Only Over-the-Air TV Homes Would Qualify For $40 Subsidy In Proposed Rules

The coupons would be distributed first-come, first- served to households with street addresses -- no post office boxes allowed -- that apply Jan. 1, 2008-March 31, 2009, NTIA said. Households that subscribe to cable or satellite would be ineligible “even if they have one or more analog-only television receivers connected to such service,” NTIA said. It seeks comment on any other “eligibility factors” it should consider -- including means-testing -- but notes that the legislation doesn’t provide for it. NTIA said “it’s possible” coupon requests will exceed availability and asks if there are other restrictions it should consider to stretch the supply. “On the other hand, if the demand for coupons is low, should NTIA consider expanding its eligibility requirements?” the agency asks.

A household may qualify for up to 2 coupons, but NTIA says they can’t be used together to buy one converter box -- a stipulation in the law. Fraud prevention proposals abound in the rulemaking, including plans to place identifying serial numbers on the coupons to track the number issued, used and redeemed. NTIA also asks whether it should consider using an electronic coupon card. Coupon holders would be barred from returning a converter box for a cash refund or credit toward purchase of another item in the store, although NTIA would permit an “even exchange” of a defective box for another certified one. NTIA said it plans to use a “computer-based application system” to prevent duplicate requests for coupons and “other potential abuses.”

“Self-certification” is the governing principle of the proposed rules as they apply to consumers, retailers and converter-box makers. NTIA said it could have proposed 3rd- party certification -- as many industry-watchers had speculated it might -- but it opted for self-certification because it felt it would be least costly and burdensome on retailers and manufacturers. A household must certify it doesn’t subscribe to cable or satellite, and if it requests more than one coupon, it must certify it has more than one analog-only over-the-air TV. Coupons would expire 3 months after they're issued, which NTIA proposes should be the date they're dropped in the mail. It proposes that the expiration date be printed directly on the coupon to “encourage consumers to obtain the necessary converter boxes in a timely manner.”

CE makers would self-certify their boxes as eligible for the program. The box should be capable of receiving, decoding and presenting video and audio from DTV transmissions as specified under ATSC’s A/52A, A/53C and A/65B standards, NTIA said. Under the proposed rules, a converter box would eligible if it: (1) “Appropriately processes” all ATSC RF signals provided to the antenna-only input and then provides output signals in standard definition video for display on an NTSC TV or monitor. (2) Delivers NTSC composite video and stereo audio to drive NTSC monitors. (3) Delivers Ch. 3 or 4 switchable NTSC RF output for TV receivers. (4) Complies with the FCC’s closed-captioning, EAS and V-chip rules. (5) Can be operated by and includes a remote control. (5) Tunes to TV Ch. 2-69.

The only input allowed on the converter box would be for an external antenna, the rulemaking says. The required outputs are Ch. 3 or 4 (NTSC modulated signals), composite video (NTSC baseband), and audio (stereo). The single “Type F” input connector “ensures that only an antenna can be connected to eligible boxes, thus ensuring use of such boxes as for over-the-air television reception only,” NTIA says. The Ch. 3 or 4 Type F analog output “ensures that older style NTSC analog television receivers can be connected to eligible boxes,” it says. The composite video and stereo audio (all 3 RCA connectors) ensures that other NTSC analog monitors can also connect to the boxes, it says.

Though manufacturers would be required to certify their boxes as meeting the standards in the rules, NTIA “reserves the right to test the converter boxes that have been self- certified by the manufacturer to ensure that they meet those standards,” the rulemaking says. Specifically excluded will be digital cable boxes, NTIA says: “We also do not intend to accept certifications for converter boxes that have features beyond those necessary to convert an ATSC digital signal to an analog NTSC format.” It seeks comment on “the appropriate minimum technical capabilities” that should be considered in a certification request. How a certified converter box should be identified for a consumer is another subject NTIA seeks comments on. It asks whether it should print a list of eligible boxes and send them with the coupons, post a listing on the Internet, or leave it to retailers to educate consumers in ads or at the point of sale.

Retailer participation is voluntary, and retailers that take part won’t be paid by NTIA, the rulemaking says: “We propose to permit consumers to redeem coupons at retailers that have established production and distribution channels and who have demonstrated that they can redeem coupons expeditiously and efficiently. We note that retailers are also typically familiar with coupon programs and have systems in place to process coupons. We are also interested in retailers that can handle converter box purchases with the coupons via mail, phone or the Internet-based sales.”

To participate, a retailer must certify “under penalty of law” that they will follow program rules and use systems

that can be “easily audited” and can prevent fraud and abuse. The rulemaking doesn’t specify proposed penalties for violations. Retailers that take part must be: (1) Willing to be audited any time during the course of the program. (2) Able to electronically provide NTIA sales information related to coupons used in the purchase of converter boxes, specifically tracking each serialized coupon by number with a corresponding certified converter box purchase. The rulemaking also proposes that retailers be required to submit coupons for reimbursement within 30 days after consumer redemption and to keep hard copies of all coupon transactions a year.

The rulemaking proposes little specifically on what NTIA plans for a consumer education campaign, but says it’s required by law to mount an effort and suggests the $5 million allocation won’t be enough. “Considering the costs of media production and paid advertising time, the $5,000,000 limit necessitates that NTIA carefully leverage the program’s consumer education spending by collaborating with and complementing the consumer education efforts of broadcasters, equipment manufacturers, retailers, consumer groups and others with a stake in a successful and timely transition to digital television broadcasting,” the rulemaking says. Any NTIA consumer outreach will only be successful if other “stakeholders… contribute significant effort to the production and distribution of this information,” it says.

Industry reaction to the rulemaking was slow in coming Mon. NAB said it had always expected that homes relying exclusively on broadcast TV “would be given priority by NTIA when it adopts DTV converter-box rules. However, we would hope that no broadcast-only TV sets are forced to go dark during this transition.” NAB said it will continue working with policymakers to ensure “minimal consumer disruption” as the Feb. 2009 cutoff approaches. Advocates & Chipmakers Welcome NTIA Proposal on Energy Standards

Energy advocates and a chip maker welcomed the NTIA decision to consider adopting energy efficiency standards for DTV converter boxes. The agency sought comment on whether it should consider energy consumption standards in determining the type of boxes eligible for the subsidy and how the standards would affect the program. The NTIA’s decision comes on the heels of the EPA’s decision to set voluntary standards for the boxes. The EPA will offer suggestions for the NTIA’s consideration of standards, Katherine Osdoba, Energy Star mgr. for consumer electronics, told us.

The National Resource Defense Council (NRDC) is “encouraged” that the NTIA is considering whether energy requirements should be “added as a condition” for the converter box rebate, said Senior Scientist Noah Horowitz: “We think that if the federal government is going to spend almost a $1 billion in rebates that at a minimum those boxes should be reasonably energy efficient.” The NRDC recommends a 2-tier system with all boxes earning a $25-$30 rebate and the energy efficient ones that meet Energy Star limits eligible for $40-$50 rebates. According to rough estimates of the boxes’ energy use over 5 years, “we could cut the nation’s [electric] bill by $1 billion if these boxes are efficient,” Horowitz said.

Douglas Johnson, CEA senior dir.-technology policy, wouldn’t elaborate on the industry’s position, saying only that “CEA looks forward to providing comments on issues and questions presented in the NTIA’s NPRM, including those related to energy use.” As the industry continues to press the Cal. Energy Commission (CEC) to withdraw its 1 w standby and 8 w active limit, “we maintain our focus on industry-led standards and the new Energy Star specification” for the boxes, he added.

Ken Salomon, attorney for a converter box chipmaker, called it “great” that the NTIA and EPA are taking up energy use of the boxes: “This is an issue that calls for a federal solution.” He said with the “artificial constraints” imposed by Congress concerning price points and short production runs, varying state standards would make it hard for manufacturers to get boxes on the market in a timely way and at low prices. “So it is imperative that rules for the boxes get adopted as quickly as possible… and that this energy consumption issue get resolved so that orders can be placed and devices can be manufactured and shipped.” A federal standard that can be met quickly is needed, Salomon said. He said he didn’t believe the NTIA is allowed to adopt a tiered rebate system like the one NRDC proposes.

The NTIA has voiced concern about state regulation impeding the digital transition, said John Wilson, adviser to CEC Comr. Arthur Rosenfeld: “They want it to go smoothly and we want it to go smoothly as well.” For now, the CEC doesn’t believe that making the boxes more energy efficient will upset the transition schedule, he added: “But that is something that the Commission will certainly pay attention to, realizing manufacturers will have to make decisions about their designs and so forth.”