NTIA to Raise Its Coupon Distribution Goal to 51.5 Million
Raising its forecast by a million coupons from a projection in November, NTIA now expects to have accepted orders for 51.5 million DTV coupons when it stops taking applications March 31, but thinks the number easily could go higher, we've learned. Marking two months until the analog cutoff Feb. 17, the agency will announce this week that it has ordered a million more coupons from IBM.
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The agency also is expected to say 16.75 million coupons have been redeemed. That’s half the 33.5 million total coupons available for redemption using the $1.34 billion that Congress authorized in the DTV Transition and Public Safety Act. At the current 52 percent redemption rate, distributing 51.5 million coupons would produce about 27 million transactions at retail and return about $268 million to the U.S. Treasury from unused coupons once the program goes out of business next summer.
Beyond the $160 million that the act authorized NTIA to spend only on administrative costs, legislation signed into law in September gave NTIA “statutory flexibility” to spend up to $20 million to send out extra coupons using money recycled into the pool from expired coupons, NTIA said in a “final phase plan” last month. Of the $20 million, the agency used $7 million “to fund full processing capacity at 50.5 million coupons,” the plan said. The other $13 million “will only be used if other needs arise,” the plan said. “Permissible uses” of the $13 million would be paying to mail more than 50.5 million coupons, NTIA told us. It’s not known how much of the $13 million the agency will spend to get to 51.5 million coupons or more distributed if demand continues.
NTIA thinks its “Apply, Buy and Try” campaign -- which grew out of lessons of the early analog cutoff in Wilmington, N.C., in September -- has spurred the recent rise in coupon demand, we're told. Average daily orders hovered around 104,000 coupons for months but grew to about 125,000 in mid- October, when “Apply, Buy and Try” kicked in. By Dec. 9, the latest date that figures are available for, daily orders spiked to more than 203,500 coupons average for the previous seven days.
In its plan, NTIA forecast one scenario in which average daily orders consistently exceed 214,000. Though that outcome is “theoretically possible” and was based on what NTIA learned in Wilmington, “as a practical matter, it is highly unlikely to be realized,” the plan said. If it came true, “this scenario is clearly beyond the program’s means” because come mid-January, NTIA “may have to hold requests for a month or longer as recycled funds from unredeemed and expired coupons become available,” the agency said. “If coupon request data demonstrates that this scenario is likely to happen, NTIA will notify the Congress and address the matter as quickly as possible.” We asked NTIA whether the recent 203,500 requests daily had sparked such a congressional notification. We were told only that NTIA “is in regular communication with congressional leaders regarding program operations, including coupon requests and redemption information.”
The 214,000 a day scenario would overwhelm “the program’s capacity to timely distribute coupons,” and the $1.34 billion in coupon funding could become “fully obligated” by mid-January, when 49 million coupons will have been issued, the plan said. “At that point, the de-obligated coupon funds from expiring and unredeemed coupons would be insufficient to meet demand. Although the program could honor an additional 2.5 million coupon requests over the first quarter, these requests could be held for a month or longer until funds became available.”
NTIA officials are reluctant to speak even privately about reports that they want Congress to lift the $1.34 billion ceiling. Lifting the ceiling wouldn’t increase the number of coupons that can be redeemed above the 33.5 million authorized by law. But it would allow NTIA the flexibility of sending out new coupons without having to wait for old ones to expire and the money from them to be recycled back into the pot. A House Commerce Committee spokesman said NTIA hasn’t even raised the idea.
Under the maximum-demand scenario, which foresees the agency’s accepting orders for 62 million coupons, NTIA would need to put applicants on waiting lists because IBM de- obligates money from unredeemed coupons only once a week under its contract with the agency, we're told. That’s at the time IBM produces a so-called “negative file” listing not only coupons that have expired but also vouchers that have been lost or stolen and likewise can’t be replaced, according to the IBM contract. The Commerce Department’s National Institute of Standards and Technology uses the list to de- obligate money or stop payments to retailers, the contract says.
As long as coupon orders and redemption rates don’t spike and money from unredeemed expired coupons keeps getting recycled back into the pool of “funds available,” NTIA thinks it’s in safe waters, we're told. The $231.3 million available Dec. 9 meant a cushion of about 5.8 million coupons, including 3.4 million available to all households and 2.4 million to those that receive TV through an antenna alone, agency data show.