broadcasters, only the broadcasting piece of this, if it
delivers 98 billion advertising impressions, if it reaches 94
percent of the U.S. television viewing viewership and the
average frequency of those messages is over 400, that we have
got a saturation program in place.
Mr. Boucher. Well, I agree that it is impressive; and I
think you are to be commended for doing it. I am still not sure
it is enough.
Thank you, Mr. Chairman.
Mr. Markey. I thank the gentleman.
If the people visiting Mr. Abbott's studio don't get it, it
is about as sophisticated a group of people that we have in the
country that will be walking through on the first day of the
opening of the WGBH studio.
The Chair recognizes the gentleman from Michigan, Mr.
Stupak.
Mr. Stupak. Thank you.
I want to go back to the coupons again, Mr. Vitelli. Is
Best Buy or anyone in your Consumer Electronics Retailers
Coalition working with NTIA to make sure there will be a way we
can redeem these online? You just said you can't do it, and you
just recently did it. But is anyone asking NTIA or IBM, I
guess, really, in this case, how can we make this happen so it
is convenient for people, especially those of us in sparsely
populated, rural areas?
Mr. Vitelli. I don't know that, but I will find out and get
back to you the answer of what is going on between other
retailers.
Mr. Stupak. Thanks.
Mr. Vitelli. Mr. Abbott, if I may, Chairman Markey started
off with this question, and I want to explore this a little bit
more. With the satellite industry being EchoStar and DirecTV
has not reached an agreement, the carriage agreement there with
public television after DTV transition, how large an audience
would be affected if there is no agreement here?
Mr. Abbott. We are very concerned in that regard. DBS
services to the American people represents approximately 23
percent, as many as 30 or 31 million homes. Many of them are in
rural areas: Oregon, Nebraska, Illinois, Virginia, Michigan.
And we are very concerned because, while we have reached a very
effective set of carriage agreements on the cable side, we have
not yet reached an agreement with either DirecTV or EchoStar.
There have been conversations with DirecTV. There is not an
agreement, and there has been even less conversation about the
potential of digital on the EchoStar side.
The challenge to us is, as we are watching on the
commercial side, there are as many as 1,500 local stations
whose high-definition services already on the commercial side
are getting carried and yet not a single public station is
being carried in high definition. Combine that with the fact,
earlier remarks by one of your colleagues, about the fact that
public television has made the more substantial commitment to
multi-cast programming, a larger library of choice and
convenience for the American people at a time in which public
television will serve better, will have greater impact across
our library. We are grateful for the enhanced carriage, the
full carriage assured us by the cable operators, but we have
not secured that from satellite.
Mr. Stupak. Well, public broadcasting is partnered with
Homeland Security in that digital emergency alert system, so if
you don't have the digital this won't work then, right?
Mr. Abbott. That's correct. We aspire to universal service
to the American people; and if the satellite piece of that
puzzle isn't there that full range of services, including our
commitment to Homeland Security, is at risk.
Mr. Stupak. Thank you.
I have nothing further, Mr. Chairman.
Mr. Markey. The gentleman's time has expired, as has all
time for questions by the panel on this largest panel ever
assembled in the history of Congress.
And what we would like to do is to get the final word, 1
minute from each one of you, what you want us to know about
what you are going to do between now and the next hearing we
are going to have with the largest panel in the history of
Congress so that--because we are going to start getting
questions asked of each of us who are members of this
Subcommittee on Telecommunications beginning in January or
February. So they are going to think that we know all the
answers out on the floor. So as they are being besieged we will
in turn get besieged for the answers.
So could you tell us, each of you, what your plans are,
what you want us to remember as we conclude this hearing,
looking forward to the next one? Mr. Taylor.
Mr. Taylor. Mr. Chairman, when I see you next, we will have
sold millions of boxes, hopefully. We are in production
beginning next week. Our commitment to work with the DTV
Transition Coalition and all of the stakeholders is stronger
than ever, and we are committed to making this a smooth
transition for both our retail partners and, ultimately, the
consumers that need these boxes.
Mr. Markey. Thank you, Mr. Taylor.
Mr. Abbott.
Mr. Abbott. Mr. Chairman, we will be committing to a clear,
understandable communication program with everyone in our
communities across the country, mindful of what they will find
at retail and the boxes available, committing as best we can
with the resources available to the communications we can offer
on our air and in our communities. With greater resources, we
can amplify the reach of those messages and ensure a successful
transition.
Additionally, on the 19th of November, we are convening
here in Washington a digital television closed captioning
summit with a cross-industry representation of manufacturers,
programmers, including those from the cable industry, Verizon,
as well as, as I have said, manufacturers, device manufacturers
and retailers talking about making closed captioning a reality
in the digital environment and accelerating the way in which we
can adequately serve all Americans.
Mr. Markey. Thank you, Mr. Abbott.
Mr. Vitelli.
Mr. Vitelli. Best Buy, along with all the other retailers,
are going to work very closely with the NTIA and with our
manufacturing partners to ensure that we have converter boxes
available and systems to process the coupons with NTIA.
Additionally, we are going to work with everybody that is
involved with the DTV Transition Coalition to make sure that
the messages to our consumers are clear, understandable and
correct.
Mr. Markey. Thank you.
Mr. Swanson.
Mr. Swanson. A significant consumer awareness and education
effort is necessary to facilitate the digital TV transition. We
believe in the voluntary efforts that are already under way. We
are running PSAs in prime time on the Fox network through
various day parts on our television stations. But we think that
it is much more than that that is necessary, and we are
committed to do that.
On the technical side, we are hopeful that the FCC will get
through these next couple of proceedings so that we can get on
with doing the things technically and on the engineering side
that we need to do to be ready for February 17, 2009.
Mr. Markey. Thank you, Mr. Swanson.
Mr. Uva.
Mr. Uva. In addition to continuing our accelerated pace
with the public service announcements across all of our
television and radio platforms, we will be ramping up our
community outreach programs; and we will also have completed
and hopefully aired a program dedicated--a public affairs
program dedicated to explaining the transition to digital to
Hispanic consumers.
Mr. Markey. Thank you.
Mr. Willner.
Mr. Willner. Just you hear a lot about the laws of
unintended consequences here. Having the largest hearing ever
in the history on digital television also means you feel like
you are sitting in the middle seat on the Delta shuttle and
delayed for 3 hours. Do you remember that?
The cable industry told you 2 years ago we would be ready,
willing and able to provide seamless transition to digital, 2
years ago. We continue to be ready, willing and able as well. I
have stood up voluntarily adding to commitments that we are
going to carry multiple streams of broadcast signals so that
the transition is seamless to our customers. They don't have to
do anything.
And we are going to step up and have already stepped up
with an advertising campaign, along with the broadcasters and
with the retailers, to make sure our customers are fully
informed as to what they need to and not need to do.
Mr. Markey. Thank you, Mr. Willner.
Mr. Barrett.
Mr. Barrett. The voluntary program I have spoken to is
under way. I think it will grow exponentially as stations
activate all of their efforts across all of our platforms. We
are prepared to report on our performance. We are prepared to
track and share with you the growth and awareness that we
create. And I have not properly referenced the effectiveness I
think of the Transition Coalition that is in place which
touches today 171 grassroots organizations that I think will
serve the interest and be responsive to many of the points,
questions about special constituencies that we need to be in
touch with. So I think that program is well under way and
effective, and we look forward to moving ahead with the
voluntary program.
Mr. Markey. Thank you. Mr. Barrett.
Mr. Knorr.
Mr. Knorr. Small cable operators also will be focused on
educating both their customers and other small operators on
what the digital transition will mean.
More importantly, as Mr. Willner pointed out, we want to
make sure this is a seamless transition. Right now, we still
have grave concerns of whether that will be the case for our
very small cable operators unless the FCC really gets it right
and absent of that may require congressional intervention.
Mr. Markey. Mr. Knorr, thank you.
And you, Mr. Bruno.
Mr. Bruno. Thank you, Chairman.
It is important to note that the 910 class A stations in
America, the 1,600 low-power stations and the 4,000 translator
stations are not part of this transition. They will remain
analog. That means that 80 percent of the broadcast stations in
America will, after the transition, still be broadcasting
analog.
Under our proposal in 1999, Congress made class A
stations--everybody had the chance, all low powers had the
chance to be class A. We took class A, and we made great
stations, and those operators took the opportunity to make
local programming and become good broadcasters in their
community. We are set to go in the next 60 and 90 days to
forego our second channel and clog up spectrum and free it up
and become digital broadcasters to move this transition
forward.
I would like to leave you with one quick story, if I may. A
week ago Monday, the fires were in California; and, in fact, in
Congresswoman Bono's district there is a station there. It is
about 100 miles east and south of Los Angeles. You had all the
helicopters and all the news stations covering all the fires in
Malibu and Los Angeles, but no one was covering Murrieta and
Temecula and Escondido.
What happened is, in the morning, the children went to
school in Escondido. Somehow, the wind shifted and blew a line
through houses and started burning houses in a strip through.
Here is where all the parents live. Here is where all the
children are. The line goes through. They close down the
freeway. Parents are frantic. People are running around trying
to get their children. The only TV station paying attention to
that little local community was the class A low power, KZSW.
They were on the air 24 hours telling what was going on.
Now, the problem with that is that it is 71 percent cable.
So 71 percent of the people didn't know that this was going on.
So all of a sudden it became a big problem with first
responders, because you had parents trying to beat these
policemen up on the highway trying to get their kid. If they
could have listened to the local television station, if we
could have told them, they would have known that their children
were safe.
Mr. Markey. Good job, Mr. Bruno. Good story. And we thank
you for your testimony.
When I was a kid, my father delivered milk for the Hood
Milk Company. I didn't know what I wanted to be. And the Perry
Mason show would come on, and Erle Stanley Gardner actually was
from Waltham, MA. So I had a special interest in it because he
was from my hometown. And every time you thought the show was
done and the case was closed and Perry couldn't win, Della
Street would show up to say the show is not over yet, Perry; I
have some new information that can help us before we hit the
hour and we move on to the next show. And that always made it
kind of very interesting because you thought the whole thing
was done.
And we thought this whole hearing was done, but Mr. Engel
has now showed up. And Mr. Engel has all new information that,
by being recognized here for 5 minutes, will make it possible
to put a spotlight and illuminate a key area.
So the Chair recognizes the gentleman from New York, Mr.
Engel.
Mr. Engel. Thank you, Mr. Chairman.
With an introduction like that, I better quit when I am
ahead and say that I will submit my questions. And I want to
thank all the gentleman for their testimony. Unfortunately, I
have been in and out because I have a lot of conflicts. But,
obviously, this is an issue that is very, very important to us
and to America; and I thank you all for your testimony.
And I will submit the questions, Mr. Chairman. You
intimidated me.
Mr. Markey. No, no. I don't mean to do that. In fact, if I
think about it, I don't think we ever heard Della Street speak.
She used to whisper to Perry. So we will submit the questions.
Mr. Engel. As long as you don't make fun of my New York
accent, we are fine.
Mr. Markey. Yes, we hate people with funny accents from
where I come from.
Mr. Engel. The Yankees next year.
Mr. Markey. It is Red Sox domination now. It is a whole new
word we have.
So we very much appreciate all of your help in moving this
forward. We are anticipating a tsunami of congressional
interest in this subject as we hit the beginning of next year.
As Members are asking questions about it, we become digital
transition ombudsmen out on the House floor. And the fewer
questions we get is the happier we are going to be. So to the
extent to which all of you working together can help to ease
this transition, it would be greatly appreciated.
This has been an excellent hearing. It is now adjourned.
Thank you.
[Whereupon, at 1:00 p.m., the subcommittee was adjourned.]
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