Paul Gluckman

Based on its belief that Microtune’s is the only tuner chipset for coupon-eligible converter boxes that’s “fully compliant” with ATSC A/74 receiver specifications, “we question how any converter box that didn’t contain an A/74- compliant tuner could pass certification,” Microtune CEO James Fontaine told analysts Monday in a quarterly earnings call. In side-by-side tests of Microtune-based boxes and CECBs with rival chipsets, “we found that certain certified boxes that are currently and widely available in the national retail chains failed at government mandated specification on multiple channels,” Fontaine said. Microtune chips are in 11 of the 70-odd CECBs that have been certified, including EchoStar’s, he said. The issue Microtune raised in the letter it wrote NTIA last month (CD March 27 p17) “is a critical one,” Fontaine said. “We are concerned that U.S. taxpayers may be subsidizing defective products via the converter box coupon program that do not meet the government’s own performance requirements, and which may in fact result in loss of TV signals for unsuspecting consumers.” Microtune thinks the NTIA “has taken the complaint very seriously,” Fontaine said. “It is our understanding that the NTIA is currently conducting a confidential investigation concerning the issue raised by Microtune.”

California and Texas in the week ended Friday became the first states to exceed a million DTV coupon requests, NTIA data show. Californians have ordered 1,070,591 coupons since Jan. 1, Texans, 1,035,480. The 11.89 million coupons ordered nationally were 53 percent of 22.25 million in the program’s “base” phase, when all households are eligible to apply. At the rate through Friday of 104,300 coupon requests a day, the 22.25 million would run out by Aug. 4 if all are redeemed. If they run out, 11.25 million coupons in a “contingent” phase will be offered to households getting TV only through antennas.

NTIA estimates 420,000 nursing-home residents will seek DTV coupons under a waiver the agency proposed in a rulemaking notice in Thursday’s Federal Register (CD April 25 p13). However, an NTIA filing the same day at the Office of Management and Budget puts the number of nursing home applicants at 13 million. But 420,000 is the correct estimate, an NTIA spokesman said. “At first review, this is a typo,” he said of the filing at OMB. Both the rulemaking notice and the OMB filing estimate 340,000 households will apply for coupons if the program is opened up to consumers receiving mail at post office boxes.

DTV coupon orders are on pace this week to exceed half the 22.25 million coupons available in the program’s current “base” phase, NTIA data show. Slightly more than 5.6 million households had ordered 10.6 million coupons as of Monday, NTIA said. That 90 percent of households are ordering two coupons at a time differs sharply from IBM’s estimate in its proposal to NTIA that 25 percent would do so. At today’s request rate, and if all coupons are redeemed, the 22.25 million would run out by Aug. 7. A “contingent” phase has funds for 11.25 million more coupons, but they will be open only to households certifying that they get over-the-air TV only.

FCC field agents have slapped a dozen CVS stores in the Baltimore and Detroit areas with citations the past three weeks alleging violations of the commission’s analog-only labeling order.

CEA filed a motion to intervene on the FCC’s behalf in low-power TV’s suit on coupon-eligible converter boxes. The Community Broadcasters Association filed suit March 26 in U.S. Appeals Court for the District of Columbia Circuit, urging the court to declare that coupon-eligible boxes violate the All-Channel Receiver Act(CD March 27 p4). CE manufacturers and retailers “maintain sizable inventories” of coupon-eligible boxes in anticipation of NTIA’s distribution of up to 33.5 million $40 coupons, CEA’s motion said. Many of the broadcasters group’s arguments are “grievously erroneous and highly misleading,” and CEA said its involvement in the case would help the court reach “an informed decision.”

The FCC whip cracked Thursday against 18 CE companies for mislabeling analog-only TV sets, leaving full V-chip functionality out of DTV sets or shipping analog-only sets with no digital tuners. Notices of apparent liability propose fines totaling $6.6 million against 11 companies. Consent decrees totaling $3.4 million were adopted against seven CE makers for violating requirements that DTV sets’ V- chips adopt content advisory rating system changes. The NALs and consent decrees were adopted Wednesday. Early Thursday, the FCC canceled an open meeting whose agenda included the actions.

Return rates on coupon-eligible converter boxes at Best Buy and RadioShack are lower than for other CE products, the retailers said. Neither those companies nor the other two major chains -- Circuit City and Wal-Mart -- promoting coupon-eligible boxes give details on returns, the chains told us. “Returns so far for the DTV converter box are well below the comparable return rate of like products in our line,” RadioShack said in a written statement.

NTIA retailer sign-ups for the DTV coupon program ended Monday with about 640 certified dealers representing just over 11,200 storefronts, the agency said. It said 4.8 million households had requested 9.1 million coupons since the program began Jan. 1. That’s 41 percent of the 22.25 million coupons available in the program’s base phase.

The Community Broadcasters Association reversal on analog-passthrough converter boxes raises “legitimate questions about the true motives of its litigation strategy,” a CEA spokesman told us. “Having successfully convinced the NTIA and manufacturers to make numerous certified boxes with analog passthrough available to consumers, CBA now completely reverses itself and argues against such boxes” in its U.S. Appeals Court for the District of Columbia complaint (CD March 31 p11), the spokesman said. “CBA should be educating its viewers about the DTV transition and choosing the right converter box,” he said. “Instead, it uses constantly shifting and increasingly expensive legal tactics in a desperate effort to derail the DTV transition and transform it into perpetual analog preservation.” CBA claims to have been consistent in opposing analog-blocking DTV converter boxes the last 18 months and is stumped on why it never raised analog passthrough or dual-tuner converter boxes in oral or written testimony it gave at an Oct. 31 House Telecom Subcommittee hearing on the DTV transition, Peter Tannenwald, CBA outside counsel, told us in an e-mail. In the days before, the CBA was caught up in its annual convention in Las Vegas, he said. Its president, Ron Bruno, even had to leave the event early to testify, Tannenwald said. Only at the convention had CBA first “gotten wind” from CE makers about the availability of only a few coupon-eligible boxes with analog passthrough, he said. Perhaps CBA “had not really thought through the implications” when Bruno testified, said Tannenwald. Nor had CBA done “any of the legal research that led us to discover the applicability of the All Channel Receiver Act” -- the basis of its D.C. Circuit complaint that coupon-eligible boxes lacking analog tuners should be declared illegal, Tannenwald said.