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Report to Congressional Requesters: 

United States Government Accountability Office: 

GAO: 

September 2008: 

Digital Television Transition: 

Implementation of the Converter Box Subsidy Program Is Under Way, but 
Preparedness to Manage an Increase in Subsidy Demand Is Unclear: 

GAO-08-1040: 

GAO Highlights: 

Highlights of GAO-08-1040, a report to congressional requesters. 

Why GAO Did This Study: 

The Digital Television Transition and Public Safety Act of 2005 
requires all full-power television stations in the United States to 
cease analog broadcasting after February 17, 2009, known as the digital 
television (DTV) transition. The National Telecommunications and 
Information Administration (NTIA) is responsible for implementing a 
subsidy program to provide households with up to two $40 coupons toward 
the purchase of converter boxes. In this requested report, GAO examines 
(1) what consumer education efforts have been undertaken by private and 
federal stakeholders and (2) how effective NTIA has been in 
implementing the converter box subsidy program, and to what extent 
consumers are participating in the program. To address these issues, 
GAO analyzed data from NTIA and reviewed legal, agency, and industry 
documents. Also, GAO interviewed a variety of stakeholders involved 
with the DTV transition. 

What GAO Found: 

Private sector and federal stakeholders have undertaken various 
consumer education efforts to raise awareness about the DTV transition. 
For example, the National Association of Broadcasters and the National 
Cable and Telecommunications Association have committed over $1.4 
billion to educate consumers about the transition. This funding has 
supported the development of public service announcements, education 
programs for broadcast, Web sites, and other activities. The Federal 
Communications Commission (FCC) and NTIA have consumer education plans 
that target those populations most likely to be affected by the DTV 
transition. Specifically, they identified 45 areas of the country as 
high risk that included areas with at least 1 of the following 
population groups: (1) more than 150,000 over-the-air households, (2) 
more than 20 percent of all households relying on over-the-air 
broadcasts, or (3) a top 10 city of residence for the largest target 
demographic groups. The target demographic groups include seniors, low-
income, minority and non-English speaking, rural households, and 
persons with disabilities. In addition to targeting these 45 areas of 
the country, FCC and NTIA developed partnerships with organizations 
that serve these hard-to-reach populations. 

NTIA is effectively implementing the converter box subsidy program, but 
its plans to address the likely increase in coupon demand as the 
transition nears remain unclear. Almost 19 million coupons have been 
issued by NTIA, but as of June 2008, only 9 percent of U.S. households 
had requested coupons. As found in GAO’s recent consumer survey, up to 
35 percent of U.S. households could be affected by the transition 
because they have at least one television not connected to a 
subscription service, such as cable or satellite. With a spike in 
demand likely as the transition date nears, NTIA has no specific plans 
to address an increase in demand; therefore, consumers might incur 
significant wait time before they receive coupons as the transition 
nears and might lose television service during the time they are 
waiting for the coupons. In terms of participation in the converter box 
subsidy program, GAO analyzed coupon data in areas of the country 
comprising predominantly minority and senior populations and found that 
households in both predominantly black and Hispanic or Latino areas 
were much less likely to redeem their coupons compared with households 
outside these areas. Additionally, GAO analyzed participation in the 
subsidy program in the 45 areas of the country on which NTIA and FCC 
focused their consumer education efforts and found coupon requests to 
be about the same for zip codes within the 45 targeted areas compared 
with areas that were not targeted. Retailers play an integral role in 
the subsidy program by selling the converter boxes and helping to 
inform their customers about the DTV transition and the program. GAO 
visited 132 randomly selected retail stores in 12 cities. Store 
representatives at a majority of the retail locations GAO visited were 
able to correctly state that the DTV transition would occur in February 
2009 and explain how to apply for a converter box coupon. 

What GAO Recommends: 

GAO recommends that the Secretary of Commerce direct NTIA to develop a 
plan to manage coupon requests in the lead up to the transition. GAO 
provided the Department of Commerce and FCC with a draft of this 
report. While Commerce did not state whether it agreed or disagreed 
with GAO’s recommendation, it stated its concern about an increase in 
coupon demand as the transition nears. FCC noted consumer outreach 
efforts that it has taken related to the DTV transition. 

To view the full product, including the scope and methodology, click on 
GAO-08-1040. For more information, contact Mark Goldstein at (202) 512-
2834 or goldsteinm@gao.gov. 

[End of section] 

Contents: 

Letter: 

Results in Brief: 

Background: 

Private and Federal Stakeholders Have Undertaken a Myriad of Activities 
Aimed at Increasing the Public's Awareness of the DTV Transition: 

NTIA Is Effectively Implementing the Converter Box Subsidy Program, but 
Concerns Exist about NTIA's Ability to Manage a Potential Spike in 
Coupon Demand: 

Conclusions: 

Recommendation for Executive Action: 

Agency Comments: 

Appendix I: Objectives, Scope, and Methodology: 

Appendix II: Comparison of Federal Consumer Education Plans to Key 
Practices for Consumer Education Planning: 

Appendix III: Federal Communications Commission DTV Consumer Education 
Order: 

Appendix IV: Comments from the Department of Commerce: 

Appendix V: Comments from the Federal Communications Commission: 

Appendix VI: GAO Contact and Staff Acknowledgments: 

Related GAO Products: 

Tables: 

Table 1: Examples of FCC and NTIA Consumer Outreach Efforts to Targeted 
Populations: 

Table 2: Request, Redemption, and Expiration Rates of Converter Box 
Coupons through June 2008: 

Table 3: Retailer Representatives Able to Explain Certain Aspects of 
NTIA's Converter Box Subsidy Program: 

Table 4: Key Practices Comparison to FCC and NTIA Consumer Education 
Plans: 

Table 5: FCC DTV Consumer Education Order Requirements, by Industry 
Sector: 

Figures: 

Figure 1: Cumulative Converter Box Coupon Requests, Issuances, 
Redemptions, and Expirations through June 2008: 

Figure 2: Average Coupon Processing Time from Request Date, through 
June 2008: 

Figure 3: Converter Box Coupons Requested, in Process, and Issued 
through June 2008: 

Abbreviations: 

CEA: Consumer Electronics Association: 

DTV: digital television: 

FCC: Federal Communications Commission: 

IBM: International Business Machines Corporation: 

NAB: National Association of Broadcasters: 

NTIA: National Telecommunications and Information Administration: 

PSA: public service announcement: 

[End of section] 

United States Government Accountability Office: 
Washington, DC 20548: 

September 16, 2008: 

Congressional Requesters: 

Federal law requires all full-power television stations in the United 
States to cease analog broadcasting and to broadcast digital-only 
transmissions after February 17, 2009. This process is often referred 
to as the digital television (DTV) transition. Currently, most 
television broadcasters transmit over-the-air signals in both an analog 
and a digital format to U.S. households. After the transition, 
consumers who rely exclusively on over-the-air television signals 
viewed on analog sets will not be able to view broadcast programming, 
which could include important news information or emergency alerts, 
unless they take action. Specifically, these consumers could (1) 
purchase a television capable of processing digital signals; (2) 
purchase a digital-to-analog converter box that converts the digital 
signals to analog signals and enables their display on an analog set; 
or (3) subscribe to cable, satellite, or other service. 

The federal government and the private sector have taken several steps 
to prepare for the DTV transition. The National Telecommunications and 
Information Administration (NTIA), which is a bureau within the 
Department of Commerce, created and implemented a digital-to-analog 
converter box subsidy program to provide households with up to two $40 
coupons toward the purchase of converter boxes that allow consumers to 
continue viewing over-the-air signals on analog television 
sets.[Footnote 1] Additionally, the government, the television 
broadcast industry, cable and satellite providers, and other carriers 
of the broadcast signal have established several educational efforts 
informing consumers about the DTV transition and the subsidy program. 
However, the success of the DTV transition and the subsidy program 
requires consumers' understanding about the transition and the steps 
needed to continue receiving a television signal. In addition, 
consumers will rely on retailers to provide information, as well as to 
supply eligible converter boxes. 

You asked us to provide information on the progress of the DTV 
transition. As part of our ongoing review of issues related to the 
transition, we determined (1) what consumer education efforts have been 
undertaken by private and federal stakeholders and (2) how effective 
NTIA has been in implementing the converter box subsidy program, and to 
what extent consumers are participating in the program. 

To meet these objectives, we interviewed agency officials from the 
Federal Communications Commission (FCC) and NTIA and reviewed their 
consumer education documents, orders, rules, and proposed rules. We 
also interviewed private sector stakeholders representing the 
broadcasting, retailer, manufacturing, and cable industries and 
reviewed publicly available information on their consumer education 
planning. Furthermore, we discussed the effectiveness of consumer 
education efforts with various advocacy groups identified as NTIA 
partners that represent hard-to-reach populations. We also analyzed 
date-specific data from NTIA on coupon applications, requests, 
issuance, redemptions, and expirations and examined NTIA timeliness in 
issuing coupons from the beginning of the converter box subsidy program 
in January 2008 through June 2008. We conducted data reliability 
testing and determined that the data used in this report were 
sufficiently reliable for our purposes. We also conducted a "mystery 
shopper" study--that is, we discussed the transition with randomly 
selected retailers without identifying ourselves as government 
employees--to determine retailer preparedness for the converter box 
subsidy program, including the level of retailer knowledge about the 
program and the availability of converter boxes. In conducting the 
mystery shopper study, we visited 132 store locations in 12 cities from 
April to early May 2008. Appendix I contains a detailed discussion of 
our objectives, scope, and methodology. 

We performed our review from February 2008 to September 2008 in 
accordance with generally accepted government auditing standards. Those 
standards require that we plan and perform the audit to obtain 
sufficient, appropriate evidence to provide a reasonable basis for our 
findings and conclusions based on our review objectives. We believe 
that the evidence obtained provides a reasonable basis for our findings 
and conclusions based on our audit objectives. 

Results in Brief: 

Private sector and federal stakeholders have undertaken various 
consumer education efforts to raise awareness about the DTV transition. 
For example, the National Association of Broadcasters (NAB) and the 
National Cable and Telecommunications Association have committed over 
$1.4 billion to educate consumers about the transition. This funding 
has supported the development of public service announcements, 
education programs for broadcast, Web sites, and other activities. NAB 
has developed 15-second and 30-second public service announcements in 
both English and Spanish and closed-captioned versions. In addition, 
the Consumer Electronics Association and most national retailers 
participating in the converter box subsidy program have developed 
consumer education campaigns to raise awareness of the DTV transition 
and the subsidy program. For example, some national retailers have 
developed informational videos for their in-store displays, and some 
are developing partnerships with broadcasters and other groups. Federal 
stakeholders (FCC and NTIA) have developed consumer education plans 
that generally follow key practices for consumer education planning and 
target those populations most likely to be affected by the DTV 
transition. Specifically, these agencies identified 45 areas of the 
country as high risk, that is, those areas with at least 1 of the 
following population groups: (1) more than 150,000 over-the-air 
households, (2) more than 20 percent of all households relying on over- 
the-air broadcasts, or (3) a top 10 city of residence for the largest 
target demographic groups. The target demographic groups include 
seniors, low-income, minority and non-English speaking, rural 
households, and persons with disabilities. FCC and NTIA have developed 
partnerships with organizations that serve these hard-to-reach 
populations. For example, FCC has participated in events with the 
National Social Worker Association, and NTIA has worked with a 
coalition of aging organizations. 

NTIA is effectively implementing the converter box subsidy program, but 
its plans to address the likely increase in coupon demand as the 
transition nears remain unclear. As of June 2008, NTIA has issued 
approximately 17 million coupons, but as of that date only 9 percent of 
U.S. households had requested coupons. As found in our recent consumer 
survey, up to 35 percent of U.S. households could be affected by the 
transition because they have at least one television not connected to a 
subscription service, such as cable or satellite.[Footnote 2] In U.S. 
households relying solely on over-the-air broadcasts (approximately 15 
percent), of those who intend to purchase a converter box, 100 percent 
of survey respondents said they were likely to request a coupon. 
Therefore, a spike in demand for converter box coupons is likely as the 
transition date nears. According to NTIA, a similar increase in 
requests around the transition date may cause a delay in issuing 
coupons. However, we found that NTIA has no specific plans to address 
an increase in demand, and that it has encountered challenges in 
issuing coupons within its requirement of 10 to 15 days from the date 
the coupon applications were approved. Given the challenges to meeting 
this requirement and NTIA's lack of a clear plan to address a potential 
spike in demand, consumers might incur significant wait time before 
they receive their coupons and might lose television service during the 
time they are waiting for the coupons. Regarding participation in the 
converter box subsidy program, we analyzed coupon data in areas of the 
country comprising predominantly minority and senior populations and 
found that participation varies. For example, we found that zip codes 
with a high concentration of Latino or Hispanic households had 
noticeably higher request rates (20 percent) compared with areas to 
predominantly non-Latino or non-Hispanic households (8 percent). 
However, households in both predominantly black and Hispanic or Latino 
areas were much less likely, compared with households outside these 
areas, to redeem their coupons once they received them. Additionally, 
we analyzed participation in the converter box subsidy program in the 
45 areas of the country on which NTIA and FCC focused their consumer 
education efforts to determine participation of the target populations. 
We found coupon requests were about the same (9 percent) for zip codes 
in the 45 targeted areas compared with areas of the country that were 
not targeted. Retailers play an integral role in the subsidy program by 
selling the converter boxes and helping to inform their customers about 
the DTV transition and the subsidy program. Store representatives at 
most (118 of the 132) retailers we visited were able to correctly state 
that the DTV transition would occur in February 2009. Additionally, 
nearly all retailers (126) identified a coupon-eligible converter box 
as an option available to consumers so that they may continue watching 
television after the transition. 

To help NTIA prepare for a potential increase in demand for converter 
box coupons and so that consumers are not left waiting a lengthy amount 
of time for requested coupons, we recommend that the Secretary of 
Commerce direct the Administrator of the NTIA to develop a plan to 
manage volatility in coupon requests to ensure that coupons are 
processed and mailed within 10 to 15 days from the day the coupon 
applications are approved, per NTIA's stated requirement. 

We provided a draft of this report to the Department of Commerce (which 
contains NTIA) and FCC for their review and comment. In response, 
Commerce did not state whether it agreed or disagreed with our 
recommendation, but the department did say that it shares our concern 
about an increase in coupon demand as the transition nears. 
Furthermore, Commerce's letter stated it is committed to doing all that 
it can within its statutory authority and existing resources to ensure 
that all Americans are ready for the DTV transition. In its letter, FCC 
noted consumer outreach efforts it has taken related to the DTV 
transition. See appendixes IV and V for written comments from Commerce 
and FCC, respectively. 

Background: 

The DTV transition will require citizens to understand the transition 
and the actions that some might have to take to maintain television 
service. For those households with subscription video service on all 
televisions or with all televisions capable of processing a digital 
signal, no action is required. However, households with analog 
televisions that rely solely on over-the-air television signals 
received through rooftop or indoor antennas must take action to be able 
to view digital broadcast signals after analog broadcasting ceases. The 
Digital Television Transition and Public Safety Act of 2005 addresses 
the responsibilities of two federal agencies--FCC and NTIA--related to 
the DTV transition. The act directs FCC to require full-power 
television stations to cease analog broadcasting by February 17, 2009. 
The act also directed NTIA to establish a $1.5 billion subsidy program 
through which households can obtain coupons toward the purchase of 
digital-to-analog converter boxes. In August 2007, NTIA selected the 
International Business Machines Corporation (IBM) as the contractor to 
provide certain services for the program. On January 1, 2008, NTIA, in 
conjunction with IBM and in accordance with the act, began accepting 
applications for up to two $40 coupons per household[Footnote 3] that 
can be applied toward the purchase of eligible[Footnote 4] digital-to- 
analog converter boxes and, in mid-February 2008, began mailing the 
coupons. Initially, during the first phase of the program, any 
household is eligible to request and receive the coupons, but once $890 
million worth of coupons has been redeemed, and issued but not expired, 
NTIA must certify to Congress that the program's initial allocation of 
funds is insufficient to fulfill coupon requests. NTIA will then 
receive $510 million in additional program funds, but households 
requesting coupons during this second phase must certify that they do 
not receive cable, satellite, or any other pay television 
service.[Footnote 5] As of June 24, 2008, in response to NTIA's 
statement certifying that the initial allocation of funds would be 
insufficient, all appropriated coupon funds were made available to the 
program. Consumers can request coupons up to March 31, 2009, and 
coupons can be redeemed through July 9, 2009. As required by law, all 
coupons expire 90 days after issuance. As unredeemed coupons expire, 
the funds obligated for those coupons will be returned to the subsidy 
program. 

Retailer participation in the converter box subsidy program is 
voluntary; however, participating retailers are required to follow 
specific program rules to ensure the proper use and processing of 
converter box coupons. Retailers are obligated to, among other things, 
establish systems capable of electronically processing coupons for 
redemption and payment and tracking transactions. Retailers must also 
train their employees on the purpose and operation of the subsidy 
program. According to NTIA officials, NTIA initially explored the idea 
of setting requirements for training content, but decided to allow 
retailers the flexibility of developing their own training programs and 
provided retailers with sample training materials. Certification 
requires retailers to have completed an application form by March 31, 
2008, and to attest that they have been engaged in the consumer 
electronics retail business for at least 1 year. Retailers must also 
register in the government's Central Contractor Registration 
database,[Footnote 6] have systems or procedures that can be easily 
audited and that can provide adequate data to minimize fraud and abuse, 
agree to be audited at any time, and provide data tracking each coupon 
with a corresponding converter box purchase. NTIA may revoke retailers' 
certification if they fail to comply with these regulations or if any 
of their actions are deemed inconsistent with the subsidy program. 
Converter boxes can also be purchased by telephone or online and be 
shipped directly to a customer's home from participating retailers. At 
the time of our review, 29 online retailers were participating in the 
converter box subsidy program. As of July 23, 2008, there were three 
instances of retailers previously listed as participating in the 
program that were no longer identified as participating online 
retailers. Additionally, 13 telephone retailers were listed as 
participating in the program, 2 of which are associated with national 
retailers. 

Private and Federal Stakeholders Have Undertaken a Myriad of Activities 
Aimed at Increasing the Public's Awareness of the DTV Transition: 

Private sector stakeholders from the broadcast, cable, retail, and 
consumer electronics industries have committed over $1 billion to 
voluntary and required consumer education efforts to inform the public 
of the DTV transition. Also, FCC and NTIA have ongoing consumer 
education efforts targeting households that rely on over-the-air 
broadcasts and targeting hard-to-reach populations, such as minority 
and non-English speakers, seniors, and rural households. The government 
consumer education plans generally follow key practices for consumer 
education planning. 

Private Stakeholders Have Established Education Efforts to Inform the 
Public about the DTV Transition: 

Private sector stakeholders, such as broadcasters, cable providers, and 
the Consumer Electronics Association, have undertaken various education 
efforts to increase public awareness about the DTV transition.[Footnote 
7] NAB and the National Cable and Telecommunications Association 
initiated DTV transition consumer education campaigns in late 2007 at 
an estimated value of $1.4 billion combined. NAB has produced six 
versions of a public service announcement, including 15-second and 30- 
second versions in both English and Spanish and close-captioned 
versions. Private sector stakeholders have also produced DTV transition 
educational programs for broadcast and distribution, developed Web 
sites that provide information on the transition, and engaged in 
various other forms of outreach to raise awareness. Examples of 
outreach by some private stakeholders include attending and 
distributing information at industry events and conferences, such as 
speakers' bureaus and road shows, and initiating an educational contest 
to find the oldest working television that receives over-the-air 
broadcasts. Additionally, most of the national retailers participating 
in the NTIA converter box subsidy program are providing materials to 
help inform their customers of the DTV transition and the subsidy 
program. Examples of these materials include informational brochures in 
English and Spanish, educational videos and in-store displays in 
English and Spanish, informational content on retailer Web sites, and 
information provided in retailer advertising in Sunday circulars. Some 
of the national retailers with whom we spoke are also engaging in 
partnerships with other organizations. For example, one national 
retailer is partnering with local broadcasters to run DTV television 
spots and with print media outlets and magazines to help inform the 
public about the transition. The private sector has also conducted 
surveys to gauge consumer awareness. For example, NAB, the Consumer 
Electronics Association, Consumers Union, and Best Buy Company, Inc., 
have all surveyed consumers nationwide regarding their level of 
understanding and awareness of the DTV transition. 

Federal Government Education Efforts Target Hard-to-Reach Populations, 
and Plans Generally Follow Key Practices for Consumer Outreach: 

FCC and NTIA also have ongoing DTV consumer education efforts, which 
target populations most likely to be affected by the DTV transition. 
Specifically, they focused their efforts on 45 areas of the country 
that have at least 1 of the following population groups: (1) more than 
150,000 over-the-air households, (2) more than 20 percent of all 
households relying on over-the-air broadcasts, or (3) a top 10 city of 
residence for the largest target demographic groups. The target 
demographic groups include seniors, low-income, minority and non- 
English speaking, rural households, and persons with disabilities. 
According to NTIA, its consumer education efforts will specifically 
target these 45 areas by leveraging partnerships and earned media spots 
(such as news stories or opinion editorials) to better reach the 
targeted populations. FCC indicated that while its outreach efforts 
focus on the targeted hard-to-reach populations, the only effort 
specifically targeting the 45 locations has been to place billboards in 
these communities. According to FCC, contracts exist for billboards in 
26 of the 45 markets, and it is working to place billboards in the 
other 19 markets. Furthermore, FCC and NTIA have developed partnerships 
with some federal, state, and local organizations that serve the 
targeted hard-to-reach populations. FCC and NTIA believe the partners 
can serve as trusted voices to inform the targeted populations about 
the DTV transition. As shown in table 1, there have been outreach 
efforts to all targeted populations. A few of the partners we contacted 
indicated that while they agreed to help inform the populations they 
serve, they had very little funding to support widespread dissemination 
of this information, and that they would like monetary support from the 
government to do so. We also found one instance of an organization 
listed as a partner by NTIA that had not agreed to disseminate DTV 
information because it could only focus on its primary mission. 

Table 1: Examples of FCC and NTIA Consumer Outreach Efforts to Targeted 
Populations: 

Targeted population: Seniors; 
Consumer outreach effort: NTIA conducted a train-the-trainer "Webinar," 
reaching approximately 200 individuals who are now conducting outreach 
to seniors. 

Targeted population: Low-income; 
Consumer outreach effort: FCC placed exhibits at four state/territory 
chapter meetings of the National Social Worker Association. 

Targeted population: Minority and non-English speaking; 
Consumer outreach effort: NTIA participated in an Asian Pacific 
American Heritage Month event in San Francisco, along with 
approximately 100 community leaders. 

Targeted population: Rural households; 
Consumer outreach effort: FCC and NTIA, in conjunction with the U.S. 
Department of Agriculture, participated in a National 4H Youth 
Conference and conducted a train-the-trainer session for approximately 
100 youth members. 

Targeted population: Persons with disabilities; 
Consumer outreach effort: FCC attended several conferences, including 
the National Black Deaf Advocates Conference, to distribute DTV 
materials. 

Sources: FCC and NTIA. 

[End of table] 

We previously reported on nine key practices for consumer education 
planning: defining goals and objectives, analyzing the situation, 
identifying stakeholders, identifying resources, researching target 
audiences, developing consistent and clear messages, identifying 
credible messenger(s), designing the media mix, and establishing 
metrics to measure success.[Footnote 8] We analyzed FCC's and NTIA's 
consumer education plans and found that they reflect almost all of the 
key practices that we previously identified for overcoming potential 
challenges in such planning. For example, NTIA has defined four primary 
objectives, including (1) increasing awareness of the converter box 
subsidy program, (2) generating requests for coupons, (3) engaging 
partners to disseminate information about the subsidy program, and (4) 
providing media information and tools needed to report on the program. 
FCC has made consumer outreach one of its primary goals for the DTV 
transition and has set goals for distributing publications; 
participating in events and conferences; and coordinating with federal, 
state, and local entities. Furthermore, NTIA and FCC conducted audience 
research on targeted populations and identified geographic areas most 
likely to be affected. The NTIA contractor for the subsidy program 
completed a study of both general consumers and those who fall into the 
target audiences to help develop the message and materials for the 
program. This process included developing, testing, and refining the 
message, with the goal of exploring the target audiences' reactions to 
the message. For additional information on the key practices and the 
FCC and NTIA consumer education plans, see appendix II. 

NTIA Is Effectively Implementing the Converter Box Subsidy Program, but 
Concerns Exist about NTIA's Ability to Manage a Potential Spike in 
Coupon Demand: 

NTIA has processed and issued coupons to millions of consumers, but a 
sharp increase in demand might affect NTIA's ability to respond to 
coupon requests in a timely manner. With relatively low participation 
rates to date, a spike in demand leading up to the transition is likely 
and, given the processing time required in issuing coupons, NTIA's 
preparedness to handle volatility in coupon demand is uncertain. Coupon 
requests and redemptions by the targeted hard-to-reach populations have 
varied compared with participation in the rest of the country, with 
some populations having higher request rates but redeeming the coupons 
at a lower rate. Retailers play a crucial role in the converter box 
subsidy program, and the national retailers we contacted have taken 
steps to inform their consumers and train their employees about the 
subsidy program. 

NTIA Has Implemented Systems to Process Requests and Issue Coupons, but 
NTIA's Ability to Respond to Volatile Coupon Demand Is Uncertain: 

NTIA and its contractors have implemented comprehensive systems to 
administer the converter box subsidy program. The contractors working 
with NTIA--IBM and its subcontractors--have implemented systems (1) to 
process coupon applications, (2) to produce and distribute coupons to 
consumers, and (3) for retailers to process coupons and receive 
reimbursement for the coupons from the government. Millions of 
consumers have requested converter box coupons, and most of the 
requested coupons have been issued. Through June 2008, households had 
requested almost 19 million coupons. NTIA had issued over 92 percent of 
all coupon requests, for more than 17 million coupons. Of those coupons 
issued, about 4.9 million (28 percent) had been redeemed and 13 percent 
had expired.[Footnote 9] At the time of our review, consumers were not 
eligible to reapply for coupons that expired before they were used. 
Rather, funds obligated for expired coupons were to be returned to the 
subsidy program. According to NTIA, it had anticipated and budgeted for 
the distribution of additional coupons as funds from expired coupons 
are returned to the program, and it is working closely with its 
contractor to ensure that as many coupons as possible can be 
distributed. 

After an initial spike at the beginning of the program, coupon requests 
have remained steady and have averaged over 103,000 requests per day. 
Coupon redemptions, since coupons were first issued in February 2008, 
have averaged over 36,000 per day. Figure 1 illustrates the cumulative 
requests, issuances, redemptions, and expirations of coupons, from the 
inception of the subsidy program (January 2008) through June 2008. 

Figure 1: Cumulative Converter Box Coupon Requests, Issuances, 
Redemptions, and Expirations through June 2008: 

This figure is a combination line graph showing cumulative converter 
box coupon requests, issuances, redemptions, and expirations through 
June 2008. The lines represent coupons requested, coupons issued, 
coupons redeemed, and coupons expired. The horizontal axis represent 
the day, and the vertical axis represent the number of coupons (in 
millions). 

Date: January 1; 
Coupons issued: 0; 
Coupons redeemed: 0; 
Coupons expired: 0; 
Coupons requested: 475,650. 

Date: January 15; 
Coupons issued: 0; 
Coupons redeemed: 0; 
Coupons expired: 0; 
Coupons requested: 3,237,393. 

Date: February 1; 
Coupons issued: 195; 
Coupons redeemed: 21; 
Coupons expired: 0; 
Coupons requested: 4,245,526. 

Date: February 15; 
Coupons issued: 195; 
Coupons redeemed: 86; 
Coupons expired: 0; 
Coupons requested: 5,072,728. 

Date: March 1; 
Coupons issued: 840,161; 
Coupons redeemed: 3,422; 
Coupons expired: 0; 
Coupons requested: 6,727,877. 

Date: March 15; 
Coupons issued: 1,800,150; 
Coupons redeemed: 79,082.
Coupons expired: 0; 
Coupons requested: 7,829,585. 

Date: April 1; 
Coupons issued: 4,159,990; 
Coupons redeemed: 228,652; 
Coupons expired: 0; 
Coupons requested: 9,389,862. 

Date: April 15; 
Coupons issued: 6,334,451; 
Coupons redeemed: 526,261; 
Coupons expired: 0; 
Coupons requested: 10,941,155. 

Date: May 1; 
Coupons issued: 9,697,960; 
Coupons redeemed: 990,775; 
Coupons expired: 81; 
Coupons requested: 12,657,192. 

Date: May 15; 
Coupons issued: 13,088,003
Coupons redeemed: 1,634,960
Coupons expired: 81; 
Coupons requested: 14,092,028. 

Date: June 1; 
Coupons issued: 14,511,303; 
Coupons redeemed: 267,699
Coupons expired: 489,598
Coupons requested: 15,812,977. 

Date: June 15; 
Coupons issued: 16,011,203; 
Coupons redeemed: 3,713,920; 
Coupons expired: 1,084,520; 
Coupons requested: 17,215,806. 

Date: June 30; 
Coupons issued: 17,473,806; 
Coupons redeemed: 4,890,000; 
Coupons expired: 2,243,760; 
Coupons requested: 18,876,626. 

[See PDF for image] 

Source: GAO analysis of NTIA data. 

[End of figure] 

In our recent consumer survey, we found that 35 percent of U.S. 
households are at risk of losing some television service because they 
have at least one television not connected to a subscription service, 
such as cable or satellite. However, through June 2008, only 9 percent 
of U.S. households had requested converter box coupons, and less than 3 
percent had redeemed these coupons. As the transition date nears, there 
is the potential that many affected households that have not taken 
action might begin requesting coupons. Our consumer survey found that 
of those at risk of losing some television service and intending to 
purchase a converter box, most will likely request a coupon. In fact, 
in households relying solely on over-the-air broadcasts (approximately 
15 percent), of those who intend to purchase a converter box, 100 
percent of survey respondents said they were likely to request a 
coupon. 

Consumers have incurred significant wait times in the processing of 
their coupon requests, but NTIA's processing time from receiving 
requests to issuing coupons is improving, as shown in figure 2. NTIA 
requires that 98 percent of all coupon requests be issued within 10 
days, and the remainder be issued within 15 days from the date the 
coupon applications are approved. From February 17 through June 30, 
2008, our analysis shows that the average duration between coupon 
request and issuance is over 19 days.[Footnote 10] In aggregate, 36 
percent of all coupon requests have been issued within 10 days, and 54 
percent of all coupon requests have been issued more than 15 days after 
being requested. From May 1 through June 30, 2008, the average 
processing time from coupon request to issuance was 9 days. 

Figure 2: Average Coupon Processing Time from Request Date, through 
June 2008: 

[See PDF for image] 

NTIA requires that 98 percent of all coupon requests be issued within 
10 days of application approval. 

Day: January 1; 
Processing time (number of days): 5.71. 

Day: January 15; 
Processing time (number of days): 28.35. 

Day: February 1; 
Processing time (number of days): 33. 

Day: February 15; 
Processing time (number of days): 37. 

Day: February 18; [Coupon requests submitted on February 18 had an 
average processing time of 38 days] 
Processing time (number of days): 38.2. 

Day: March 1; 
Processing time (number of days): 34. 

Day: March 15; 
Processing time (number of days): 28. 

Day: April 1; 
Processing time (number of days): 22. 

Day: April 15; 
Processing time (number of days): 15. 

Day: May 1; 
Processing time (number of days): 6.89. 

Day: May 15; 
Processing time (number of days): 9.95. 

Day: June 1; 
Processing time (number of days): 9. 

Day: June 15; 
Processing time (number of days): 9. 

Source: GAO analysis of NTIA data. 

[End of figure] 

Throughout the course of the subsidy program, NTIA has increased its 
capacity to issue coupons, at times issuing as many as 500,000 coupons 
per day. However, the number of coupons issued per day varies greatly 
and, as shown in figure 3, has declined since peaking in early May 
2008. 

Figure 3: Converter Box Coupons Requested, in Process, and Issued 
through June 2008: 

[See PDF for image] 

Weekday (Mondays): February 25; 
Coupons requested: 765,252; 
Coupons in process: 5,919,303; 
Coupons issued: 359,974. 

Weekday (Mondays): March 03; 
Coupons requested: 502,606
Coupons in process: 5,968,625
Coupons issued: 479,992. 

Weekday (Mondays): March 10; 
Coupons requested: 563,801; 
Coupons in process: 6,008,313; 
Coupons issued: 480,005. 

Weekday (Mondays): March 17; 
Coupons requested: 534,385; 
Coupons in process: 6,095,202; 
Coupons issued: 479,981. 

Weekday (Mondays): March 24; 
Coupons requested: 555,286; 
Coupons in process: 5,734,133; 
Coupons issued: 1,074,967. 

Weekday (Mondays): March 31; 
Coupons requested: 744,053; 
Coupons in process: 5,312,324; 
Coupons issued: 1,074,890. 

Weekday (Mondays): April 07; 
Coupons requested: 754,856; 
Coupons in process: 5,007,522; 
Coupons issued: 1,059,711. 

Weekday (Mondays): April 14; 
Coupons requested: 789,293; 
Coupons in process: 4682,790; 
Coupons issued: 1,124,804. 

Weekday (Mondays): April 21; 
Coupons requested: 736,457; 
Coupons in process: 4,256,045; 
Coupons issued: 1,224,633; 

Weekday (Mondays): April 28; 
Coupons requested: 746,840; 
Coupons in process: 3,757,601; 
Coupons issued: 1,224,495. 

Weekday (Mondays): May 05; 
Coupons requested: 736,510; 
Coupons in process: 2,722,302; 
Coupons issued: 2,143,772. 

Weekday (Mondays): May 12; 
Coupons requested: 697,259; 
Coupons in process: 1,285,018; 
Coupons issued: 1,964,265. 

Weekday (Mondays): May 19; 
Coupons requested: 746,205; 
Coupons in process: 1,026,103; 
Coupons issued: 620,160. 

Weekday (Mondays): May 26; 
Coupons requested: 687,879; 
Coupons in process: 1,203,920; 
Coupons issued: 449,789. 

Weekday (Mondays): June 02; 
Coupons requested: 768,651; 
Coupons in process: 1,340,461; 
Coupons issued: 749,692. 

Weekday (Mondays): June 09; 
Coupons requested: 694,436; 
Coupons in process: 1,302,968; 
Coupons issued: 749,949. 

Weekday (Mondays): June 16; 
Coupons requested: 712,272; 
Coupons in process: 1,255,028; 
Coupons issued: 749,973. 

Weekday (Mondays): June 23; 
Coupons requested: 762,678; 
Coupons in process: 1,250,858; 
Coupons issued: 732,575. 

Weekday (Mondays): June 30; 
Coupons requested: 773,818; 
Coupons in process: 1,292,372; 
Coupons issued: 729,931. 

Source: GAO analysis of NTIA data. 

[End of figure] 

Given the processing time required in issuing coupons, NTIA's 
preparedness to handle volatility in coupon demand is unclear. 
Fluctuation in coupon requests, including the potential for a spike in 
requests as the transition date approaches, could adversely affect 
consumers. When NTIA faced a deluge of coupon requests in the early 
days of the converter box subsidy program, it took weeks to bring down 
the deficit of coupons requested to coupons issued. According to NTIA, 
it expects a similar increase in requests around the transition date, 
and such an increase may cause a delay in issuing coupons. As a result, 
consumers might incur significant wait time before they receive their 
coupons and might lose television service during the time they are 
waiting for the coupons. NTIA told us it has discussed options to 
address the increase in requests, such as downloadable coupons. NTIA 
interprets the statute, however, as requiring it deliver all coupons 
using the U.S. Postal Service. While NTIA and its contractors have 
demonstrated the capacity to process and issue large numbers of coupon 
requests over short periods, they have yet to establish specific plans 
to manage a potential spike or a sustained increase in demand leading 
up to the transition. 

Participation in the Converter Box Subsidy Program by Hard-to-Reach 
Populations Varies: 

We analyzed data to compare areas of the country that comprise 
predominantly minority and elderly populations with the rest of the 
U.S. population and found some differences in the coupon request, 
redemption, and expiration rates for Hispanic, black, and senior 
households compared with the rest of the U.S. population.[Footnote 11] 
For example, zip codes with a high concentration of Latino or Hispanic 
households had noticeably higher request rates (20 percent) compared 
with non-Latino or non-Hispanic zip codes (8 percent). However, 
households in predominantly black and Latino or Hispanic zip codes were 
less likely, compared with households outside these areas, to redeem 
their coupons once they received them. As shown in table 2, the overall 
rate of redemption for the converter box subsidy program is 28 percent, 
but only 19 percent of coupons have been redeemed in predominantly 
Latino or Hispanic areas. In predominantly black areas, 22 percent of 
coupons have been redeemed. 

Furthermore, we found that in areas of the country with a high 
concentration of seniors, fewer coupons were requested (7 percent) 
compared with areas of the country that did not have a high 
concentration of seniors (9 percent). Redemption rates for the senior 
population were similar to the redemption rates in the rest of the 
country. Regarding coupon expirations, we found a wide variance between 
minority and senior populations compared with the population as a 
whole. For example, the areas comprising Latino or Hispanic households 
only allowed 4 percent of their coupons to expire, while areas with 
predominantly senior populations allowed 21 percent of their coupons to 
expire. 

Table 2: Request, Redemption, and Expiration Rates of Converter Box 
Coupons through June 2008: 

U.S. population; 
Request rate: 9.1%; 
Redemption rate: 28.0%; 
Expiration rate: 12.8%. 

Latino or Hispanic; 
Request rate: 19.8; 
Redemption rate: 19.4; 
Expiration rate: 4.3. 

Black; 
Request rate: 9.2; 
Redemption rate: 21.5; 
Expiration rate: 11.2. 

Seniors; 
Request rate: 6.9; 
Redemption rate: 27.5; 
Expiration rate: 21.0. 

Source: GAO analysis of NTIA data. 

[End of table] 

The higher coupon request rates for Latino or Hispanic households 
compared with the non-Latino or non-Hispanic areas might be due to the 
consumer education efforts of the Spanish speaking broadcasters. An 
advocacy group representing Hispanics told us that the outreach efforts 
of Spanish speaking broadcasters, such as Univision, Telemundo, and 
Azteca America, have been effective in educating their viewers on the 
DTV transition. While the advocacy group had high praise for these 
broadcasters, it and another advocacy group representing minority 
populations that we contacted expressed concerns about certain aspects 
of the consumer education and outreach efforts by federal and private 
sector stakeholders. Specifically, these groups expressed concerns 
about the lack of funding for outreach to targeted vulnerable 
populations, the possibility of misinformation being provided by 
retailers to consumers, a lack of technical assistance to the targeted 
populations (such as assisting the elderly with connecting the 
converter boxes to their televisions), and the absence of rapid 
response planning to assist the targeted populations if funds for the 
converter box subsidy run out. Furthermore, these advocacy groups 
stated they believe the current transition messaging is very general 
and not targeted toward at-risk populations. As such, one group 
believes current messaging does not lead the at-risk populations to 
being fully aware of what they may need to do to prepare for the 
transition. Another group stated that targeted outreach efforts to its 
member organizations and populations are very general, and that 
outreach efforts on the transition and converter box subsidy program 
have not resonated with their communities. 

To determine participation in the converter box subsidy program in the 
45 areas of the country receiving targeted outreach by NTIA and FCC, we 
analyzed NTIA coupon data (including requests, redemptions, and 
expirations) in the 45 areas compared with the rest of the country not 
targeted by NTIA and FCC. We found participation levels were about the 
same in the targeted areas compared with the rest of the country. As we 
have previously mentioned, the 45 areas were targeted for the level of 
at-risk households, including households relying on over-the-air 
television. Therefore, the portion of the population in those 45 areas 
requiring action to continue viewing television broadcasts should be 
higher than in other areas of the country. However, we found that in 
the 45 targeted areas, 8.8 percent of households have requested coupons 
compared with 9.4 percent for the rest of the country not targeted by 
NTIA and FCC. We also found similarities between the 45 targeted areas 
and the rest of the country when looking at the coupon redemption and 
expiration rates. According to NTIA, similarities in request, 
redemption, and expiration rates between the 45 targeted areas and the 
rest of the country is viewed as a success. 

Retailers Are Participating in the Converter Box Subsidy Program, but 
Lacked Guidance from NTIA at the Time of Our Review: 

As the sellers of the converter boxes, retailers play a crucial role in 
the converter box subsidy program and are counted on to inform 
consumers about it. To do so, many national retailers are using in- 
store video programming, signage, and brochures to inform consumers. At 
the time of our review, seven national retailers were participating in 
the subsidy program.[Footnote 12] Three national retailers 
participating in the program told us they display programming about the 
transition on televisions at their store locations. One of these stores 
said it developed two consumer education videos, which run along with 
other programming on in-store displays. These videos provide 
information in both English and Spanish on the DTV transition, 
consumers' options for maintaining television service after the 
transition, and information about how to set up digital-to-analog 
converter boxes on analog televisions. Additionally, all of the 
retailers we spoke with indicated that signs and informational 
pamphlets about the DTV transition would be part of their in-store 
education campaigns. Retailers wanting to participate in the converter 
box subsidy program must become certified and are obligated to, among 
other things, train employees on the purpose and operation of the 
subsidy program. All of the retailers with whom we spoke told us they 
were training employees on the DTV transition and the subsidy program, 
although the retailers varied in which staff must complete training. 
For example, one retailer told us that all employees working in sales, 
customer service, call centers, and facilities handling warranties and 
service must complete DTV transition-related training. Another retailer 
told us that although it provides some training to its sales staff, 
most of the training is focused on employees working at cash registers. 

As part of our work, we conducted a "mystery shopper" study by visiting 
132 randomly selected retail locations in 12 cities across the United 
States that were listed as participating in the converter box subsidy 
program. We did not alert retailers that we were visiting their stores 
or identify ourselves as government employees. During our visits, we 
engaged the retailers in conversation about the DTV transition and the 
subsidy program to determine whether the information they were 
providing to customers was accurate, and whether individual stores had 
coupon-eligible converter boxes available. While not required to do so, 
some stores we visited had informational material available and others 
had signs describing the DTV transition and the subsidy program. The 
informational materials included retailer-produced brochures and 
fliers, NTIA-produced fliers, and converter box subsidy applications. 
We also determined whether the information that retailers were 
providing to customers was accurate, and whether individual stores had 
coupon-eligible converter boxes available. At most retailers (118) we 
visited, a representative was able to correctly identify that the DTV 
transition would occur in February 2009. Additionally, nearly all (126) 
retailers identified a coupon-eligible converter box as an option 
available to consumers to continue watching television after the 
transition. Besides coupon-eligible converter boxes, representatives 
identified other options to continue viewing television after the 
transition, including purchasing a digital television (67) or 
subscribing to cable or satellite service (77). However, in rare 
instances, we heard erroneous information from the retailers, including 
one representative who told us that an option for continuing to watch 
television after the transition was to obtain a "cable converter box" 
from a cable company and another representative who recommended that we 
buy an "HD tuner." Since participating retailers are obligated to train 
their employees on the purpose and operation of the subsidy program, we 
observed whether the representative was able to explain various aspects 
about the program. As table 3 shows, a vast majority of the 
representatives were able to explain how to receive or apply for a 
coupon and the value of the coupon, while a similar number were able to 
explain the converter boxes eligible for the subsidy program and who 
needs a converter box. 

Table 3: Retailer Representatives Able to Explain Certain Aspects of 
NTIA's Converter Box Subsidy Program: 

Was representative able to explain the following aspects of the 
converter box subsidy program?: How to receive or apply for the coupon; 
Yes: 117; 
No: 10. 

Was representative able to explain the following aspects of the 
converter box subsidy program?: Value of the coupon; 
Yes: 119; 
No: 8. 

Was representative able to explain the following aspects of the 
converter box subsidy program?: Which converter boxes were eligible for 
the subsidy program; 
Yes: 110; 
No: 14. 

Was representative able to explain the following aspects of the 
converter box subsidy program?: Who needs a converter box; 
Yes: 108; 
No: 14. 

Source: GAO. 

Note: Questions were not asked uniformly to all salespeople; therefore, 
the number of responses to each question is not identical. 

[End of table] 

Although we could obtain information from the majority of the stores 
that we visited and that were listed as participating in the subsidy 
program, in a few instances, we were not able to ask questions and 
observe whether the information provided was accurate. In two 
instances, there was no retailer at the store location listed as a 
participating retailer on NTIA's Web site ([hyperlink, 
https://www.dtv2009.gov/VendorSearch.aspx]). In another instance, the 
location listed was under construction and had not yet opened. In two 
additional instances, the locations listed were private residences--one 
was an in-home electronics store, and the other was a satellite 
television installer working from a house. We asked NTIA how it ensured 
the accuracy of the list of participating retailers on its Web site, 
and according to NTIA, ensuring the accuracy of the list is the 
responsibility of the retailers. NTIA said it provides a list of 
locations to each retailer prior to placing the list on the Web site, 
and retailers can update addresses or add new listings as warranted. 

At the time of our review, retailers told us that it would be useful to 
have guidance from NTIA on how to handle the refunds of converter boxes 
purchased with a government coupon. Some retailers said that they were 
tracking returns in their own systems and awaiting guidance from NTIA 
on how to return funds to the government from returned boxes. As part 
of NTIA's final rule on the converter box subsidy program, consumers 
may not return a coupon-eligible converter box to a retailer for a cash 
refund for the coupon amount. Therefore, if a customer returns a 
converter box purchased with a coupon, the retailer can only refund to 
the customer the amount paid for the converter box above the value of 
the coupon, and the retailer must refund the value of the coupon to 
NTIA. One of the retailers told us that it had developed an in-house 
accounts payable system to track converter boxes that are returned 
because it had no guidance from NTIA on how to return funds to the 
government. In July 2008, NTIA provided guidance to the retailers on 
how to handle the returns of coupon-eligible converter boxes. According 
to the guidance, retailers must have agreed to the terms by August 15, 
2008, or face deactivation from the subsidy program. 

Conclusions: 

NTIA estimates that it will see a large increase in the number of 
coupon requests in the first quarter of 2009. In addition, our analysis 
confirms that a spike in coupon requests is likely as the transition 
nears. However, NTIA has not developed a plan for managing that 
potential spike or sustained increase in coupon demand. The time 
required for processing coupons has improved from when consumers 
incurred significant wait times to receive their coupons at the 
beginning of the program, but, until recently, NTIA fell short of its 
requirement for processing coupons within 10 to 15 days from the date 
the coupon applications were approved. Given the relatively low 
participation rates to date and the amount of time it took to process 
the spike in coupon requests in the early days of the program, NTIA's 
ability to handle volatility in coupon demand without a plan is 
unclear. Consequently, consumers face potential risks that they might 
not receive their coupons before the transition and might lose their 
television service after February 17, 2009. 

Recommendation for Executive Action: 

To help NTIA prepare for a potential increase in demand for converter 
box coupons and so that consumers are not left waiting a lengthy amount 
of time for requested coupons, we recommend that the Secretary of 
Commerce direct the Administrator of NTIA to develop a plan to manage 
volatility in coupon requests so that coupons can be processed and 
mailed within 10 to 15 days from the day the coupon applications are 
approved, per NTIA's stated requirement. 

Agency Comments: 

We provided a draft of this report to the Department of Commerce (which 
contains NTIA) and FCC for their review and comment. In response, 
Commerce did not state whether it agreed or disagreed with our 
recommendation, but the department did say that it shares our concern 
about an increase in coupon demand as the transition nears. Commerce 
believes that NTIA has monitored coupon demand throughout the program, 
has effectively responded to those demands, and will adjust the 
program's operation as necessary to address consumer demand as the 
transition date approaches. Furthermore, Commerce's letter stated it is 
committed to doing all that it can within its statutory authority and 
existing resources to ensure that all Americans are ready for the DTV 
transition. In its letter, FCC noted consumer outreach efforts it has 
taken related to the DTV transition, some of which were announced after 
we concluded our audit work at the commission. For example, FCC stated 
that in 81 markets, the Chairman, a commissioner, or FCC senior staff 
would hold a public event, such as a town-hall meeting, workshop, or 
roundtable discussion, to highlight the steps consumers need to take to 
be prepared for the DTV transition. See appendixes IV and V for written 
comments from Commerce and FCC, respectively. 

We are sending copies of this report to interested congressional 
committees, the Secretary of Commerce, and the Chairman of FCC. We will 
make copies available to others upon request. In addition, the report 
will be available at no charge on the GAO Web site at [hyperlink, 
http://www.gao.gov]. 

If you or your staffs have any questions concerning this report, please 
contact me on (202) 512-2834 or goldsteinm@gao.gov. Contact points for 
our Offices of Congressional Relations and Public Affairs may be found 
on the last page of this report. Key contributors to this report are 
listed in appendix VI. 

Signed by: 

Mark L. Goldstein: 

Director, Physical Infrastructure Issues: 

List of Requesters: 

The Honorable Edward J. Markey: 
Chairman: 
The Honorable Cliff Stearns: 
Ranking Member: 
Subcommittee on Telecommunications and the Internet: 
Committee on Energy and Commerce: 
House of Representatives: 

The Honorable Herb Kohl: 
Chairman: 
Special Committee on Aging: 
United States Senate: 

The Honorable Daniel K. Inouye: 
Chairman: 
Committee on Commerce, Science, and Transportation: 
United States Senate: 

The Honorable Joe Barton: 
Ranking Member: 
Committee on Energy and Commerce: 
House of Representatives: 

The Honorable Bill Nelson: 
United States Senate: 

The Honorable Fred Upton: 
House of Representatives: 

[End of section] 

Appendix I: Objectives, Scope, and Methodology: 

The objectives of this report are to provide information on issues 
surrounding the digital television (DTV) transition, specifically, (1) 
what consumer education efforts have been undertaken by private and 
federal stakeholders and (2) how effective the National 
Telecommunications and Information Administration (NTIA) has been in 
implementing the converter box subsidy program, and to what extent 
consumers are participating in the program. 

To obtain information on consumer education efforts, we reviewed 
federal agency consumer education planning documents, agency orders, 
rules, proposed rules, and testimony statements from the Federal 
Communications Commission (FCC) and NTIA. We analyzed and compared 
federal consumer education plans with key practices for consumer 
education planning that were developed by an expert panel in our 
previous work on the DTV transition.[Footnote 13] This analysis was 
used to determine the extent that federal consumer education plans 
incorporated the key practices for effective consumer education 
planning. We also reviewed publicly available information on private 
sector consumer education planning and consumer awareness surveys 
conducted by industry groups, such as the Consumer Electronics 
Association (CEA), the National Association of Broadcasters (NAB), and 
Consumers Union. In addition, we spoke with government and private 
sector stakeholders involved in the transition, including FCC and NTIA 
officials. We also spoke with representatives from the broadcasting, 
retailer, manufacturing, and cable industries, including NAB, the 
Community Broadcasters Association, the Consumer Electronics Retailers 
Coalition, the North American Retailer Dealers Association, CEA, and 
the National Cable and Telecommunications Association. Lastly, we 
contacted all national retailers participating in the NTIA converter 
box subsidy program and spoke with six of the seven national retailers, 
including Best Buy Company, Inc; Circuit City Stores, Inc; Kmart (a 
subsidiary of Sears Holdings Corporation); Radio Shack Corporation; 
Sears Holdings Corporation; and Target Corporation about their consumer 
education efforts. Only one national retailer, Wal-Mart Stores, Inc., 
declined the opportunity to speak with us about its DTV consumer 
education efforts. 

To determine how effective NTIA and its partners have been in 
implementing the converter box subsidy program, we analyzed coupon data 
on request, redemption, and expiration rates. To examine NTIA's 
timeliness in issuing coupons, we analyzed data for each day of the 
subsidy program, beginning on January 1, 2008, through June 30, 2008. 
Operating under the assumption that all coupons were issued in the 
order the requests were received, we calculated the average daily 
processing time for applications received. Furthermore, we analyzed 
date-specific data from NTIA on coupon applications, requests, 
issuance, redemptions, and expirations. To determine participation by 
the targeted hard-to-reach populations, NTIA provided us with a list of 
zip codes for the 45 areas of the country identified in FCC and NTIA 
consumer education plans. We analyzed the NTIA data by zip codes to 
draw comparisons across demographic differences. To do so, we merged 
the NTIA zip code data with data from the 2000 Census SF-3 summary file 
Zip Code Tabulation Areas. From the census data, we grouped zip codes 
into urban and rural categories and looked at coupon requests, 
redemptions, and expirations for zip codes that were over 50 percent 
black or Hispanic/Latino. Furthermore, we discussed the effectiveness 
of the consumer education with advocacy groups representing hard-to- 
reach populations, including AARP, the National Hispanic Media 
Coalition, Leadership Conference on Civil Rights, the American 
Association of People with Disabilities, and National 4-H Headquarters. 
To assess the reliability of these data, we reviewed related 
documentation and conducted manual testing of certain source databases. 
We also interviewed knowledgeable agency officials about the quality of 
these data. As a result, we determined that these data were 
sufficiently reliable for the purposes of this report. We also 
conducted a "mystery shopper" study to determine the extent of retailer 
preparedness for the converter box subsidy program, including (1) 
retailer knowledge about the subsidy program, (2) the availability of 
converter boxes, and (3) whether retailers were attempting to up-sell 
to consumers who were interested in the program. We conducted the 
mystery shopper study from April 14, 2008, to May 2, 2008. The sample 
of retail stores that we visited was generated and randomly selected on 
April 11, 2008, from the list of participating retail stores identified 
on the NTIA Web site ([hyperlink, 
https://www.dtv2009.gov/VendorSearch.aspx]). Our sample was limited to 
store locations within a 15-mile radius of each GAO field office's and 
GAO headquarters' 5-digit zip code. For the study, we visited 132 store 
locations in 12 cities--Atlanta; Boston; Chicago; Dallas; Dayton; 
Denver; Huntsville; Los Angeles; Norfolk; San Francisco; Seattle; and 
Washington, D.C. The results of this study are not representative of 
retailer preparedness across the nation and are only applicable to the 
locations that we visited. However, our sample was sufficient to make 
basic statistical generalities and collect anecdotal evidence on the 
general level of retailer preparedness at that point in time. 
Additionally, the time frame in which the study was conducted limited 
our sample to retailers that were participating in the converter box 
subsidy program at that time (which included national retailers Best 
Buy Company, Inc; Circuit City Stores, Inc; Radio Shack Corporation; 
and Wal-Mart Stores, Inc.) 

We conducted this review from February 2008 to September 2008 in 
accordance with generally accepted government auditing standards. Those 
standards require that we plan and perform the audit to obtain 
sufficient and appropriate evidence to provide a reasonable basis for 
our findings and conclusions based on our review objectives. We believe 
that the evidence obtained provides a reasonable basis for our findings 
and conclusions based on our audit objectives. 

[End of section] 

Appendix II: Comparison of Federal Consumer Education Plans to Key 
Practices for Consumer Education Planning: 

In our previous work on the DTV transition, we convened an expert panel 
to discuss consumer education issues applicable to the 
transition.[Footnote 14] These issues included potential challenges 
that may obstruct efforts and the key planning components of a consumer 
education campaign that will help overcome some of those 
challenges.[Footnote 15] As shown in table 4, we analyzed FCC and NTIA 
consumer education plans and compared them with the key practices for 
consumer education planning. We found that the federal plans address 
nearly all of the key practices. (See detailed discussions of these 
practices following the table.) 

Table 4: Key Practices Comparison to FCC and NTIA Consumer Education 
Plans: 

Key practice: Define goals and objectives; 
Did FCC plan address key practice?: Yes; 
Did NTIA plan address key practice?: Yes. 

Key practice: Analyze the situation; 
Did FCC plan address key practice?: Yes; 
Did NTIA plan address key practice?: Yes. 

Key practice: Identify stakeholders; 
Did FCC plan address key practice?: Yes; 
Did NTIA plan address key practice?: Yes. 

Key practice: Identify resources[A]; 
Did FCC plan address key practice?: No; 
Did NTIA plan address key practice?: No. 

Key practice: Research target audiences; 
Did FCC plan address key practice?: Yes; 
Did NTIA plan address key practice?: Yes. 

Key practice: Develop consistent, clear messages; 
Did FCC plan address key practice?: Yes; 
Did NTIA plan address key practice?: Yes. 

Key practice: Identify credible messenger(s); 
Did FCC plan address key practice?: Yes; 
Did NTIA plan address key practice?: Yes. 

Key practice: Design media mix; 
Did FCC plan address key practice?: Yes; 
Did NTIA plan address key practice?: Yes. 

Key practice: Establish metrics to measure success: Process metrics; 
Did FCC plan address key practice?: Yes; 
Did NTIA plan address key practice?: Yes. 

Key practice: Establish metrics to measure success: Outcome metrics; 
Did FCC plan address key practice?: No; 
Did NTIA plan address key practice?: Yes[B]. 

Source: GAO analysis of FCC and NTIA data. 

[A] Budget and other resource information was not provided within the 
consumer education plans available for our review. 

[B] The outcome metrics that NTIA uses measures only over-the-air 
household participation and not participation by other hard-to-reach 
populations. 

[End of table] 

Key Practice 1: Define goals and objectives. Both FCC and NTIA defined 
the goals and objectives of their consumer education plans. The FCC 
plan's stated goal is to identify channels and outreach activities not 
yet utilized to ensure that the American public is made aware of the 
DTV transition so they can benefit from it and, if necessary, take 
action to be prepared for the transition.[Footnote 16] The NTIA plan's 
stated goal is to educate U.S. residents who receive over-the-air 
broadcasts on analog television about the DTV transition and the 
converter box subsidy program. The objectives of the NTIA plan are to 
(1) increase awareness of the subsidy program as one option available 
to consumers; (2) generate requests for coupons through various request 
methods, such as toll-free numbers, Web site visits, or written or 
faxed correspondence; (3) engage program partners to disseminate 
information about the subsidy program; and (4) provide media 
information and the tools needed to report on the program. 

Key Practice 2: Analyze the situation. Both FCC and NTIA analyzed the 
situation related to market conditions, including competing voices or 
messages, and constraints on timing. For example, FCC's plan provides 
an analysis that determined the segments of the population most 
vulnerable to the transition (i.e., over-the-air viewers). Included in 
this analysis is the general resistance and skepticism to change beyond 
the public's control; the challenge to ensure accurate, consistent, and 
coordinated information between public and private sector stakeholders; 
and the potential for the news media to pursue new angles and issues 
related to the DTV transition. The NTIA plan addressed situation 
analysis in two primary ways, including (1) media environment and (2) 
partner environment. The media environment analysis assessed keeping 
the media interested and engaged at critical times, recognizing that 
the consumer education campaign would be in operation in a "crowded 
media environment" competing with the 2008 presidential elections and 
the holiday season for public attention. Additionally, NTIA assessed 
that different organizations would be engaged in its transition 
outreach activities, and that NTIA would be challenged with engaging 
partners that are in a position to carry messages most effectively and 
efficiently to target audiences, and ensuring they deliver accurate 
information about the subsidy program. 

Key Practice 3: Identify stakeholders. Both FCC and NTIA identified and 
engaged stakeholders that would be involved with communication efforts, 
including the roles and responsibilities of each stakeholder. For 
example, the FCC plan emphasizes and recommends the use of various 
stakeholders to be involved in consumer outreach, such as broadcast 
outlets; media services, such as radio, print, and online news 
services; and other direct-to-consumer methods of outreach, including 
outdoor and transit public service advertising and outreach through 
grocery store chains.[Footnote 17] The NTIA plan also identifies 
various organizations as partners, such as the major broadcast networks 
and other federal agencies. In addition to identification, NTIA has 
developed a tiered approach to partnerships with other organizations. 
The tiered partner system identifies the level of impact and 
communication capability a partner may have on outreach based on the 
organization's ability to reach the program's target 
populations.[Footnote 18] The NTIA plan also outlines the minimum level 
of commitment from the tiered partner and the amount of support the 
partner would receive from NTIA. 

Key Practice 4: Identify resources. Short-term and long-term budgetary 
resources and other resources were not identified or available in the 
planning documents used for our comparison of FCC and NTIA consumer 
education plans to the key practices for consumer education planning. 
However, FCC had $14.5 million in allocated and reprogrammed funds for 
consumer education in fiscal year 2008, and also requested an 
additional $20 million for fiscal year 2009.[Footnote 19] NTIA was 
allocated $5 million for consumer education. 

Key Practice 5: Research target audiences. Both FCC and NTIA conducted 
audience research to determine needs, preferences, and characteristics 
as well as possible audience-specific obstacles, such as access to 
information. FCC and NTIA identified the target audiences who would be 
hard to reach, most unaware of the transition, and most reliant on over-
the-air broadcasts (i.e., minorities, rural residents, persons with 
disabilities, seniors, and low-income individuals). NTIA prioritized 
its outreach efforts to 45 market areas that have high concentrations 
of households most likely to be reliant on over-the-air broadcasts. FCC 
also used NTIA's geographic prioritization data to focus its outreach 
efforts. 

Key Practice 6: Develop consistent, clear messages. FCC and NTIA 
developed clear and consistent messages based on audience research and 
goals. For example, FCC's consumer education plan messaging is divided 
into three timeline phases that determine the type of information 
outreach efforts emphasized and is focused on providing clear and 
simple information to consumers that is accessible to all target 
populations through a variety of formats and languages. The phases 
described in the FCC plan are (1) transition basics (February to April 
2008)--consumers need to know the transition is happening and may need 
to take action; (2) transition detail (May to October 2008)--consumers 
receive more specific information, such as how to choose a DTV, the 
need for an antenna, how to get a coupon and converter box, and how to 
hook up a converter box; and (3) transition urgency (September 2008 to 
February 2009)--consumers need to act now and take action to avoid 
losing their television viewing signal if they are affected. NTIA has 
also developed and tested campaign messaging that resonates with target 
audiences and changes over time to suit the needs of the converter box 
subsidy program.[Footnote 20] The NTIA plan divides messaging into two 
phases: (1) awareness/educate and (2) action/participate. During the 
first phase, campaign messaging focused on the digital transition, what 
the converter box subsidy program is, why it exists, the benefits of 
the transition and the converter box, options for consumers to navigate 
the transition, and how to participate in the program. Phase two 
provides the same information, but the emphasis shifts to taking action 
to avoid the loss of television signals and taking advantage of the 
subsidy program. 

Key Practice 7: Identify credible messenger(s). FCC and NTIA identified 
in their consumer education plans partners who would be delivering the 
messages and ensuring they are credible with audiences. Specifically, 
the FCC plan identifies (1) the national media, such as the broadcast 
networks, national radio, cable networks, online outlets, magazines, 
and industry trade publications; (2) over-the-air markets, including 
local television and radio stations and major daily newspapers; and (3) 
target population media services and sources, which are based on the 
media habits and preferences of the vulnerable populations, as credible 
messengers. NTIA identified two broad groups of credible messengers, 
including earned media and partners. Earned media messengers fall into 
three categories, which consist of (1) the national media, including 
the major broadcast networks, cable networks, online outlets, 
magazines, and industry trade publications; (2) geographically targeted 
media consisting of local television and radio stations and major daily 
newspapers; and (3) demographically targeted media based on the media 
habits and preferences of the target populations. 

Key Practice 8: Design media mix. Both FCC and NTIA identified in their 
consumer education plans methods and frequency of messaging to reach 
target audiences. The FCC and NTIA plans present various types of media 
services, such as satellite and radio media tours, background 
briefings, editorial meetings, online chats, over-the-air market 
outreach, and radio advertisements that will be used to generate media 
coverage and as methods of outreach to inform target groups. In 
addition, the FCC plan recommends direct-to-consumer initiatives, such 
as outdoor and transit public service announcements and outreach 
through grocery store chains. FCC also includes a timeline that denotes 
by month when it will engage in outreach by messaging phases. 

Key Practice 9: Establish metrics to measure success. FCC and NTIA have 
established process metrics to measure the success of their consumer 
outreach, but only NTIA has created outcome metrics. Process metrics 
track the quantity, quality, and timeliness of work and have been 
established by both FCC and NTIA. For example, FCC and NTIA have 
measures tracking the distribution of materials, which enables them to 
report on the quantity of materials mailed and the audience receiving 
the materials. In addition, both FCC and NTIA will track media 
coverage, including earned media and media coverage, of other DTV 
transition stakeholders. NTIA has also implemented outcome metrics-- 
which evaluate how well a consumer education campaign influenced 
attitudes or behaviors to determine if the target populations were 
adequately receiving the message. For example, according to NTIA, it 
tracks coupon requests and redemptions of over-the-air households for 
the purpose of measuring the impact of its consumer education. NTIA 
said it reviews coupon request data every 2 weeks and compares the 
coupon requests by over-the-air households with the estimated number of 
over-the-air households in major geographic areas of the country. 
According to NTIA, if an area exists where less than 20 percent of the 
over-the-air households in a market have ordered coupons, NTIA will 
increase its outreach efforts in that area. NTIA also indicated that it 
uses coupon request data to monitor the 45 targeted areas and uses 
these data to determine if it is reaching the hard-to-reach 
populations. Furthermore, NTIA indicated that it would use publicly 
reported consumer awareness survey information from industry 
participants and others to track progress in consumer awareness for 
other populations. NTIA states in its plan that these measures will 
indicate the success of its education efforts and highlight areas that 
need additional focus. The use of monthly coupon application and 
redemption data in comparison to over-the-air households measures the 
effect of consumer education efforts on the population as a whole, but 
does not determine whether the targeted hard-to-reach populations have 
been influenced and have applied for and redeemed converter box 
coupons. 

[End of section] 

Appendix III: Federal Communications Commission DTV Consumer Education 
Order: 

FCC adopted a final DTV consumer education order in February 2008, 
which requires broadcasters, cable and satellite providers, certain 
telephone service providers, and certain consumer electronics 
manufacturers to provide a minimum level of DTV transition consumer 
education.[Footnote 21] For example, commercial broadcasters are 
required to choose one of two education options, and noncommercial 
broadcasters must select one of three education options. These options 
determine the number of public service announcements, crawls, or other 
on-air consumer education programming they must air and report to FCC 
per quarter. FCC officials told us that FCC has collected the required 
report filings for broadcasters for the first two quarters since the 
FCC order took effect. Cable and satellite providers are required under 
the order to provide information on the DTV transition in billing 
notices to their customers. Consumer electronics manufacturers are 
required to include information with certain television-related devices 
that explain what effect, if any, the DTV transition will have on the 
devices' use. FCC also requires telephone companies that participate in 
the Low Income Federal Universal Service program to provide information 
on the transition to their Life-line and Link-up customers, either as 
part of the billing notice or in a stand-alone mailer, such as a 
postcard. According to FCC, it has sent compliance surveys to the nine 
largest cable and satellite providers and the nine largest telephone 
companies, and it intends to send compliance letters to the nine 
largest electronics manufacturers to assess their consumer education 
efforts. Furthermore, FCC stated that its Enforcement Bureau is working 
with NTIA to spot-inspect retailers that are participating in the 
converter box subsidy program. The purpose of the spot inspections is 
to detail and assess retailer employee training and consumer education 
plans and efforts. FCC Enforcement Bureau personnel, as of July 31, 
2008, have visited 1,335 stores and conducted 1,291 interviews in 49 
states and in Puerto Rico. According to FCC testimony, it has found 
that the majority of store managers are well-informed about the DTV 
transition and the converter box subsidy program. 

Table 5: FCC DTV Consumer Education Order Requirements, by Industry 
Sector: 

Industry sector: Broadcasters; 
Consumer education requirements: Commercial broadcasters must select 
either option one or option two, while noncommercial broadcasters may 
select any of the three options. The requirements of each option apply 
separately to the station's analog channel and primary digital stream; 
Option one: The station must air 1 public service announcement (PSA) 
and run 1 transition crawl in every quarter of every day. The 
requirement increases to 2 PSAs and crawls per quarter per day on April 
1, 2008, and will increase to 3 of each on October 1, 2008. PSAs are in 
addition to, not in lieu of other PSAs; Option two: The station must 
air 16 PSAs per week and an average of 16 transition-related crawls, 
snipes, or tickers per week over each quarter through the transition 
period between 5:00 am and 1:00 am. Over the course of each calendar 
quarter, ¼ of all mandatory PSAs, crawls, snipes, or tickers must air 
between 6:00 pm and 11:35 pm (EST & PST) and between 5:00 pm and 10:35 
pm (CST & MST); Option three: This option is open only to noncommercial 
stations, and the station must air 60 seconds per day of on-air 
consumer education, in variable time slots, including at least 7.5 
minutes per month between 6:00 pm and 12:00 am. The requirement doubles 
beginning May 1, 2008, and increases to 180 seconds per day and 22.5 
minutes per month between 6:00 pm and 12:00 am beginning November 1, 
2008. All transition PSAs must be closed-captioned. 

Industry sector: Cable and satellite providers; 
Consumer education requirements: All cable and satellite providers are 
required to provide notice of the DTV transition to their subscribers 
in monthly bills or billing notices, either as part of the bill or as a 
"bill stuffer."[A]. 

Industry sector: Consumer electronics manufacturers; 
Consumer education requirements: Manufacturers of some television-
related devices, such as television broadcast receivers, television 
interface devices, devices that record or display signals received from 
television broadcast receivers, and set-top boxes from cable/satellite 
providers, are required to include information with those devices 
explaining what effect the transition will have on their use.[A]. 

Industry sector: Telephone companies; 
Consumer education requirements: Telephone companies participating in 
the Federal Universal Service Low-Income Program are required to 
provide notice of the transition to their customers as a bill stuffer, 
part of the bill itself, or use of a monthly stand-alone mailer (i.e., 
postcards).[A]. 

Source: FCC. 

[A] The bill notice, bill stuffer, separate mailing, or included 
information must be noticeable, state the transition date, and note 
that analog-only televisions may not work unless the viewer takes 
action. These documents must also note that analog-only televisions 
will continue to work for low-power, Class A, translator television 
stations; with a cable or satellite service; and for use with game 
consoles, VCRs, and DVDs. Furthermore, the notice must indicate that 
viewers can get additional information about the DTV transition by 
going to [hyperlink, http://www.DTV.gov] or by calling their cable 
provider, satellite provider, or telephone company. Additional 
information about the converter box subsidy program is available at 
[hyperlink, http://www.dtv2009.gov] or by calling NTIA (1-888-DTV-
2009). 

[End of table] 

[End of section] 

Appendix IV: Comments from the Department of Commerce: 

The Secretary Of Commerce: 
Washington, D.C. 20230: 

August 29, 2008: 

Mr. Mark L. Goldstein: 
Director, Physical Infrastructure Issues: 
Government Accountability Office: 
441 G Street, NW: 
Washington, DC 20548: 

Dear Mr. Goldstein: 

Thank you for the opportunity to comment on the Government 
Accountability Office's (GAO) Report provisionally entitled, "Digital 
Television Transition: Implementation of the Converter Box Subsidy 
Program Is Underway, But Preparedness to Manage an Increase in Subsidy 
Demand Is Unclear," GAO-08-1040. The Department of Commerce appreciates 
GAO's acknowledgment that the National Telecommunications and 
Information Administration (NTIA) is effectively implementing the TV 
Converter Box Coupon Program (Coupon Program). This recognition is 
underscored by the fact that to date, NTIA has distributed coupons to 
one of every nine households in the United States and its 
territories—in total, over 23 million coupons. 

In the report, GAO recommends that NTIA develop a plan to manage 
volatility in coupon requests in the period of time leading up to the 
transition. The Department shares GAO's concern about an increase in 
coupon demand as the transition nears. Throughout this program, NTIA 
has monitored coupon demand and has effectively responded to those 
demands. The Coupon Program is currently processing household requests 
for about three million coupons monthly. As part of NTIA's plan for a 
potential spike in coupon requests, it has focused its consumer 
education message to urge consumers to act now to experience the 
immediate benefits of digital television. NTIA has been working with 
its partners to encourage over-the-air consumers to apply for coupons 
as soon as possible to avoid any delays in the processing of requests 
that could result from a last-minute rush. NTIA will adjust the 
Program's operation as necessary to address consumer demand as the 
February 17, 2009, deadline approaches. 

The Department is committed to doing all that it can within its 
statutory authority and existing resources to ensure that all Americans 
are ready for the digital transition. Thank you again for the 
opportunity to share the Department's comments on this report. With 
less than six months remaining before the digital transition concludes, 
we are on track to achieve a smooth transition for the American public. 

Sincerely, 

Signed by: 

Carlos M. Gutierrez: 

[End of section] 

Appendix V: Comments from the Federal Communications Commission: 

Federal Communications Commission: 
Washington, D.C. 20554: 

August 28, 2008: 

Mr. Mark L. Goldstein, Director: 
Physical Infrastructure Issues: 
U.S. Government Accountability Office: 
Washington, DC 20548: 

Dear Mr. Goldstein: 

Thank you for the opportunity to review and provide comments on the 
Government Accountability Office's (GAO) Draft Report Digital 
Television Transition – Implementation of the Converter Box Subsidy 
Program is Underway, but Preparedness to Manage an Increase in Subsidy 
Demand is Unclear. In the Draft Report, GAO reviews (1) what consumer 
education efforts have been undertaken by private and federal 
stakeholders and (2) how effective NTIA has been in implementing the 
converter box subsidy program and to what extent consumers are 
participating in the program. This letter contains the Federal 
Communications Commission's (FCC) comments to the Draft Report. 

The Commission's outreach effort places an emphasis on consumers who 
receive their television signals "over-the-air," those who are 
disproportionately impacted by the transition, and those who are hard 
to reach and may be unaware of the upcoming transition. As the Draft 
Report notes, the Commission has engaged in targeted measures to reach 
these groups, which include senior citizens; non-English speaking and 
minority communities; people with disabilities; low-income individuals; 
and people living in rural and tribal areas. Ketchum, an outside 
contractor hired by both the NTIA and the FCC, identified and 
recommended that we focus our efforts on 45 areas of the country with 
at least one of the following population groups: (1) more than 150,000 
over-the-air households, (2) more than 20 percent of all households 
relying on over-the-air broadcasts, or (3) a top 10 city of residence 
of the largest target demographic groups. 

The FCC has gone beyond specifically targeting only the 45 markets 
recommended by Ketchum. We have chosen to place additional resources 
into targeting at least 81 markets that are potentially more vulnerable 
than the rest of the country with respect to the transition – including 
all those markets with at least one of the following population groups: 
(1) more than 100,000 over-the-air households, (2) more than 15 percent 
of all households relying on over-the air broadcasts, or (3) otherwise 
recommended specifically by Ketchum for specialized outreach. In those 
81 markets, the Chairman, a Commissioner or FCC senior staff will hold 
a public event, such as a town hall meeting, workshop, or roundtable, 
to highlight steps consumers need to take to be prepared for the 
digital transition. 

Also concurrent with these visits, FCC staff will work to saturate each 
media market with earned media related to these visits, and will 
simultaneously encourage local radio and television broadcasters to run 
PSAs related to the transition. Additionally, in the days prior to each 
visit by the Commissioner, FCC staffers will be on the ground providing 
technical and outreach assistance to local broadcasters, community 
leaders, and other stakeholders, to further publicize the transition to 
digital and help educate members of the community. 

The FCC will also be coordinating with NAB to explore whether these 
markets may participate in a temporary turn off of their analog signals 
(so-called "soft tests"), as a means for stations and viewers to 
determine consumer readiness for the DTV transition. This is an 
unprecedented nationwide tour by the entire Commission, designed to 
educate consumers in these markets and especially those groups that are 
most vulnerable in the transition. 

In addition to these specialized efforts, as you note, the FCC has 
placed or is placing billboards in those 45 markets recommended by 
Ketchum for specialized outreach. The decision to initially place 
billboards in those 45 markets was due to our prioritizing the limited 
resources the Commission has available for consumer outreach. We are 
exploring the possibility of placing billboards in all 81 of the 
markets where the Chairman, other Commissioners, and senior staff will 
be holding town hall meetings. 

The Commission is not focused on the target areas at the exclusion of 
other areas of the country. The Commission is committed to doing 
everything within its statutory and budgetary capacity to make sure 
that no American is left behind. As the Draft Report recognizes, the 
FCC is engaged in outreach activities throughout the entire nation. We 
have hosted and participated in events and conferences; coordinated 
with federal, state, local, and tribal entities and private industry 
groups; conducted outreach through national and local media outlets; 
developed and distributed DTV publications; and conducted outreach and 
training sessions to targeted communities throughout the country. 

Here are just a few statistics on the status of our education campaign. 

* The Commission has conducted over 1584 DTV Awareness sessions, 
attended more than 351 conferences and events, held over 425 
partnership meetings, and made over 7024 visits to various 
organizations around the country to disseminate DTV information. 

* The Commission recently launched a Speakers Bureau for groups 
throughout the country to request speakers to discuss the upcoming 
transition to Digital Television (DTV) at their meetings in order to 
give all communities the opportunity to request a speaker at their 
events. 

* Over 5.6 million pages of our DTV publications have been distributed 
to individual consumers and to consumer agencies and organizations 
nationwide. 

* We have distributed over 8,600 posters nationwide. We are displaying 
DTV education posters in all 34,000 post offices across the nation. 

* We have secured commitments from 36 states to display DTV materials 
in 1100 Department of Motor Vehicle locations. 

* We have distributed radio PSAs to radio stations throughout the 
country, and have just completed production of television PSAs, which 
will be distributed to commercial broadcasters nationwide. 

The FCC's consumer outreach effort recognizes that some consumers will 
be disproportionately impacted by the transition, or are harder to 
reach than the general population. 

For instance, we have placed special emphasis on reaching seniors. 
Through the work of our field agents, we have made visits to over 5098 
senior centers in 50 states, plus the District of Columbia and two U.S. 
territories, where we have delivered DTV material. In addition, we have 
made 1496 presentations and answered questions from seniors about the 
DTV transition. We are working closely with the AARP and other senior 
organizations, presenting at their conferences and participating in 
interviews with their media. 

We are also taking extra steps to reach non-English speakers and 
minorities, who disproportionately rely on over-the-air television 
reception. 

* All of our DTV publications are available in Spanish. Also our most 
widely distributed DTV one-pager is now available in 20 languages: 
English, Spanish, Chinese, French, Korean, Russian, Tagalog, 
Vietnamese, Hmong, Japanese, Arabic, Cambodian, Navajo, Somali, 
Amharic, Yupik, Portuguese and Laotian, Creole, and Kurdish, as well as 
Braille and audio formats. 

* We have conducted 16 DTV Awareness sessions, attended more than 23 
conferences or events, had 9 partnership meetings, and made about 72 
visits to various organizations all specifically targeting the Hispanic 
population. 

* We have partnered with Univision to educate its Spanish-speaking 
audience, including outreach activities specifically targeted at 
seniors in the Hispanic community. Similarly we have partnered with the 
U.S. Hispanic Chamber of Commerce which will be conducting DTV 
awareness sessions with local chambers around the country. Recently, 
the FCC has participated in the League of United Latin American 
Citizens national conference and the National Council of La Raza's 
national conference. 

* We have exhibited and presented DTV information at conventions and 
conferences targeting minority communities and umbrella organizations 
such as the Houston Black Expo, the Indiana Black Expo, and the 
National Black Expo 2008, the NAACP Convention, and the National Urban 
League Conference. In addition, the Commission is partnering with the 
leadership of the National Black Church Initiative to target outreach 
activities in predominantly African-American communities. The 
Commission is also partnering with the Harlem Consumer Education 
Council (HCEC) to educate both African-American and Spanish Harlem 
consumers at DTV outreach events. Earlier this year, the Commission 
conducted outreach at the Rainbow PUSH Wall Street Project Conference, 
in New York City. 

Low-income households also generally rely more on over-the-air 
television signals due to the high costs of paid subscription services. 
One way we are reaching these consumers is through our partnership with 
the Department of Health and Human Services. Several HHS agencies 
disseminate DTV material to consumers eligible for their services. 

One step we have taken to target rural viewers has been to place DTV 
transition materials at state and county fairs throughout the country. 
We will be disseminating transition materials to 193 state and county 
fairs in 26 states. 

Regarding people with disabilities, Commission staff regularly attends 
targeted conferences and events to distribute DTV educational materials 
that will reach this vulnerable population. For example, the FCC has 
attended and provided DTV materials at the National Black Deaf 
Advocates Conference, the Vocational and Educational Services for 
Individuals with Disabilities Conference, and the Emergency Planning 
and Response for Special Needs and Disabilities Conference. We have 
recently attended the American Council of the Blind Annual Conference, 
the National Association of the Deaf Biennial Conference, and the 
Summer Quarterly Meeting of the National Council on Disabilities and 
discussed the DTV transition. Our website, [hyperlink, 
http://www.DTV.gov], features a DTV educational video in American Sign 
Language. Our most commonly utilized publications are available in 
Braille and audio format and all of our fact sheets and advisories are 
available in large print. In addition, we have publications addressing 
DTV and closed captioning and video description. In addition, we 
recently created a chart of select features available on 32 coupon 
eligible digital-to-analog converter boxes. The chart, developed in 
response to recommendations from the Commission's Consumer Advisory 
Committee, as well as requests from groups representing people with 
disabilities, describes features of particular interest to the 
disabilities community. The chart, which is available on our website, 
has been distributed to various interested groups, will be updated as 
additional NTIA-approved converter boxes become available at retail 
stores and online. 

The Draft Report indicates that the short-term and long-term budgetary 
resources and other resources were not identified or available in the 
planning documents used for your comparison of FCC and NTIA consumer 
education plans to the key practices for consumer education planning. 
The FCC has requested appropriated funds to support its DTV outreach 
efforts since 2006 when it first requested $500,000 in the proposed 
fiscal year 2007 budget. In response to the FCC's request for $1.5 
million in the proposed budget for fiscal year 2008, on December 26, 
2007, the Commission received authorization to spend $2.5 million in 
appropriated funds on DTV outreach. On January 28, 2008 the Commission 
initiated the process for awarding a contract for DTV Consumer 
Education Support Services to strengthen the FCC's outreach efforts 
nationwide. This contract for national consumer education support was 
awarded on February 13, 2008 to Ketchum, Incorporated. 

On June 5, 2008 the Commission requested authorization to use $12 
million of prior year unobligated funds to expand efforts to educate 
consumers about the transition to DTV. The Commission received approval 
from the House on June 19, 2008, the Senate on July 8, 2008 and the 
final required action from the Office of Management and Budget on 
August 4, 2008 enabling the Commission to move forward with obligating 
and spending the $12 million. Just two weeks later, on August 18, 2008, 
Chairman Martin announced the 81-city outreach tour to target educating 
consumers in the high over-the-air markets about the transition. 

In addition, in the proposed budget for fiscal year 2009, the FCC 
requested $20 million in appropriated funds for DTV outreach. The House 
and Senate appropriations committees both approved this request in the 
mark ups of the 2009 budget. 

One technical point to note regarding Appendix III, as of July 31, 
2008, Enforcement Bureau field agents have visited 1335 stores and 
conducted 1291 interviews in 49 states and the Commonwealth of Puerto 
Rico. 

We appreciate the opportunity to review and comment on the Draft 
Report. If we can assist in any further way in the completion of this 
report, please let me know. 

Sincerely, 

Signed by: 

Monica Desai: 
Chief, Media Bureau: 

[End of section] 

Appendix VI: GAO Contact and Staff Acknowledgments: 

GAO Contact: 

Mark L. Goldstein, (202) 512-2834, or goldsteinm@gao.gov: 

Staff Acknowledgments: 

In addition to the individual named above, other key contributors to 
this report were Sally Moino, Assistant Director; Colin Fallon; Simon 
Galed; Eric Hudson; Bert Japikse; Aaron Kaminsky; Michael Pose; and 
Andrew Stavisky. 

[End of section] 

Related GAO Products: 

Digital Television Transition: Broadcasters' Transition Status, Low- 
Power Station Issues, and Information on Consumer Awareness of the DTV 
Transition. [hyperlink, http://www.gao.gov/cgi-bin/getrpt?GAO-08-881T]. 
Washington, D.C.: June 10, 2008. 

Digital Television Transition: Majority of Broadcasters Are Prepared 
for the DTV Transition, but Some Technical and Coordination Issues 
Remain. [hyperlink, http://www.gao.gov/cgi-bin/getrpt?GAO-08-510]. 
Washington, D.C.: April 30, 2008. 

Digital Television Transition: Increased Federal Planning and Risk 
Management Could Further Facilitate the DTV Transition. [hyperlink, 
http://www.gao.gov/cgi-bin/getrpt?GAO-08-43]. Washington, D.C.: 
November 19, 2007. 

Digital Television Transition: Preliminary Information on Progress of 
the DTV Transition. [hyperlink, http://www.gao.gov/cgi-bin/getrpt?GAO-
08-191T]. Washington, D.C.: October 17, 2007. 

Digital Television Transition: Preliminary Information on Initial 
Consumer Education Efforts. [hyperlink, http://www.gao.gov/cgi-
bin/getrpt?GAO-07-1248T]. Washington, D.C.: September 19, 2007. 

Digital Television Transition: Issues Related to an Information 
Campaign Regarding the Transition. [hyperlink, http://www.gao.gov/cgi-
bin/getrpt?GAO-05-940R]. Washington, D.C.: September 6, 2005. 

Digital Television Transition: Questions on Administrative Costs of an 
Equipment Subsidy Program. [hyperlink, http://www.gao.gov/cgi-
bin/getrpt?GAO-05-837R]. Washington, D.C.: June 20, 2005. 

Digital Broadcast Television Transition: Several Challenges Could Arise 
in Administering a Subsidy Program for DTV Equipment. [hyperlink, 
http://www.gao.gov/cgi-bin/getrpt?GAO-05-623T]. Washington, D.C.: May 
26, 2005. 

Digital Broadcast Television Transition: Estimated Cost of Supporting 
Set-Top Boxes to Help Advance the DTV Transition. [hyperlink, 
http://www.gao.gov/cgi-bin/getrpt?GAO-05-258T]. Washington, D.C.: 
February 17, 2005. 

Telecommunications: German DTV Transition Differs from U.S. Transition 
in Many Respects, but Certain Key Challenges Are Similar. [hyperlink, 
http://www.gao.gov/cgi-bin/getrpt?GAO-04-926T]. Washington, D.C.: July 
21, 2004. 

Telecommunications: Additional Federal Efforts Could Help Advance 
Digital Television Transition. [hyperlink, http://www.gao.gov/cgi-
bin/getrpt?GAO-03-7]. Washington, D.C.: November 8, 2002. 

Telecommunications: Many Broadcasters Will Not Meet May 2002 Digital 
Television Deadline. [hyperlink, http://www.gao.gov/cgi-bin/getrpt?GAO-
02-466]. Washington, D.C.: April 23, 2002. 

[End of section] 

Footnotes: 

[1] The prices of eligible converter boxes range from $40 to over $90. 

[2] GAO, Digital Television Transition: Broadcasters' Transition 
Status, Low-Power Station Issues, and Information on Consumer Awareness 
of the DTV Transition, [hyperlink, http://www.gao.gov/cgi-
bin/getrpt?GAO-08-881T] (Washington, D.C.: June 10, 2008). 

[3] Households requesting coupons must submit the name of the person 
requesting the coupon and a valid United States Postal Service address. 
A post office box will not be considered a valid address, except in the 
cases of residents of American Indian reservations, Alaskan native 
villages, and other rural areas without home postal delivery. In April 
2008, NTIA issued a notice of proposed rulemaking to change the 
household eligibility and application process for individuals residing 
in nursing homes and households that use post office boxes. The comment 
period, for the proposed rulemaking, closed June 9, 2008, and NTIA has 
indicated its intent to complete the rulemaking as soon as possible. 

[4] NTIA established technical and performance specifications that 
converter boxes must meet to be eligible for the subsidy program. 

[5] With the additional $510 million, total program funding is $1.5 
billion, which includes up to $1.34 billion in coupon funds and up to 
$160 million in administrative funds. 

[6] The Central Contractor Registration database is the primary 
registrant system for collecting, validating, storing, and 
disseminating data in support of agency acquisition missions. 
Furthermore, the Central Contractor Registration facilitates electronic 
financial transfers through electronic fund transfers. According to 
NTIA officials, registration in the Central Contractor Registration 
database does not mean that the registrant is a government contractor. 

[7] FCC requires broadcasters, cable and satellite providers, and 
consumer electronics manufacturers to provide a minimum level of DTV 
transition consumer education. See appendix III for additional 
information on these FCC requirements. 

[8] GAO, Digital Television Transition: Increased Federal Planning and 
Risk Management Could Further Facilitate the DTV Transition, 
[hyperlink, http://www.gao.gov/cgi-bin/getrpt?GAO-08-43] (Washington, 
D.C.: Nov. 19, 2007). 

[9] Our redemption rate was calculated by dividing the number of 
redeemed coupons by the total number of issued coupons as of June 30, 
2008. The total number of issued coupons includes coupons that had been 
redeemed, had expired, and had not yet expired as of that date. 

[10] For the purposes of our analysis, we assumed that all coupons were 
issued in the order they were received. According to NTIA, coupon 
issuance was to begin 1 year from the transition. Therefore, the 
processing time between coupon requests and issuance was calculated 
beginning on February 17, 2008. 

[11] Zip codes where 50 percent or more of the population, according to 
the 2000 U.S. Census data, were part of one of the identified 
demographic groups--minority or elderly--were used in this analysis. 

[12] The seven national retailers include Best Buy Company, Inc; 
Circuit City Stores, Inc; Kmart (a subsidiary of Sears Holdings 
Corporation); Radio Shack Corporation; Sears Holdings Corporation; 
Target Corporation; and Wal-Mart Stores, Inc. We spoke with 
representatives from each of these retailers, with the exception of Wal-
Mart Stores, Inc., which declined to speak with us. 

[13] GAO, Digital Television Transition: Increased Federal Planning and 
Risk Management Could Further Facilitate the DTV Transition, 
[hyperlink, http://www.gao.gov/cgi-bin/getrpt?GAO-08-43] (Washington, 
D.C.: Nov. 19, 2007), 26. 

[14] [hyperlink, http://www.gao.gov/cgi-bin/getrpt?GAO-08-43]. 

[15] The challenges highlighted by the expert panel included 
prioritizing limited resources, educating consumers who do not 
necessarily need to take action, reaching underserved populations, and 
aligning stakeholders. 

[16] This FCC plan is noted as being in addition to and augmenting 
current FCC plans by providing recommendations to complement current 
FCC outreach efforts. 

[17] The Kroger Company and Safeway, Inc., are two grocery store chains 
mentioned in the FCC consumer education plan. 

[18] Tier 1 partners are national organizations that have the ability 
to reach the coupon program's targeted populations in most areas of the 
country and have a deep stake in the DTV transition. Tier 2 partners 
are regional or local organizations that have the ability to reach one 
or more targeted vulnerable populations and the ability to conduct on- 
the-ground activities. Tier 3 partners are any organizations that have 
expressed an interest in disseminating information and notifying 
constituencies, but have little or no relation to the targeted 
populations or the DTV transition. 

[19] According to the Joint Explanatory Statement accompanying the 2008 
Consolidated Appropriations Act (Pub. L. No. 110-161), FCC was provided 
with $2.5 million for DTV consumer education and requested and received 
approval to reprogram $12 million in unspent funds in early July 2008. 

[20] IBM Global Business Services, U.S. Department of Commerce, 
National Telecommunications and Information Administration, Consumer 
Testing Results Report (Gaithersburg, MD: November 2007). 

[21] Federal Communications Commission, DTV Consumer Education 
Initiative, MB Docket No. 07-148, Report and Order, 23 FCC Rcd. 4134 
(2008). 

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