WASHINGTON — A billion-dollar program to help consumers prepare for the upcoming switch to digital television has been mismanaged and is running out of money, key lawmakers say, prompting concerns that millions of TV viewers could be left in the dark.
The National Telecommunications and Information Administration, an agency within the Commerce Department, is in charge of a $1.5 billion program to distribute $40 coupons to help consumers pay for the converter boxes they will need to continue watching on analog TVs. The boxes typically cost $50 to $80.
Last year, NTIA awarded IBM a $120 million contract to perform administrative duties for the program, including taking coupon orders and mailing them to consumers. But IBM’s contract does not include enough funds to process and mail the recycled coupons to consumers, according to a letter sent to the NTIA Thursday by Democratic Reps. John Dingell of Michigan, chairman of the House Commerce Committee, and Edward Markey of Massachusetts, chairman of the House Subcommittee on Telecommunications and the Internet.
Finding a fix
The letter asked pointed questions about how the error occurred and how much it will cost to fix.
“The NTIA’s apparent lack of planning is a serious oversight, one that they must correct promptly and without dipping into the funds marked to help consumers,” Markey said.
On Feb. 17, broadcasters will stop airing traditional analog signals as they upgrade to all-digital programming. Consumers who rely on antennas to receive broadcasts will need a converter box for every analog TV. Each household can order two coupons for converter boxes.
The coupons expire after 90 days, when they are supposed to be redistributed to other households.
IBM’s contract specifically calls for the distribution of 33.5 million coupons, according to the contract’s requirements found on NTIA’s website. The contract does not account for the costs associated with recycling unredeemed coupons but does cover administrative expenses.
Contract confusion
Although demand for coupons has been high, redemption rates have been low. About 60 percent of the coupons were not redeemed within 90 days, meaning those funds are to be used for additional coupons. But according to the letter sent to the NTIA, the current contract with IBM does not include administrative funds to process and mail additional coupons.
“The contract with IBM does address recycled coupons,” said Meredith Baker, acting assistant secretary for communications and information at the NTIA, in a statement. “The program has been very successful. … We anticipated coupons would be recycled and prepared for it.” IBM declined to comment.
Nearly 20 million coupons have been requested and about 5.5 million have been redeemed, the NTIA said. Some consumers have said they feel limited by the 90-day expiration for their coupons because it does not give them time to shop around for a converter box, and some models are not yet available in retail stores.
The number of requests for converter box coupons is expected to increase as the transition date draws closer. The coupon program is divided into two phases. Until March 31, 2009, all households may request up to two coupons until the initial $990 million allocated for the program has been exhausted. NTIA may then request an additional $510 million already authorized by Congress. During this period, coupons will be available only to households that rely on analog broadcasting as their sole source of TV programming.
