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Subsidies Are Sticky Point in DTV Draft Bill

Lawmakers are nowhere near hammering out an acceptable analog sunset bill if the latest House subcommittee hearing is any indication. The hearing, held Thursday, revolved around a draft bill unveiled late last week calling for analog TV signals to end Dec. 31, 2008.

Three particular points emerged at the hearing--set-top subsidies, the broadcast flag and predicating a deadline on the budget deficit.

Several members indicated they'd seek a broadcast flag in any final DTV transition bill, including Reps. Jay Inslee (D-Wash.), Edolphus Towns (D-N.Y.), Elliot Engel (D-N.Y.) and Marsha Blackburn (R-Tenn.). No one actually came out against the flag.

Members were split on subsidizing set-top, digital-to-analog converters, which was not addressed in the draft. Rep. Anna Eshoo, (D-Calif.) called it a "glaring omission." Most of the Democrats who used their five minutes of floor time expressed support for some type of subsidy. Rep. Rick Boucher (D-Va.) reiterated his view that it's only fair to subsidize a converter box for every analog TV not plugged into cable or DBS. Rep. Lee Terry (R-Neb.), who was previously somewhat dismissive of the idea, favored a more measured approach "limited to low-income antenna users."

Reps. Cliff Stearns (R-Fla.) and Charles Bass (R-N.H.) were not into the subsidy thing. Bass said a subsidy program would be "difficult, complicated and potentially unworkable."

Before the draft bill was unveiled, House Commerce Committee Chairman Joe Barton (R-Texas) pushed like all get-out for a Dec. 31, 2006 deadline. Barton favored a subsidy program for 2006, but pushing the hard date out gives people more time to buy a box, he reckoned. Barton said if folks started saving 30 cents a week now, they'd have $50 by Dec. 31, 2008 -- that is, if they know they'll need one. As of NAB2005, the chairman had yet to discuss the issue with his own constituents.

Testimony from Mark Goldstein, director of physical infrastructure issues at the Government Accountability Office, made it clear that creating a set-top subsidy program would be no small feat. Congress would have to nail down who's eligible, how to find those people, what agency administers the program, how much the administrative cost would be and how to pay for all of it.

Goldstein's team looked at existing subsidy programs to evaluate administrative costs. In one case, the price for mailing vouchers to approximately 1.5 million households was estimated to be about $552,000.

Current estimates of households receiving television exclusively over the air range from 13 million to 21 million. Based on the GAO example, administrative costs for sending vouchers to OTA households would range from $4.8 million to $7.7 million.

The GAO also looked tracking the OTA contingent using cable and satellite subscriber lists, but concluded it would be a daunting task. Cable companies told the GAO that under current law, the government would need a court order to obtain subscribers lists. Cable officials also told the GAO that subscriber lists constantly change, and that churn in some systems is as high as 10 percent.
After taking such complications into account, Rep. John Dingell (D-Mich.) wondered if there would be any money left to buy set-top converters. Dingell was also one of several lawmakers who lamented that the push to end analog TV broadcasting was being driven by the federal budget. He even went so far as to recall what initiated the DTV transition in the first place.

"It is because of the budget pressures in 1997 that we are still struggling to complete the digital transition the right way," he said. "Sound telecommunications policy cannot be achieved when a bill is being crafted for budget purposes."
Rep. Ed Markey, (D-Mass.) was colorfully skeptical about how the deadline was derived.

"On Jan. 1, 2009, the federal budget will still be in the red as consumers' TVs go black," he said.

And from Rep. Elliot Engel, (D-N.Y.): "This is really a budget bill, not a telecom policy bill."

The one thing most lawmakers agreed on was establishing a deadline, and while Barton said 2008 "is probably frozen," his counterpart in the Senate, Sen. Ted Stevens (R-Alaska), hasn't signed off on it.

The House draft, dubbed the "Digital Television Transition Act of 2005," addresses consumer education, digital channel selection, digital must-carry and a tuner requirement.

The FCC would have to issue a report and order by Dec. 31, 2006 on final digital channel assignments, and complete reconsiderations by July 31, 2007. Congress would have to be updated every six months starting Feb. 1, 2006 on international coordination issues.

The deadline for putting digital tuners all TV sets (with screens 13 inches and larger) would be moved up to July 1, 2006. The current deadline is one year later.

Cable operators would have to carry the primary digital video signals of must-carry broadcasters, and they would have the option of converting it at headends for analog subscribers. However, MSOs who downconvert one signal would have to do the same for all must-carry stations in a market, at least until the end of 2013, when the FCC would be empowered to end the requirement.