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Consumers Having Problems with Digital TV Converter Coupons

Consumers Union is calling on the National Telecommunications and Information Administration (NTIA) and Congress to address the problem of the 90-day expiration date on the government-issued coupons that help consumers buy digital converter boxes.

Currently, the $40 government coupons expire 90 days after issue, with no option of replacement or reissue.

It's just the latest of a string of problems and missteps in the decade-long attempt to move television broadcasters to a different frequency band.

A report earlier this month warned that television viewers in New York, Los Angeles, Boston and other major metro areas may find reliable television reception to be a thing of the past when the transition occurs.

NTIA has the authority to allow consumers to reapply if their coupons have expired but not been used, or Congress could extend the 90-day deadline. Both options would allow consumers to have greater access to a wider variety of converter boxes, which have been slow to come on the market.

"There are a limited number of coupons and they expire," said Joel Kelsey, a policy analyst for Consumers Union. "Consumers that were proactive and requested coupons early will have fewer choices when they go to buy the boxes," added Kelsey. "We are expecting more converter boxes on the market in a few months, which might be too late for consumers who requested their coupons early," added Kelsey.

Echostar has said it would be releasing a converter this summer that will be about $40, the cost of the coupon.

On February 17, 2009, television broadcasters will end "analog" broadcasts and only send television signals in a "digital" format. The DTV transition will affect millions of consumers who use analog television sets to view free over-the-air programming.

The analog televisions will either need to be connected to a digital converter box, attached to cable or satellite service, or replaced with a digital television in order to function. The government has created a coupon program to offset the cost of purchasing digital converters, $40 a coupon, two per household.

While the conversion is less is than a year away, a quick survey found many retailers have only one or two models of the converter boxes in stock, forcing consumers to choose from pricier converter options to prevent the coupons from expiring.

A brief sample of online retailers Best Buy, Circuit City, Radio Shack, and Wal-Mart found that each had just one or two boxes. Of the boxes listed, all but two cost $60; only Wal-mart had lower-priced models, for $50 and $53.

With these four retailers, the coupons cannot be used if making the purchase online. The government coupons must be redeemed in person at the retail store, or by phone from Radio Shack and Best Buy.

"We are asking Congress to extend the deadline on the coupons so consumers that took the initiative to request coupons early this year won’t be penalized for acting quickly," added Kelsey.

Reliable reception?
Meanwhile, a report earlier this month warned that milliosn of television viewers may find reliable television reception to be a thing of the past when the transition occurs.

The report warns that when analog television channels are shut down on February 17, 2009, more than 9 million of the 17 million homes that still rely on over-the-air broadcast signals will encounter spotty service and few channels to select from.

The report, conducted by market research firm Centris, surveyed homes that receive only over-the-air signals and are not subscribed to any cable or satellite service. Of those homes, 54 percent were located in "challenging reception areas," defined as having small rooftop or indoor "rabbit ear" television antennae. Distance transmission towers and local terrain were also factored in.

Centris claimed that 24 percent of consumers in those areas who have insufficient antennae will receive few or no channels, even if they purchase a digital signal set-top converter box, thus requiring them to buy more advanced antennae as well.

"We have completed an analysis of the entire country to identify where in each market the receptivity gaps exist and now have exact figures for the number of at-risk households down to individual census block groups," said Centris' executive vice-president David Klein.

"The statistics suggest that digital TV signal coverage will be significantly more limited than currently anticipated and further reinforce the need for industry and consumer education on this issue."

Centris also identified what it called the most "at-risk markets" for problems with the digital television transition, with New York and Boston topping the list.

Rounding out the top ten were Philadelphia, Los Angeles, Washington, DC, Seattle-Tacoma, the San Francisco Bay Area, Minneapolis-St.Paul, Atlanta, and Cleveland-Akron, Ohio.

The Centris study comes two months after a study conducted by Consumers' Union that found that as many as 23 million households, or 11 percent of the country's population, may have limited service or lose service together after the switchover.

That study found that Western and Midwest states would be the hardest hit by the transition, and that elderly, low-income, and Latino households would be the largest population segments affected.

Covering the bases
The two government agencies most directly in charge of the transition, the Federal Communications Commission (FCC) and the National Telecommunications and Information Administration (NTIA), have been scrambling to educate the public in the wake of findings that Americans are still underinformed about the transition and what they have to do in order to receive television service.

The FCC has also begun levying punishments on electronics retailers that have been taking advantage of the confusion to sell consumers televisions and equipment that do not actually provide digital service.

On April 10, the FCC published enforcement orders against numerous big-box retailers such as Best Buy, Circuit City, Sears, and Wal-Mart, for selling televisions that were not clearly labeled as requiring a set-top converter box to receive digital signals, with orders to forfeit profits of up to $6 million.

"Based on the evidence before us, we find that Circuit City apparently willfully and repeatedly violated [government regulations by] failing to display conspicuously and in close proximity to equipment with an analog-only tuner, in clear and conspicuous print, the required Consumer Alert label," said the Circuit City citation. The forfeiture notice will cost the retailer $712,000.

Both agencies have also been heavily publicizing the government's voucher program that enables consumers to download or order free $40 coupons to go towards the cost of purchasing a new set-top converter box. Commerce Secretary Carlos Guiterrez, whose agency oversees the NTIA, recently announced that 10 million coupons had been requested by consumers to purchase converter boxes.

Missed information
But members of Congress and many consumer rights groups continue to express concern that the FCC and NTIA are not adequately educating consumers about critical aspects of the digital television transition, such as the fact that the converter box coupons will expire three months after they are issued, with no option to replace them or issue more.

At a Senate Commerce Committee hearing held on April 8 to discuss the transition, FCC chair Kevin Martin and acting NTIA head Meredith Baker were grilled on their plans to educate consumers and push for more dissemination of information relating to the transfer.

Committee chairman Daniel Inouye (D-HI) said that "too many Americans remain in the dark about what the digital television transition (DTV) means."

"I have deep reservations about the FCC spending its limited time and resources in media areas unrelated to the transition," Inouye said. "Meanwhile, the NTIA is challenged by the Administration's push for a third leadership change at the agency within the past year. I urge both agencies to keep an eye on what is most pressing, and to proceed cautiously when you choose to spend time on what is not."

Vice-chairman Ted Stevens (R-AK) echoed Inouye's concerns, saying that the FCC was wasting too much time on preferred issues of Martin's such as "a la carte" cable packages.

"The digital transition must be the FCC's number one priority this year. No other issue before the FCC has the same critical countdown as this transition," Stevens said. "It is crucial that government officials, industry, and consumer advocacy groups increase their outreach efforts to senior citizens and rural Americans."

Inouye requested that both agencies begin making monthly reports to the Commerce Committee in order to assess the status of the transition and ongoing related issues.

What to do
The following sites have more information about the analog-to-digital transition:

• Our Dawn Carlson provides a thorough overview of what you need to know.

• Visit the FCC's official DTV site to get more information.

• Apply for a converter box coupon at the NTIA's converter program Web site.