NTIA Within a Week of ‘Fully Obligating’ Coupon Money, It Says
NTIA by next week thinks it will “fully obligate” the $1.34 billion Congress appropriated for DTV coupons, Acting NTIA Administrator Meredith Baker told House Telecom Subcommittee Chairman Ed Markey, D-Mass., Friday. She responded to his call for a status report on the coupon program. Reaching the $1.34 billion “ceiling” won’t mean the program has run out of money, but the NTIA will need to halt processing new coupon orders until money from expired coupons has been recycled back into the pool, Baker said.
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Redemption rates currently are 52.3 percent and rising, according to NTIA data for the week ended Dec. 23, when NTIA had $125.3 million in uncommitted money available, enough for about 3.1 million coupons. Two weeks earlier, the agency had a cushion of over 5.7 million coupons. Not only are redemptions rising, but so are average daily orders. For months on end, average daily orders hovered no higher than 107,000. For the week ended Dec. 23, the NTIA accepted an average of 240,300 in daily coupon orders. At that burn rate, the program would run out of available funding by Jan. 5, not counting any money recycled into the program from unredeemed coupons. IBM, NTIA’s contractor, recycles money into the pool once a week, the agency has told us.
As recently as early November, the NTIA said halting orders until money from unredeemed coupons became available for obligation was an “unlikely” scenario, but it if did happen, it could mean perhaps a month’s delay in processing new requests (CD Dec 17 p3). Baker didn’t specify to Markey how long the NTIA thinks it would need to hold orders. But the agency “realizes” any interruption “would likely result in consumer confusion and dissatisfaction with the program,” she said.
The Bush administration opposes an Anti-Deficiency Act exception to lift the $1.34 billion ceiling, Baker told Markey. “The ADA provides well accepted principles of sound financial management that protect the taxpayer from spending in excess of appropriations.” 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 the old ones to expire and the money from them to be recycled into the pot.
Baker seemed to have no objection to raising the $1.34 billion “statutory cap” when Markey asked whether she thinks lifting the cap would be necessary to meet coupon demand. “The program’s statutory cap could be raised for coupons and, potentially, for administrative costs, in order to avoid queuing requests, which would begin to occur once the program reached its obligation limit of $1.34 billion in coupons,” Baker said. Raising the cap could allow the NTIA to distribute up to 56.5 million coupons -- 5 million more than currently targeted -- by the time the program stops taking orders in the spring, she said.
With or without the NTIA’s support, Markey thinks “it is becoming increasingly clear that at minimum Congress may need to quickly pass additional funding for the converter box program in early January to prevent any delay in coupon availability or issuance,” he said in a written statement headlined, “Success or Failure of DTV Transition Still Hangs in the Balance.”
“The challenges posed by the DTV switch cannot be underestimated,” Markey said in the statement, which accompanied his release of Baker’s responses. “The expected surge in consumer demand for converter box coupons is occurring and the fact that NTIA now projects it will have to delay or possibly deny the issuance of converter box coupons to consumers without additional funding is of great concern. Moreover, lingering consumer confusion over aspects of the transition and an apparent lack of converter box availability and call center capability pose additional threats to success of the transition.”
A Hill official said Congress will need to address the ADA exception soon after it reconvenes next week. But an exception would only get the coupon program past the hurdle of bringing coupon processing to a halt, the official said. Any broader need for more money beyond the $1.34 billion statutory cap is something the new Obama administration will need to address in concert with Congress after Jan. 20, the official said.
Finding a box to buy for those who land a coupon could be another program quandary, Markey said in his statement. Consumers who try to redeem coupons between now and June could find available converter box supplies about 2.5 million boxes short, Baker told Markey. The estimate assumes 11 million more boxes will be available for purchase through June and that redemption rates hover around 60 percent, Baker said. “The NTIA and IBM will continue to work closely with participating retailers, Congress and the incoming administration to keep retailers informed on coupon program demand so that they are able to adequately meet consumer demand for converter boxes through the life of the program,” Baker said. “NTIA has found that retailers have generally kept pace with the announced number of coupons available, and would work to ensure inventory is available if additional coupons are to be distributed.”