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: Published: Sep 16, 2008. Publicly Released: Sep 16, 2008.

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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.

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.

Recommendation for Executive Action

  1. Status: Closed - Implemented

    Comments: In response to our recommendation, NTIA implemented a plan for how NTIA and its contractor would respond to the likely increase in coupon demand during the final 100 days prior to the DTV transition to ensure consumers were not subject to delays in receiving their coupons.

    Recommendation: 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, the Secretary of Commerce should 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 Affected: Department of Commerce


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