THE STATUS OF THE DIGITAL TELEVISION

TRANSITION

HEARINGS

BEFORE THE

SUBCOMMITTEE ON TELECOMMUNICATIONS AND

THE INTERNET

OF THE

COMMITTEE ON ENERGY AND

COMMERCE

HOUSE OF REPRESENTATIVES

ONE HUNDRED TENTH CONGRESS

FIRST SESSION

MARCH 28, OCTOBER 17, 31, 2007

Serial No. 110–27

(

Printed for the use of the Committee on Energy and Commerce

energycommerce.house.gov
U.S. GOVERNMENT PRINTING OFFICE

WASHINGTON : 

For sale by the Superintendent of Documents, U.S. Government Printing Office

Internet: bookstore.gpo.gov Phone: toll free (866) 512–1800; DC area (202) 512–1800

Fax: (202) 512–2104 Mail: Stop IDCC, Washington, DC 20402–0001

45–347 PDF 2008

THE STATUS OF THE DIGITAL TELEVISION

TRANSITION

HEARINGS

BEFORE THE

SUBCOMMITTEE ON TELECOMMUNICATIONS AND

THE INTERNET

OF THE

COMMITTEE ON ENERGY AND

COMMERCE

HOUSE OF REPRESENTATIVES

ONE HUNDRED TENTH CONGRESS

FIRST SESSION

MARCH 28, OCTOBER 17, 31, 2007

Serial No. 110–27

(

Printed for the use of the Committee on Energy and Commerce

energycommerce.house.gov
THE STATUS OF THE DIGITAL TELEVISION TRANSITION
COMMITTEE ON ENERGY AND COMMERCE

JOHN D. DINGELL, Michigan, Chairman

HENRY A. WAXMAN, California

EDWARD J. MARKEY, Massachusetts

RICK BOUCHER, Virginia

EDOLPHUS TOWNS, New York

FRANK PALLONE, JR., New Jersey

BART GORDON, Tennessee

BOBBY L. RUSH, Illinois

ANNA G. ESHOO, California

BART STUPAK, Michigan

ELIOT L. ENGEL, New York

ALBERT R. WYNN, Maryland

GENE GREEN, Texas

DIANA DEGETTE, Colorado

Vice Chairman

LOIS CAPPS, California

MIKE DOYLE, Pennsylvania

JANE HARMAN, California

TOM ALLEN, Maine

JAN SCHAKOWSKY, Illinois

HILDA L. SOLIS, California

CHARLES A. GONZALEZ, Texas

JAY INSLEE, Washington

TAMMY BALDWIN, Wisconsin

MIKE ROSS, Arkansas

DARLENE HOOLEY, Oregon

ANTHONY D. WEINER, New York

JIM MATHESON, Utah

G.K. BUTTERFIELD, North Carolina

CHARLIE MELANCON, Louisiana

JOHN BARROW, Georgia

BARON P. HILL, Indiana

JOE BARTON, Texas

Ranking Member

RALPH M. HALL, Texas

J. DENNIS HASTERT, Illinois

FRED UPTON, Michigan

CLIFF STEARNS, Florida

NATHAN DEAL, Georgia

ED WHITFIELD, Kentucky

BARBARA CUBIN, Wyoming

JOHN SHIMKUS, Illinois

HEATHER WILSON, New Mexico

JOHN B. SHADEGG, Arizona

CHARLES W. ‘‘CHIP’’ PICKERING,

Mississippi

VITO FOSSELLA, New York

STEVE BUYER, Indiana

GEORGE RADANOVICH, California

JOSEPH R. PITTS, Pennsylvania

MARY BONO, California

GREG WALDEN, Oregon

LEE TERRY, Nebraska

MIKE FERGUSON, New Jersey

MIKE ROGERS, Michigan

SUE WILKINS MYRICK, North Carolina

JOHN SULLIVAN, Oklahoma

TIM MURPHY, Pennsylvania

MICHAEL C. BURGESS, Texas

MARSHA BLACKBURN, Tennessee

PROFESSIONAL STAFF

DENNIS B. FITZGIBBONS, Chief of Staff

GREGG A. ROTHSCHILD, Chief Counsel

SHARON E. DAVIS, Chief Clerk

DAVID CAVICKE, Minority Staff Director

(II)
(III)

SUBCOMMITTEE ON TELECOMMUNICATIONS AND THE INTERNET

EDWARD J. MARKEY, Massachusetts, Chairman

MIKE DOYLE, Pennsylvania

Vice Chairman

JANE HARMAN, California

CHARLES A. GONZALEZ, Texas

JAY INSLEE, Washington

BARON P. HILL, Indiana

RICK BOUCHER, Virginia

EDOLPHUS TOWNS, New York

FRANK PALLONE, JR, New Jersey

BART GORDON, Tennessee

BOBBY L. RUSH, Illinois

ANNA G. ESHOO, California

BART STUPAK, Michigan

ELIOT L. ENGEL, New York

GENE GREEN, Texas

LOIS CAPPS, California

HILDA L. SOLIS, California

JOHN D. DINGELL, Michigan (ex officio)

FRED UPTON, Michigan

Ranking Member

J. DENNIS HASTERT, Illinois

CLIFF STEARNS, Florida

NATHAN DEAL, Georgia

BARBARA CUBIN, Wyoming

JOHN SHIMKUS, Illinois

HEATHER WILSON, New Mexico

CHARLES W. ‘‘CHIP’’ PICKERING,

Mississippi

VITO FOSSELLA, New York

GEORGE RADANOVICH, California

MARY BONO, California

GREG WALDEN, Oregon

LEE TERRY, Nebraska

MIKE FERGUSON, New Jersey

JOE BARTON (ex officio)

(V)

C O N T E N T S

MARCH 28, 2007

Page

Barton, Hon. Joe, a Representative in Congress from the State of Texas,

opening statement ................................................................................................ 10

Blackburn, Hon. Marsha, a Representative in Congress from the State of

Tennessee, opening statement ............................................................................ 15

Dingell, Hon. John D., a Representative in Congress from the State of Michigan, opening statement ....................................................................................... 4

Doyle, Hon. Mike, a Representative in Congress from the Commonwealth

of Pennsylvania, opening statement ................................................................... 13

Green, Hon. Gene, a Representative in Congress from the State of Texas,

opening statement ................................................................................................ 13

Harman, Hon. Jane, a Representative in Congress from the State of California, opening statement ........................................................................................ 9

Markey, Hon. Edward J., a Representative in Congress from the Commonwealth of Massachusetts, opening statement .................................................... 1

Pallone, Hon. Frank, Jr., a Representative in Congress from the State of

New Jersey, opening statement .......................................................................... 9

Shimkus, Hon. John, a Representative in Congress from the State of Illinois,

opening statement ................................................................................................ 6

Solis, Hon. Hilda L., a Representative in Congress from the State of California, opening statement ........................................................................................ 12

Stupak, Hon. Bart, a Representative in Congress from the State of Michigan,

opening statement ................................................................................................ 7

Terry, Hon. Lee, a Representative in Congress from the State of Nebraska,

opening statement ................................................................................................ 14

Towns, Hon. Edolphus, a Representative in Congress from the State of New

York, opening statement ...................................................................................... 15

Upton, Hon. Fred, a Representative in Congress from the State of Michigan,

opening statement ................................................................................................ 2

Walden, Hon. Greg, a Representative in Congress from the State of Oregon,

opening statement ................................................................................................ 8

WITNESSES

Britt, Glenn A., president and chief executive officer, Time Warner Cable ....... 47

Prepared statement .......................................................................................... 49

Fetchet, Mary, founding director, Voices of September 11th ............................... 56

Prepared statement .......................................................................................... 59

Nogales, Alex, president and chief executive officer, National Hispanic Media

Coalition ................................................................................................................ 43

Prepared statement .......................................................................................... 45

Taylor, John I., senior vice president, LG Electronics, USA, Incorporated ........ 16

Prepared statement .......................................................................................... 18

Vitelli, Michael, senior vice president, consumer electronics and product Management, Best Buy, Inc. ....................................................................................... 65

Prepared statement .......................................................................................... 68

Yager, K. James, chief executive officer, Barrington Broadcasting Company,

LLC ........................................................................................................................ 21

Prepared statement .......................................................................................... 23

SUBMITTED MATERIAL

‘‘What You Need to Know About the February 17, 2009 ‘DTV Transition’’’

Consumer Electronics Retailers Coalition ......................................................... 104
Page

VI

‘‘Digital Television Transition Campaign Plan’’ prepared by Jonathan

Collegio, National Association of Broadcasters ................................................. 108

Comments of the Association for Maximum Service Television, et al., letter

of September 25, 2006 to NTIA .......................................................................... 130

RCA press release of March 12, 2007 .................................................................... 163

David H. Arland, vice president, marketing,Thomson, letter of March 27,

2007 to Messrs. Markey and Upton ................................................................... 165

OCTOBER 17, 2007

Barton, Hon. Joe, a Representative in Congress from the State of Texas,

opening statement ................................................................................................ 176

Capps, Hon. Lois, a Representative in Congress from the State of California,

prepared statement .............................................................................................. 185

Deal, Hon. Michael F., a Representative in Congress from the Commonwealth

of Pennsylvania, opening statement ................................................................... 172

Dingell, Hon. John D., a Representative in Congress from the State of Michigan, opening statement ....................................................................................... 171

Doyle, Hon. Mike, a Representative in Congress from the Commonwealth

of Pennsylvania, opening statement ................................................................... 173

Eshoo, Hon. Anna G., a Representative in Congress from the State of California, opening statement ........................................................................................ 175

Ferguson, Hon. Mike, a Representative in Congress from the State of New

Jersey, opening statement ................................................................................... 179

Green, Hon. Gene, a Representative in Congress from the State of Texas,

opening statement ................................................................................................ 180

Inslee, Hon. Jay, a Representative in Congress from the State of Washington,

opening statement ................................................................................................ 182

Markey, Hon. Edward J., a Representative in Congress from the Commonwealth of Massachusetts, opening statement .................................................... 167

Solis, Hon. Hilda L., a Representative in Congress from the State of California, opening statement ........................................................................................ 178

Stearns, Hon. Cliff, a Representative in Congress from the State of Florida,

opening statement ................................................................................................ 182

Stupak, Hon. Bart, a Representative in Congress from the State of Michigan,

opening statement ................................................................................................ 184

Terry, Hon. Lee, a Representative in Congress from the State of Nebraska,

opening statement ................................................................................................ 181

Towns, Hon. Edolphus, a Representative in Congress from the State of New

York, prepared statement .................................................................................... 185

Upton, Hon. Fred, a Representative in Congress from the State of Michigan,

opening statement ................................................................................................ 169

Walden, Hon. Greg, a Representative in Congress from the State of Oregon,

opening statement ................................................................................................ 174

WITNESSES

Benjamin, Michael, executive director, Family, Career, and Community Leaders of America ....................................................................................................... 308

Prepared statement .......................................................................................... 310

Answers to submitted questions ...................................................................... 355

Fazlullah, Amina, staff attorney, media and telecommunications, U.S. Public

Interest Research Group ...................................................................................... 299

Prepared statement .......................................................................................... 302

Answers to submitted questions ...................................................................... 360

Goldstein, Mark L., Director, Physical Infrastructure Issues, U.S. Government

Accountability Office ............................................................................................ 229

Prepared statement .......................................................................................... 231

Answers to submitted questions ...................................................................... 363

Kneuer, John M.R., Assistant Secretary, Communications and Information,

National Telecommunications and Information Administration, U.S. Department of Commerce ........................................................................................ 186

Prepared statement .......................................................................................... 189

Answers to submitted questions ...................................................................... 369

Martin, Kevin J., Chairman, Federal Communications Commission .................. 207

Prepared statement .......................................................................................... 211

Answers to submitted questions ...................................................................... 401
Page

VII

Romeo, Tom, director, Federal services, Global Business Service, IBM Corporation ................................................................................................................. 326

Prepared statement .......................................................................................... 328

Stout, Claude, executive director, Telecommunications for the Deaf and Hard

of Hearing, Inc., on behalf of the Coalition of Organizations for Accessible

Technology ............................................................................................................ 283

Prepared statement .......................................................................................... 286

Answers to submitted questions ...................................................................... 421

Zirkin, Nancy M., vice president/director of public policy, Leadership Conference on Civil Rights ......................................................................................... 315

Prepared statement .......................................................................................... 317

Answers to submitted questions ...................................................................... 426

SUBMITTED MATERIAL

‘‘Broadcasters Announce Comprehensive $697 million Campaign to Educate

Consumers about the February 17, 2009 Transition to Digital Television

(DTV),’’ DTVAnswers .com, October 15, 2007 .................................................... 431

Kyle McSlarrow, president and chief executive officer, National Cable and

Telecommunications Association, letter of September 6, 2007 to Messrs.

Dingell, Barton, Markey and Upton ................................................................... 438

‘‘Univision Communications Inc. Launches Industry’s First Digital Television

Conversion Education Campaign,’’ Univision press release, October 1, 2007 442

Hon. Fred Upton, ‘‘Auction the Spectrum’s ‘White Spaces,’’’ op-ed, The Hill,

October 16, 2007 ................................................................................................... 444

OCTOBER 31, 2007

Capps, Hon. Lois, a Representative in Congress from the State of California,

opening statement ................................................................................................ 452

Eshoo, Hon. Anna G., a Representative in Congress from the State of California, opening statement ........................................................................................ 449

Green, Hon. Gene, a Representative in Congress from the State of Texas,

opening statement ................................................................................................ 450

Harman, Hon. Jane, a Representative in Congress from the State of California, opening statement ........................................................................................ 449

Markey, Hon. Edward J., a Representative in Congress from the Commonwealth of Massachusetts, opening statement .................................................... 447

Radanovich, Hon. George, a Representative in Congress from the State of

California, opening statement ............................................................................. 451

Solis, Hon. Hilda L., a Representative in Congress from the State of California, opening statement ........................................................................................ 451

Stearns, Hon. Cliff, a Representative in Congress from the State of Florida,

opening statement ................................................................................................ 451

Upton, Hon. Fred, a Representative in Congress from the State of Michigan,

opening statement ................................................................................................ 448

WITNESSES

Abbott, Jonathan, president and chief executive officer, WGBH, Boston, MA ... 583

Prepared statement .......................................................................................... 585

Answers to submitted questions ...................................................................... 644

Barrett, David J., president and chief executive officer, Hearst-Argyle Television, Incorporated, New York, NY ................................................................... 467

Prepared statement .......................................................................................... 469

Bruno, Ron, president, Community Broadcasters Association, president,

Bruno-Goodworth Network, Inc., Pittsburgh, PA .............................................. 453

Prepared statement .......................................................................................... 456

Knorr, Patrick, president, and general manager, Sunflower Broadband, Lawrence, KS ............................................................................................................... 458

Prepared statement .......................................................................................... 460

Swanson, Dennis, president, station operations, Fox Televsion Stations,

Incorportated, New York, NY .............................................................................. 556

Prepared statement .......................................................................................... 558

Taylor, John, vice president, government relations and communications, LG

Electronics, Lincolnshire, IL ............................................................................... 599

Prepared statement .......................................................................................... 601
Page

VIII

Uva, Joe, chief executive officer, Univision Communications, Inc., New York,

NY ......................................................................................................................... 550

Prepared statement .......................................................................................... 552

Vitelli, Michael, senior vice president and general manager, Home Solutions

Operating Group, Best Buy, Incorporated, Richfield, MN ................................ 566

Prepared statement .......................................................................................... 568

Answers to submitted questions ...................................................................... 648

Willner, Michael S., vice president and chief executive officer, Insight Communications, New York, NY ................................................................................ 540

Prepared statement .......................................................................................... 542
(1)

THE STATUS OF THE DIGITAL TELEVISION

TRANSITION

WEDNESDAY, MARCH 28, 2007

HOUSE OF REPRESENTATIVES, SUBCOMMITTEE ON TELECOMMUNICATIONS

AND THE INTERNET, COMMITTEE ON ENERGY AND COMMERCE, Washington, DC.

The subcommittee met, pursuant to call, at 10:00 a.m., in room

2123 of the Rayburn House Office Building, Hon. Edward J. Markey (chairman of the subcommittee) presiding.

Members present: Representatives Doyle, Harman, Inslee, Boucher, Towns, Pallone, Stupak, Green, Solis, Dingell, Upton,

Hastert, Deal, Shimkus, Wilson, Walden, Terry, Blackburn, and

Barton.

Staff present: Johanna Shelton, Colin Crowell, Maureen Flood,

Mark Seifert, Tim Powderly, David Vogel, Kyle Chapman, Neil

Fried, and Courtney Reinhard.

OPENING STATEMENT OF HON. EDWARD J. MARKEY, A REPRESENTATIVE IN CONGRESS FROM THE COMMONWEALTH

OF MASSACHUSETTS

Mr. MARKEY. Good morning, ladies and gentlemen and whoever

is watching this on C-SPAN. Twenty-five million people. That is

bigger than ‘‘Dancing with the Stars.’’ If they see this on delay, it

is March 28, 2007. But it has been 80 degrees here in Washington,

and all of these various blossoms are completely confused, and this

is the debate over whether or not global warming is affecting our

country and causing this personality disorder in plant life. I am

saying that I have had such a pollen attack that it is going to affect

how people hear me today, but I am going to be kind of in a Luca

Brasi sound alike contest today, and I don’t have a cold, but——

Mr. UPTON. You are sounding a little bit like Charlie Rangel.

Mr. MARKEY. Charlie Rangel, Luca Brasi, I am not going there,

OK, but there is a, I think, a real problem for many people here

today in Washington. The purpose of today’s hearing is to provide

this subcommittee with a clearer picture of how Government, industry and community groups will work together to ensure that

millions of Americans do not lose free, over-the-air television after

the transition from analog to digital broadcasting on February 17,

2009.

Recent oversight hearings with the Federal Communications

Commission and the NTIA have left this subcommittee with a DTV

transition picture that is fuzzy, at best. If we are going to make
2

sure that all Americans don’t see their analog televisions go dark

on February 17, 2009, we need to start getting better reception

from the parties who are responsible for making sure this digital

transformation is a success.

I truly hope today’s panelists can provide high-definition clarity

to the DTV transition so that we can assure the public it will be

a success for everyone. Let me start by reaffirming my support for

the DTV transition. I held the first HDTV hearing as chairman of

this subcommittee in this room 20 years ago, 1987. We have long

known the benefits of transitioning to digital TV and it is time to

get the job done and done correctly.

If implemented successfully, transitioning broadcast television to

digital service will free up valuable spectrum to enhance public

safety communications, may bring consumers an array of new digital broadcast video and other services and will provide spectrum

that, if also implemented properly, will enhance wireless competition and spur a new wireless broadband deployment and innovation.

Mr. Dingell and I and other Democratic colleagues urged the administration and our Republican colleagues in the last Congress to

ensure sufficient funding for this program so that all of the almost

70 million analog television sets would be covered. The CBO estimated that this would cost roughly $3.6 billion, or more than twice

the amount in the final law. With the relinquished spectrum estimated to garner upwards of $10 billion at auction, there is sufficient money to do this right.

In the last Congress, the Democratic side offered a plan which

allocated enough money to cover every possible applicant for a converter box and we proposed that the remainder of the $10 billion

in auction revenue should be used to fund public safety interoperability and network upgrades. Instead, our colleagues proposed less

than half that amount for converter boxes and only $1 billion for

first responders. In addition, there is only $5 million for consumer

education at NTIA and $1.5 million at the FCC in order to deal

with this issue.

We have to get this job done. That is what this hearing is all

about. We are going to make sure that all of the parties from the

Government and the private sector play their role in protecting the

American right to their television set, turning on when they have

spent their good hard earned money to purchase that set.

And the time of the Chair has expired. I turn and recognize the

gentleman from Michigan, Mr. Upton.

OPENING STATEMENT OF HON. FRED UPTON, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF MICHIGAN

Mr. UPTON. Well, thank you, Mr. Chairman, and I would like to

thank the witnesses for testifying today on this very important

issue. I commend you for holding this extremely important hearing.

The DTV transition is an issue that continues to generate an outstanding amount of attention and it is certainly imperative that the

attention on the issue focuses on the heart and soul of the matter,

and that is giving our first responders, many whom I have met

with this morning in my office, from my district, the resources that

we need to keep America safe.
3

The catalyst for the DTV transition is the post–9/11 realization

that we have to get the 24 MHz of spectrum into the hands of public safety officials for interoperability once and for all. In fact, clearing the 24 MHz was precisely the task which the bipartisan 9/11

Commission, in its recommendations to Congress, also recognized

as a mission very critical to homeland security. And despite the

moral imperative, much of the debate is focused on the NTIA program to provide consumers with coupons for subsidized converter

boxes. And I am confident that the NTIA coupon program is more

than adequate to provide subsidized converter boxes.

According to the National Association of Broadcasters’ testimony

there are a total of 69 million TVs not connected to cable or satellite, including those in homes that subscribe to cable and satellite. They estimate that after a broadcaster sponsored consumer

education campaign, consumers will want subsidized converter

boxes for about a third of those TVs. That makes 23 million subsidized converter boxes well below, well below the 331⁄2 million subsidized converter boxes that the $1.5 billion coupon program is intended to cover.

In fact, I think the initial $990 million will be more than enough

to cover the demand for the subsidized converter boxes based on

the estimates using data from the FCC or the consumer electronics

industry. And according to the CEA, the manufacturers building

the boxes, only 25 million sets will need a converter box by the

transition date and only a third of those will feel that they need

the subsidy, and that is a little more than 8 million boxes which

easily can be covered by funds for the program.

The fact remains that it is in the financial interest of the broadcasters, the satellite and cable folks to make sure that each TVviewing household knows about the DTV transition. The last thing

the industry wants to do is lose viewers. The broadcasters should

be commended for the work that they are going to do to ensure consumers to be aware of that transition and I am confident that they

will continue to do more than their share to ensure that the transition is successful.

It should be noted that the transition has been difficult for our

local broadcasters. Individually, each broadcaster has had to invest

significant sums, often more than a million bucks, to make this

Government imposed transition; not to mention the energy and the

insurance costs for operating both analog and digital facilities at

the same time. Our local broadcasters are to be commended for

doing their part. Had it not been for their hard work and sacrifice,

the transition would not have been possible.

However, if any of my colleagues on either side of the aisle have

doubts or concerns about the industry’s resolve to educate consumers, I would urge them to cosponsor and pass H.R. 608, the Digital

TV Consumer Education Act. Make no mistake, if we alter any of

the fundamental pillars of the DTV Act plan, like changing the

auction date or the spectrum allocations, we jeopardize, jeopardize

the 24 MHz of public safety spectrum and the billion dollar public

safety grant that was included in the legislation. The stakes are too

high to gamble and we have come so far. We should try to risk

avoid strain from that well-plotted course.
4

As I conclude my opening statement, I would just like to highlight a few of the relevant numbers again. Fifteen million exclusively over-the-air homes; 94 million cable and satellite homes. Projected demand for the subsidized converter box is 21.8 million.

Thirty-three and a half million converter boxes are available

through the Federal coupon program, which is, should be, more

than enough to cover the 21.8 million. But the numbers that matter the most are the 24 MHz of spectrum and the billion dollars

for public safety.

I look forward to hearing from the panel today. The 9/11 Commission understood the importance of ensuring that our first responders have the equipment and the spectrum necessary to communicate in times of emergency. I am proud that we were successful in not only passing the DTV transition last Congress, but we

are also providing a helping hand to enable our first responders to

better protect all of America.

Mr. MARKEY. The gentleman’s time——

Mr. UPTON. Oh, wait. If I could just submit a unanimous consent

to put in a letter from Thomson indicating that they will have the

converter sets available by January 1, 2008.

Mr. MARKEY. Without objection it will be included.

Mr. UPTON. And also to allow Congresswoman Blackburn, to sit

in and participate in the normal process, as she is not a member

of this subcommittee?

Mr. MARKEY. Without objection Mrs. Blackburn will be allowed

to participate in the hearing and she will be recognized after all of

the members of the subcommittee have been recognized, but we

welcome you. Thank you. The Chair recognizes the gentleman from

Michigan, the chairman of the committee, Mr. Dingell.

OPENING STATEMENT OF HON. JOHN D. DINGELL, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF MICHIGAN

Mr. DINGELL. Mr. Chairman, I thank you and I commend you for

holding this hearing. This is the first oversight hearing on the digital television transition since the law that set a hard date to turn

off analog television was enacted more than a year ago. I think

that careful oversight is going to be very much needed because I

have great apprehensions that a fine mess lies before us.

Mr. Chairman, consumers deserve a clear picture of the digital

television DTV transition. This committee will work hard in the

coming months to see to it that the public and private stakeholders

are doing all that they should to prepare consumers. Much will be

gained for our country if the transition is done properly and is successful. The timely return of the spectrum will produce significant

public benefits, particularly for the first responders and wireless

innovators.

Indeed, led by my good friend Mr. Stupak of Michigan, many of

us voted to use the bulk of the spectrum auction proceeds, $5.8 billion, for first responder interoperability. Unfortunately, that law

was enacted in the previous Congress and set aside far less funding

for first responders. Decisions being made now by this administration and others will lay the foundation for success of the transition;
5

good decisions that put the consumer first will go far towards ensuring a timely return of the analog broadcast spectrum.

Consumer adoption is the lynchpin of a successful DTV transition. I suspect few consumers know that they will need to purchase

new equipment to keep their analog television sets working. We

must reach all Americans with accurate information about the

transition date and about the coupon program. The law established

a first-come, first-served converter box coupon program. That imposes significant perils on portions of our society that may or may

not be aware of that feature of the law.

When that money runs out many households, including those dependent on free, over-the-air television, for every day for their local

news, weather and emergency alerts may be left with a blank

screen. Retailers must provide consumers with simple and useful

information. When consumers walk into a store, the necessary

equipment, including eligible low-cost converter boxes, must be in

stock and visible on the shelves.

Consumers should see effective informational displays and be

able to pick up coupon applications right at the store where the

boxes are sold. Sales associates should accurately answer questions

and assist coupon holders in obtaining eligible low-cost boxes. Consumer electronics manufacturers must also make certain that affordable converter boxes are produced in sufficient numbers and

available to retailers in the proper timeframe.

Given that coupon distribution will begin in January 2008, I am

curious whether orders have been placed to produce low-cost boxes

and in what quantities. How will manufacturers market, promote

and test the boxes? Will there be installation or antennae assistance? Will product labeling easily identify coupon eligible boxes?

The most crucial part of any consumer education campaign is the

efforts of the broadcast industry, itself. Broadcast television is a

powerful media to reach consumers.

Local broadcasters must begin a thorough public education program as the coupons become available next January. Broadcasters

should also partner with local retailers and community organizations to promote outreach to hard-to-reach populations. Cable operators must also do their part. They must provide accurate and appropriate information to guide their subscribers through this transition. It must be noted that retailers and wholesalers and others

involved in the sales of television equipment must also do their

share and must not sell equipment which will not best suit the

needs and the concerns of the consuming public.

Importantly, Government agencies such as the Federal Communications Commission and the National Telecommunications and

Information Administration must step up their efforts. There has

been too little appreciation for the task of properly informing and

equipping American households. It is the responsibility of the FCC

to inform all Americans about the transition and coordinate the

technical steps required to usher in full digital broadcasting. NTIA

has serious responsibilities here and they must conduct vigorous

consumer outreach regarding the coupon program and they must

keep Congress adequately informed on the progress of their efforts.

As we prepare for February 2009 we should not forget that we

are asking ordinary people to pay for a Government decision that
6

essentially makes their television sets obsolete. For that reason we

should ensure that this transition is as painless as possible for

American consumers and that they have all of the information

needed to protect themselves in what could be a dangerous undertaking for their viewing interests. Thank you, Mr. Chairman.

Mr. MARKEY. The Chair recognizes the gentleman from Illinois,

Mr. Shimkus.

OPENING STATEMENT OF HON. JOHN SHIMKUS, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF ILLINOIS

Mr. SHIMKUS. Thank you, Mr. Chairman. Remember what we did

in the Deficit Reduction Act of 2005? The primary responsibility

was to get 24 MHz up to the first line responders and a billion dollars to help in that transition, but I want to highlight something

that I covered in a hearing of last week; it is up on the screen, it

is up on this placard and it is really the best way to get a hold of

some numbers to understand whether we have enough money or

whether we don’t have enough money.

At last week’s DTV hearing I walked through the converter box

numbers with NTIA, demonstrating that the initial $990 million allocated to the program would cover demand. Some said I did it too

quickly, so I thought I would do it again, this time with some help.

According to the FCC’s most recent estimate, there are 15.36 million exclusively over-the-air homes. NAB’s February 2007 survey

projects that 25 percent of the over-the-air homes may want a subsidized converter box; that comes to 3.84 million homes. Over-theair homes tend to have two televisions for a total of 7.68 million

subsidized converter boxes.

According to the same FCC estimates, there are 94.23 million

cable and satellite homes. According to NAB, 15 percent of cable

and satellite homes may want a subsidized converter box. That

comes out to 14.13 million homes. Those homes are likely to have

only one television not connected to their cable or satellite service,

so that is a total of 14.13 million subsidized converter boxes. If you

add those numbers together you get 21.81 million subsidized converter boxes. That is less than the 22.25 million subsidized converter boxes that the initial $900 million less the administration

costs can fund.

And I would like to point out the consumer electronics industry,

the ones who actually are making and selling the converter boxes,

thinks the numbers needed will be even smaller. I realize that

many of these numbers are estimates, however. If they are accurate, then we are headed in a great direction. When we passed the

Deficit Reduction Act of 2005 with these provisions included and I

personally think we did a good job.

I will end, again, with my primary, my opening part of this was

it is all about dollars and cents and priorities. And the number one

priority is get the spectrum to the first line responders so they can

communicate. The second major responsibility is to make sure that

we have money to help in the interoperability. That is all what this

debate is primarily responsible and I think, budgetary, we can defend the $990 million for the set top converters.

With that, Mr. Chairman, I will yield back my 20 seconds.
7

Mr. MARKEY. The gentlelady from California. Let me go to the

gentleman, if you wouldn’t mind, let me recognize the gentleman

from Michigan. I know he has got to run.

OPENING STATEMENT OF HON. BART STUPAK, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF MICHIGAN

Mr. STUPAK. Thank you, Mr. Chairman, and thanks for holding

this hearing. While I support the transition to digital television, I

do not support legislation passed by the last Congress to implement

the DTV transition because it does not do enough to help consumers and it fell short of what could be done to help public safety.

Nonetheless, the legislation passed and now we have to make sure

it is implemented in a way that best meets the needs of consumers

and public safety.

I supported setting a hard date to finally give an additional 24

MHz of spectrum to public safety agencies to improve first responder communications. I am also a strong supporter of freeing up

this beachfront spectrum to speed advanced wireless and Internet

services to rural America. Unfortunately, these benefits come at

the expense of rendering 69 million analog television sets useless.

Many of these sets are in homes which have cable or satellite for

their primary TV, but their other television sets in their homes will

be affected by this transition.

Perhaps more importantly, there are 21 million households who

depend solely on over-the-air television. The average income of

these over-the-air households is $30,000, which is representative of

my district. Forty-one percent of the over-the-air viewers can’t afford cable or satellite. Over-the-air viewers are more likely to live

in rural America and they are more likely to be older. Consumers

didn’t ask for this transition. They don’t know it is coming and they

are not going to appreciate being hit with a $50 TV tax. They are

going to need to be educated about how to make their TVs work

after February 19, 2009. Americans will need to be persuaded that

this transition is a good thing.

Under the best case scenario, we have a tall order ahead of us.

Unfortunately, the Deficit Reduction Act did nothing to provide us

for this best case scenario. Instead of funding for a robust coupon

program and education campaign, we have a piecemeal approach

that will inevitably lead to confusion and television sets being left

in the dark come January 2009. Let me be clear, it did not have

to be this way. I voted for an alternative bill that provided a converter box to every household that needed one. In addition, I fought

to direct the remaining spectrum proceeds to help public safety update their communications equipment.

Public safety officials need additional spectrum but they also

need modern equipment. Yet, this administration has committed

just $2 billion to interoperability upgrades since September 11 to

meet a need that is estimated to be $18 billion. I offered an amendment to direct $5.8 billion of the spectrum auction money to create

a public safety communications trust fund for interoperability. Unfortunately, my amendment failed on a tie 24–24 party line vote.

Republican leadership chose much of the $20 billion from the sale

of the spectrum to offset another round of tax cuts for the wealthiest Americans rather than to adequately compensate consumers for
8

this digital transition and invest in first responder communications.

In closing, unless we want these converter boxes thrown at us,

Congress had better meet its obligation to consumers and make

DTV transition as inexpensive and as least burdensome as possible. With that, I yield back, Mr. Chairman. Thank you for the

time.

Mr. MARKEY. The gentleman from Oregon, Mr. Walden.

OPENING STATEMENT OF HON. GREG WALDEN, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF OREGON

Mr. WALDEN. Thank you very much, Mr. Chairman. I look forward to hearing from our witnesses today and appreciate the

breadth and scope of their testimony. I do have to take some exception with my friend and colleague from Michigan when he indicated that the Deficit Reduction Act did nothing to help consumers.

There is $1.5 billion in there to help subsidize these consumer converter boxes, which in my part of the world, is still a lot of money,

billion and a half.

Now, the one thing I would say is that I had my own reservations, as many of you know, about this legislation and the hard cutoff date, recognizing a cutoff date was essential, but was not convinced that the market was ready for this and that agreements had

been in place before that spelled out how this transition would

occur. Clearly, those agreements have gone by the wayside and we

have a new law in place that sets a hard cutoff date.

With a hard cutoff date in place, the worst thing we could do is

change it, because, I think, the manufacturers are ramping up to

make the converter boxes; consumers are beginning to get educated

and the real issue for us now is how do we effectively educate consumers in a timely and appropriate way so that they are ready for

this transition. I know at one point, the cutoff date was going to

be New Years Day of 2009, which I thought was pretty stupid, actually, because most of us would wake up that day and turn on our

televisions; if they didn’t work, you had no place to except to the

phone book to call your Member of Congress. I would prefer they

go to Radio Shack or somewhere else and get the converter box. Of

course, those stores would have been closed.

The other thing I would say is I stayed up late last night to read

the Constitution. Right next to the second amendment, which deals

with guns, is how we deal with televisions and so I do think we

have to be cognizant of this right of consumers to get TV the way

they have been getting it in the least disruptive way or we are all

going to hear about it, so it is important for all of us to get it right.

The date is there, the transition needs to happen. First responders

need the spectrum and frankly, the Government can better use the

funds from the auction for essential Government services, including

helping first responders.

I think consumers are used to technological changes. Nobody

likes having to buy one of these boxes or upgrade their software

when some operating system changes, but we recognize that is the

price of progress, too. So we are going to do our part to help those

who need the help the most. We need to make sure that as few sets
9

are rendered inoperable as possible and that HD signals are passed

through the cable systems to analog sets in an un-degradated way.

And I look forward to your comments today as we work to make

this happen in a positive direction. I look forward to working with

you in the future to make sure consumers are duly educated and

ready for this transition. Thank you, Mr. Chairman.

Mr. MARKEY. The Chair recognizes the gentlelady from California, Ms. Harman.

OPENING STATEMENT OF HON. JANE HARMAN, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF CALIFORNIA

Ms. HARMAN. Thank you, Mr. Chairman. Good morning to our

witnesses. Over 5 years ago, former Congressman Curt Weldon and

I introduced the Hero Act to clear 24 MHz of spectrum in the 700

MHz band for our Nation’s first responders for public safety communications. In the mid–1990s this committee and that Congress

promised that the spectrum would be cleared by the end of last

year provided that the DTV transition was well under way. The

DTV transition was not well under way, so we have moved the

deadline to 2009.

I view this decision, to move the deadline, as extremely problematic. I believe there is ample evidence that we could face more terror or natural disasters on the scale or bigger than 9/11 and

Katrina before 2009 and what will that mean? Well, ask Mary

Fetchet, one of our witnesses today, who will explain to you exactly

what that means and then sober up everybody and understand that

we just better find the way to keep this promise.

Mary and the 9/11 families like her are the reason Congress has

taken action at all. And in the memory of Mary’s wonderful son,

Brad, and the numbers of first responders and other family members that were lost on 9/11, we simply cannot fail. Last week at our

hearing with NTIA chief, John Kneuer, I said, and I just want to

repeat it today, I feel very strongly about this; that this is not a

broadcaster relief issue.

This is a public safety issue and to those who are going to cite

all the problems with the converter boxes and the details of the

transition, I just say to you, you have spouses and parents and

children who live in communities all over America. Those communities are vulnerable today, as they were on 9/11 because we have

not fixed this problem. If we have one of these catastrophic attacks

and you lose your Brad, what will you say about your failure to

act? I yield back, Mr. Chairman.

Mr. MARKEY. The gentlelady’s time has expired. Chair recognizes

the gentleman from Virginia, Mr. Boucher.

Mr. BOUCHER. Thank you, Mr. Chairman. I am going to waive

an opening statement and reserve time for questions.

Mr. MARKEY. Gentleman reserves his time. Gentleman from New

Jersey, Mr. Pallone.

OPENING STATEMENT OF HON. FRANK PALLONE, JR., A REPRESENTATIVE IN CONGRESS FROM THE STATE OF NEW JERSEY

Mr. PALLONE. Thank you, Mr. Chairman, and I want to thank

you for holding this very important oversight hearing on the digital
10

television transition. And I would also like to welcome our panelists, who will play a very large role in this mandated transition.

Mostly, I am interested in what measures we can all take to prepare the country. With good intentions last year, Congress passed

the law setting a hard date for the digital television transition.

Without modification, such as a digital converter box or subscription service, approximately 70 million analog TVs will go black

after February 17, 2009 and my concern is that most Americans

have no idea that this transition is coming. The task of educating

over a hundred million U.S. households is enormous. There should

be no disagreement that we have not provided nearly enough funding to the various agencies responsible for the transition. Berlin,

Germany needed nearly $1 million for its entire city and we have

allocated a mere $5 million for the whole country. Anyone can do

the math and figure out that is not going to work.

And now that the date is set, I do not believe it should be postponed. The resulting spectrum auction will have large impacts on

the public safety communications and that should not suffer. Instead, we must all work together and share the responsibility of

making this as smooth a transition as possible. I, myself, am taking steps to help educate my constituents. I am writing a letter

shortly alerting them to the transition. I have also made arrangements with local radio stations to record public service announcements and I just want to commend the industries like NAB, LG

and NCTA, who have already taken voluntary efforts to create a

DTV transition coalition.

I am afraid, however, that you will have to pick up where the

administration leaves off and it is my hope that you are willing and

ready to do so. We have a lot of work to do over the next 2 years.

I strongly believe this must be a fully coordinated effort so that

American consumers are not blindsighted by the transition to DTV.

Obviously, today’s hearing is an important part of that process.

Thank you again, Mr. Chairman.

Mr. MARKEY. The gentleman’s time has expired. The Chair notes

the presence of the ranking minority member of the committee, Mr.

Barton. If he would seek recognition, we would recognize him at

this time.

Mr. BARTON. Thank you, Mr. Chairman. It sounds like you have

what I have had. You seem to have a little bit of a chest cold.

Mr. MARKEY. I have already explained that it is pollen. It is global warming. It is excessive fossil fuels in the atmosphere finally

coming back in this catastrophic——

Mr. BARTON. Having to put up with the pesky minority. We understand. I especially understand because I have sat where you are

sitting now, so I——

Mr. MARKEY. It is a burden I am willing to bear to be the majority.

OPENING STATEMENT OF HON. JOE BARTON, A

REPRESENTATIVE IN CONGRESS FROM THE STATE OF TEXAS

Mr. BARTON. I would like to thank you for your continuing interest in the digital television transition. This is the second hearing

in as many weeks that has been called to take a second look at legislation that we passed several years ago. The bill that we did pass
11

was such a good compromise that it passed this particular committee 33 to 17. Then it also passed the House and the Senate.

We understand that there are some concerns about the converter

box program that is in the law as it currently is. We understand

that there is some concern that we should do consumer education

differently. Having said that, just because there is some lingering

concerns about the bill doesn’t mean that it is time to go back and

redo it all over again. I personally believe that we go the balance

right when we did it and I hope that we will stick with it.

People in the industry and people in the country, the affected

stakeholders, I think, will benefit by sticking with what we already

have. Broadcasters are going to return 24 MHz of spectrum to be

used by first responders, implementing one of the 9/11 Commission’s recommendations. The FCC will auction 60 MHz of spectrum

for wireless broadband. One billion dollars of these proceeds are

going to be used in grant programs to help give police, fire fighters

and paramedics the equipment they need to better communicate

with each other and with us when we need them most.

Another $1.5 billion is available for consumers who may still

wish to use their old analog television sets with rabbit ears after

February 17, 2009. Under the NTIA’s rules that have been promulgated, all households may request, free of charge, one or even two

converter boxes, and the cost is going to be subsidized from the

first $990 million allocated to the program. If NTIA needs the remaining $510 million, only homes without cable or satellite service

will be eligible for this second round of funding. That is to ensure

that the subsidized converter boxes go to those who really need

them the most.

I hope that the added money won’t be necessary. A dwindling minority of Americans use analog television sets with over-the-air antennas. Fewer still will want taxpayers to give them a subsidy.

After all, they are taxpayers, too. Using broadcaster demand projections and FCC estimates of number of the over-the-air cable, and

satellite homes, it appears that we would need approximately 21.8

million subsidized boxes. The consumer electronics industry the

ones who are actually building and selling the boxes—think that

the demand is going to be considerably less than that.

Regardless, the $990 million fund, by itself, can fund 22.25 million converters, which is a number larger than 21.8 million. Keep

in mind, anyone can accumulate the requisite wealth to buy a $60

converter box, if they wish to, just by putting their pennies and

dimes into their piggy banks.

Yes, the Senate’s Byrd rule stripped the consumer education requirements other than the $5 million for the NTIA. But these are

the broadcasters’ consumers. And those of the cable, satellite, retail

and consumer electronics industries. They have every incentive to

inform the American public how to manage the transition. They are

in a far better position to do so, with almost 2 years still to go, I

might add.

I continue to think that the bill, as it is, is right, but I am not

in the majority now. You can allocate more money for converter

boxes if you think it is necessary. If you don’t think industry is

going to do enough to educate their own consumers, you can move

H.R. 608, the bill that I have introduced with Mr. Upton and Mr.
12

Hastert to replace the consumer education requirements that were

stripped out in the Senate by the Byrd rule. Or you can introduce

your own consumer education bill. We shouldn’t squabble over the

coupon program; the public safety and other benefits of this legislation are too important.

I also, before I yield back, Mr. Chairman, want to welcome Mary

Fetchet from the Voices of September 11th for testifying. I hope her

presence will help us keep things in their proper context as we look

at this issue. With that, Mr. Chairman, I hope you feel better soon.

I yield back.

Mr. MARKEY. I thank the gentleman very much. The Chair recognizes the gentlelady from California, Ms. Solis.

OPENING STATEMENT OF HON. HILDA L. SOLIS, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF CALIFORNIA

Ms. SOLIS. Thank you, Mr. Chairman, and I won’t sound like

Luca Brasi. But I want to thank you for this hearing, Mr. Chairman, and also Ranking Member Upton. I want to thank our witnesses that here today and I especially want to thank a good friend

of mine, Alex Nogales, who has agreed to testify, representing the

National Hispanic Media Coalition based in Los Angeles, for coming all the way out here today. I worked with Mr. Nogales for the

past few years on telecommunication issues important to the

Latino and under-represented communities.

The deadline for the digital television transition is fast approaching. In just 9 months the NTIA’s coupon program to provide consumers with financial assistance to purchase a set top digital converter box will soon begin and I join with my colleagues in voicing

serious concerns that some consumers, particularly low-income minority communities, will be left behind in the DTV transition.

Households with over-the-air television sets and no cable or satellite service are disproportionately low-income and many, in some

cases, are Spanish speaking.

The Deficit Reduction Act allocated a relatively small amount of

money for the NTIA to educate consumers across the country about

the transition and the set-top box coupon program. It seems that

the NTIA and FCC are relying heavily on education and outreach

from the industries affected most by the DTV transition. So therefore, I am eager to learn today how all of the industry is impacted,

including broadcasters, cable providers, retailers, advocates and

manufacturers are working to make the transition a positive

change for all consumers.

And I hope that the witnesses today will address outreach efforts

to households with limited Internet access, language barriers, cultural barriers, outlining more creative solutions to ensure that all

consumers are educated about the DTV transition. I want to thank

the witnesses again and look forward to hearing from all of you.

Mr. MARKEY. The gentlelady’s time has expired. The gentleman

from Pennsylvania, Mr. Doyle.
13

OPENING STATEMENT OF HON. MIKE DOYLE, A REPRESENTATIVE IN CONGRESS FROM THE COMMONWEALTH OF PENNSYLVANIA

Mr. DOYLE. Thank you, Mr. Chairman. Mr. Chairman, the world

woke up on January 1, 2000 without computer outages, without

power failures and without the end of the world as we know it. We

woke up that day with no major problems because we had been

talking about Y2K and the potential for problems. We are now less

than 2 years away from the end of analog broadcasting as we know

it and if we don’t get this transition right, then dealing with constituents complaining about their TVs not working anymore will be

the least of our concerns.

A few years ago, 20 percent of Americans didn’t know how to set

the time on their VCRs. For millions of Americans, that darn VCR

blinked twelve o’clock until they bought a TiVo or a DVD player.

We now have the challenge of telling millions of people, who watch

broadcast television, also known as our constituents, that the Government has broken their TV sets and that they have to act fast

to get a fix. If we are going to use the spectrum to create interoperable communications for our first responders, prevent another tragedy that befell the firefighters on 9/11 and we should, then we have

to get this right.

Mr. Chairman, thank you and I yield back my time.

Mr. MARKEY. Gentleman’s time has expired. Gentleman from

Texas, Mr. Green.

OPENING STATEMENT OF HON. GENE GREEN, A

REPRESENTATIVE IN CONGRESS FROM THE STATE OF TEXAS

Mr. GREEN. Thank you, Mr. Chairman, and following my colleague from Pennsylvania, some of us may still not be able to set

our clocks on our DVDs. The digital transition, it seemed so far

away for so long, it is hard to believe it is almost around the corner. In less than 2 years 69 million television sets will no longer

be able to receive over-the-air signals due to an act of Congress and

I know that 1.5 billion seems like a lot, but it is interesting, unfortunately, that act of Congress that did that only includes enough

funding to cover maybe half to two-thirds of the cost for about onethird of those television sets.

Millions of these sets were bought within the last few years,

some as recently as 4 years ago and many consumers are not

aware of it and I know my colleague from Oregon and I, Congressman Walden, talked about this a few years ago before the budget

passed that included the transfer and the hard date, but it didn’t

include some of the consumer information that should be out there

now instead of saying we are still talking about it. We are taking

a big gamble that the public will not demand more coupons and I

am afraid that we may lose that bet.

Perhaps retailers and manufacturers who sold those television

sets without warning consumers should contribute toward the coupon program. We expect that we are not going to get enough funds.

The public owns the spectrum and we are moving them involuntarily, so we should compensate them. By failing to compensate all

over-the-air viewers, this plan transfers the wealth from those who

rely on over-the-air, primarily seniors and moderate income fami-
14

lies, to the U.S. Treasury. Working families and seniors like many

of my constituents use their television sets for years and do not

tend to go out and purchase a $1,000 high tech television very

often.

I think there is a good chance we are going to need more funding

for the program; the sooner we know about it, the sooner we can

do it. Our district has lots of homes that rely on over-the-air, including middle class families, seniors, Spanish speaking consumers.

Our office is going to do everything in our power to inform our constituents about the need to get their coupons early. We are probably going to include this information in about everything we send

out for the next 2 years to make sure.

My concern is that we should have a pre-order list for coupons

where people can sign up ahead of January 2008. This would give

consumers more time to sign up, starting immediately. It would

also give us a better idea on how many boxes we are going to need

earlier in the process, which will help plan ahead. This list could

encourage production, ordering and stocking of the converter boxes.

This information would help the transition by telling us about

where the demand is and how strong it is that these converter

boxes may be much better than some consumer surveys.

If NTIA keeps a we should start out sooner, maybe we would

have something proactive to tell consumers to do instead of telling

them to get ready for January 1, 2008 and then starting help remind people. Again, I am glad our witnesses are here, Mr. Chairman, and I look forward to our committee to continue to publicize

what is getting ready to happen to folks.

Mr. MARKEY. Gentleman’s time has expired. The gentleman from

Nebraska, Mr. Terry.

OPENING STATEMENT OF HON. LEE TERRY, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF NEBRASKA

Mr. TERRY. Thank you, Mr. Chairman, and I just want to say

hello to John and follow up on our last conversation where I emailed you and bragged about buying a new LG HD set that was

on special at Nebraska Furniture Mart, so I am enjoying that, the

transition, and it is the one that doesn’t need a box, that is cable

ready; one of the projects that we worked on and I would agree

with all of the statements of my colleagues up here that we have

to continue to build confidence in the transition and inform of the

hard date and make sure that people aren’t making mistakes in

their purchases today or at least not making uninformed decisions

when they go to Best Buy or Nebraska Furniture Marts of the

world to buy a new television and that is why you are here today.

In an unrelated issue that I think is important to confidence in

the transition to digital and high definition, is an issue that is

more for the broadcasters and cable folks to be before us, but when

a local broadcaster refuses to allow the HD signal to be aired on

a cable network, which has occurred twice in Omaha, and so I want

to bring that up because I think that destroys confidence in the

transition at an early stage, so we are talking about how to build

confidence from now until the transition date, but what is occurring right now, there is an erosion, when those signals are hijacked.
15

So I wanted to just put that out there and give it an opportunity.

I may ask one of you what you feel about that. Now, with that laid

on the table, I yield back to the chairman.

Mr. MARKEY. Gentleman’s time has expired. Gentleman from

Washington State, Mr. Inslee.

Mr. INSLEE. I will waive.

Mr. MARKEY. Gentleman from New York, Mr. Towns.

OPENING STATEMENT OF HON. EDOLPHUS TOWNS, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF NEW

YORK

Mr. TOWNS. Thank you very much, Mr. Chairman, for holding

this hearing. We need to make sure that DTV transition is handled

smoothly because the benefits of transitioning are enormous, opening up desperately needed spectrum for first responders. I believe

my constituents will support this transition if they know how to

keep their TV signal and that they know why it is important. I look

forward to hearing from our witnesses on how they plan to educate

consumers and on what other ways Government or industry can

take to prepare us.

First, let me welcome all of the witnesses and I am especially

pleased to see Mr. Glenn Britt, the CEO of that fine cable company, Time Warner, a leader in the transition digital. Glenn’s presence is a testament to his commitment to make the transition a

success. I look forward to hearing his thoughts on educating the

public about the transition and making the transition as seamless

as possible.

There are varying estimates of the number of analog TV sets still

in use and I am concerned that the outreach and implementation

of this program will not be sufficiently targeted. How will one of

my senior constituents know how to get and plug in their converter

box? I have a very diverse district and how many different languages will the outreach be available for them. This level of detail

in the program will be crucial to make sure our constituents don’t

lose their TV signal.

In addition, I am eager to hear the witnesses’ concerns about

converter box technical rules. We are right to address the consumer

education and other issues, but I believe that any uncertainty in

the box technical rules will have serious repercussions all the way

down the line because of the delay of manufacturing, testing, approval and distribution. I am eager to hear from our witnesses on

these crucial considerations and I thank them for taking the time

to appear before us today. And Mr. Chairman, on that note, I yield

back the balance of my time.

Mr. MARKEY. The Chair recognizes the gentlelady from Tennessee, Mrs. Blackburn.

OPENING STATEMENT OF HON. MARSHA BLACKBURN, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF TENNESSEE

Mrs. BLACKBURN. Thank you, Mr. Chairman. I want to thank

you and Ranking Member Upton for allowing me to participate in

the hearing. This is an issue that is of tremendous importance to

my constituents in Tennessee. So many are involved in the enter-
16

tainment industry. And we know that there is another side to this,

also, which is the public safety aspects and the 24 MHz and having

that spectrum made available and made available quickly.

I think that we would all agree that the problems that are before

us with the issue are solvable problems and we should not focus

on those; we should focus on what will be the end result, which is

improved safety in the times of national disaster. This is something, as the gentlelady from California so beautifully stated, this

has languished for too long. We have allowed procrastination to

take hold and this process not to be completed. The legislation has

been passed. We know that this is something that should be done

and done in a timely manner and that there should be not one single excuse accepted for missing this deadline.

I look forward to hearing from our witnesses and again, I thank

you for the opportunity to participate.

Mr. MARKEY. The gentlelady’s time has expired. All time for

opening statements by members of the committee has expired.

We will now turn to our panel. Our panel consists of Mr. John

Taylor, who is vice president of public affairs for LG Electronics,

a manufacturer of consumer electronics devices. Mr. Taylor represents LG in matters before Congress and the executive branch.

James Yager, who is the chief executive officer of Barrington

Broadcasting, a consortium of 21 local television stations located

throughout the United States.

Mr. Alex Nogales is president and chief executive officer of the

National Hispanic Media Coalition, a nonprofit advocacy organization that represents the interests of Latinos in telecommunications

policy. Next, Mr. Glenn Britt, who is the chief executive officer of

Time Warner Cable, the Nation’s second largest cable television operator. Next, it is our honor to have with us Ms. Mary Fetchet, who

is the founding director of Voices of September 11th, an advocacy

organization that represents families who lost loved ones in the

World Trade Center attacks. Thank you for coming today.

And finally, Mr. Michael Vitelli, who is senior vice president of

consumer electronics and general manager of Home Solutions Operating Group for Best Buy. Mr. Vitelli is responsible for Best

Buy’s consumer electronics product lines. So each of you will have

5 minutes and then we will go to questions from the subcommittee

members. Mr. Taylor, when you feel comfortable, please begin.

STATEMENT OF JOHN TAYLOR, VICE PRESIDENT, PUBLIC

AFFAIRS AND COMMUNICATIONS, LG ELECTRONICS USA, INC.

Mr. TAYLOR. Thank you, Mr. Chairman. My name is John Taylor.

I am the vice president of public affairs for LG Electronics. I also

serve as the chairman of the HDTV Committee for the Consumer

Electronics Association and vice chair of the Video Division. I have

been involved in HDTV personally for a number of years. In fact,

I was at Zenith, Mr. Chairman, 20 years ago working on HDTV

when you held that first hearing. We should all take great pride

in the progress we have made over these years and we have really

come a long way. I feel like we are on the 20 yard line and we are

going to make the touchdown in just 692 short days.

A brief word on my company. We are one of the world’s leading

manufacturers of television sets and flat panel displays. LG is also
17

the parent company of Zenith, which was one of the primary developers of the digital television standard. But I think apropos to

today, it is important to point out that LG Electronics is also one

of the early developers of the digital to analog converter box in conjunction with our friends in the broadcast area with the Association

for Maximum Service Television and the National Association of

Broadcasters. Two companies, LG Electronics and RCA, developed

prototype boxes to help define the specifications and create a reference designed for the industry.

Mr. MARKEY. Could you hold that up so the Members can see it?

Mr. TAYLOR. Sure.

Mr. MARKEY. Thank you.

Mr. TAYLOR. And I will discuss that a little more in few minutes.

Three issues I would like to address today. The NTIA’s specifications for these converter boxes; the pricing and timing and availability of the boxes; and this very important issue of consumer education.

First, the NTIA has now issued its specifications and rules which

gives us, as manufacturers, the certainty we need to move ahead,

complete the development of these boxes and prepare for mass production. The NTIA provides the appropriate level of features necessary to provide reliable reception and to enable consumers to use

these boxes.

The NTIA correctly did not require additional features beyond

the basic function of the box, which is to receive digital signals and

output them to existing analog sets. This kind of box doesn’t include a DVR, digital video recorder or a DVD player. It doesn’t

even output high definition. We have other products that do that

and consumers will buy those beyond the coupon program.

But the NTIA did permit a number of valuable features not required, but as optional features that we think provide value. For

instance, our implementation includes a very simple electronic program guide that allows consumers to navigate through these new

digital channels, especially the new multicast channels that are

coming from the broadcasters. And finally, the NTIA, in establishing minimum performance standards, we think, is very, very important to the success of the program to assure that the consumer

experience measures and that consumers have a great experience

when they get that box home.

Second, regarding the number of coupons and the box price. The

number of coupons is really hard to put your finger on at this

point. We have heard lots of numbers here this morning. We think

that there will be a demand for tens of millions of boxes, but when

you look at what is going to happen over the next 2 years, between

now and February 2009, more than 60 million digital television receivers will be purchased by American consumers, separate from

the coupon program. That is a result of the FCC’s tuner mandate

that requires all television sets shipped in interstate commerce, as

of this past March, to have those digital television tuners. Our plan

at LG Electronics is to introduce this converter box in time for

early 2008 in time for the converter coupon program and expect it

to sell for around $60.

Finally, consumer education efforts are really crucial to the success of the overall program and the manufacturers are undertaking
18

a vibrant consumer education effort. We are taking an active role

in the new Digital Television Transition Coalition, whose singular

goal is to assure that no consumer’s analog TV goes without free

over-the-air television service for lack of information. And even

though we have just launched a month ago, there is a tremendous

amount of momentum already with the Web site being launched

and moving into multilingual Web sites and continuing that effort.

My company is preparing for the launch of this box and we will

have a toll-free number for consumers to call, easy installation instructions so consumers can understand. This basically is the box

that goes on Grandma’s TV and Grandma needs to be able to hook

it up herself. It has a very simple input and out put, simple instructions, should be able to use your existing antenna.

Finally, we are stepping up our sales training efforts, as well, to

make sure that this is a successful activity and our colleagues in

the industry are doing the same. I am proud to report that the consumer electronics industry will continue its efforts to educate consumers.

[The prepared statement of Mr. Taylor follows:]

TESTIMONY OF JOHN I. TAYLOR

Mr. Chairman and members of the Subcommittee, my name is John I. Taylor. I

am senior vice president at LG Electronics USA, Inc. I also serve as chairman of

the High-Definition Television (HDTV) Committee of the Consumer Electronics Association (CEA) and vice chairman of CEA’s Video Division. I also represent LG

Electronics as a founding member of the new Digital Television Transition Coalition.

I welcome the opportunity to appear before you today to speak about the exciting

transition to digital television (DTV).

LG Electronics USA is the North American subsidiary of LG Electronics, a $48-

billion multinational electronics and communications firm. One of the world’s largest manufacturers of television sets and of TV flat-panel displays, LG Electronics

has established itself as a global digital leader, and its LG brand is among the fastest-growing in the United States.

LG Electronics also is the parent company of Zenith Electronics Corporation (Zenith), the U.S. technology company that developed the VSB (Vestigial Side Band)

digital transmission system adopted by the Federal Communications Commission as

the centerpiece of the Nation’s DTV broadcast standard.

Decades ago, Zenith was instrumental in the founding of both the National Association of Broadcasters (NAB) and CEA. In addition to its long-time leadership in

digital HDTV, Zenith pioneered industry standards for black-and-white and color

television and is credited with the invention of countless industry-leading innovations, including Stereo FM radio, television stereo sound, television remote controls

and flat color picture tubes, to name a few. Zenith was one of the first developers

of HDTV technology, beginning in 1988. In 1993, Zenith helped found the Digital

HDTV Grand Alliance, which developed the Advanced Television Systems Committee (ATSC) DTV broadcast standard.

Building on this extensive experience, and the combined strengths of LG Electronics’ worldwide engineering and production capabilities and the Zenith R&D capability in the United States, LG Electronics has led the industry in optimizing DTV

broadcast reception. In particular, LG Electronics’ fifth-generation VSB chips, which

eliminate multipath interference concerns, are considered top performers by both

broadcasters and consumer electronics industry analysts.

As part of our commitment to driving the DTV transition to a successful conclusion, LG Electronics and its U.S. R&D lab, Zenith, partnered over the past two

years with the NAB and the Association for Maximum Service Television in a joint

effort to develop prototype high-performance, low-cost digital-to-analog converters to

enable existing analog TVs to continue to receive free over-the-air broadcasts after

the Nation’s switch to all-digital broadcasting in 2009. This alliance with broadcasters accelerated LG Electronics’ product development timetable, resulting in prototypes that meet the goals set forth by the National Telecommunications and Information Administration (NTIA) and the establishment of a state-of-the-art reference
19

design for the industry. So, I believe, it is obvious that LG Electronics has a significant stake in the digital transition.

The Committee is focused today on the status of the Nation’s transition to digital

television technology. Mr. Chairman, LG Electronics shares your view that successfully concluding this transition is of critical importance. This Committee has been

instrumental in advancing DTV’s deployment, and as a result, today we are seeing

exciting marketplace developments involving digital technologies. Digital transmission offers incredible high-resolution video, and anyone who has experienced

HDTV becomes an instant believer in this technology. In addition to these benefits,

the digital transition provides an opportunity to return spectrum for important governmental objectives (including public safety and homeland security needs) and to

deploy new commercial technologies for consumers.

Many important issues are associated with the DTV transition, including manufacture of boxes compliant with NTIA’s requirements; government assistance to help

consumers purchase boxes capable of converting free, over-the-air DTV broadcast

signals for viewing on their existing analog TV sets; and consumer education. Please

permit me to address these three areas this morning.

When LG Electronics testified before this Subcommittee in 2005, we stated that

factors such as the level of technology and unit sales volume influence any estimate

of converter box costs. NTIA now has issued technical specifications for converter

boxes eligible to be covered by the coupon program, giving manufacturers the certainty we need to prepare for mass production of these devices. The NTIA rules help

manufacturers to know what we must build and to have some ability to estimate

the cost of our converter boxes.

Consistent with the intent of Congress, NTIA’s specifications provide an appropriate level of features necessary to provide reliable reception and to enable consumers to use the boxes satisfactorily. Some of NTIA’s converter box elements are required, while others are permitted (but not mandatory). NTIA addressed encoding;

output formats; Program and System Information Protocol (PSIP) processing; the

range of capability for receiving radio channels; radio frequency input and output

requirements; composite output; and interference levels. Also, NTIA required that

converter box equipment must display all channels; must provide closed captioning,

emergency alert systems, and parental controls; will include a remote control; and

must meet energy efficiency standards. These parameters should yield converter

boxes sufficient for average, non-technical consumers to enjoy the DTV experience.

We are pleased that NTIA did not mandate additional features that are not required to convert a digital over-the-air signal, as that would have increased the

prices of converter boxes by a significant margin. Rather, NTIA permitted manufacturers to include a limited range of ‘‘no frills’’ functions in eligible converters so that

they will be easy to use and perform well.

For example, NTIA permitted the optional inclusion of a simple electronic program guide (EPG), and this adds very little to a converter box’s price. But the EPG

will make the box much easier to use, and this is especially important because digital broadcasters can ‘‘multicast’’ or transmit multiple programming streams via

their DTV signals. This multicasting greatly expands the number of program offerings made available to over-the-air television viewers. Allowing simple EPGs in eligible boxes will enable these viewers to navigate multicast channels and thereby

maximizes the number of viewers able to enjoy the benefits of DTV technology.

In addition, we are pleased that NTIA’s rules help to ensure that the performance

quality of the converter boxes eligible for the coupons remains at a high level consistent with the needs and expectations of consumers. By adopting minimum performance requirements, NTIA has enhanced significantly the likelihood of success

for the overall program by helping to assure that the devices eligible under the coupon program perform to the satisfaction of American consumers. NTIA’s specifications are now clear, and at LG Electronics, we are moving forward rapidly to comply

with these standards as quickly as possible.

Regarding Government assistance for consumers to purchase converter boxes, we

are pleased that NTIA provided that households with analog-only sets reliant on

over-the-air TV services are not excluded from participating in the coupon program

initially. By NTIA’s expanding the definition of households eligible to participate in

the coupon program beyond that proposed in its original notice, the program should

attract more interest and benefit consumers.

NTIA has recognized that many consumers may neither need nor want a coupon

to purchase a converter box. Between now and February 2009, according to CEA estimates, American consumers will purchase more than 60 million television receivers and set-top boxes with over-the-air DTV tuning capability, independent of the

converter box program. This is in addition to the 50 million DTVs purchased by consumers in the past 5 years (2002–06).
20

While it is unclear how many of these have actually displaced or will displace

older analog-only TVs, these receivers no doubt will impact the number of American

households needing a low-cost converter box under the coupon program. Given the

rapidly growing number of households that are expected to have access to digital

signals—either over-the-air, via cable or by satellite—well before the transition’s

end in 2009, we are hopeful that sufficient funds will be available in the coupon

program to ensure that converter boxes are provided to all households that need

them.

With regard to the price of converter boxes, LG anticipates that its converter

boxes meeting NTIA’s specifications should be available to consumers for around

$60. Manufacturers anticipate producing tens of millions of converter boxes. Given

this number, and with the certainty provided by NTIA’s specifications, LG Electronics thinks that boxes can be available in our $60 price range for retail distribution by early 2008.

Finally, we are pleased that, pursuant to Congressional direction, NTIA addressed

the critical need for a vibrant consumer education effort related to the DTV transition. As you probably know, there is a cross-industry consumer education effort related to NTIA’s program and the DTV transition generally.

Spurring consumer interest in the converter box program and ensuring that consumers’ participation in the program is not burdensome will require a broad-based

effort that involves the government and multiple industries and stakeholders. As an

active participant in the new DTV Transition Coalition, LG Electronics is fully committed to working with the government, our major retailers, and our colleagues in

the consumer electronics and broadcast industries to facilitate the program’s success.

In particular, we are intensifying our own sales training efforts with retailers and

collaborating with broadcasters to promote DTV technology. We also maintain an

informative DTV Web site guide (http://us.lge.com/GuidetoHDTV/what/

index.html), which introduces consumers to the features available through DTV

technology. We will update this Web site on an ongoing basis with valuable information about the DTV transition and the converter box program.

Consistent with NTIA’s efforts to encourage manufacturers and retailers to provide adequate information to consumers to ensure that they fully understand how

to install and use their converter boxes, LG will implement a special toll-free number that consumers can call to receive assistance with installing and connecting

their new LG converter boxes. LG’s converter boxes also will feature an easy-to-follow installation guide that includes simple instructions in multiple languages. We

anticipate that these efforts will help consumers to use the devices, and prevent

them from unnecessarily returning boxes to retailers.

Of course, the converter box program is just one aspect of the digital transition

effort. By 2008 there will be a range of options, including very affordable integrated

DTV receivers. Those who want high definition reception and other features will pay

more, just as they do today for progressive-scan DVD players. Manufacturers such

as LG Electronics are doing our part to offer consumers a wide array of quality DTV

products at affordable prices. Product prices will continue to decline, as they have

done since DTV’s introduction in 1998, and this will speed the transition.

LG Electronics commends this Committee for its efforts to advance the digital

transition, and for its attention to avoiding potential disruption to consumers when

the final switch-over to digital broadcasting occurs. We look forward to continuing

to work with you to ensure that all Americans are able to enjoy the tremendous benefits of digital television.

I am, of course, pleased to respond to any questions you may have, and I appreciate the opportunity to appear before you today.

Mr. MARKEY. Gentleman’s time has expired. What we could do

is actually bring out a TV set and ask a grandmother in the audience to take that box and to put it on very simply and see how long

it takes Grandma to do it with the instructions handed to her. I

bet she beats members of this committee. I thought grandmothers

just called their grandchildren.

Ms. HARMAN. Sorry, I am a grandmother. I am volunteering for

this exercise. I am a lot less talented than some on the other side,

obviously.

Mr. MARKEY. Mr. Yager, you are recognized for 5 minutes.
21

STATEMENT OF K. JAMES YAGER, CHIEF EXECUTIVE OFFICER,

BARRINGTON BROADCASTING CO., LLC

Mr. YAGER. Thank you, Mr. Chairman. Thank you, Ranking

Member Upton and members of the subcommittee. My name is Jim

Yager. I am the chief executive officer of Barrington Broadcasting,

which owns and operates 21 television stations in medium and

small markets across the country. I am testifying today on behalf

of the National Association of Broadcasters and the Association for

Maximum Service Television, Incorporated.

We are here today to talk about the transition to digital television or DTV. America’s broadcasters are taking the DTV challenge head on. As of last month over 90 percent of full-powered television stations are providing digital programming, which was

achieved at a cost of nearly $5 billion to the television industry. Of

those stations remaining, many have faced specific technical problems; for example, the construction delays in New York City. According to recent NAB surveys, about 40 percent of Americans have

any idea that the DTV transition is underway and among those

who do, only 1 to 3 percent realize that the transition will be completed by February 2009.

In all, NAB estimates that 69 million television sets will potentially be impacted by the DTV transition. In other words, we have

a lot of educating to do. The good news is that broadcasters take

that educational campaign very seriously. Once consumers become

aware of the transition, they will learn that they have three options to navigate it. First, consumers can obtain a DTV converter

box that will convert the new digital signal for display on analog

television sets. Second, consumers can buy new television sets with

integrated digital tuners. Finally, consumers could decide to subscribe to a pay television service, like cable, satellite or telephone

video service.

For our part, broadcasters are engaged in consumer awareness

campaigns. NAB has hired a full-time staff dedicated exclusively to

the DTV transition. We have commissioned research and conducted

focus groups not only to measure the demographics of who will be

affected by the transition, but determine where these viewers get

their information and how to best frame the DTV message with

consumers.

We have undertaken an active media campaign, not only gaining

stories in national media, but in local newspapers and on local

newscasts, as well. We will kick off a large speakers bureau, utilizing local station talent for community appearances at the local

level. We are working on the launch of a DTV road show where we

will have a van that goes from location to location with DTV demonstrations to help generate buzz on the transition. We are also

helping coordinate a large coalition of organizations, 27 at last

count, to help bring everyone who has an interest in smooth transition on to the same message regarding digital. In fact, AARP joined

the coalition just yesterday.

The coalition has launched a consumer Web site and local stations will also be launching their own Web sites. NAB has

proactively met with European officials who have completed or are

in the midst of their own DTV transition. We are also reaching out

to NTIA and the FCC to ensure that our messaging is consistent
22

and resonates with the American public. Broadcasters view our

public service announcements as the real currency of the DTV marketing campaign. We are prepared to launch PSAs across the country beginning in 2008 to raise public awareness about the transition and consumer options.

We may also employ crawls at the top of our screens during programming to complement the PSAs. We believe those PSAs should

begin when the converter boxes become available to avoid any consumer confusion. The broadcasters and the coalition group cannot

educate consumers by themselves. We want to work in partnership

with the Government and each of you in Congress. For instance,

we will supply you with articles for your constituent newsletters

and DTV kits to educate your constituents in town meetings in

your individual district.

The NTIA coupon program is also in step in the right direction,

but more needs to be done. All consumers who have analog sets

that rely on over-the-air television signal should have access to coupons, especially those in under-served communities. Lower income

households, minority people living in rural areas and seniors will

be disproportionately impacted by the transition and the coupon

program needs to work for them. Finally, other countries have successfully utilized a 1–800 number to provide consumer information

and the FCC and NTIA may want to consider a similar program.

The bottom line is that television will change dramatically on

February 17, 2009. The benefits of going digital are remarkable.

Public safety will get its much needed spectrum and consumers

will see clearer pictures, more programming and high definition

television. And while we all have a lot in front of us, from broadcasters to retailers to manufacturers to you in Congress, we can

join our efforts to make this happen in February 2009.

Thank you, Mr. Chairman, Ranking Member Upton, for inviting

me to testify. I look forward to answering your questions.

[The prepared statement of Mr. Yager follows:]
23
24
25
26
27
28
29
30
31
32
33
34
35
36
37
38
39
40
41
42
43

Mr. MARKEY. Thank you, Mr. Yager, very much. Mr. Nogales.

STATEMENT OF ALEX NOGALES, PRESIDENT AND CEO,

NATIONAL HISPANIC MEDIA COALITION

Mr. NOGALES. Thank you. Mr. Chairman and members of the

subcommittee, thank you for giving me the opportunity to speak to

you today about the National Hispanic Media Coalition’s concerns

regarding the status of the digital television transition. My name

is Alex Nogales. I am the president and CEO of the National Hispanic Media Coalition and HMC is a 21-year old non-profit Latino

civil rights advocacy organization based in Los Angeles, California.

We have 13 chapters nationwide and our mission is to improve the

image of American Latinos as portrayed by the media; includes a

number of American Latinos employed in all facets of media and

advocate for media and telecommunications policies that benefit

the Latino community.

In 2005 the Government Accountability Office reported that 21

million U.S. households rely solely on over-the-air television. These

21 million households included a disproportionate number of Spanish language speakers, one-third. Seven million people who will be

impacted by the digital transition are Spanish language speakers.

It is also estimated that one-third of the 21 million households include residents over the age of 50, many of whom live on fixed incomes. Million of these households will be in rural areas or will include persons with disabilities. Further, according to the National

Association of Broadcasters, African American households are 22

percent more likely to rely exclusively on over-the-air reception.

In summary, households impacted by the digital transition will

be minorities, low-income families living on a fixed income and requiring a well-defined and more specific educational outreach program than the overall population requires. I will refer to these

groups as our target groups or target population. More specific educational campaign to these target populations must be proactive,

consumer friendly and culturally and linguistically sensitive.

Appropriate outreach to disabled, minority, rural, low-income

and senior citizens is essential. For example, the public service announcement promoting this initiative must include closed captioning for the hearing impaired and should be available in Spanish as

well as other relevant languages. The call-in centers handling the

voucher questions must include live operators that include Spanish

speakers. Wait time should not go over 10 minutes and must accommodate telecom relay services to make it easier for the deaf to

communicate by phone. And it is not sufficient to translate English

materials to Spanish. Those doing the outreach must communicate

with Spanish speakers in a manner where the message will be understood. Cultural awareness here is fundamental for the outreach

campaign to be successful.

Congress allocated $5 million to the National Telecommunications and Information Administration to educate consumers

about the DTV coupon program. The Federal Communications

Commission or FCC, has only requested $1.5 million for consumer

education effort in its 2008 budget request. That is a total of $6.5

million to educate 300 million, about 2 cents per person. To put

this in perspective, when Berlin, Germany transitioned to DTV, it
44

spent $984,000 to educate about three million people, or 33 cents

per person. Two cents versus 33 cents per person. Why is the city

of Berlin willing to make this expenditure on its citizens, but our

Nation?

I want to jump ahead a little bit. We strongly encourage the

NTIA to bring in community based organizations, CBOs, to represent the disabled, minority, rural and senior advocates that will

help develop a thorough outreach plan to ensure that the outreach

and educational components of this program is solid and has no

holes. We can’t afford to make mistakes on a program that is a

first come, first served program where the population that are most

in need of these programs run the risk of being the last to hear

about the program.

Already we see problems with the so-called one step clearinghouse of consumer information and tools provided by the NTIA and

hosted by the DTV Transition Coalition. Its Web site has no consumer information in Spanish. How is that possible when we already know that one-third of the 21 million households that should

be targeted consists of Spanish speakers? NAB estimates that

about 5 percent of the population knows that the digital translation

is taking place. I suspect the NAB is being optimistic. Not many

people outside the beltway have heard about the digital transition

and its possible impact on the households.

This past weekend I was in Calexico, California visiting my family, most of whom are bilingual. Calexico is a little rural town on

the border with Mexicali in Mexico. While having supper, I asked

several heads of households sitting at the table if they knew about

the digital transition. None of them did nor did they understand

how it was going to impact them. This was not a scientific full

granted, but I am inclined to believe the target population, my

large family included, is oblivious to the digital transition and the

effect it will have on them. If the target population doesn’t learn

of the transition until the year it is going to take place, then I don’t

think we are ready to transition to digital.

NHMC also objects to the two-phased plan the NIT is proposing

for the distribution of the coupons. The first phase, where $990

million is allocated——

Mr. MARKEY. Mr. Nogales, could you summarize, please?

Mr. NOGALES. Of course. Thank you for the time. A well-funded

proactive consumer friendly and culturally sensitive outreach program needs to begin as soon as possible and should include a wellcoordinated campaign that includes CBOs working closely with the

NTIA. The money that is projected to be spent on the educational

outreach program is not enough and should be supplemented. Since

a predominantly high number of Spanish speakers will be impacted

by this transition, bilingual and bicultural staff is essential.

For any educational campaign to be effective, it is not only relevant that the person be able to speak the language, but also understand the culture. English written materials should not be

translated to Spanish as they are seldom culturally effective. Materials to the Spanish speaking should be original and the appropriate place to advertise to the Latino community should be carefully considered.
45

For example, Latinos, more than anyone else, consume a great

deal of radio programming. A two-phased program with an added

burdensome requirement for those that applies doesn’t make sense.

Mr. MARKEY. Mr. Nogales, I appreciate the detail that you want

to go into in your opening statement. Your entire witness statement will be placed in the record and I think you are going to be

given plenty of opportunity during the question and answer period

to further elaborate on what you think the Hispanic community

will need in order to make a transition.

Mr. NOGALES. Very good. Thank you, Mr. Chairman.

[The prepared statement of Mr. Nogales follows:]

TESTIMONY OF ALEX NOGALES

Mr. Chairman and members of the Subcommittee, thank you for giving me the

opportunity to speak to you today about the National Hispanic Media Coalition’s

(NHMC) concerns regarding the Status of the Digital Television Transition.

My name is Alex Nogales; I am the president and CEO of NHMC. NHMC is a

21-year old non-profit Latino civil rights, advocacy organization based in Los Angeles, California. We have 13 Chapters nationwide and our mission is to (1) improve

the image of American Latinos as portrayed by the media; (2) increase the number

of American Latinos employed in all facets of media; and (3) advocate for media and

telecommunications policies that benefit the Latino community. NHMC is also the

Secretariat for the National Latino Media Council, a national coalition comprised of

15 of the largest Latino Civil Rights Advocacy groups in the nation. Additionally,

NHMC is an executive committee member of the Media and Democracy Coalition,

a national coalition comprised of many of the largest mainstream media and consumer advocacy groups in the nation.

The transition from analog to digital television brings great opportunities but also

great challenges. In 2005, the Government Accountability Office (GAO) reported

that 21 million U.S. households rely solely on over-the-air television. Of these households, about 48% earn less than $30,000 per year per household. These 21 million

households include a disproportionate number of Spanish language speakers: onethird or 7 million people who will be impacted by the digital transition are Spanish

language speakers. It is also estimated that one-third of the 21 million households

include residents over the age of fifty, many of whom live on fixed-incomes; millions

of these households will be in rural areas or will include persons with disabilities.

Further, according to the National Association of Broadcasters (NAB), AfricanAmerican households are 22% more likely to rely exclusively on over-the-air reception.

In summary, households impacted by the digital transition will be minorities, lowincome families, living on a fixed-income, and requiring a well-defined and more

specific educational outreach campaign then the overall population requires. I will

refer to the groups that I just mentioned as our target groups or target population.

A more specific educational outreach campaign to these target populations must

be pro-active, consumer-friendly and culturally, linguistically sensitive. Appropriate

outreach to disabled, minority, rural, low-income and senior citizens is essential. For

example, the public service announcements promoting this initiative must include

closed captioning for the hearing impaired and should be available in Spanish as

well as other relevant languages. The call-in centers handling the voucher questions

must include live-operators that include Spanish-speakers, wait time should not go

over ten minutes and must accommodate telecom relay services that make it easier

for the deaf to communicate by phone. And it is not sufficient to translate the

English materials to Spanish. Those doing the outreach must communicate with

Spanish speakers in a manner where their message will be understood. Cultural

awareness here is fundamental for the outreach campaign to be successful.

Congress allocated $5 million to the National Telecommunication and Information

Administration (NTIA) to educate consumers about the DTV coupon program. The

Federal Communications Commission (FCC) has only requested $1.5 million for consumer education effort in its 2008 budget request. That’s a total of $6.5 million to

educate 300 million people, about 2 cents per person. To put this in perspective,

when Berlin, Germany transitioned to DTV, it spent $984,000 to educate about

three million people, or 33 cents per person. Why is the City of Berlin willing to

make this expenditure on its citizens, but our Nation is not?
46

Furthermore, the FCC does not plan to begin its public education campaign until

2008, when the converter box coupons and the boxes are expected to be available

on January 1, 2008. In our opinion, the FCC campaign is starting a year late. Consumers need to know about the DTV transition generally, and the coupon program

specifically, as soon as possible, but certainly well before NTIA makes the coupons

available to the public.

We strongly encourage the NTIA to bring in community based organizations

(CBOs) that represent the disabled, minority, rural and senior advocates that will

help develop a thorough outreach plan to ensure that the outreach and educational

component of this program is solid and has no holes. We can’t afford to make mistakes on a program that is a first-come, first-serve program where the populations

that are in most need of these coupons run the risk of being the last to hear about

the program. Already, we see problems with the so-called one-stop clearinghouse of

consumer information and tools promoted by NTIA and hosted by the DTV Transition Coalition. Its Web site www.dtvtransition.org has no consumer information in

Spanish. How is that possible when we already know that one-third of the 21 million households that should be targeted consist of Spanish Speakers?

NAB estimates that about 5 percent of the population knows that the digital transition is taking place. I suspect the NAB is being optimistic. Not many people outside the Beltway have heard about the digital transition and its possible impact on

their households. This past weekend I was in Calexico, California visiting my family, most of whom are bilinguals, Spanish/English. Calexico is a rural area right on

the border with Mexicali, Mexico. While having supper I asked the seven heads of

households sitting at the table if they knew about the digital transition. None of

them did, nor did they understand how it was going to impact them. This was not

a scientific poll, granted, but I’m inclined to believe the target population, my large

family included, is oblivious to the digital transition and the effect it will have on

them. If the target population doesn’t learn of the transition until the year it is

going to take place, then I don’t think we are ready to transition to digital.

Obviously, not enough has been done so far to educate our target groups that this

historic change is taking place and that their over-the-air televisions will go dark

after February 17, 2009 without a converter box. The outreach program needs to

start today and more effort needs to be made by the NTIA, FCC and the DTV Transition Coalition to reach community-based organizations that focus on the target

groups. We need more people outside of D.C. to know about the transition and be

able to communicate in a clear and understandable manner to those that will be

impacted.

Finally, NHMC objects to the two-phase plan that NTIA is proposing for the distribution of the coupons. In the first phase, where $990,000,000 is allocated, payTV customers will be able to apply for up to two $40 coupons per household to purchase converter boxes. The second phase is only open to households that certify in

writing that they rely on over-the-air reception. So once the $990,000,000 is spent,

those that apply late or do not find out about the coupon program in time will be

burdened by an added certification that may deter them from applying. Changing

eligibility mid-course will result in needless customer confusion. Indeed, the certification will be a deterrent to low-income families, especially those that do not dominate the English language. Ladies and gentleman, I have no doubt that the

disenfranchised population that will be the most impacted by the digital transition

will be the last to apply for the coupons. This being the case, having to certify in

writing that they rely on over the air reception is just adding an additional burden

that will lock many of them from applying for converter boxes. A two phase-plan

with an added burden for those that are hardest to reach doesn’t make a lot of

sense. If the reason for this two-phase system is because NTIA thinks there is a

likelihood that the program will run out of funds before all the impacted households

have obtained their coupons, then NTIA should go back to Congress and ask for additional funding.

Summary:

• A well-funded pro-active, consumer-friendly, and culturally sensitive outreach

program needs to begin as soon as possible and should include a well-coordinated

campaign that includes CBOs working closely with the NTIA.

• The money that is projected to be spent on the educational outreach program

is not enough and should be supplemented.

• English-written materials should not be translated to Spanish as they are seldom culturally effective. Materials to the Spanish-speaking should be original and

the appropriate place to advertise to Latinos should be carefully considered. For example, Latinos more then anyone else consume a great deal of radio programming.
47

Mr. MARKEY. Thank you, sir. Next we will hear from Mr. Britt.

Welcome.

STATEMENT OF GLENN BRITT, PRESIDENT AND CEO, TIME

WARNER CABLE

Mr. BRITT. Thank you, Mr. Chairman, Mr. Upton and Mr. Barton

and members of the subcommittee. We, at Time Warner Cable, are

one of the leaders in the conversion to digital. We provide our customers with high quality digital video services like high definition

television and video on demand, as well as Internet access service

and digital phone service. As of last December, approximately 7.3

million, or 54 percent of our video customers also subscribed to digital video services and 1.9 million of those customers had taken our

high definition service.

We encourage our subscribers to move to high definition service

by providing HD boxes at no additional cost over digital. Mr. Chairman, now that Congress has established a hard date for the end

of analog broadcasting, I think all of the affected industries and

elected officials have a common goal and that is to make sure that

all of our consumers and your constituents are not left in the dark

at midnight on February 17, 2009.

The cable industry is ready, willing and able to work with you

and our industry partners to achieve this important goal. And to

that end, in January 2007, NCTA, CEA and NAB agreed to join

forces to form the DTV Transition Coalition. This coalition is comprised of a broad range of diverse entities representing affected industries and interest groups. This privately funded initiative will

engage in coordinated marketing and public education strategies to

help television viewers better understand the nature of the transition and to provide information about steps that consumers may

need to take to maintain the over-the-air television signals.

The coalition has launched a Web site targeted to consumers that

offers information, important information about the transition and

we will include this information in Spanish, as well. In addition,

Time Warner Cable has established an internal working group to

create a comprehensive plan to ensure our customers understand

exactly what they need to do and maybe just as importantly, what

they don’t need to do.

We will train our customer service representatives to answer the

tough questions consumers will raise as the hard date gets closer.

We will also reach out to all of the populations we serve, including

a large number of Spanish speaking customers we have in Texas,

California, New York and the Carolinas. We stand ready to commit

the resources to help make this transition a success.

Though an increasing number of customers are opting for digital

cable services, a vast number of televisions are not equipped to receive digital signals. NCTA estimates that just in the homes of

cable customers, there are 134 million analog television sets that

are not equipped to receive digital transmissions or are not connected to additional set top box. With so many analog TVs still on

the market, cable operators have a huge stake in ensuring that the

digital transition is seamless for all our customers.

Each cable operator’s first priority is to make certain that its customers do not suffer any disruption in their television service. We
48

believe we have the flexibility to ensure their customers can, on the

first day of digital only broadcasts, continue to watch all of the stations they receive today on their existing televisions. This flexibility

permits cable operators to employ a variety of solutions to ensure

a seamless transition from the consumer’s viewpoint.

For instance, the cable operator may decide to convert the digital

broadcast signal to an additional analog format at the head end

and under this option, cable customers can continue to receive the

service on analog television without a set top box. In cable systems

that have significant digital penetration, another option might be

to deploy digital set tops to every consumer. This option, however,

would require these consumers to change equipment or to add a set

top box where maybe they didn’t have one before.

Thanks to Congress and the NTA, cable customers will be able

to have the ability to obtain coupons to purchase digital to analog

converter boxes that will make the over-the-air digital broadcast

signals available on analog TV sets that are not connected to cable.

We look forward to continuing to work with you and other members of this committee on our shared goal of promoting an affordable and seamless digital transition. And I would be pleased to answer any questions during the Q and A period.

[The prepared statement of Mr. Britt follows:]
49
50
51
52
53
54
55
56

Mr. MARKEY. Thank you, Mr. Britt. Again, we are honored to

have Mary Fetchet, who is the founding director of the Voices of

September 11th with us today. Thank you so much for being willing to appear before us. Whenever you are comfortable, please

begin.

STATEMENT OF MARY FETCHET, FOUNDING DIRECTOR,

VOICES OF SEPTEMBER 11TH

Ms. FETCHET. Good morning, Chairman Markey and Congressman Upton and our distinguished members, especially Congresswoman Harman, who I worked so closely with when we were trying

to get legislation passed. It was an honor to work with her. And

it is an honor to be here on this panel and I am relieved to hear

that people are moving forward in this process.

My name is Mary Fetchet and I am founding director of Voices

of September 11th, a 9/11 family organization whose membership

includes over 6,000 individuals worldwide. As you may know, my

husband and I suffered the ultimate loss, as parents, when our 24-

year old son, Brad, was tragically killed in the Tower 2 of the

World Trade Center. Like many Americans, my sense of security

and my faith in our Government’s effectiveness was shattered on

that horrific day.

The past 5 years have been a painful education for me, grappling

with the challenges presented by political maneuvering, Congressional inertia and powerful special interest groups. But due to the

dedicated efforts of 9/11 family members, the 9/11 commissioners

and many of our elected officials, some progress has been made.

However, I am frustrated by the slow progress concerning first responder communications. Imagine, if you will, being told that your

loved one’s death could have been prevented. Imagine then that the

solution to this problem was identified a full 5 years earlier. Imagine further that nearly 6 years later little has been done. As you

know, this is not a hypothetical example. It is an unfortunate reality that exists today.

I was horrified to learn, actually when we were at a caucus meeting, sitting on a panel, that this final report of the Public Safety

Wireless Advisory Committee, which was published in 1996 to the

FCC and NTIA, nearly 11 years ago, identified the exact problems

in first responder communications that still exist today. ‘‘The lack

of sufficient quality radio spectrum suitable for public safety users

deters technological innovation, diminishes the responsiveness and

effectiveness of public safety and ultimately compromises the safety

of the responding officers and of the very individuals seeking their

help.’’

I was baffled that a problem identified after the 1993 World

Trade Center bombing, confirmed in Oklahoma City, confirmed on

9/11 and confirmed during Hurricane Katrina, has yet to be corrected. I can think of no other words than negligence. The 9/11

Commission made a strong recommendation in their 2004 report

urging the expedited and increased assignment of spectrum for

public safety purposes. Less than a year ago Chairman Tom Kean

and Vice Chairman Lee Hamilton asked a committee of your colleagues, ‘‘Who can say that no disaster will strike us before 2009?
57

It is inexcusable that we still haven’t gotten our rescue workers the

tools that they need to do their jobs.’’

This sentiment resonates strongly with American people, as well.

In August 2006, Voices of September 11th conducted a national

survey of over 2,000 individuals to measure their perception of preparedness. The results were sobering. Over two-thirds of respondents rate national preparedness as fair or poor. Local preparedness

and home preparedness rate only slightly better. I fear, as Congresswoman Harman said, that another mother, father or sibling

will suffer the same loss as my family. I fear not only for their loss

but for the torment and anger that they, too, will experience following that their loved one’s death could have been prevented had

these important reforms been implemented.

Please prove these fears wrong. We cannot afford to wait, cannot

afford to jeopardize the lives of our first responders or the lives of

those they are called upon to save. In the past, the Federal Government has neglected its fundamental responsibility to protect its

citizens. Who will be held accountable when the next lives are lost?

I would like to play the message my son left me around 9:00 a.m.

on September 11th.

[Recording played]

As you can see, Brad was unaware that his life was in jeopardy

and followed the direction he was given to remain in his office.

They were safe and secure. Sadly, individuals trying to evacuate

the building were sent back up to their offices. Firefighters and

first responders who rushed into the building to save lives were not

able to communicate. I remain convinced that Brad’s life and the

lives of over 600 other innocent citizens in Tower 2 could have been

saved if the first responders were able to communicate on 9/11.

Let me close as I began. My husband and I suffered the ultimate

loss, as parents, when our 24-year old son, Brad, was tragically

killed in Tower 2 of the World Trade Center. Today I am very

hopeful, as I am hearing these panelists talk about moving forward

and how they are going to approach converting the spectrum. And

I believe that you will learn from the lessons of 9/11 and that with

your support, our brave first responders will be better equipped to

respond and minimize the loss of life in the next catastrophic emergency, whether it is a terrorist attack or a natural disaster.

We all have an obligation, both public and private sectors, to ensure this radio spectrum transition. Appropriate funds must be

dedicated with vigilant oversight by this committee to ensure we

are spending limited homeland security dollars wisely. A concerted

effort on all levels of Government must be made to work in a bipartisan manner and concrete deadlines must be adhered to. I implore

you to make a promise to my family and the families like mine that

we will not allow this problem to continue any longer.

Voices of September 11th remains committed to working towards

the full implementation of the 9/11 recommendations, especially in

the area of preparedness and improved first responder communications. I make a personal commitment to support your efforts in

educating the general public, as well as the efforts of everyone sitting here on the panel, as you move forward with the spectrum

conversion. I sincerely thank you for the opportunity to speak today

and I look forward to answering any questions.
58

[The prepared statement of Ms. Fetchet follows:]
59
60
61
62
63
64
65

Mr. MARKEY. Thank you very much, Ms. Fetchet, and thank you

for sharing your story with us today. Mr. Vitelli, you have 5 minutes.

STATEMENT OF MICHAEL VITELLI, SENIOR VICE PRESIDENT,

CONSUMER ELECTRONICS AND PRODUCT MANAGEMENT,

BEST BUY, INC.

Mr. VITELLI. Good morning. Chairman Markey, Mr. Upton and

members of the subcommittee, my name is Mike Vitelli and I am

pleased to be here today on behalf of Best Buy and the Consumer

Electronics Retailers Coalition, otherwise known as CERC. Best

Buy is the country’s leading consumer electronics retailer with over

800 stores in 49 States with approximately 130,000 employees. We

are a founding and leading member of CERC, which includes other

leading consumer electronic specialty retailers, major general retailers that sell consumer electronics and three major national retail associations.

In the last Congress, you set a clear, definite, unconditional date

for the end of analog broadcasts, which we agreed would be the single most effective thing you could do to complete the transition to

digital broadcast signal. Since then, CERC and its members have

worked proactively with the FCC and the NTIA. We look forward,

as well, with working with members of this subcommittee, its leadership, any interested members, to help make this transition an

unqualified success for our customers and your constituents, so I

want to talk about four key points about the transition.

First is the purchase of a new television is more complex than

it needs to be and the education of consumers will help the transition. Best Buy research shows that 77 percent of all DTV shoppers

visit Best Buy before they buy a TV. And they may not all buy at

Best Buy, but we can use these visits to help people better understand the DTV transition. Television shoppers are now increasingly

studious and deliberate. In addition to other stores, they actually

visit a Best Buy store four or five times before buying a TV and

almost 80 percent of our shoppers have researched their options online before they buy a TV.

Buying a TV often involves in-depth dialog with our sales associates to learn the customer’s particular requirements and how they

are going to use it and what their budget is. The sales associate

can then identify a combination of display features, single acquisition choices and what they home network options are to give them

the best overall home entertainment experience.

We expect that consumers with TVs that rely on antenna signals

will find the option of a Government subsidized converter box attractive. Many customers will not need a converter box, but our opportunity for discussion with each of them fosters a better understanding about the transition, as a whole, and each informed consumer will then be better able to help others, like their parents,

understand the transition. So second, that goes to public education

about the transition to the DTV is critical and retailers are playing

a role. Albert Einstein said you really don’t understand something

until you can explain it to your grandmother. And we try to do this

as a business, as part of an industry group and as part of the

broader coalition.
66

CERC has worked with the FCC and the CEA to develop, publicize and distribute a DTV tip sheet with core information about

digital television products and services. Best Buy, Circuit City and

Radio Shack have distributed hundreds of thousands of copies of

these to our stores, physically and electronically, and it has been

published twice in retail industry magazine and remains on the

CERC Web site today. CERC has also published a 3-page consumer

guide, ‘‘What You Need to Know About the February 17, 2009 DTV

Transition’’, and continues to update this document with each critical step in the transition and we are about to add more information

about the NTIA regulations.

Third, targeted public education about the need for converter

boxes is required and needs to be simple. Last week, before the

subcommittee, Assistant Secretary Kneuer stressed that the NTIA

would leverage its own public education resources by working with

the private sector. In anticipation of this need, CERC joined with

APTS, NAB and CEA in founding the DTV Transition Coalition.

This steering committee of a very broad coalition includes NCTA

and the Leadership Conference on Civil Rights.

The objective is to work with the FCC, the NTIA and the Congress to provide accurate and consistent information via all media

and avenues to assure that no American household is without the

information they need to handle the transition successfully. The

goals of this broad public education campaign should be to help

people understand whether they will and perhaps more importantly, whether they will not need a converter box; help the people

that do need the box to understand how to receive one through the

program and ensure that people understand the reasons why the

transition is occurring and the many benefits and choices that it

offers.

Though a majority of Best Buy’s customers will complete this

transition without the need for a Government subsidized box, we

know that the success of the transition will be judged by the experience of those who do need or want a converter box, which leads

me to the final point. In order for NTIA’s CECB program to be successful, the program has to work with retailers and their systems.

CERC has been concerned that NTIA design a program that is

feasible for a broad scale of small, medium and large retailers, including online only retailers, such as our member Amazon.com and

thus far, we have appreciated the fact that the NTIA has shown

sensitivity to our concerns and our advice. And we know that

NTIA’s selection of a turnkey program vendor, which it plans to announce on August 15, 2007 may be the key to determining whether

the necessary electronics systems for processing coupons and handling payments will be feasible for a broad scale of retailers and

their customers.

So aside from the matter of expense, making any change in your

point of sales system or payment system is dangerous and a

daunting task. A single bug can bring the system down. In the case

of a large retailer like us, this can mean sever inconvenience for

our customers and a smaller retailer, can literally put them out of

business. And no entity can afford to endanger its mission critical

systems, whether that is for ringing up sales or tallying up votes

and I think you will appreciate the fact that for the welfare of your
67

constituents and local economies, the time for retailers to make

this change in our mission critical systems shouldn’t be during the

holiday selling season.

So NTIA has correctly left the door open for coupon redemption

early in 2008 and a sufficient number of retailers are coming online. So in summary, the DTV transition is all about offering new

choices. We and our competitors are in the business to offer consumers these options, help them to understand them and choose

the options best for them. The coupon eligible converter box provides an option which our customers must be and will be well

aware of.

And Mr. Chairman, at last week’s hearing, members of this subcommittee asked Secretary Kneuer to plan to work with them and

their constituents to understand and anticipate the change. On behalf of CERC and all of its members, I expect and hope you will

offer the same thing to us. We want to work with you, as well as

the FCC and the NTIA and other members of the DTV Transition

Coalition to make February 17 and 18 days that will pass only with

the appropriate recognition for all that we have accomplished by

working together. And on behalf of Best Buy and CERC and its

members, thank you again for inviting me to meet with you today.

[The prepared statement of Mr. Vitelli follows:]
68
69
70
71
72
73
74
75
76
77
78
79
80

Mr. MARKEY. Thank you, Mr. Vitelli, very much. We will now

turn to questions from the subcommittee members.

Mr. Vitelli, if a consumer walked into Best Buy today, could they

still buy an analog TV set?

Mr. VITELLI. There are, yes. The answer is yes. There are very

few left.

Mr. MARKEY. Are they told, do your sales people tell, are they

mandated by you, by your company to tell the consumer that the

TV will not work in 2 years without a converter box?

Mr. VITELLI. Our education of our sales employees gets into a

tremendous amount of detail about high definition, standard definition.

Mr. MARKEY. So if I walked in, if I left here this afternoon, which

I am going to do, and go into a Best Buy and I ask to buy that

TV set right over there, knowing it is an analog, would the salesman tell me it won’t work in 2 years?

Mr. VITELLI. If you engaged in that conversation with that person, you should get into that conversation.

Mr. MARKEY. No, no. I am asking does he give me or she give

me a warning that it won’t work in 2 years? I am saying I want

that TV, I like that TV. Does the salesperson say it is a good TV,

but it is an analog TV; it won’t work in 2 years without a converter

box?

Mr. VITELLI. That is part of our training with our sales staff.

Mr. MARKEY. So they will do that?

Mr. VITELLI. That is part of our training.

Mr. MARKEY. OK, so is there a sticker on the TV that says this

will not work in 2 years without a converter box?

Mr. VITELLI. Individual manufacturers are doing that. Some do

and some don’t.

Mr. MARKEY. Now, what does Best Buy do? Does Best Buy put

a sticker on the analog TVs?

Mr. VITELLI. We are not putting stickers on the televisions.

Mr. MARKEY. Is there a sign near the analog TV sets that says

these TV sets won’t work in 2 years? It is kind of like a clearance

sale right now? When you know that those ties that cost $19.95 are

the ties that they couldn’t sell for $119? Do you have any kind of

warning like that, Mr. Vitelli?

Mr. VITELLI. No.

Mr. MARKEY. You should. And I think our committee is going to

insist that you do warn from now on and we are going to ask your

association to warn all consumers that the analog TV set will not

work in 2 years and we are going to ask you to report back to the

committee as to the types of warnings on the sets or near those

sets and what requirements you have placed on sales people for the

next year because otherwise they are engaging in very bad consumer purchases.

If I went into a Best Buy this afternoon, what are the chances

that a salesperson would know about the digital TV conversion?

Mr. VITELLI. Very high.

Mr. MARKEY. Very high. What efforts will Best Buy make next

January to ensure that the consumers are going to get the information they need as they are walking into purchase these converter

boxes? Is there a training program you are putting in place?
81

Mr. VITELLI. We certainly will when that time is there. We have

actually not gotten into product discussions yet with any of the

manufacturers about the box.

Mr. MARKEY. Have you put in an order for converter boxes from

Mr. Taylor’s company or from other companies that are manufacturing them?

Mr. VITELLI. We have not gotten a formal proposal, if you will,

about boxes.

Mr. MARKEY. When do you expect to place your orders for the

converter boxes?

Mr. VITELLI. Normally, the cycle of an order for a new product

is about 3 to 4 months in advance of its arrival.

Mr. MARKEY. Will you have enough converter boxes on the

shelves of Best Buy on January 1, 2008? How many do you plan

right now on having on the shelves of your stores on January 1,

2008?

Mr. VITELLI. We haven’t done that analysis yet because of analyzing which stores they should be in, how many should we have,

how many different manufacturers——

Mr. MARKEY. Will they be in all stores, Mr. Vitelli?

Mr. VITELLI. It will depend on what we perceive the demand to

be.

Mr. MARKEY. I am not hearing you correctly. The answer to that

question is yes, they will be in all stores. Do you want to try that

one again? There are 23 million homes that don’t have a way of

watching television unless they can buy a converter box. We want

to hear you say all our stores will have converter boxes, Mr. Vitelli.

Can you please say that right now?

Mr. VITELLI. We will have boxes available for people.

Mr. MARKEY. In all of your stores?

Mr. VITELLI. On the assumption of when they are available and

where they meet——

Mr. MARKEY. No, we want them available on January 1 in all of

your stores because that is when the converter boxes are going to

be available for sale and the coupons will be in people’s hands. Will

you commit that you will have converter boxes available for sale on

January 1 in all of your stores?

Mr. VITELLI. If there are converter boxes available, we will have

them in our stores.

Mr. MARKEY. You will have them in all of your stores? Are you

saying all or some, again?

Mr. VITELLI. You are asking me to predict——

Mr. MARKEY. I want you to just get an idea of the scope of this,

Mr. Vitelli. They are having an election for president in France

right now. There are 23 million homes in France. That is all there

are. There are 23 million homes in America that don’t have anything except analog TV sets. Now, imagine how big that issue

would be right now in a presidential election if everyone France

was being asked. I think that is the only question that the candidates for president would be getting asked.

It is a big issue, huge issue, Hispanic community and they just

don’t subdivide into neat little communities across America, this

Hispanic population or other communities. They tend to live in all

States, in all cities and near all Best Buys and other retail stores.
82

So we would really appreciate it if you could ensure that not only

Best Buy but the rest of your industry, when we have you back

here again, have put in place the program that will give us some

assurances that every American will have access to it.

My time has expired. Let me turn to the gentleman from Michigan, the ranking member of the committee, Mr. Upton.

Mr. UPTON. Well, I thank you, Mr. Chairman, and I just want

to say to Mr. Vitelli, I very much agree that we do need warning

stickers for all of our consumers. I can remember the story of Mr.

Barton’s wife going to get him a Christmas gift.

Mr. BARTON. No, it was I.

Mr. UPTON. Oh, you bought it? I though it was a gift from your

wife.

Mr. BARTON. It was a gift, but I bought it.

Mr. UPTON. All right. But that was before we actually had a

date, but we have a date now and it is important that every consumer, whether it be this afternoon or a year from now, when they

go in, if there are analog sets, they know precisely that if they have

over-the-air, it is not going to work without a converter box.

And I will say that in the legislation that we moved in the last

Congress, which was bipartisan, for the most part, did include that

requirement in the legislation as the House passed it. And unfortunately, the Senate, with its parliamentary rules, were able to knock

it out, and I wanted to say this before Mr. Markey left the room,

but we had a bill that will require that, to put it back. It is H.R.

608 and I don’t know if you have had a chance to look at it or not

or the industry, but I appreciate, maybe at some point in the next

few days, you might do that and come back in writing with a comment.

It was introduced by Mr. Barton, co-sponsored by Mr. Hastert

and myself, and it requires consumer education and just that, so

that all consumers, and I am sad to say that it was introduced a

couple months ago and we have no, other than the two co-sponsors,

Mr. Hastert and myself, nobody else has co-sponsored and if we

want to see legislation move, we want to see a bipartisan, we want

to see this requirement put back and maybe if we are able to get

Mr. Markey’s support and others, knowing that they now have the

gavel, we can get this legislation moved. But it would require that

consumer education for everyone going to any store, whether it be

a Best Buy or a Sears, to have that requirement.

Mr. Taylor, I appreciated your comment early on, saying that we

certainly do need a hard date. And as you reflect back, you know

that that was an issue that we worked on very hard for a good

number of years. We had a number of different industry

roundtables to figure out where things were and I again just brown

nose Mr. Barton here for a second. He did pick a date and it was

met with a lot of resistance. We moved the date just a little bit,

but we made it firm and some have suggested that we delay the

implementation of this, that we push it back further.

And there were efforts in this subcommittee and maybe even the

full committee, as well, to actually pick a later date than what we

ended up with and thank goodness, Mrs. Fetchet, we defeated

those amendments. And I want to tell you, from this side of the

aisle, and I think Mr. Markey and I hope Mr. Markey and others
83

would agree, that this date has to stick. It was a carefully balanced

date that we picked.

We didn’t want the consumers not to be able to get over-the-air

TV, but we had to allow the time to really force the broadcasters

to make the $5 billion in investment, as Mr. Yager said, to be able

to get the cameras and the equipment. And 90 percent of them

have achieved that, whether it be in the market that serves my district in South Bend or Kalamazoo, or a larger market, as well. And

we were successful because we did push the broadcasters, screaming a little bit, but they are going to make this date and that, then,

allows us to take that 24 MHz and give it to the first responders.

And through the sale of the analog spectrum the minute we were

able to pursue to provide assistance for the first responders so they

can, in fact, purchase the equipment down the road and I got to

tell you, I want to thank Mrs. Harman, who is here. She was a

leader. She worked with my colleague, former colleague now, Mr.

Weldon, on the act and even though they had an earlier date, I

think we all were convinced that this date works and I want to assure you that we will not allow that date to slip.

I think we are in store to see this transition come somewhat

seamlessly and we do need an education effort and I will just plug

my bill one more time in the remaining 7 seconds, actually, Mr.

Barton’s bill. H.R. 608 does exactly that and we have now 18 Republicans I am told that have cosponsored the legislation. No

Democrats.

Mr. BARTON. That is fast work.

Mr. UPTON. Well, you got to put them in. You got to put the

names in, but it does do a lot of things for education and reminds

people that those analog sets need the converter box. We need to

push the industry to make sure that they are available in every

store around the country and I think that it can work and we appreciate very much your meaningful testimony. I yield back.

Mr. DOYLE [presiding]. Thank you, Mr. Upton. The chair now

recognizes the chairman of the full committee, Mr. Dingell.

Mr. DINGELL. Mr. Chairman, thank you. These questions are for

Mr. Vitelli. I think, for the most part, Mr. Vitelli, you could answer

yes or no. Do you believe that information on the coupon program

should be widely available through retailers?

Mr. VITELLI. Yes.

Mr. DINGELL. Now, you have already distributed hundreds of

thousands of DTV tip sheets, is that correct?

Mr. VITELLI. Yes.

Mr. DINGELL. Now, given your testimony about the importance

of DTV education, do you believe that the retailers of the country

should see to it that there would be distribution of the coupon application forms inside every store that is going to deal with these

kinds of sales of televisions?

Mr. VITELLI. Yes.

Mr. DINGELL. Will Best Buy do that?

Mr. VITELLI. Yes, we will.

Mr. DINGELL. Thank you. You are certainly to be praised for that

and that is a commitment I think is of great value to the consumers of the country. Thank you. Now, I am concerned here, again,

that retailers may be tempted to sell Americans expensive digital
84

televisions rather than letting them know that they can buy coupons or rather, they can obtain coupons for low cost converter

boxes. Is that a concern for you and for Best Buy?

Mr. VITELLI. It is not a concern for me and Best Buy. Best Buy

is a customer relationship selling environment, not an all pressure

sales environment, so we engage with the customer, try to understand what their needs are and get them the best thing for their

needs.

Mr. DINGELL. What should a responsible retailer do to prevent

consumers from then being forced into buying more expensive and

unnecessary digital televisions when they only need a converter

box?

Mr. VITELLI. As I just described, what we do is try to engage

with each customer and understand what they are trying to accomplish and based upon that, give them the best thing for what that

experience is and if all that experience is to get my analog TV to

work, then that box is the number one thing that they need.

Mr. DINGELL. So you are trying, then, to see to it that the information is readily available in the stores to make that choice clear

to your consumers and customers, is that right?

Mr. VITELLI. As soon as those boxes are there, that will be part

of our education process to make sure that we are giving the right

information to all of our customers.

Mr. DINGELL. Now, do you think that retailers should maintain

a sufficient supply of boxes at all times throughout the coupon program so that consumers are not being put in the position of being

unable to redeem the coupons due to an inadequate or insufficient

or nonexistent supply of retail outlets?

Mr. VITELLI. Absolutely. The point I was trying to make earlier,

I was struggling to make, is that air shipping a box from a central

location can be just as effective as having it dispersed over stores.

In some cases, it can be more effective because you can have an

imbalance of where the inventory is, so the mechanics of getting

somebody what they need quickly, there are multiple ways to do

that. One answer might be have it in all stores. Another answer

might be to air ship them the next day. There is multiple ways to

solve the same thing, which is get people what they need.

Mr. DINGELL. Thank you. Now, I assume that the education programs that a responsible store would conduct would be to have

prominent in-store signs and displays that would inform consumers

of this situation and their choices?

Mr. VITELLI. Each retailer does it a little bit differently. Signage

is an important part of our stores. In our stores, the human interaction is probably the highest. In stores that have less sales people,

signage could be, so it is going to be a mix, depending on individual

retailers and how they engage with their customers.

Mr. DINGELL. But there should be an attempt on each retailer to

see to it that the customers are properly informed of these matters?

Mr. VITELLI. Clearly.

Mr. DINGELL. And that is more than just a slip by the cash register, something like that, is it not?

Mr. VITELLI. I agree with you. It is more than that. Best Buy and

the consumer electronic retailers have been talking about the DTV

transition for some time.
85

Mr. DINGELL. Now, will there be point of sale symbols or logos

that will denote converter boxes which are eligible for the coupon

program should that be the case?

Mr. VITELLI. I am not sure exactly what your question is, but I

think the actual packaging of a converter box, saying that it is eligible for the coupon program would probably be a good idea because it is one of those products that will be available and it will

be very visible and maybe designing the packaging that way could

be a good way of communicating, as well.

Mr. DINGELL. Thank you. You have answered that question very

well. Is Best Buy going to see to it that there is information about

the coupon programs and eligible converter boxes in its advertisements and direct mailings?

Mr. VITELLI. When the timing is right and we understand the sequencing, I would say absolutely, yes, and making sure that that

is very clear. I think all retailers will look to do that during that

timeframe.

Mr. DINGELL. Thank you, Mr. Vitelli, and thank you, Mr. Chairman.

Mr. DOYLE. Thank you, Mr. Chairman. The chair now recognizes

the ranking member of the full committee, Mr. Barton.

Mr. BARTON. Thank you, Mr. Chairman. We have talked a little

bit about H.R. 608, which is the bill that Mr. Hastert and Mr.

Upton and I introduced back on January 22 to put into law those

parts of the educational program in the DTV transition that were

stripped out by the Byrd rule in the Senate several years ago.

This bill does six things. It would require retailers to display

signs near analog-only television sets on their shelves. It would require cable and satellite operators to provide DTV billing inserts

explaining to their customers what is going on; require broadcasters to file regular FCC reports detailing their consumer education efforts, such as the airing of public service announcement

over their stations. It would ask the FCC to create a public outreach program, including a DTV working group. It would require

the NTIA to establish national energy standards for converter

boxes so that the State regulations don’t hinder the manufacture

of efficient low-cost converter boxes. And it would ask that the FCC

submit progress reports to Congress on the FCC, the private sector

education efforts, the NTIA to submit progress reports to Congress

on the coupon distribution and redemption effort.

According to the bill, this would all start, some of these education

efforts are supposed to start by May 1, 2007, which is only 2

months from now. Does everybody on the panel support this type

of legislation—if not this particular bill? Is there anybody that

doesn’t support this? How many do support it? OK, let the record

show nobody supports it.

Mr. TAYLOR. May I?

Mr. BARTON. Yes, Mr. Taylor.

Mr. TAYLOR. Many of those things are already under way. I

should say that the consumer electronics industry had a voluntary

labeling effort that started last year. If you were to buy an analog

LG television set and we didn’t have too many models left, but

those that were available at retail starting last year had a label in
86

English and Spanish that explained, once we had a hard date we

were able to label it, which was very helpful.

It explained that if you were going to use this for over-the-air television, you would need a converter box in 2009, so some of us are

doing that. Regarding the energy standards that I believe is included in the NTIA rules, this product, in order to be certified by

NTIA to be sold for the coupon program, must have a 2 watt standby power and auto power down after 4 hours of nonuse, so that has

been addressed. I mean, I think that we are making progress in a

lot of these areas.

And I have to tell you, as one who has been involved in the formation of the DTV transition coalition, the passion and commitment on the part of all the parties is unparalleled. Everybody is

really committed to moving forward with or without legislation.

Mr. BARTON. Anybody else want to comment?

Mr. YAGER. Let me just say that it is very difficult for broadcasters to commit to a May start date on a program where promoting converter box when the consumer cannot get them at Best Buy

or any other retail outlet. We are planning a full scale, full blown

campaign to make the public aware, but setting it on a specific

date, before we have a product for the consumer to actually purchase, I think would create tremendous confusion.

Mr. BARTON. What date would you recommend?

Mr. YAGER. Well, if the converter boxes aren’t going to be available until the 1st of January 2008, I would recommend that we go

to some time in November. You need a little lead time to ramp up

the campaign, but May 1 is going to create tremendous confusion.

I don’t want to create panic in the marketplace early. But we do

think we have a real job to do in educating the leadership in our

communities through speakers, bureaus and other things, up until

the point we get there. With all good reference to Best Buy, we

have a lot of education to do at the retail outlet, itself.

Mr. BARTON. Mr. Britt, do you have any comment?

Mr. BRITT. Yes. I think four of us are involved in this coalition

and through that coalition we support everything that is in the bill.

Education is really the key, most important thing that has to happen here and I think we need to do all of the things you mentioned

plus some more, so we do support that effort. Whether it needs to

be legislated or not is something for all of you, but we do need to

do the education.

Mr. BARTON. Well, I think Mr. Yager made that the May 1 date

is too early and we are very open on that. There seems to be concern, and I would even go so far as to say a legitimate concern that

there needs to be a fairly comprehensive, coordinated, massive outreach program to make sure the public knows what is happening.

We had these things that were in the law, in the bill that came

out of the House, but got stripped in the Senate. So I am going to

ask Mr. Dingell and Mr. Markey to hold a hearing on our bill and

if we need to make some changes, fine. I think it would be helpful

to have legislation that is supported just so that we know what the

ground rules are. Mr. Hastert and myself and Mr. Upton are not

trying to be cute about this.

If we don’t have it right, this is a bill that we are very open and

flexible on, I will be asking Mr. Dingell and Mr. Markey to sched-
87

ule a hearing specifically on the bill. If there are changes that need

to be made, like Mr. Yager’s that recommend action that those can

be incorporated. I have several other questions, Mr. Chairman, but

I will just submit them for the record.

Mr. VITELLI. I just have one comment to your question.

Mr. BARTON. Sure.

Mr. VITELLI. And I can’t speak to every one of our competitors’

inventory situation, but by May 1, plus or minus some days, there

won’t be any analog TVs inside of Best Buy.

Mr. BARTON. That is a moot point. OK.

Ms. FETCHER. I just wanted to say we reach out to our constituents on a weekly basis. We send out a weekly newsletter and actually publicize a lot of what is going on here in Washington. We

would be happy to do that. But I would also have you think about

September as preparedness month and you have a Government

agency, Ready.gov and FEMA and others that you might be able

to publicize through them, through the American Red Cross,

through some of the emergency planning, the police department,

the fire department.

Because I think the way that you frame the message is going to

be so critical. You don’t want to frighten the general public. You

want to explain why this is being done, how it is being done and

work with the coalition to coordinate the launch time and put a

timeframe in place so you are working together with the private

and public sector.

Mr. BARTON. Thank you. Thank you, ma’am.

Mr. DOYLE. Gentleman’s time is expired. The chair recognizes

the gentlelady from California, Ms. Harman.

Ms. HARMAN. Thank you, Mr. Chairman. I want to second that

suggestion that Mary Fetcher just made. September is Emergency

Preparedness Month and there are programs in many States, including in California, to teach emergency preparedness in schools.

It is a perfect opportunity to communicate a message without creating fear in those who are receiving it and I would recommend we

would consider that.

I also want to thank Mr. Upton for some of the comments he has

made, including the one that he will not let this deadline slip. I am

missing the mark up of the authorization bill for the Homeland Security Department right now because I feel so strongly that we cannot, we cannot violate, really, a sacred trust to those who died on

9/11 and I will do whatever it takes in this committee and in that

committee to make certain that this deadline does not slip.

A week before 9/11, my oldest son, I have four sons and a grandchild now, spent that week in one of the Trade Towers in the New

York office of his San Francisco based investment firm. He was

then 26. Brad Fetchet was 24. I don’t know what floor he was on,

but I do know that he could easily have been there on 9/11 and I

think any of you could tell a story like that, that someone you

know, one of your family members could easily have been there on

9/11 and could tragically have suffered the fate that Brad Fetchet

did.

I don’t know how Mary can listen to that tape. I am not sure I

could listen to that tape. But I hope all of you felt a pain in your

hearts when you heard that tape. A young child, one of the
88

Fetchet’s three children, who loves his parents, wanted to calm

them down, never suspected that he would be in harm’s way, in a

place, at a time when had we had adequate interoperable communications, his life might have been spared.

Let me ask the panel, did any of you have family members or

dear friends who perished on 9/11, either in the Trade Towers or

in the Pentagon or on those airplanes? Nobody? Did any of you

know or do any of you know people whose family members perished? Yes. Well, OK, Mr. Vitelli, let us talk to you for a minute.

I understand all the problems at Best Buy and I really know it is

a massive chain. In fact, one of my other sons worked there for a

summer, it is a very capable outfit. We shop there. But I don’t care

how many problems there are with this. If you had lost a family

member or thinking about your friend, putting yourself in that

friend’s shoes, does that change anything about the testimony you

just gave?

Mr. VITELLI. There is no question in my mind that, actually, testifying after Mrs. Fetchet was very difficult.

Ms. HARMAN. I would bet.

Mr. VITELLI. And it does indeed make a lot of the things that we

talk about seem very trivial.

Ms. HARMAN. Thank you for that answer. It surely does to me,

too. In another lifetime I was a corporate attorney. I get it, that

all of this is hard. Some of my best friends are broadcasters, et

cetera, but I think that nothing is harder than losing a family

member needlessly in a future 9/11-type or natural disaster because we weren’t ready. Does anyone think that that is less hard

than the problems you all have been talking about?

OK, so I think I am going to yield back the remainder of my

time. I really am too emotional about this to ask detailed questions,

but I would just say to this committee that we should stop at nothing to get this right. I am planning to review the Upton bill that

has been discussed. I haven’t seen it and I am going to study it.

I think bipartisan cooperation is absolutely necessary here and a

firmness of view that nothing, and I mean absolutely nothing, will

cause this date to slip. I yield back the balance of my time.

Mr. DOYLE. Chair thanks the gentlelady. Chair now recognizes

the gentleman from Oregon, Mr. Walden.

Mr. WALDEN. Thank you very much, Mr. Chairman. I have a couple of questions for our witnesses and Mr. Taylor, let us start with

you because you are the maker of the box, right? Or one of the

makers of some of the boxes. Can you guarantee you will have an

adequate supply of boxes available in time for Mr. Vitelli to have

them on sale in his store by January 1, 2008?

Mr. TAYLOR. We do plan to have sufficient quantities available

by January 2008. We are in discussions with our retailers right

now and preparing the launch plan.

Mr. WALDEN. And Mr. Vitelli, isn’t one of the issues you have is

that you have got to make sure they have the boxes before you can

commit that you will have them in your stores?

Mr. VITELLI. Yes, that is true. And someone mentioned earlier,

and I don’t remember exactly who it was, it might have been Mr.

Green, but I am not sure, but the idea of some preorder process.

Mr. WALDEN. Right.
89

Mr. VITELLI. To estimate the actual requirements. That actually

sounded interesting to me when I heard it.

Mr. WALDEN. Is that something you have done a rollout before

of a new product?

Mr. VITELLI. Generally not, because manufacturers have a certain amount of supply they can come up with and if it is hot, it

is usually——

Mr. WALDEN. Like Xbox, where people are camping out all night.

Mr. VITELLI. I was just going to say, yes.

Mr. WALDEN. Mr. Taylor, is there an opportunity, have you ever

engaged in a preorder process? Do you think that would be necessary here?

Mr. TAYLOR. We would be happy to look into that, sure.

Mr. WALDEN. OK. I want to ask another question, Mr. Taylor.

The coupons that are going to be available, you referenced that this

box you have on display here is a simple dumb box, if you will let

me use that term. It is very bright inside, but all it does is convert

digital to analog, right?

Mr. TAYLOR. It has other features, but that is the main——

Mr. WALDEN. OK. And I can use my coupon for that. Can I upgrade to the smarter box with the recording capabilities and I will

still use that $40 coupon to reduce the cost of that box?

Mr. TAYLOR. You cannot, under the law nor the NTIA rules, use

the coupon for anything beyond a basic box.

Mr. WALDEN. A basic box.

Mr. TAYLOR. But we expect many consumers will buy that upgraded box. In fact, we have on the market right now DVD recorders, DVD/VCR combos with the built-in digital TV tuners. I can’t

speak for others in the room, but I probably wouldn’t partake of the

coupon program. I would probably want to get one of those higher

end boxes to use with that set in my bedroom.

Mr. WALDEN. You are a consumer, just like I am and I sat here

thinking the same thing. That is why I asked the question. And I

can see where consumers, I don’t know what lid I am opening on

what box here, but consumers say why can’t I use that $40 any

way I want as long as I am getting a D-Day converter? So I don’t

know if that is something we are going to revisit or not, but Mr.

Vitelli, I share the concern of some of my colleagues.

I know when we debated this issue in this committee last year,

2 years ago, the notion that retailers might still be selling TVs that

are destined to be antiques here pretty quickly or at least require

a set top box, and I would encourage you, too, and I feel bad for

you, actually, today because you are representing one company but

you are really representing the whole industry and so we shouldn’t

be picking on Best Buy as some sort of problem here.

But I think you understand a lot of us are concerned that without labels, without warnings, we are going to have consumers buying sets without the knowledge they are going to need one of those

boxes and I just tell you, if I were on your end I would understand

why you want to clear out analog TVs. Sure, you have got them

or you are buying them or whatever, but I think, too, that in the

long run, for consumer satisfaction, there will be a lot of grumpy

folks a year from now or 2 years from now when they discover they
90

have got to buy yet another component, so I hope we can, Mr.

Ranking Member, get a hearing on your and Mr. Barton’s bill.

And I don’t understand why we can’t get that scheduled, given

the importance of this issue to consumers and I know that the

chair and the other chair are both gone right now, but I would certainly hope that we can get H.R. 608 up for a hearing, a markup,

and include it for movement here in the near future.

Mr. Yager, I guess I would like to ask you and the other panelists here, I am concerned about the rollout and the education portion of this program. As you know, I had concerns about the hard

date and catching consumers unprepared or the industry, the makers of the boxes, unready to help consumers. Is there anything we

need to do, other than those who call for more money, is there anything we need to do or you need us to tell you to do to educate consumers that you are not already going to do?

Mr. YAGER. I think it is going to be a willingness, Congressman,

to participate in the program. That is, those mailers you send to

your constituents to part of the program.

Mr. WALDEN. But I mean for broadcast. At one point there was

a requirement to force you to run ads, a certain number a day during certain day parts. Do you need us to do that or do you anticipate the industry is——

Mr. YAGER. No, I don’t think we need you to do that. Other than

Ms. Fetchet, nobody has a more vested interest in making this

transition work than the over-the-air broadcaster. I mean, we are

talking about our audience here. We are talking about our life

blood. We have got to make sure these sets work come February

2009, so in trying to say we are going to mandate spots be run here

or spots be run there gets a little difficult. We have a station in

Marquette, Michigan that does 70 shares with its newscast. Three

spots on that station a week will reach the whole Marquette audience. I have got some other stations that 30 spots a week are going

to require to reach the same kind of saturation point. I think you

have got to leave this to the broadcast stations and the individual

market.

Mr. WALDEN. But you and the cable and everybody else are committed to getting this word out? That is what I want to know.

Mr. YAGER. Broadcast industry is serious, totally committed to

getting the word out and I would assume cable is.

Mr. WALDEN. And Ms. Fetchet, I can’t——

Mr. DOYLE. The gentleman’s time has expired.

Mr. WALDEN. I just want to express appreciation for all you have

done, Ms. Fetchet, to move this forward and I realize I am extended, but thank you.

Ms. FETCHET. If I could say, too, if you could, if the Government

could send out information to your constituents, I think that would

be helpful and also the Government Web sites would be another

way to just distribute information.

Mr. DOYLE. Thank the gentleman. Now the chair recognizes the

gentleman from Michigan, Mr. Stupak.

Mr. STUPAK. Thank you, Mr. Chairman. I have been in and out,

but I watched you a little bit in my office. I had a meeting with

constituents. Every member of this committee supports a hard

date. In our bill that we ran that ended up in a close vote on com-
91

mittee here, on the Democratic side, our hard date was April as opposed to February and there is a number of good reasons for it,

since a lot of this is in rural areas that are affected the most and

February, we are worried about getting out of our driveway, not

what station we are getting on the TV.

And I am glad that we have so many converts to interoperability.

We don’t have to wait for a hard date to do interoperability. What

we need are the resources to put in there. There are patches that

are available, as the hearing last week showed us about. Problems

where the interoperability on Hurricane Katrina could have been

done. If the administration would get behind interoperability instead of moving money, taking money, moving money, taking

money. In fact, the $1 billion you see cut out of the cops grants, we have

it in interoperability, so you are taking money out of cops to put

it in interoperability. It is sort of a shell game and I hope we get

away from it and really put a sincere effort into interoperability instead of all these excuses about hard dates and who has got this

date and that date.

And Ms. Fetchet, I hope we don’t leave it to the Government to

try to educate people, because we have not done a very good job.

I hope we do leave it to the broadcasters, because they know what

they are doing and they are much more effective in communicating

what needs to be done as opposed to the Government.

But Mr. Yager, if I may ask you this question. Satellite is not

here, I wanted to ask them. But let me ask you a question because

it comes up oftentimes in rural areas and since you have a station

in my district, Marquette and Traverse City and a couple others,

let me ask you this. Many people assume that if a consumer has

cable or satellite, they will be just fine on their DTV transmission.

Some consumers that depend on satellite TVs, other on cable, but

I am concerned that not all satellite viewers will be fine. I wish

satellite was represented here today, as I said, but let me ask you.

According to the latest FCC filings, Equastar has local to local

service in 170 television markets, while DirecTV has local into local

service in 142 television markets. There are a total of 210 television markets. That leaves at least 40 markets where satellite is

not carrying the local broadcast channel. One of these, without

local into local, is of course, Marquette, Michigan in our district,

and you own that station up there. So will consumers in Marquette

DMA, who have satellite, need to purchase a box to receive their

signal over the air?

Mr. YAGER. They would have to purchase a box if they have an

analog set. When Marquette starts transmitting in digital, which

I mean, they are transmitting now in digital, but they also have

an analog signal they are transmitting. When they go totally digital, they will have to have a box that would convert it to analog

so that they can get a picture.

Mr. STUPAK. OK. In 1999 Congress allowed satellite companies

to do local into local, but it did not require it. Later, Congress did

a curious thing and mandated local into local in Hawaii and Alaska, but not the rest of the country.

Mr. YAGER. And we wish you would have in the Upper Peninsula.
92

Mr. STUPAK. I do, too. So do you thing the DTV transition provides an opportunity for satellite companies to roll out local into

local nationwide to all television markets? And broadcasters have

a date certain to switch to digital, February 2009. Do you support

a date certain for local into local rollout?

Mr. YAGER. Well, I certainly would support a date certain for

local into local rollout. I think it is kind of unfair that the smallest

markets in this country; Kirksville, Missouri; Marquette, Michigan

do not have local to local service.

Mr. STUPAK. Correct. Thanks. Mr. Taylor, thanks for your testimony. Let me ask you this question. Who certifies the boxes that

you make?

Mr. TAYLOR. There is a self-certification process not unlike FCC’s

certification.

Mr. STUPAK. Self-service. Who does it, though?

Mr. TAYLOR. The manufacturer.

Mr. STUPAK. OK, so manufacturers are putting forth these standards.

Mr. TAYLOR. But there is also a process where the boxes are submitted to the NTIA.

Mr. STUPAK. OK.

Mr. TAYLOR. And there is a stop gap measure there. If there is

any inkling that there may not be the performance levels required,

there is a closed loop.

Mr. STUPAK. So has NTIA approved this box, then?

Mr. TAYLOR. Not yet. The rules just came out several weeks ago,

so we are finalizing the design, but this box, we believe, will be

compliant and we plan to do our testing in the near——

Mr. STUPAK. Do you have to submit it to FCC for any kind of approval or their guidelines?

Mr. TAYLOR. I think there might be an FCC piece to this, but I

have to admit I don’t know that part of the rules.

Mr. STUPAK. OK. When do you anticipate these boxes being

available so we could, like, run them to our district, see if they are

going to work?

Mr. TAYLOR. They will be available at retail in early 2008. I have

a few prototypes. If you want to borrow one, we could talk after the

meeting.

Mr. STUPAK. Thank you.

Mr. DOYLE. Gentleman’s time has expired.

Mr. STUPAK. Thank you, Mr. Chairman.

Mr. DOYLE. Thank you. The chair now recognizes my friend, the

gentleman from Illinois, Mr. Shimkus.

Mr. SHIMKUS. Thank you. It is great to be here. Thank you for

the panel. I have been in and out, as you can tell, conducting most

of my meetings right in the hallway, so I appreciate you all coming.

It is an interesting issue. My opening statement talked about dollars and cents and based upon NAB’s survey and information about

how many people are connected to satellite and cable and stuff, I

think the $990 million is enough.

But if it is not, in the provision there is 450 million additional

dollars to get rolled out to cover. And if it is not, then we can readdress that. It is not an issue that we want to stop this process.

And first of all, Mary, thank you for coming and testifying. I co-
93

chair the e–911 Caucus and so a lot of my work has been on 911

issues, working with the same communities that you work with.

Just highlight for us again, as much as we got our big corporate

titans here dealing in billions of dollars, we have to really remember that the issue here for us is interoperable communications, first

line responders and ability to help that transition. I am going to

give you a few minutes just to tell us again how important that is.

Ms. FETCHET. Well, spectrum, I know that that is what we are

talking about today and I am so happy to hear the panelists, but

that is only one area that we have to look at. We have to look at

equipment, we have to look at community planning both on the

local, State, regional and Federal level. I was one of the family

members that pushed for the creation, the commission, and met

with several of your offices over the last 5 years plus. My background, I know nothing about politics. I am a clinical social worker,

so this was a new forum for me and so I went into it very naively.

But I remember the caucus and thinking about, after the report

came out, about how critical it was to prepare our communities and

I was just so struck, reading this final report, and when you look

at the description in the World Trade Center in 1993 and the problems that they had with first responders not being able to communicate floor to floor, it just seemed like you could change the dates

and it would be the same story.

I do think there is a sense of urgency. I am concerned that we

are going to have a nuclear attack here in the United States and

I do think to respond to something like that, the response is much

different today. People are not going to rush into an emergency.

They have to be prepared. They have to have the right equipment

and more importantly, they have to be able to radio out to the

emergency response team and so I think the spectrum is an important part of it. Certainly having the equipment and then having

the planning on the local, State and Federal level.

Mr. SHIMKUS. I appreciate that. I do think of all the failures that

we have done throughout the years I have been here, Katrina really highlighted a failure to move more rapidly and listening to the

panelists’ testimony, you understand MHz and moving and local interest, but you do bring a compelling interest to keep us to push

forward and keep a hard date and move this forward so we don’t

have another experience like September 11 or Katrina where our

first line responders cannot talk to each other. I really appreciate

you being here.

Mr. Taylor, can you talk about the sets that are being sold now

with digital receivers? Part of the calculations that I used really

didn’t address that things were being rolled out now. Is that true?

Mr. TAYLOR. It is hard to find an analog television set today, not

that anyone would want to, but I have to tell you that when you

see the very attractive pricing on digital television receivers of all

shapes and sizes, the overall prices of flat panel displays came

down by 40 percent last year on top of 40 percent reduction the

year before. They are really hitting the mainstream. The install

base of digital television receivers continues to rise.

There was probably 50 million sold in the last 5 years and another 50 or 60 to be sold in the next 2 years, so America’s love affair with the automobile has been transferred to television and
94

high definition is the big driver these days and now that there is

lots and lots of programming that is driving the market, it is not,

I think many, many consumers are not going to wait to retrofit

their old analog television set; they are going to replace it now.

Mr. SHIMKUS. Thank you very much. I will just end by saying I

like multiple pipes. I think digital transmission and receiving over

the air gives the consumer one more choice versus cable and satellite now over the air and I am very excited about it. I yield back.

Mr. DOYLE. Gentleman’s time has expired. Chair recognizes the

gentleman from Virginia, Mr. Boucher.

Mr. BOUCHER. Thank you very much, Mr. Chairman, and I also

want to say thank you to our panel of witnesses for today. Sorry

I didn’t get to hear your prepared statements. I was unavoidably

detained at another meeting.

Mr. Yager, I have several questions for you. And welcome back

to the committee, by the way.

Mr. YAGER. Thank you, sir.

Mr. BOUCHER. Nice to see you again. I heard statements from a

number of individuals earlier about the number of analog sets that

are not connected either to cable or satellite. These would be sets

that are over-the-air dependent. And some of the estimates suggested that that number of sets might be in the range of 20 million.

Now, I think you might have a higher number because the 20 million sets probably would encompass those that are in households

that do not have a cable or satellite connection. But even in households that do have a cable or satellite connection, there are sets

that are not connected to cable. These would be perhaps on the second floor of the house where the wires don’t run. And I recall from

earlier hearings that we have had on this subject, that the number

of sets in total that are over-the-air dependent is many multiples

above 20 million, in fact, maybe as many as 70 million. Is that consistent with your numbers?

Mr. YAGER. That is very consistent with our numbers. We estimate 19.6 million sets are TV-only sets, which would conform to

your 20 million, but there are another 45 million sets that are second, third and fourth sets in a household that are not connected

to a multiple distribution system that are analog only. So yes, the

answer is yes.

Mr. BOUCHER. Well, I think it is important to make that point

and for the record, clearly to reflect it for the benefit of those who

are operating under the assumption that the total universe of sets

that we need to be concerned about is in the category of about 20

million. That obviously is not true. We are concerned, really, about

the entire universe of approximately 70 million sets.

And that is why it is very important that the NTIA regulations

not restrict the eligibility for the digital to analog converter boxes

just to those who live in homes that do not have cable or satellite

subscriptions. And it is my understanding that the regulation will,

in fact, provide for that broader eligibility. But the money that will

be required will be necessary to go to the higher number potentially, not just to the 20 million level, so thank you for your clarification.

The next question that I have of you relates to the public education campaign that we all now need to cooperate in mounting in
95

order to make sure that TV owners across the country are aware

of this impending transition. I am pleased to be joining with Mr.

Walden, on this committee, in launching the Congressional HDTV

Caucus.

In that effort, we will be communicating with members of the

House of Representatives, all 435 Members, providing information

about the impending transition and then suggesting to them that

they help educate their constituents; in town hall meetings, by putting information in their newsletters about the impending transition so that people will know that if they are going shopping now,

they certainly want to buy a TV set that has a digital tuner. They

have to be sure they are doing that.

And second, that they have become aware of the converter box

program and the availability of vouchers. So while we are doing

that here in Congress, I think the broadcasters have some things

they need to be doing, to. And let me just suggest some of those

to you. I think it would be very appropriate for broadcasters to

have public service announcements that are carried on local broadcast stations informing the television viewing audience of the

impendency of this transition.

I would hope that those public service announcements would

begin, perhaps, in December of this year because the converter

boxes will be available in January of 2008. People need to know

that they are going to be available and PSA announcements on behalf of broadcasters would really help. So my first question to you

is do you think the industry, generally, is planning to run these

PSAs and if so, when will they start?

Mr. YAGER. The answer is absolutely we are planning to run the

PSAs. We are planning to have a national campaign of PSAs plus

very localized PSAs with the talent of our various television stations trying to explain to many of our viewers. They have the credibility in our market; our weather people, our anchors, so we will

do both and December 2007 to start the PSAs is not too soon. We

have got to balance this when the converter boxes are really available to the public because, as I said earlier, there can be nothing

worse than to have demand for a product that a consumer cannot

purchase.

Mr. BOUCHER. Well, Mr. Taylor, if the broadcast industry across

the country starts PSAs in December 2007, are there going to be

converter boxes available pretty soon after that January date when

the vouchers are going to be available?

Mr. TAYLOR. Our plan is to have the boxes available at the first

of the year.

Mr. BOUCHER. OK. That is great. Well, do you think, Mr. Yager,

that the broadcast industry, generally, will start those PSAs this

coming December?

Mr. YAGER. I can almost assure you of that. At least, we have

already started, in our group, with the educational campaign at

local level and I would volunteer the NAB digital task force to work

with you and Congressman Walden in making sure that the message you get out is adequate.

Mr. BOUCHER. That is very helpful. Thank you. One other question. In Berlin, where they undertook a similar kind of transition

several years ago, in advance of the transition date, the broad-
96

casters there ran a scroll on the bottom of the television screen announcing the impending transition. Now, you have to be artful, obviously, in how you do that. There is not a lot of room there if you

are going to watch a program, but there can be some contact information, a phone number or something provided and I am just wondering if any thoughts have been given to doing that?

Mr. YAGER. A lot of thought has been given to that, Congressman, and it is a good idea. The problem is we have closed captioning right now on the bottom of our screens and that is, Mr. Nogales

talked about the need for serving that community, so we are thinking about a scroll on top of the screen. It is not an undoable.

Mr. BOUCHER. I think the top is good, as long as the scroll is

what counts. Mr. Britt, let me spend the rest of my limited time

here with you and I am what I am asking about is what kind of

signal the cable subscriber in the home is going to receive after the

transition date? I asked a similar set of questions on February 17,

2005 to Mr. Michael Wilner, the CEO of Insight Communications.

He basically said the following.

Let me just ask a leading question by asking you if you agree

with this. He said that every home would receive an analog signal

after the transition so that if individuals wanted to keep their analog sets in operation through a cable connection they could do so.

That would be either through a headend conversion with the signal

sent to the home or the conversion of the set top box level with the

industry providing the box. Do you agree with that? Is that still the

industry’s plan?

Mr. BRITT. Yes, I do.

Mr. BOUCHER. OK. Question No. 2, a lot of people have now invested lots of money in high definition and they bought very nice

sets. Can they rely, after the digital transition, in the full high definition signal that is being broadcast by the local broadcaster being

passed through on cable to the home viewer?

Mr. BRITT. Yes, our plan is to carry high definition signals. As

you know, there are many definitions of what that is, but we do

plan to carry those and we carry many today already.

Mr. BOUCHER. And can the viewer rely on those signals being

provided to him on whatever tier service he happens to be subscribing to so that he would not have to subscribe to the higher tier of

service just to get the high definition signal? Broadcasters provide

this for free. Seems to me the cable subscribers ought to be able

to get those on whatever tier they subscribe to. What would your

answer to that be?

Mr. BRITT. In our case, we haven’t fully addressed one part of

that. In our case today, if you buy digital service, which does cost

more than basic, and if you then want HD, we don’t charge any

extra for it. Most of the other cable and satellite companies do

charge extra, by the way. We have not addressed yet somebody

who buys basic only who might want HD. My guess is there aren’t

very many of those people.

Mr. BOUCHER. We will have further discussions on that. Thank

you, Mr. Chairman.

Mr. MARKEY [presiding]. Gentleman’s time has expired. Gentleman from Nebraska, Mr. Terry.
97

Mr. TERRY. Thank you very much, Mr. Chairman, for again holding this series of these important meetings or hearings. First of all,

Mary, I want to join my colleagues in thanking you for being here.

You provide an important perspective in that the reason for the

hard date and moving forward on this is public safety. The end result is that a major part of the spectrum will be used for public

safety and that is our ultimate goal, so thank you for reminding

us, as we get bogged down into the nuances of stickers on boxes.

That may sound rather silly to you and your focus is much deeper and emotional than that, and to my friend from Best Buy, I do

buy there, as well, not just Nebraska Furniture Mart. In fact, your

store manager at the Village Point store in Omaha has become

very close to my wife. They are on a first name basis. I can’t remember a name. But it is really neat to see a store manager greet

people at the front when they walk in and even using their names

on occasion, so you have got a good one at Village Point.

With that, I want to jump back, then, Mr. Taylor, since he is the

master of the box right now, are you able to tell us, without violating any LG insider secrets about pricing, what do you expect that

box to retail for next year when it is released en masse?

Mr. TAYLOR. Well, retailers actually do set the prices, but we——

Mr. TERRY. Well, your manufacturing price.

Mr. TAYLOR. We anticipate that it will sell in the $60 range at

retail.

Mr. TERRY. OK. And our coupon is estimated to be $40 so the

consumers still have a $20—is there a way to engineer that down

to $40 or is the NTIA requirements so high that you can’t do that?

Mr. TAYLOR. Very difficult to do. There is already very little margin in here for the manufacturer or for the retailer, but it is the

right thing to do, to make it as—our goal, in designing the box, was

always to make it as affordable as possible, but at the same time,

make sure it had the features necessary to take full advantage of

digital and most importantly, to have the performance.

Mr. TERRY. I don’t think that really answered my question about

whether the NTIA set their requirements too high to have an affordable box that will match the coupon price.

Mr. TAYLOR. I don’t think, as far as we are concerned, we don’t

think it was ever contemplated that there would not be a co-pay

on the part of consumers.

Mr. TERRY. OK. Mr. Yager had mentioned about 69 million

unconnected television sets. Just in my own personal world, we

have one TV that is not hooked up to cable because that is the one

hooked up to the Xbox and we don’t use it for TV at all, so I

wouldn’t use a coupon for that TV set even if you gave it to me.

So I want to ask John, it seems pretty high to me that we are talking about 69 million TV sets that are going to need a converter box.

Do you agree with that number? Does CEA agree with that number?

Mr. TAYLOR. According to the Consumer Electronics Association,

about 30 million television sets are used solely with video games

and DVD players, so unless the consumer wants to hook an antenna up to them, they would not need a box, so that kind of comes

right off the top. There are lots of numbers floating around out

there. We think there is going to be a market in the tens of mil-
98

lions of units for these, but again, I would point out that millions

of consumers, tens of millions of sets will be purchased over the

next 2 years that have the digital tuner built in.

Mr. TERRY. Mr. Yager, very quickly, I appreciate a quick answer,

your testimony suggests that we should be sending consumers two

coupons to be able to get to these secondary tertiary level of TVs

that aren’t hooked up to cable.

Mr. YAGER. And that is the NTIA’s recommendation, as I understand it.

Mr. TERRY. OK, and that is the National Association of Broadcasters’ suggestion, as well?

Mr. YAGER. That is correct.

Mr. TERRY. OK. Just for the record, I will join Mr. Shimkus in

saying that I think we need to have some level of fiscal responsibility in here and you also mentioned that there is not enough money

set aside to do two for each household.

Mr. YAGER. Well, the law provides up to a billion and a half dollars for the converter boxes. What we don’t know is what the demand is going to be and I am not trying to mislead you in terms

of what we think the demand will be. When the television campaign begins to say that converter boxes are available, I think you

are going to see a totally different dynamic on the part of the public because we believe television works and we believe we can sell

a product and it would put——

Mr. TERRY. Well, my time is up, but I appreciate your restating

that for the record and Mr. Chairman, if you would give me 5 seconds, I still stand by my original position that I earn $160,000

here. I have one TV set that is for a game. I don’t need a coupon

and it is almost insulting to this Government that we are going to

send me or others in like positions multiple coupons.

Mr. MARKEY. The gentleman’s time has expired. The chair recognizes the gentlelady from California, Ms. Solis.

Ms. SOLIS. Thank you, Mr. Chairman. I want to begin by thanking Mary Fetchet for coming and talking so eloquently about what

we need to do here in the Congress to enter into more discussion

and debate about interoperability. And I say that in all sincerity,

because when you hear about the impact of what we are talking

about with respect to all the witnesses today, if people, a large

number, millions of people don’t even have access to, say, the digital components and equipment and television and what have you,

that is soon to come, that is even going to be even more disastrous

when there is, say, perhaps another disaster.

And California is a prime area for that. We have earthquakes,

we have fires. If people, for example, that don’t speak English are

in a remote area and don’t have access because they are going to

be cut off, how do we communicate with them? How do we keep

those lines of communication going?

So my question, I guess, for Mr. Yager and Mr. Britt, and I

thank you all for coming, is you mentioned the kind of outreach

programs that you are prepared to do, but I don’t hear about any

concrete efforts where you have a plan of action, because this is

coming so soon, a strategic plan. Have you gone out, have you

talked to people from the various communities that are going to be
99

most heavily impacted and what kind of plan is that? And I will

go to Mr. Yager first.

Mr. YAGER. The answer is yes, we have. In our own company, we

have a station in Texas on the Texas-Mexican border where we are

fully intending to do our PSAs in Spanish. It is a very strong Hispanic market. We have been advised by the NAB, in response to

Mr. Nogales’s question about a Web site. There will be a Spanish

language Web site up on the conversion, probably within the next

2 weeks. Every general manager in our company is charged with

getting to the leadership of their community to explain to them

first what is going to happen. It is amazing to us how little is

known about the conversion, even in Congress, other than the

House Commerce Committee.

Ms. SOLIS. Just quickly, is there any attempt to also put a 1–800

number with individuals who speak the language, other than

English?

Mr. YAGER. Absolutely.

Ms. SOLIS. OK, then. For Mr. Britt I would also ask you what

efforts you have underway?

Mr. BRITT. Yes. We have a very direct relationship with our customers. We send them bills every month. Many of them call us

every month. And we operate in communities where people speak

many languages, including Spanish. And we always have people

who are able to speak those languages and we have people who

write materials that are culturally sensitive so it is not just

English translated. So we are going to use those skills in this education effort, which is very important.

Ms. SOLIS. I would just like to bring to Mr. Yager and to your

attention, Mr. Britt, that just reading your testimony, you mentioned you have advisory groups that you are talking to about planning for all of this and I noticed that you mention the leadership

conference on civil rights, but I see no major Hispanic national organization involved. Can you please make an effort to do that immediately? And then my next question is for Mr. Nogales, because

you have traveled so far. What have we missed here that we should

probably highlight or underscore in terms of how we really reach

these niche markets that are out there that we still have not uncovered?

Mr. NOGALES. Thank you very much for the question. I have

been sitting here very patiently hoping to get into this. I think we

all understand that the security concerns of this country are paramount, but the other part of what we are supposed to be doing here

is transitioning a population from analog to digital.

I think that relying on the broadcasters, the cable companies, the

satellite, everybody else, that they are going to help us and they

are going to somehow bridge all the differences is wrong. I think

that community based organizations can do a much better job, especially when it comes to niche markets, such as the Latino community.

I haven’t really heard anything that we are working with the

community based organizations to get the word out to our population. If 7 million of the people that we are looking at that need

transitioning are not going to be included because community

based organizations are not going to be part of the equation, I don’t
100

see how that is going to be done. So with all due respect to everyone here, I say that we have to invest monies to make sure that

community based organizations are really involved in helping our

population transition over, otherwise it is not going to happen.

Ms. SOLIS. And just lastly——

Mr. MARKEY. Could I, just only because we have 10 minutes left

to go here and I would like to have the remaining members ask

questions, if that is all right.

Ms. SOLIS. That is fine.

Mr. MARKEY. I thank you. gentlelady’s time is expired. Chair recognizes Speaker Hastert.

Mr. HASTERT. I thank the chairman and I thank you for bringing

these witnesses before us. I think your testimony, Mrs. Fetchet,

about what happened on 9/11 really puts us into focus, why we are

doing this—is to make sure there is spectrum available for a new

dynamic way that people can talk to each other and so we can prevent the kind of disasters, at least after the fact, that happened on

9/11 so that our responders can respond and do the job they have

to do.

So I thank you very much for being here and your testimony. I

listen to this and think about all the things that are going to happen before February 17, 2009. Congress will stand for election and

be sworn in to the 111th Congress before then, so we have to go

through all that process. We are going to elect a new President. He

will be elected, he will be sworn into office before all this. Americans will pay their income taxes twice before all this happens, so

in our minds we have a lot of things we have to do.

And probably guys like me have an old black and white TV in

my little townhouse in Washington with two rabbit ears. Let me

tell you how old it is. It has got Magnavox on it, so anyway it is

going to be February 18 and I am going to turn that TV on to get

the morning news and all of a sudden it is not going to work. So

I will probably go down to Best Buy or someplace and say ‘‘hey,

have you got any of those boxes left’’ and I won’t have the coupon

and I will be paying $60 or $70. Well, I hope you got boxes left

after February 17.

But the fact is people who tune it to your TV stations and they

are your customers, aren’t they, in a sense? Is that correct?

Mr. YAGER. That is absolutely correct.

Mr. HASTERT. And if you are not making sure that you have

those people still in your system, you lose them, right?

Mr. YAGER. Shame on us if we do.

Mr. HASTERT. And in a sense you lose revenue. Some of them

might be subscribers but the other people are people that buy from

your advertisers.

Mr. YAGER. That is correct.

Mr. HASTERT. So in a free market sense, it is really important

that those people go out and do the things that they have to do because you are going to lose a customer, right?

Mr. YAGER. Absolutely.

Mr. HASTERT. So you are probably going to do whatever announcements you have to make beforehand, remind people that if

you have an old black and white set, like me, maybe I will have

to get——
101

Mr. YAGER. Well, I may get this box for you, right here.

Mr. HASTERT. Oh, thank you. Mr. Taylor, these people in a sense

are your customers, too, right?

Mr. TAYLOR. Absolutely.

Mr. HASTERT. And if they aren’t warned beforehand the type of

product that they are going to buy, whether I walk into the WalMart store that is just down the road from me, I am out in the

country, or a Best Buy or whatever, if people aren’t told the truth

about what they are buying, retailers and your industry suffers,

isn’t that true?

Mr. TAYLOR. Absolutely.

Mr. HASTERT. So it is really in your best interest.

Mr. TAYLOR. There aren’t very many analog sets left on retailers’

shelves, thankfully.

Mr. HASTERT. Do you have any black and whites?

Mr. TAYLOR. No more black and whites, sorry to say.

Mr. HASTERT. Out of luck.

Mr. TAYLOR. But even those that are, manufacturers did voluntary labeling a year ago, when we had the hard date, to make

sure consumers understood that when February 2009 rolls around,

you would need an additional piece of equipment to be able to receive over-the-air——

Mr. HASTERT. I don’t even have a TV hooked up for an Xbox. I

don’t know what an Xbox is. But that happens. I know we have a

vote and I want to extend my appreciation to the chairman for allowing me to take a couple minutes and testify, I think the free

market is working and I think, to the extent that Government can

help it, we will. And just the fact that these coupons are going to

be available to people that need it. Again, Mrs. Fetchet, I thank

you for your testimony and for the cause of this, why this is really

happening. And I will yield back my time.

Mr. MARKEY. Gentleman’s time has expired. The Chair is going

to recognize the gentleman from Pennsylvania, the vice chair of the

committee, Mr. Doyle. There are 61⁄2 minutes left for four votes out

on the House floor. I will leave it to his discretion as to adjourning

the hearing.

Mr. HASTERT. Mr. Chairman, before we close. Will you accept our

opening statements?

Mr. MARKEY. Without objection, all of the statements will be included in the record. I yield to the gentleman from Pennsylvania.

Mr. DOYLE. Thank you, Mr. Chairman. Mrs. Fetchet, I just want

to echo my colleague’s sentiments that the questions we have for

the rest of the panelists today pale in comparison to our responsibility to make sure first responders have interoperability and you

have my personal commitment that there will be no backtracking

on the date and that we will do what we can to do that as soon

as possible.

Now, Mr. Taylor, apparently you are not the person to ask what

this set top is going to cost because you are not the retailer, so Mr.

Vitelli, let us ask you, can you tell this committee, with any degree

of certainty, that these set top boxes that people are going to come

in with coupons for are going to cost around $60? Is that what you

see happening at Best Buy?

Mr. VITELLI. How much are they going to cost, John?
102

Mr. TAYLOR. Around $60.

Mr. VITELLI. It will probably be close to that because we have

products today that we sell at low margins. We have products that

we sell at different points and they are all over the map.

Mr. DOYLE. So when Mr. Taylor says he expects the box to retail at around $60, are you going to sell it to him for $60 and have him

sell it for free? Is that it, Mr. Taylor?

Mr. TAYLOR. That is what we would consider the manufacturer’s

suggested retail price, but it is up to retailers to set the actual——

Mr. DOYLE. OK, so is $60 a real number?

Mr. VITELLI. I don’t know. I have not gotten a proposal from anyone specifically yet.

Mr. DOYLE. So we don’t know what the real number is?

Mr. VITELLI. I don’t, yet.

Mr. DOYLE. And Mr. Taylor, you say you are going to have boxes

ready at the beginning of the year. How many boxes do you anticipate, not a sufficient quantity, I am not going to hold you to an

exact number.

Mr. TAYLOR. I don’t have a number today. We will work that

number out with our retailers in the coming months.

Mr. DOYLE. Just wing it for me. Three million?

Mr. TAYLOR. Way too soon to say. Just don’t know yet.

Mr. DOYLE. So we have got these 23 million customers. Let me

just ask that one question. I think there is going to be, by the way,

to my friends on the Republican side, I don’t think there is going

to be plenty of money because I think there is going to be so much

up-selling going on here that we are going to see very few people

come in with that coupon and leave the store with one of those

kind of boxes. I think they are going to be, I don’t want to call it

bait and switch, but I think there is going to be a lot of up-selling.

Mr. Vitelli, is it your opinion that at your Best Buy stores that

there is going to be an effort to try to get these consumers to buy

TV sets or fancier boxes or when they come in with that coupon

are you just going to hand them the set?

Mr. VITELLI. As I mentioned earlier, what we do at Best Buy, we

do not have a pressured sales environment. We talk to the customer about what they are trying to accomplish and what they are

trying to do and if they come in with the coupon and they want

to buy a box, they will get a box.

Mr. DOYLE. OK. At this time I want to yield to my friend, Mr.

Inslee, for the balance of my time.

Mr. INSLEE. Thank you. I just want to ask about the frequency,

the penetration of the PSAs that people will receive. When we run

for office, the people who do our media tell us there are a certain

number of points that you have to have until a message is actually

received. How many points will people receive as a result of the efforts, either of the Federal or private enterprise on these PSAs?

Mr. YAGER. Points are referring to a rating point and normally,

they are broken down. A rating is that percentage of the total audience that is viewing television at any given time and in any given

market. We always recommend about 150 to 200 rating points a

week if you are trying to sell a product or a commodity to a viewer.

We think we will probably far exceed that. You have got to remember that again, our vested interest in making this transition kind
103

of seamless for the viewer is absolutely critical to the television industry.

Mr. INSLEE. So how many points throughout the course of the

campaign would a person be exposed to?

Mr. YAGER. That is really going to depend on how fast the demand develops for the boxes. If the demand is great for the boxes

in the early part of 2008, obviously toward the end of the year, the

points will go down. If it continues strong, I mean, if it continues

and the demand is not there, we will continue to promote right up

until February 17.

Mr. INSLEE. So has the industry made any commitment that any

of us can count on that enough points will be put out on a PSA to

make sure all those coupons are used?

Mr. YAGER. I don’t know how we could do that, make a commitment in terms of points to get all the coupons. What we can commit to is creating the demand for the coupons and making sure the

public understands the need to have a box to operate an analog set

after the 17th of February 2009.

Mr. INSLEE. Let me just express, and I am not sure you can solve

this, but one of the frustrations we have here is we are very concerned, I have been very concerned. I still don’t think that our approach to these coupons is adequate to the Americans that are

going to be very frustrated by this experience and we think it is

very important this information be obtained by Americans. And we

are trying to get a handle on what people will really see and it is

pretty amorphous. I hear the industry saying they have good intentions, which I appreciate, and I think it is sincere, but is there anything you think you could give us more to sort of have more real

parameters on what it will really look like in real life?

Mr. DOYLE. And I would advise my friend that we are down to

54 seconds on our vote.

Mr. YAGER. I don’t think I can answer the question in 54 seconds, but we are committed to using the talent and the personnel

of our television stations who have the credibility in the local markets we serve to advise the American public about what is the

whole transition.

Mr. INSLEE. Thank you.

Mr. DOYLE. And I want to thank the panelists. It is the chair’s

intention to adjourn this hearing at this point. Mr. Taylor, I would

just leave you with one thought. When people call that toll-free

number on your set top box, could there be a human being on the

other end of the phone, please?

Mr. TAYLOR. There will be in Huntsville, Alabama.

Mr. DOYLE. Thank you. Thank you. This meeting is adjourned.

[Whereupon, at 1:00 p.m., the subcommittee was adjourned.]

[Material submitted for inclusion in the record follows:]
104
105
106
107
108
109
110
111
112
113
114
115
116
117
118
119
120
121
122
123
124
125
126
127
128
129
130
131
132
133
134
135
136
137
138
139
140
141
142
143
144
145
146
147
148
149
150
151
152
153
154
155
156
157
158
159
160
161
162
163
164
165
166
(167)

STATUS OF THE DTV TRANSITION—PART 2

WEDNESDAY, OCTOBER 17, 2007

HOUSE OF REPRESENTATIVES, SUBCOMMITTEE ON TELECOMMUNICATIONS

AND THE INTERNET, COMMITTEE ON ENERGY AND COMMERCE, Washington, DC.

The subcommittee met, pursuant to notice, at 9:40 a.m., in room

2123, Rayburn House Office Building, Hon. Edward J. Markey

(chairman)

Present: Representatives Doyle, Gonzalez, Inslee, Rush, Eshoo,

Stupak, Green, Solis, Dingell, Upton, Stearns, Deal, Shimkus,

Radanovich, Terry, Ferguson, and Barton.

Also present: Representative Blackburn.

Staff present: Amy Levine, Colin Crowell, Tim Powderly,

Maureen Flood, David Vogel, Philip Murphy, Neil Fried, Courtney

Reinhard, and Garrett Golding.

OPENING STATEMENT OF HON. EDWARD J. MARKEY, A REPRESENTATIVE IN CONGRESS FROM THE COMMONWEALTH

OF MASSACHUSETTS

Mr. MARKEY. Good morning. Welcome to the Subcommittee on

Telecommunications and the Internet. This is the subcommittee’s

second in a series of oversight hearings on the status of the digital

television transition. Unfortunately, prior oversight hearings have

left this subcommittee with a DTV picture that is fuzzy at best.

Our goal going forward will be to get better reception from the Federal Government, industry and community groups about how they

might work better in concert to ensure that millions of Americans

do not lose free over-the-air television after the transition from

analog to digital broadcasting on February 17, 2009.

I am encouraged by some recent Government efforts to help consumers navigate the transition successfully. After our last hearing,

the Commission required retailers to inform consumers when television equipment only has an analog tuner by displaying a Government-mandated consumer alert near the device. Not only does such

a notice assist consumers in making fully informed decisions before

bringing home an analog-only TV, it also serves to educate consumers about the DTV transition itself.

The Commission has rigorously enforced this rule. Seven retailers are facing almost $3 million in fines. In addition, the Commission also has assessed penalties against manufacturers for importing TVs lacking digital tuners. I commend FCC Chairman Martin
168

for sending a strong message that the Government will not tolerate

the TV equivalent of war profiteering.

I encourage the Commission to vigorously monitor and assess the

transition as it proceeds. For instance, the FCC could send employees into participating stores to make sure that retailers are sufficiently stocking and selling the converter boxes subsidized by the

coupon program, and not just hocking the $500 digital TV sets. The

Commission should also spot-check digital devices, including converter boxes, to make sure they include mandatory pro-consumer

technologies. Like the V-chip and closed captioning and those other

features, we have to ensure that they actually function properly for

consumers.

I also want to applaud Assistant Secretary John Kneuer for

NTIA’s decision to hire IBM to manage the Digital-to-Analog Converter Box Coupon Program. IBM and its subcontractors appear to

have the expertise and proconsumer orientation necessary to implement a successful coupon program if other elements and entities in

the transition work in concert and do their part.

The most critical component of a successful DTV transition is

consumer education. Ultimately, the Federal Government is responsible for making sure that more than 300 million Americans

are adequately informed, not the industry or consumer groups. It

is, after all, Government mandates that will render obsolete millions of analog TVs. Both the FCC and NTIA have been preparing

consumer advisories, creating Web sites, holding forums and meeting with public- and private-sector groups. The current plan relies

heavily on the good graces of industry and the voluntary efforts of

committed consumer and community groups to get the job done.

However, because the amount of money available to the Commission and to the NTIA for consumer education for their respective

aspects of the transition is highly limited, more must be done.

Affected industries appear to be stepping up to fill some of the

void. Thus, recent commitments by the cable industry, broadcasters

and public television to air millions of dollars’ worth of messages

about the transition on TV will be critical to the success of this effort. But all of those efforts are purely voluntary.

As Chairman Dingell and I suggested to Chairman Martin earlier this year, there is value in mandating a minimum level of compulsory consumer education on the part of industry, particularly

given that these requirements can be monitored and enforced. I am

pleased that Chairman Martin took our suggestion to initiate a

rulemaking, and I hope he adopts those rules expeditiously as the

deadline draws near.

This leads me to the aspect of the DTV transition that needs

greater clarity and coordination. According to the report being prepared at my request by the Government Accountability Office, no

single organization has assumed responsibility for the overall transition. It is as if we have a team of able running backs and receivers running around the field searching for the end zone, but no

quarterback running the plays. Indeed, according to the GAO,

there is no comprehensive DTV transition plan, no monitoring and

no contingency plan.

I want to commend the GAO for their excellent work in preparing for today’s testimony, which provides us with an Emergency
169

Broadcast System alert about challenges ahead with sufficient time

to take corrective action. It is my belief that while NTIA has responsibility for the consumer coupon program, the FCC has primary responsibility for the overall digital transition. Chairman

Martin, I think that makes you Tom Brady for our DTV purposes.

Mr. UPTON. A good Wolverine, I want you to know.

Mr. MARKEY. That is where Mr. Upton and I really feel good. We

are Michigan and Boston bond on this Tom Brady issue. And giving

you this mantle, Mr. Chairman, is the highest accolade that can be

bestowed on a bipartisan basis in this committee.

Mr. UPTON. Hail to the victors, right?

Mr. MARKEY. You are the Nation’s DTV quarterback, and we will

be counting on you and the Commission for the leadership to coordinate the various aspects of the transition, which is so important for public safety, economic growth, innovation, consumer welfare and the future of television itself. I look forward to hearing

from today’s witnesses.

Let me turn to recognize the ranking member of the subcommittee, the gentleman from Michigan, Mr. Upton.

OPENING STATEMENT OF HON. FRED UPTON, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF MICHIGAN

Mr. UPTON. Thank you, Mr. Chairman. Good morning to all.

I would like to thank the witnesses for testifying today on this

very important subject. This is not our first hearing on the topic,

and, given the importance, I don’t think it will be the last.

Still a year and a half away, the DTV transition is an issue that

continues to generate an outstanding amount of attention. And I

am absolutely confident that as we move closer to February 2009,

an even brighter spotlight will shine on the DTV transition, so

much so that the transition will be a success, and consumers will

not be caught off guard.

We should certainly commend the cable and the broadcast industries for stepping up to the plate to help educate the public about

the digital television transition. We still have more than a year to

go. Their already outstanding efforts and commitments are sure to

increase as the deadline approaches. Specifically, local broadcasters

are to be commended for their proactive initiatives to educate

Americans on the transition to DTV. It is comforting to know that

the broadcasters understand the critical importance of educating

Americans on this issue so that a seamless transition can take

place in February 2009. Individually each local broadcaster has already had to invest significant sums, millions of dollars to move

the transition forward, and had it not been for their hard work and

sacrifice, that transition would not be possible.

The fact remains it is in the financial interests of the broadcasters, pay-TV companies, manufacturers, retailers to make sure

that each TV viewer in the household knows about the DTV transition. The last thing the industry wants to do is lose viewers, and

I am confident that they will do everything necessary to ensure

that that does not happen.

Some of the industry’s plan is similar to a measure that I introduced with Mr. Hastert and Mr. Barton in January, H.R. 608.

Similar provisions would be law today had it not been for the Sen-
170

ate procedural rules that stripped the consumer education provisions from the original DTV legislation that was enacted in the last

Congress. And if any of my colleagues on either side of the aisle

have doubts or concerns about the industry’s resolve to educate

consumers, I would ask them to cosponsor our bill, H.R. 608.

Much of the focus has been external, looking at industry and the

NTIA and the FCC; however, there is much that we can do as

Members of Congress to educate our constituents. My Web site already has information about the DTV transition, as well as links

to external sites with information about the DTV transition. In the

next few weeks, I plan on launching a new Web site with even

more comprehensive DTV education. Congressional franking rules

also permit Members to include information about the transition

through our constituent mail. Everyone has a role to play, and I

would urge my colleagues to do their part.

Additionally, the cable industry has taken a significant step forward in promoting an orderly transition by voluntarily agreeing to

carry the broadcasters’ digital and analog signals for the next 3

years, which mirrored what this committee passed last year, and

which the FCC recently adopted.

Chairman Martin has also proposed a new multicast must-carry

mandate on cable operators, and I happen to believe that imposing

that standard at this point would perhaps threaten an orderly

transition, and I look forward to hearing more about that as the

question-and-answer period moves forward.

Lastly, I would like to again recommend the auctioning of white

spaces. The market is much better than we regulators at determining the value of and the best use for the spectrum. There are likely

a number of possible areas, and one that has recently been raised

is an alternative to special access. All potential providers and services should be given an opportunity to compete for that spectrum

in a fair auction. Licensing would also have the added benefit of

protecting against any interference with digital TV should it arise.

The recent test results released by the FCC demonstrate that that

might be a problem.

At a minimum FCC testing is needed, and I am glad that that

is going to happen. It is too important to risk with the use of unlicensed devices. Further, it has and will demonstrate the tax for

value in auctioning the spectrum.

I look forward to hearing from the panel this morning.

The 9/11 Commission understood the importance of ensuring that

our first responders have the equipment and the spectrum necessary to communicate in times of emergency. I am proud that we

were successful in not only passing the DTV transition in the last

Congress, but provided a helping hand to enable our first responders to better protect all of America.

I also have a letter from Chairman Martin indicating that the

number of exclusively over-the-air homes has once again dropped

and now is only at about 13 percent. The letter also indicates that

the legislation, H.R. 608, that we introduced in January would help

reduce litigation over the FCC’s authority to impose consumer education requirements. I have three letters from the Cable Association, the Broadcast Association and Univision concerning their recent announcement to launch about $1 billion to combine the con-
171

sumer education. And I would ask unanimous consent that these

documents be placed in the record.

Mr. MARKEY. Without objection.

Mr. UPTON. And with that, Mr. Chairman, I yield back the balance of my time.

Mr. MARKEY. The gentleman’s time has expired.

The Chair recognizes the gentleman from Michigan, the chairman of the full committee, Mr. Dingell.

OPENING STATEMENT OF HON. JOHN D. DINGELL, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF MICHIGAN

Mr. DINGELL. Mr. Chairman, I thank you for your courtesy. I

commend you for holding this hearing. It is a matter of great importance to the country as we are going to find out as the event

comes near. The digital television transition might well be the most

important telecommunications issue before this committee.

I want to express my appreciation to the panel for being with us

this morning. Gentlemen, thank you. We appreciate your help, and

we need it, and we look forward to it.

This oversight hearing is the second in a series regarding the

DTV transition. The transition promises great benefits to consumers, including more and higher-quality over-the-air programming,

new advanced wireless services, and by use of the analog spectrum

currently reserved for broadcast television, first responders and

other public safety communications. We must, however, make sure

that the Government and industry have done all they can to ensure

that no consumer wakes up on February 18, 2009, to find their television screen has gone dark, and also to find that we are incapable of providing them with the proper information for the switchover.

Much work remains to be done for a successful transition, and,

quite frankly, I am not satisfied that we know what that might

happen to be. First and foremost, there has to be Government leadership. As our GAO witness will testify, there is currently no clear

leader in the transition. That must be defined much more clearly.

The Federal Communications Commission should be the agency

spearheading this transition. The NTIA, or the National Telecommunications and Information Administration, has a distinct,

statutorily defined role in administering the converter box coupon

program, and it is an extremely important role, but appropriately

the FCC should be leading the transition and working with NTIA

and others to coordinate these many efforts.

I urge the FCC to consider an interagency task force to facilitate

a smooth transition, similar to the one that was established to address Y2K. That interagency task force spent nearly 2 years on its

missions with a clear priority and a sense of urgency to prepare the

Nation for any effects that might be brought about by the arrival

of the year 2000. We need a similar approach to the problems now

before us. We face a shorter timetable for the DTV transition, and

I believe that the administration must approach the DTV transition with the same diligence as the previous administration employed for Y2K.
172

The converter box coupon program is a critical element. Each

and every consumer who will need a converter box to view overthe-air programming must have one. Coordinating the logistics of

this program and the distribution of coupons for converter boxes

presents a tremendous challenge, one on which I am not satisfied

that we have properly conducted our inquiries or arrived at our

conclusions.

I look forward to the testimony of IBM, the vendor selected by

NTIA to implement this enormous undertaking, about its plans to

carry out a very important job. We will also receive testimony from

consumer groups about the various constituencies that should be

informed and educated about the transition. Many at-risk populations, such as the elderly, the economically disadvantaged, people

with disabilities and those who live in rural and other underserved

areas and communities will need particular attention.

As I noted before, digital television holds great promise for the

country, and we all look forward to its potential being fully realized, but at this moment it is uncertain that it will be fully realized

or will be realized without a great level of pain, discomfort and inconvenience. We must also ensure that all Americans will enjoy the

benefits that can follow the end of analog TV on February 17, 2009,

and the institution of the digital system that we look forward to.

I want to thank our witnesses again and observe that each of

them has an important role here today. We are here to help you

facilitate a successful transition, and I look forward to working

with you over the next 16 months.

Mr. Chairman, I thank you for your courtesy to me.

Mr. MARKEY. The gentleman’s time has expired.

Mr. MARKEY. The Chair recognizes the gentleman from Georgia

Mr. Deal.

OPENING STATEMENT OF HON. NATHAN DEAL, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF GEORGIA

Mr. DEAL. Thank you, Mr. Chairman.

I thank our witnesses for being with us today. And I would like

to raise several issues relating to the DTV transition with you.

First of all, I would like to address the FCC’s recent dual carriage order which deals with the broadcast carriage obligations of

cable operators after the digital transition in television. The order

requires cable to pass along the digital signal of must-carry broadcasters in both digital and analog formats to their subscribers. Unfortunately it does not provide an exemption for small operators.

Rather, it allows cable systems with limited capacity to file for a

waiver to relieve them of this obligation.

I am concerned with this decision as it essentially acknowledges

the dual carriage rule will be burdensome for small cable providers

due to their unique technological limitations. It seems ill-advised

for the Commission to enact rules which force small rural cable operators with limited means to go out and hire a DC lawyer simply

to navigate the FCC’s often unpredictable waiver process.

In the same vein I would like to comment on proposals at the

FCC to impose multicast must-carry requirements on cable operators. I have long advocated for less regulation and more free-market principles in the video marketplace. I find proposals to impose
173

more must-carry requirements disturbing. It is important that consumer preference, not Government mandates, determine what

viewers watch. In addition, by implementing new must-carry mandates, the Government is creating a video market with little or no

incentive to develop or produce high-quality programming. I would

urge the Commission to avoid a path of increased regulation.

Lastly, I would like to briefly comment on the ongoing testing of

white-space devices at the FCC. I understand and agree with the

need to conduct additional testing to ensure that no interference to

broadcast or wireless microphone services, and commend the Commission for its willingness to continue working on this issue. Television’s white spaces hold a potential for great innovation, including low-cost rural wireless broadband service and the wireless distribution of content within the home and office. For entrepreneurs,

white spaces provides nearly boundless possibilities for development and exploration. It is important for us to build on the initial

FCC tests which prove that the concept that white-space devices

can detect and avoid both digital television and wireless microphone signals, and I thank you for continuing to test those devices.

Thank you, Mr. Chairman. I look forward to hearing the Commissioners, and I yield back my time.

Mr. MARKEY. The gentleman’s time has expired.

Mr. MARKEY. The Chair recognizes the gentleman from Pennsylvania Mr. Doyle.

OPENING STATEMENT OF HON. MIKE DOYLE, A REPRESENTATIVE IN CONGRESS FROM THE COMMONWEALTH OF PENNSYLVANIA

Mr. DOYLE. Thank you, Mr. Chairman.

Mr. Chairman, just a few hours ago the tiny U.K. town of

Whitehaven and the surrounding area just began its DTV transition. It is the canary in the coal mine, so to speak, and I hope that

we will be able to learn something from the switch that is happening over there today.

That said, back over here I am worried that we are not doing

enough to educate and inform consumers of the switch. Mr. Chairman, Procter & Gamble spent $128 million in 2004 to market the

Swiffer broom to American consumers, and GM has pledged $100

million to promote its new Malibu. But NTIA has only $5 million

to inform American consumers that they don’t need to spend too

much out of pocket to keep their TV sets working after the Government mandates the transition to digital TV. And the FCC has a

total of $1.5 million to help talk about the transition as a whole.

Now, compare that to the city of Berlin, a city which has only

3.4 million residents. They needed to spend $1 million; or the U.K.,

which is spending over $400 million to educate their country.

Mr. Chairman, it is not that America has not had to educate our

people on this kind of a scale, but we have never done it on a shoestring like this. Instead America has chosen to encourage the private sector to step up to the plate.

Because we are relying so much on the private sector to educate

and inform the American public, we have to remember that these

guys are competitors. Now, that is a good thing, but I want to
174

make sure that the vigorous competition doesn’t harm the need for

clear, useful and informative messages.

Back before the turn of the 21st century, FCC Chairman William

Kennard reached across the aisle and chose then-Commissioner Michael Powell to be in charge of the FCC’s preparation for Y2K.

Now, Y2K went off without much of a blip. And, Mr. Chairman, I

hear that people are only now beginning to finish the canned goods

they socked away in their basement. I think it would be useful to

work through a Commissioner. They would be able to help the industries and the associations involved work better together.

Chairman Martin, they say making policy is like baking a cake.

I have read your testimony, and I have to say I hope the details

of your proposed consumer education order are as sweet as the

frosting looks. But we should not be distracted by unrelated and irrelevant policy goals. DTV should not be an excuse so that people

throw anything on the wall to see what sticks. And just like DTV

shouldn’t be a windfall for regulators, it should also not be an unfair windfall to retailers and manufacturers.

Now, I love my big-screen HDTV, and I am glad I have other flat

panels at home, too, but I can afford them, and I wanted the better

picture quality. But a study published by U.S. PIRG suggests that

retailers aren’t telling their staff the right information about the

transition. The transition’s first line of defense, the retail sales

clerk, often weren’t aware of affordable converter boxes coming to

the market soon, much less that there will be a coupon to compensate them to keep their TV working.

Mr. Chairman, I look forward to hearing the testimony of Ms.

Fazlullah on this issue, and the other witnesses, and I yield back.

Mr. MARKEY. The gentleman’s time has expired.

The Chair recognizes the gentleman from Oregon Mr. Walden.

OPENING STATEMENT OF HON. GREG WALDEN, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF OREGON

Mr. WALDEN. Thank you very much, Mr. Chairman. Thanks for

having this additional hearing on the DTV transition.

I want to welcome the Secretary and the Commissioners and others who testify today. Unfortunately I am going to have to step out,

but I will take your testimony and read it later.

Four hundred eighty-nine days from today it all happens. Millions of Americans will be affected, and our phones will ring off the

hook. As chairman of the Congressional Digital Television Caucus,

along with my colleague Rick Boucher, I am pleased that the subcommittee is having this hearing today, and we are doing everything we can as a caucus to educate our colleagues and others not

on this committee about what lies ahead. We have got to get this

right, and we have to work collaboratively to ensure a smooth transition.

I appreciate the fact that the cable industry and the broadcast

industry together are spending more than $900 million to air

English- and Spanish-language advertising on cable and broadcast

stations. I have already begun to see those ads. I think that is essential to educate consumers about what lies ahead. Certainly it

will complement the $5 million that NTIA has on hand to spend

on consumer education. But clearly the bulk of the heavy lift here
175

will be done by cablecasters, broadcasters and satellitecasters. The

NAB says that their efforts will reach some 98 billion audience impressions over the course of the campaign, and I applaud the commitment of all who are involved.

I also think it is important to recognize the Digital Television

Transition Coalition. It is a broad-based group that is comprised of

business and industry groups as well as grass-roots organizations

that share an interest in a smooth transition.

I am pleased to hear that the coupon NTIA is putting out will

actually look like a gift card. Indeed it is. And consumers are familiar with gift cards, and it will make it a lot easier to use when they

go to get the converter boxes.

It is important we not take our eye off this ball. We have to carefully consider the feedback of our witnesses today in order that we

get a transition that is as smooth as possible, and that consumers

are both educated about what is coming toward them and have the

ability to connect appropriately so that they don’t lose contact with

the digital TV world.

Mr. Chairman, thank you again for this hearing and for the work

that you and the subcommittee are doing, and we look forward to

a smooth transition in 2009.

Mr. MARKEY. The gentleman’s time has expired.

The Chair recognizes the gentleman from Texas Mr. Gonzalez.

Mr. GONZALEZ. Waive opening.

Mr. MARKEY. The Chair recognizes the gentlelady from California Ms. Eshoo.

OPENING STATEMENT OF HON. ANNA G. ESHOO, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF CALIFORNIA

Ms. ESHOO. Thank you, Mr. Chairman, for holding this second

DTV hearing. It is an important one.

And welcome to the witnesses.

I think that we all know that digital transition holds great hope

for both broadcast television and wireless broadband, and the members of this committee know it very well because it is obviously our

jurisdiction. We have worked on this for a long time. We kind of

know the language that surrounds the issue, and we drill down almost every time we meet on something that has something to do

with the issue.

There are, I think, important and noteworthy efforts that have

taken place in the private sector to provide guidance to customers

for the transition, but I think that we are assuming that it is penetrating and that it is understandable. I, for one, think that we are

falling short. The good news is I think we have time to do something about it, and I think that a very well coordinated, comprehensive DTV transition plan really has to be taken seriously

and implemented.

I want to tell a story of something that occurred when I was

home this weekend. I heard from a number of constituents both at

town hall meetings and when I went to Mass on Sunday. I attend

Mass at a place where the retired sisters, the Religious of the Sacred Heart, live. Now, they are all Ph.D.s, former college presidents, RAND, some of the most prestigious institutions of learning
176

in our country. So this is not a slow group. The only thing that

might be slow is their walk now because they are retired.

Well, they had received a notice that they were not going to have

C-SPAN anymore. And I have to tell you, to be surrounded by almost 60 nuns after Mass waving these cards, I don’t know about

you, Mr. Chairman, or anyone else, but that is a tough audience.

So it said to me that even the message that is going out is kind

of written in someone else’s telecommunications language.

And that may seem anecdotal and a sweet story, but I think that

we need to pay attention to that. We know the language, and we

think we have a handle on how this is going to work. But that TV

set and what comes across it and what it means to fill the hours

and to inform people in our country or to entertain them, whatever

the purpose might be, is very, very important. So this transition

has to have relevancy to it. People need to know what the actual

steps are. Is it going to cost them more? Do they have to get a box?

Who do they call? Why do they have to pay more?

So I think we have a ways to go. At one time I offered an amendment here with a former colleague now, Mr. Bass, that the local

PBS stations would be in charge of at least some of the education

on this to people in communities across the country. Now, I know

that about $5 million has gone to the NTIA. I think that has gone

to a PR firm. I think $5 million is a drop in the bucket. If something has been carried, I don’t watch TV all the time, in fact very

little of the time, but I have never picked up on anything, and I

am not the important one. The people that we represent are.

So I think we have a ways to go on this, and I think that Commissioner Adelstein has made a very important recommendation

that we have a transition task force. And it needs to be coordinated, it needs to be clear, it needs to be relevant. And do you

know what? How about some simplicity to it so that people understand it?

So thank you, Mr. Chairman. I look forward to the witnesses.

And don’t forget the story of the Religious and the Sacred Heart.

Mr. MARKEY. The gentlelady’s time has expired.

The Chair recognizes the ranking member of the committee, the

gentleman from Texas, Mr. Barton.

OPENING STATEMENT OF HON. JOE BARTON, A

REPRESENTATIVE IN CONGRESS FROM THE STATE OF TEXAS

Mr. BARTON. Thank you, Mr. Chairman. It is good to see our

friends here today and the first panel and then our second panel

also. It is good to have another hearing on the digital transition,

which, as we all know. Is coming next year or year after next, in

February 2009. The exact date is February 17, 2009.

For those of you that wonder where that date came from, I don’t

know that I have ever said this publicly, but Mr. Markey and Mr.

Dingell had a lot to do with it. I wanted a shorter date, and they

pointed out that we probably need to get the presidential election

out of the way and the Super Bowl and that that would be a good

day. So for those of you that wonder how legislation is done, this

was a bipartisan negotiation where Mr. Dingell and Mr. Markey

convinced myself and Mr. Upton that that was a good date. And
177

I am happy to say that in all of these hearings that we have had

and the public comments, that date has held.

Our manufacturers are moving to have the set-top converter

boxes and the TVs with the digital receivers in them, and the private sector is gearing up to do the public outreach, which we are

going to hear more about today. And our friends in the Government

that have to implement the program are moving ahead with their

program. So we think we have enough money. We set aside $1 billion to

go to the first responders for their interoperable communications

equipment after the auction is held in January 2008. We also set

aside up to $1.5 billion for the converter box program. And those

converter boxes are beginning to be manufactured as we speak.

Mr. Upton and myself sent a letter to Chairman Martin not too

long ago asking him for his comments about how many people

might have to use those converter boxes. He replied recently in a

letter that the FCC predicts only about 13 percent of the television

sets in America on that date will actually be rabbit ears or antennas and need some sort of a box. We all know that the market is

changing and that there is every reason to believe that by the time

that date gets here, that that number will be even less.

There is also some question about how many people will actually

feel like they want to use the coupon. Again, just as a personal

aside, Mr. Markey and myself, I should say Chairman Markey, I

have got to call him Chairman Markey now that he is sitting there

with the gavel, we did a contest to see who had the most obsolete

TVs, and I thought I won with 13 TVs in various domiciles here

and in Texas. But Mr. Markey won the contest for the most obsolete TV. He claims he has a little old black and white portable that

he shaves by. So we will get a converter box for that for him and

put a gold label on it, the first one issued or something, so that it

gets converted.

We are very happy that the private sector is beginning their public outreach program. We don’t have a witness from the National

Association of Broadcasters here today, but they said earlier this

week that they are going to spend up to $700 million in public education to show their viewers if they need to be prepared for the digital transition.

Mr. Chairman, I have got quite a bit of boring commentary in my

written statement that I will put into the formal record, but let me

end up by saying that if we need to do more legislatively, Mr.

Upton, Mr. Hastert and myself have introduced H.R. 608, the Digital Television Consumer Education Act of 2007. We had a number

of consumer education provisions in the House bill when this became law in the Deficit Reduction Act, but because of the Byrd

rule, those are considered nongermane in the Senate and were

stripped out on a technicality. So at some point this year if we need

to do more legislatively, I would recommend to the committee and

the subcommittee that H.R. 608 would be a good place to start.

With that, Mr. Chairman, thank you for the hearing, and I yield

back my time.

Mr. MARKEY. I thank the gentleman very much.

My little screen is about 6 inches wide and about 25 years old,

and it has just been looking at me at my eye level.
178

Mr. BARTON. Does it still work?

Mr. MARKEY. Oh, yes, as I shave in the morning. Unfortunately,

the converter box is probably going to be three times as big as this

little TV, so it is going to become a logistical problem.

Mr. UPTON. Make sure you don’t plug it in next to the sink. You

might get a little shock.

Mr. MARKEY. We do need warnings not only for nuns, but for

Congressmen as well. It is really going to be a tricky transition.

The Chair recognizes the gentlelady from California Ms. Solis.

OPENING STATEMENT OF HON. HILDA L. SOLIS, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF CALIFORNIA

Ms. SOLIS. Thank you, Mr. Chairman.

I would like to thank our ranking member and also the witnesses

and panel that are going to be speaking here today.

We only have 75 more days before we actually implement this

program. That is not a long time. So I know that we have a lot to

cover during our session here, and I hope to hear some innovative

ideas of how we can fast-forward the information that is going to

be so sorely needed in many of our communities.

And one example I would like to point out is recently Univision,

one of the largest Spanish-language networks, actually rolled out

PSAs and is also promoting radio ads and a 1–800 number operated with the FCC and NTIA for Spanish-speaking consumers.

That is a good start. I would hope that other major Spanish-language networks, as well as Asia networks, will also contact you and

we have that rollout happening as soon as possible.

I want to applaud also the cable industry and the broadcasters

also for stepping up to the plate and putting in funding to also provide for PSAs and outreach. But one thing I am still concerned

about is the fact that there is still so many people that don’t know

about this change that is going to be occurring, and the fact that

so many of them are in communities of color, low-income, disadvantaged, elderly. In my case in my district, this is the situation where

we still have rabbit ears that dominate many of the households in

East Los Angeles and the San Gabriel Valley.

So I am looking for leadership, and I am hoping that the FCC

will take that leadership on and will help to provide clarity so that

everyone is on board, and we really, clearly understand what it is

that we are doing. And I raise that issue because in a commentary

that I sent to the FCC, I asked for clarification on just language

usage in terms of how you talk about a converter box, and we

found that there were several different translations, and some that

I wasn’t aware of that, to be honest, are not words that are easily

understood by many. And I think someone who went to college understands a little bit better than, say, maybe a grandmother who

only has maybe a sixth-grade education.

So I think there has to be clarity. I think there have to be standards at some point. And I think that the stakeholders have to be

brought in and told and somehow directed as to what it is we are

going to be doing.

So I would ask the FCC to please become more engaged in this

effort and provide the kind of leadership that is so sorely needed.
179

We talk about converter boxes. There are different words you can

use in Spanish to explain what that is. It is very confusing. And

I know you stepped in and helped to weigh in and clarify that, but

I think that is just one little instance. There is going to be more

of that happening. And I would just hope that we could work together to see how we can provide that clarification.

So I look forward to hearing your testimony and also working

with you and also other stakeholders in this process.

Thank you. I yield back.

Mr. MARKEY. The gentlelady’s time is expired.

The Chair recognizes the gentleman from New Jersey Mr. Ferguson.

OPENING STATEMENT OF HON. MIKE FERGUSON, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF NEW JERSEY

Mr. FERGUSON. Thank you, Mr. Chairman. I thank you and Mr.

Upton for holding another hearing on the status of the DTV transition with less than a year and a half to go. This subcommittee can

play a key oversight role, and it is in both the Government’s and

the industry’s interest that the DTV transition proceed smoothly

and efficiently and that no viewers are left behind.

To that end I want to commend the industry’s timely efforts.

Both the broadcasters and cable have stepped up to the plate, presenting comprehensive and multifaceted DTV education campaigns

that aim to ensure that all Americans, whether they subscribe to

cable or receive over-the-air signals, will be educated to help make

a seamless transition to digital programming.

We in Government have an important role to play as well, from

Congress to the NTIA to the FCC. We have to all work together

to make sure that the transition is a success. And while we wait

with interest for the FCC to rule on the DTV consumer education

initiative, I urge this subcommittee to move the Digital Television

Consumer Education Act, which will provide the Commission with

additional authority to expand their capabilities for education and

outreach.

In the meantime, as the Commission proceeds with their order,

I also want to strongly urge that it stay focused on educating our

constituents and making the DTV transition a success, and to refrain from pursuing anticompetitive policymaking. We heard Mr.

Doyle before talk about throwing a lot of things at the wall and to

see what sticks. I would say we have to keep that in mind specifically when I refer to the continuing discussion at the FCC of

multicast must-carry. I sincerely hope that the FCC does not allow

itself to get sidetracked by a proposal that is not only unnecessary,

but it is anti-free market, and, frankly, it is constitutionally suspect. The Commission already adopted a dual carriage requirement

in September. Adding a multicast must-carry obligation to that at

this critical point in time is an unwarranted distraction and could

even be viewed as irresponsible. I strongly urge the Commission to

continue its cooperation with NTIA and their good work in educating the American public and to focus on a successful transition

rather than needless Government mandates and regulation.
180

I want to thank you again, Chairman Markey and Mr. Upton, for

holding this hearing. I thank our witnesses for attending. I look

forward to hearing from them and getting their perspectives and

updates on the status of the DTV transition, because this is something all of us clearly want to and need to get right.

Thank you, Mr. Chairman. I yield back.

Mr. MARKEY. The gentleman’s time is expired.

The Chair recognizes the gentleman from Texas Mr. Green.

OPENING STATEMENT OF HON. GENE GREEN, A

REPRESENTATIVE IN CONGRESS FROM THE STATE OF TEXAS

Mr. GREEN. Thank you, Mr. Chairman. And I would like to

thank you for holding this hearing on the digital transition.

I welcome our witnesses and look forward to their testimony.

As we approach a start date for the converter box coupon application and distribution, it is important we bring in all involved parties to assess the situation and address the shortcomings that

might occur anywhere in the process. It seems the transition is

coming down to the tracks like a train at a full speed, and preparations are not keeping pace, especially education outreach efforts. I

am very concerned that there have been no coordinated campaign

to educate people first and foremost that the transition is coming,

much less why they need a converter box, or that coupon program

exists and they may start applying in January.

I have seen a few commercials on the transition, but they have

not been very clear and straightforward. If someone is not familiar

with the transition, I doubt the commercials I have seen will give

them any indication of what is going to happen. The toll-free number set for the converter box program, the 800-DTV–2009, provides

only limited recorded information. It doesn’t offer an opportunity to

speak to an operator about the transition.

The Government’s consumer education efforts would greatly improve by adding a national DTV call center and hotline where consumers could call in and ask questions of live staff who speak multiple languages and can help the elderly and people with disabilities. It appears that a lot of the outreach and education efforts are

Internet-based. This is not going to affect inventory in vulnerable

populations, such as the elderly and non-English-speaking households that typically rely heavily on the over-air reception and access to the Internet at low percentages than any other population.

I understand there is going to be efforts to work with groups like

AARP, the VA and other organizations that represent potentially

vulnerable populations. But we are only 2–1/2 months away from

the date applications for converter boxes can be submitted. This

process seems to be moving much slower than it should.

Monday’s commitment by the National Association of Broadcasters to spend $700 million on DTV education and advertising is

a promising sign that broadcasters nationwide are committed to ensuring there is a successful transition. And the cable’s industry

commitment of the $200 million in advertising is promising as well.

I hope to see similar by all involved parties.

The second issue I am extremely concerned about is retailers taking advantage of customers when they bring in their coupons for

converter boxes. The FCC did a commendable job enforcing the
181

analog labeling requirements by issuing 262 citations to retailers

who were not in compliance with the labeling order. I hope a similar proactive approach is taken with regards to consumers going

into stores with coupons to pick up their boxes. It would be easy

for a retailer employee to take advantage of a consumer who did

not know the specifics of the converter box program or what other

viewing options are. With the Consumer and Governmental Affairs

Bureau and several FCC field offices across the country, I think it

should seriously consider sending employees to stores to determine

that these types of deceptive practices are going on.

I am also aware of the DTV education notice of proposed rulemaking and hope you are able to move forward with that order

quickly, especially with the language requiring employee training

by participating retailers. Again, I want to thank our witnesses in

having visited a few retail outlets over the last 6 months. Earlier

this year there was no information at all, but within the last month

there is more information in a lot of the big-box retailers. At least

there is information of that source so they don’t end up buying an

analog TV that was available, and, frankly, it was available last

February and March, and now we are seeing that changed. But

hopefully those folks who bought that analog TV and got a good

deal on it understand that they are still going to have to have a

converter box.

With that, I yield back my time.

Mr. MARKEY. The gentleman’s time has expired.

The Chair recognizes the gentleman from Illinois Mr. Shimkus.

Mr. SHIMKUS. Mr. Chairman, I will waive. And I think Mr. Terry

was before me anyway.

Mr. MARKEY. The Chair recognizes the gentleman from Nebraska

Mr. Terry.

OPENING STATEMENT OF HON. LEE TERRY, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF NEBRASKA

Mr. TERRY. Thank you.

Just to start off, I do think this is an important hearing, and we

have had a series of hearings on the digital TV transition. And I

think the folks in front of us in the audience can understand that

we are nervous about the transition and how it is going to roll out

because it has the potential, as one of my colleagues said, to really

make our phones ring.

Now, I have had a series of meetings with FCC officials on this

subject, NAB, our local TV stations in Omaha, and I feel fairly

comfortable where we are at. As Greg Walden said, we are 400 and

some days, a year and 4 or 5 months out. So on the timing issue

of how and when we press it, I think is something worthy of discussion, because if you do it too early, you are going to create—I don’t

want to say a panic, that would be an exaggeration, but a concern

too early. You want to do it at the right time where people can actually go out and get their boxes, get the coupons. You need to do

it a little bit in advance. But if you are going to do it a year and

5 months early before coupons even come out, then I think you

have mistimed the communications.

And in regard to the discussions about how much money is being

put up at the Federal level, again, I am not so concerned about
182

that, because when I meet with the local officials, I am pretty impressed that each one of the TV stations in my district have a plan.

And it is fairly aggressive in doing PSAs. And when I asked what

programs; yes, they are going to run it, the Matlock rerun in the

afternoon. They aren’t just going to run these at 2:00 a.m. They

want to make sure that their viewers have the information necessary; that if they rely on over-the-air TV, that they will get their

set-top box and not miss a day.

They have also agreed, and I don’t know if this is just unique to

Nebraska, but they are working with the United Way to make sure

that they communicate with the various groups, whether it is the

disabled community, deaf community, senior population, minority

population, whatever. We are working, our TV stations are working, with United Way and the Office on Aging and other groups to

make sure that the message gets out. So I see a pretty good plan

out there. And I think the issue is not just about money, but about

the effort.

And I yield back.

Mr. MARKEY. The gentleman’s time is expired.

The Chair recognizes the gentleman from Washington State Mr.

Inslee.

OPENING STATEMENT OF HON. JAY INSLEE, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF WASHINGTON

Mr. INSLEE. Thank you. I would like to address, we had some

previous discussion about white spaces. I just was reading an article today I thought was kind of interesting in one of the Hill documents here, pointing out there has been some discussion about interference. And it was pointing out that Dell, HP and Philips are

major retailers of high-definition sets, which would mean if there

was going to be interference from white spaces, that they would be

undercutting their own business model, if you will. And I thought

it was an interesting comment, because I think it indicates at least

three major players whose business model would be damaged if

there was interference want to see movement forward to continue

testing and continue to develop our white spaces solution. And I

hope that would be the direction that we move.

There also has been a suggestion that that become auctioned and

that we allow folks to camp on spectrum. And I don’t think that

that is the most useful use of this spectrum. I hope that we are

moving forward with continued testing in this regard to maximize

use of this. I keep talking to folks who are ready at the gate to

start access to these new technologies. I hope we are moving in

that direction and look forward to discussion of that today. Thank

you.

Mr. MARKEY. The gentleman’s time has expired.

The Chair recognizes the gentleman from Florida Mr. Stearns.

OPENING STATEMENT OF HON. CLIFF STEARNS, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF FLORIDA

Mr. STEARNS. Thank you, Mr. Chairman and Chairman Martin.

I appreciate your forbearance here as we go through these opening

statements. I think we are in pretty good shape here.
183

Mr. Terry mentioned that he feels pretty confident about where

we are at, and I sort of feel pretty confident myself, especially because the consumer electronic industry. Now, these are the ones

that are going to be actually selling the boxes. Now they predict

demand for subsidized boxes will be closer to 8 million, and I think

the FCC estimates over-the-air cable and satellite homes and

broadcasters, estimates of interest, there should be a demand for

22 million subsidized converter boxes. So we have quite a discrepancy between the 22 million and the 8 million. And according to

recent reports, fewer consumers will be using these analog television sets with over-the-air antennas by February 17, 2009. So

perhaps fewer still will need the subsidy.

As Mr. Barton mentioned, the Nielsen estimates that only 13

percent of TV households, representing about 14 million homes,

will rely exclusively on over-the-air antennas on January 1, 2008.

So I think that is all good news. Furthermore, under the FCC

rules, all television receivers manufactured since March 1, 2007,

must be able to receive digital signals over the air.

So the combination of the new predictions, the combination of the

FCC rules that are stated, I think when this actually occurs, there

will be fewer consumers in need of this analog box because there

will be less analog TV signals. And so I think that is all good news.

Not to mention that the National Association of Broadcasters has

a great amount of, shall we say, something at stake here. They recently announced a $700 million PSA campaign for the DTV transition. This effort will encompass a broadcast network and 95 TV

broadcasting companies and include TV spots, educational programs and banners on TV Web sites.

In addition, my colleagues, last month the cable industry announced it was launching a $200 million English- and Spanish-language TV advertising campaign that will run until February 2009.

Spanish-language broadcaster Univision has begun airing 30-second PSAs explaining the DTV transition on its TV network, local

TV stations, radio stations and online sites.

So, my colleagues, these examples demonstrate that market and

nongovernment solutions to the DTV transition exist, they are

working. The estimates are showing that it is coming down from

the discussions we have had over a year ago. And I think that is

all good news. But, as Mr. Barton, the chairman, talked about, if

the Democrats want, they could move H.R. 608, the bill that he and

Mr. Upton and Mr. Hastert introduced to replace consumer education requirements that were stripped from the original legislation

by Senator Byrd in the Byrd rule. So we have a fallback. It is time

to move on. The 24 MHz and 1 billion for public safety is too important to be squabbling about. So I think we have good news in the

offing with the combination of the National Association of Broadcasters, these new estimates that are coming in, and the FCC’s ruling, and I look forward to their testimony.

Thank you, Mr. Chairman.

Mr. MARKEY. The gentleman’s time is expired.

The Chair recognizes the gentleman from Michigan Mr. Stupak.
184

OPENING STATEMENT OF HON. BART STUPAK, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF MICHIGAN

Mr. STUPAK. Thank you, Mr. Chairman, and thank you for holding this hearing on the status of digital transition television or digital television transition. It is important that we stay on top of this

issue as we are just 16 months away from the hard date deadline

for the transition from analog to digital across America.

More than 14 million households in the United States are completely dependent on free, over-the-air television. An estimated 41

percent of these households do not have the access or economic resources to switch to cable or satellite. Sixteen months is a very

short time to handle such a significant transition. By relying so

heavily on individual private interest to carry out the public service

of consumer education, I believe we risk confusing Americans without uniformity in how the transition message is delivered.

Consumer education is only part of the problem. Once they are

properly notified, how will consumers in rural areas receive these

converter boxes? Unlike Mr. Green, we don’t have these big box

stores that he speaks of. Rural communities like the district I represent cover a lot of territory, are sparsely populated, and are disproportionately dependent on analog transmission. If the experience of broadband deployment is any indicator, corporations driven

by profit will not take into account the needs and challenges of

rural consumers.

Despite my concerns, I also realize that transition from analog

to digital television holds tremendous promise if properly implemented. By freeing up the spectrum, hopefully rural America can

begin receiving broadband where none exists thanks to new wireless technologies. Entry into the market will be less cost-prohibitive, and we can begin closing the digital divide. In addition, first

responders will be able to move into the newly unoccupied spectrum, which they will use to work towards interoperability. However, the equipment for this transmission is expensive, with costs

estimated to be over $20 billion. But once completed, it will make

our Nation safer.

I have introduced H.R. 3116, the Public Safety Interoperability

Implementation Act, which would create a trust fund for public

safety agencies from the spectrum auction proceeds. Public safety

is far too important and for far too long have been shortchanged.

And so with the spectrum, but without proper equipment and infrastructure, there really is no value to law enforcement. I look forward to working with the Chairman in advancing my legislation.

Mr. Chairman, thank you for holding today’s hearing. I look forward to the testimony of our witnesses. I know many of us will be

jumping back and forth because the FISA bill is on the floor today.

I look forward to participating in this hearing as much as possible.

Thank you, Mr. Chairman.

Mr. MARKEY. The gentleman’s time has expired.

We also have with us the gentlelady from Tennessee Mrs.

Blackburn, who has joined us, although she is not a member of the

subcommittee. Would you like to make an opening statement?

Mrs. BLACKBURN. Mr. Chairman, I will waive.

Mr. MARKEY. Then the gentlelady will waive her opening statement.
185

But I see arriving is the gentleman from Illinois Mr. Rush. And

I would inquire as to whether or not he would like to make an

opening statement at this time.

Mr. RUSH. Mr. Chairman, I will waive.

Mr. MARKEY. The gentleman from Illinois will waive as well.

Any additional statements for the record will be accepted at this

time.

[The prepared statements follow:]

PREPARED STATEMENT OF HON. EDOLPHUS TOWNS, A REPRESENTATIVE IN CONGRESS

FROM THE STATE OF NEW YORK

Thank you, Chairman Markey and Ranking Member Upton. I am very pleased

that the subcommittee is holding this hearing. These oversight hearings allow us

to keep the pressure on and make sure the DTV transition is handled smoothly because the benefits of transitioning are enormous, opening up desperately needed

spectrum for first responders. I believe my constituents will support this transition

if they are properly educated on how to keep their TV signal, if they feel they are

treated fairly, if they know their Government is behind them, and they know why

it’s important. I look forward to hearing from our witnesses on how they plan to

handle the operations and contractors carrying this complicated effort out and on

what other ways government or industry can take to prepare us.

I would like to welcome all of our witnesses today and congratulate them on their

commitment to public service. I also want to make certain they know that this transition is a time in their careers when they can really shine. A smooth transition

would be a crowning achievement that they could hang their hat on all their lives.

Government agencies, industry, and public interest groups should work hand in

hand so that they all have the right information they need to target the populations

that are most vulnerable. I am particularly concerned with making sure seniors

have the help they need to make the transition.

I am pleased to learn of the efforts of local broadcasters and cable companies to

begin educating millions of American television viewers on the transition to digital

television. They play an important role in providing my community with timely

news and information and it is imperative that viewers not lose access to such a

critical service.

Thank you, and I yield back the balance of my time.

PREPARED STATEMENT OF THE HON. LOIS CAPPS, A REPRESENTATIVE IN CONGRESS

FROM THE STATE OF CALIFORNIA

Mr. Chairman, thank you for holding this important hearing and for keeping our

subcommittee focused on the continued oversight of the digital television transition.

All of us on the subcommittee are fully aware of what will take place on February

17, 2009—but unfortunately our constituents are not.

For those constituents who hear of the transition and attempt to make inquiries,

the answers they receive can leave them even more confused.

That said, for the purposes of this hearing I would like to focus on the need for

a comprehensive DTV transition strategy, the need for accountability, and the need

to promptly address the concerns of the deaf and hard of hearing.

As GAO has reported, the lack of a comprehensive plan—or planning body—to

oversee and implement various facets of the transition leaves our most vulnerable

consumers at risk.

Over 20 million households will need to purchase at least one converter box, and

yet if a consumer walked into a retailer today with questions about the conversion

they would likely be given misinformation.

Where is the comprehensive plan to educate our consumers? Or to provide appropriate accountability mechanisms so that consumers are protected from misinformation and any potential glitches in the transition?

Lastly, I want to be sure that we do all that we can to ensure that populations

with hearing and vision impairments are not left behind in this transition. To this

end, I look forward to the testimony of Mr. Stout and to hearing his recommendations in this area.

Thank you again, Chairman Markey, for holding this hearing.
186

Mr. MARKEY. Let us turn to our very, very distinguished panel.

First of all, I would like to apologize to you for the number of Members who have arrived, kind of in historic numbers, to make opening statements before the beginning of a hearing. You are wondering what is going on, I am sure, and it is very simple. ‘‘congressional expert’’ is an oxymoron. It is a contradiction in terms, like

Salt Lake City night life. I mean, there is no such thing as a congressional expert compared to real experts.

However, on this one subject, a relationship between television

sets and their constituents, Members of Congress are experts. This

is one thing we all understand in our bones. And every Member

wants each of you to understand how deeply we are immersed in

ensuring that this digital television transition does not affect our

constituents in a way that is adverse. And so we apologize to you,

but that is something that you should understand in terms of how

this panel, I think every Congressperson, will view this issue.

So we will begin with John Kneuer, who is the Assistant Secretary for Communications and Information at the National Telecommunications and Information Administration from the United

States Department of Commerce. We welcome you back, Mr.

Kneuer. Whenever you are ready, please begin.

STATEMENT OF JOHN M.R. KNEUER, ASSISTANT SECRETARY,

COMMUNICATIONS AND INFORMATION, NATIONAL TELECOMMUNICATIONS AND INFORMATION ADMINISTRATION,

U.S. DEPARTMENT OF COMMERCE

Mr. KNEUER. Thank you, Chairman Markey and Ranking Member Upton, members of the committee, for the opportunity to appear again before this committee.

I am pleased to report that NTIA is making great strides in accomplishing the task Congress laid out in the Digital Television

Transition and Public Safety Act of 2005. As you know, the DTV

Act required NTIA to establish and implement a program allowing

eligible U.S. households to obtain up to two $40 coupons to be applied towards the purchase of digital-to-analog converter boxes.

Now, when I last testified before this committee, NTIA’s converter

box program was in its earliest stages, and members of this committee appropriately asked important questions about how the program would ultimately unfold. Specifically members wanted to

know who would be responsible for issuing coupons to consumers.

Would manufacturers produce boxes to meet consumer demand?

Would enough retailers participate in the program so that boxes

would be widely available? And, most significantly, how could we

possibly educate the American public with the $5 million made

available for consumer outreach under the statute?

Today I am pleased to report that NTIA, in coordination with

other Government agencies, and in collaboration with a broad

array of market participants, service organizations and consumer

advocacy groups, has made enormous strides to ensure that the

converter box program is run effectively, that consumers will have

widespread access to coupon-eligible converter boxes, that the television viewing public is well informed about the transition, and

that those members of our society with special needs could access
187

the assistance they need to continue to have access to over-the-air

television after the transition.

On August 15, NTIA awarded a contract to IBM to manage three

broad functional aspects of our coupon program—systems processing, financial processing and consumer education and communications. Under the contract, IBM is leading a team of partners that

includes Corporate Lodging Consultants, which is responsible for

retailer management, coupon distribution, coupon redemption and

payment; Epiq Systems, which is handling coupon distribution and

consumer support; and Ketchum, Inc., a global public relations firm

that is leading the consumer education program. Each of these

companies has extensive experience in each of the functional areas

and has successfully implemented large and complex national programs.

NTIA is on schedule to meet its obligations under the act, and

beginning January 1, 2008 and continuing through March 31, 2009,

consumers will be able to request two $40 coupons per household

to purchase an approved DTV converter box.

We have also adopted rules to provide guidance to converter box

manufacturers regarding the submission of test results and sample

equipment for evaluation and certification. Pursuant to our regulations, certified converter boxes will possess performance features

based on industry-accepted DTV standards as well as on FCC requirements for other television products.

The regulations required, for example, to NTIA-certified converter boxes comply with the FCC’s parental control or V-Chip

rule, emergency alert system rules, and closed-captioning requirements for converters. NTIA has certified Digital-to-Analog Converter Box models from multiple manufacturers, and equipment

from other vendors is currently being evaluated and tested.

I am pleased with the number of manufacturers that have filed

notices of intent and test submissions. I suspect more boxes will be

certified over the weeks leading up to the transition, and a list of

certified converter boxes, including make and model numbers, will

be distributed with consumers with their coupons. We have also

worked diligently with retailers to assure that consumers will be

able to easily obtain converter boxes during the transition period.

NTIA is actively working to make the program accessible and attractive to a full range of retailers in order to gain participation not

only from large chains but from regional outlets and small, independent local stores as well. This month alone, we will send out approximately 25,000 mailings to smaller retailers so they can be

made aware of the program and they can have information on how

they can participate.

At our public meeting and Expo on September 25th, Radio

Shack, with 4,400 company-owned stores and 1,600 franchisees, announced they intend to participate in the program. In addition to

stocking converter boxes, Radio Shack will train its sales associates

on the coupon program, as well as engage in consumer education

efforts both in the stores and on its Web sites. I expect other retailers will follow that lead.

With regard to consumer education and outreach, to maximize

the value of our $5 million in consumer education funds, NTIA has

been working through partnerships to leverage support from a di-
188

verse range of stakeholders. In particular, the industries most directly affected by the transition—the broadcast, cable and consumer electronics industries—are actively informing their viewers,

subscribers, and customers about the February 17, 2009 transition

date and the variety of options that consumers have to respond to

it.

Last month, the National Cable and Telecommunications Association announced a $200 million campaign to raise consumer

awareness. On Monday, the National Association of Broadcasters

launched its marketing campaign, valued at nearly $700 million,

which was intended to generate 98 billion discrete impressions

with consumers. The Consumer Electronics Association is running

radio spots and has developed consumer-friendly tools, including a

video that helps consumers understand their options.

In addition to the broad public education campaign, NTIA recognizes that certain segments of society are more directly impacted

by the DTV transition and may be least equipped to manage it on

their own. Accordingly, we have identified five target groups for

particular consumer education efforts: seniors, the economically

disadvantaged, rural residents, people with disabilities, and minorities. These groups depend on over-the-air television to a greater extent than does the general population, and NTIA will carefully design and market-test its consumer education materials to ensure

the materials are accessible to and can be easily understood by

these target communities.

In addition, we are working in partnership with trusted intermediaries for these groups in order to get the word out and to provide help in obtaining and in installing converter boxes. By educating those groups and service organizations that already reach and

assist these targeted communities, we will maximize available resources to ensure that DTV transition assistance gets to those who

need it most.

Working together in a broad public-private partnership, including NTIA, the FCC, more than a dozen Federal Government departments and agencies, market participants, and literally hundreds of nonprofit and service organizations, I am confident that

we as a nation will conclude this transition smoothly, that consumers will be well-informed, and that financial and other assistance

will be available to those who need it.

Thank you, and I will look forward to your questions.

[The prepared statement of Mr. Kneuer follows:]
189
190
191
192
193
194
195
196
197
198
199
200
201
202
203
204
205
206
207

Mr. MARKEY. Thank you, Mr. Kneuer, very much.

Our next witness is the Chairman of the Federal Communications Commission, Kevin Martin.

We welcome you back, and we enjoy working with you, and we

thank you for being here today. Whenever you are ready, please

begin.

STATEMENT OF KEVIN J. MARTIN, CHAIRMAN, FEDERAL

COMMUNICATIONS COMMISSION

Mr. MARTIN. Good morning, Chairman Markey, Ranking Member

Barton, Ranking Member Upton, and all of the members of the

committee. Thank you for inviting me to be here today to talk

about the digital transition.

Thank you, Chairman Markey, for the favorable comparison to

Tom Brady. Except for, hopefully, my wife, I think you are the only

person who might compare me to Tom Brady, but I appreciate the

comparison nonetheless. With my athletic prowess, I thought a

more apt comparison or analogy might be to our Red Sox manager,

Terry Francona, but after last night’s loss for our team, I am not

sure that that is as good a comparison today.

I certainly am as mindful as you are that February 17, 2009 is

only 16 months away, and I appreciate the opportunity to tell you

what the Commission has been doing to try to prepare for this unprecedented event. I believe a successful completion of the digital

transition depends upon minimizing the burdens placed on consumers and maximizing their ability to benefit from it. The Commission has taken some important steps to that end, but there is still

more we need to do. Our efforts to date have been threefold:

First, we have been focused on getting the right policies in place

to facilitate a smooth transition.

Second, we have been actively enforcing our roles to protect consumers.

Third, we have been promoting awareness of the transition

through our consumer education and outreach efforts.

Through all of our activities, the Commission is committed to ensuring that no American is left in the dark. Now, our top priority

has been to implement policies that will minimize the burden borne

by consumers and maximize their opportunities to benefit from this

upcoming transition.

First, the Commission acted to dramatically reduce the number

of consumers who would need a converter box to view broadcast

signals after the transition.

Second, we are resolving the main technical issues.

Third, we are employing our authority and industry’s resources

to conduct a far-reaching effort to inform consumers.

Finally, it is my hope that the Commission acts to encourage and

to facilitate broadcasters’ abilities to offer free additional changes

so that DTV transition is a benefit rather than a burden to consumers.

The Commission recently adopted an order that guarantees that

all cable customers will be able to watch all of the broadcast stations after the digital transition. Specifically, the Commission took

action to ensure that cable operators continue to make signals of

all broadcast stations viewable after the transition, as the must-
208

carry statute requires. With this action, we were able to significantly reduce the number of Americans potentially needing a converter box to watch broadcast stations post-transition.

Making sure that the almost 35 million households that subscribe to analog cable are taken care of allows us to focus all of our

energies on assisting the nearly 15 million households that rely exclusively on over-the-air signals.

Now, in August of this year, the Commission also adopted the

final DTV table of allotments. This order provided over 99 percent

of the full power television stations across the country with their

final digital channel assignment. Today, 95 percent of all television

stations are already broadcasting in digital.

In April of this year, the Commission also adopted a labeling

order that required sellers of analog-only televisions to disclose

that at the point of sale. Retailers must state that the TVs include

only an analog tuner and, therefore, will require a converter box

to receive over-the-air broadcast television signals after February

17, 2009.

At the suggestion of Chairman Dingell and Chairman Markey,

we initiated a DTV education notice of proposed rulemaking earlier

this year. I recently circulated to my colleagues an order that

would require the following: Broadcasters would use PSAs and

screen crawls throughout the day to inform viewers about the transition. Broadcasters would also publicly report on these education

efforts on a quarterly basis. MVPDs, cable operators and satellite

operators would provide monthly inserts about the DTV transition

in their customers’ billing statements. Manufacturers of television

receivers and related devices would provide notice of the upcoming

transition to consumers when they are selling their equipment. All

of the Commission’s DTV partners would provide quarterly updates

on their consumer education efforts. Finally, we would continue to

work with NTIA to ensure that the retailers participating in the

converter box program are appropriately training their employees

and informing their consumers.

Finally, I believe that one policy action in particular could fundamentally change for the better the course of the digital transition. Broadcasters should be able to and be encouraged to use their

digital spectrum to send multiple television signals to consumers

for free. Right now, a broadcaster using analog technology transmits one programming stream, which we think of as a television

channel. With the digital spectrum, broadcasters can put out not

just one programming stream but several, so a broadcaster could

broadcast two or three channels at the same time—for instance, a

movie channel, a 24-hour news channel or a sports channel—with

no additional cost to the consumer and no need for additional spectrum.

In short, multicasting enables broadcasters to provide consumers

with more free television programming. I believe that the ability to

view new broadcast channels would facilitate the transition by providing people with an incentive to get a converter box.

As things stand today, over-the-air consumers have the burden

of purchasing a converter box just to maintain the status quo. This

burden is probably why a majority of those aware of the transition

think that the Government is on the wrong track, according to a
209

recent APTS survey. The message we have been sending is simply

not appealing: You need to buy a new box or you will lose your TV

altogether.

But what if we had a more positive message: If you get a new

digital television or a converter box, you will be able to watch a

wide array of new, free programming. Then what was a burden will

become a meaningful benefit. The opportunity to enjoy more programming choices would give consumers an actual incentive to be

excited about adopting digital technology, and the faster they get

that technology, the fewer Americans there would be at risk of

being left behind in the dark in the digital transition.

Now, this proposal is how it worked in Germany. In Berlin, the

opportunity to receive more free channels drove people to

proactively purchase converter boxes instead of viewing the need to

do so as a burden. Before the transition, over-the-air viewers in

Berlin received only 12 channels, but after the transition, they received 27. A German Government report analyzing the transition

concluded that the switchover resulted in less protests than they

had anticipated, in part because of the added value of receiving

more services and channels.

Indeed, the GAO has also analyzed the Berlin transition and has

made similar findings. Mr. Goldstein, who also has done a study

on Berlin, concluded that the government industry and consumer

representatives with whom we spoke mentioned several factors as

contributing to the success of the Berlin DTV transition. These factors included the following:

The DTV transition provided enhanced consumer value for Berlin

households as the number of channels available through terrestrial

television increased from approximately 11 to 27, and it included

an electronic programming guide. These new channels were available through terrestrial television, following the DTV transition,

and they existed on cable and satellite systems. And there was

good cooperation between the Government officials and industry,

which helped ensure that the consumers all received these additional channels.

I believe that what worked in Germany could work here as well,

and I have circulated a proposal to my colleagues that will help facilitate multicasting and will require cable companies to carry

these additional multiple streams as free programming to consumers. And I am hopeful that a majority of the Commission will soon

realize the potential benefit of this policy for the DTV transition.

Now, the Commission’s DTV enforcement efforts have also focused on protecting consumers from the unknowing purchase of

TVs without digital tuners. We are enforcing three rules: the requirement to label analog-only televisions; the prohibition on shipping analog-only televisions; and the requirement that the V-Chip

function with digital technology.

With respect to labeling, our staff has inspected nearly 1,280 retail stores and Web sites, and we have issued nearly 280 citations,

notifying retailers of violations. We have circulated among the commissioners notices of apparent liability against 14 retailers, for a

total of over $3.5 million. We have also issued NALs against two

companies for, apparently, shipping only analog televisions, receivers and equipment.
210

Finally, thanks to information referred to us by Chairman Markey, we have circulated NALs against three manufacturers for violating our V-Chip rules as well. The fines total over $11 million.

One company had failed to include a V-Chip in the digital television altogether, while two others had made TVs whose V-Chips

were not capable of being updated and adjusted to changes going

forward.

The swift enforcement of all of our DTV-related rules is critical

to protecting consumers, and our activities in this area will continue to be a priority.

Now, in addition to our policy and our enforcement activities, the

Commission has been actively promoting consumer awareness of

the upcoming transition. Given our current resources, we are

prioritized, reaching consumers who are the least likely to be

aware of the transition, including senior citizens, non-English

speaking and minority communities, people with disabilities, lowincome individuals, and people living in rural and tribal areas. We

have focused our efforts on three primary activities: presenting

DTV information at conferences and events; disseminating information via the news media; and partnering with industry, consumer

and other groups to help facilitate the message.

Now, with respect to conferences and events, the Commission

staff has been distributing DTV education materials at as many

conferences as possible. In the last few months, we have attended

or have participated in 30 conferences. Earlier this month, I spoke

about the digital transition at a technology summit that was part

of the Congressional Hispanic Caucus Institute, and we plan to

participate in at least 30 more events this year. We are also utilizing the agents in the Commission’s field offices around the country

to expand the scope of our consumer education efforts. Representatives in each of our field offices have been targeting communities

that risk getting left behind in the DTV transition. Through the

work of our field agents, we are able to reach consumers in 36

States. We have distributed information to over 1,400 senior centers, senior organizations, community centers, and groups, and

have given nearly 50 presentations.

Mr. MARKEY. Mr. Chairman, you are going to get a lot of questions. Is it possible that you could summarize?

Mr. MARTIN. Sure.

We anticipate providing information to over 2,000 organizations

and making another 350 presentations just this year.

Obviously, I would ask that my full statement be entered into

the record. With all of the rest of the activities that we have had

ongoing, I think we are committed to devoting significant resources

in facilitating the transition, continuing with our three-pronged approach of policy making, enforcement and consumer outreach, and

we intend to take whatever actions are necessary to minimize the

potential burden of the digital transition on consumers and to

maximize the ability of consumers to benefit from it.

Thank you.

[The prepared statement of Mr. Martin follows:]
211
212
213
214
215
216
217
218
219
220
221
222
223
224
225
226
227
228
229

Mr. MARKEY. Thank you. Your entire statement, which looks voluminous, will be included in the record in its entirety.

Our final witness on this first panel, Mr. Mark Goldstein, is the

Director of Physical Infrastructure Issues for the U.S. Government

Accountability Office.

We welcome you, Mr. Goldstein. We appreciate your work on behalf of the subcommittee. Whenever you are ready, please begin.

STATEMENT OF MARK L. GOLDSTEIN, DIRECTOR, PHYSICAL

INFRASTRUCTURE ISSUES, U.S. GOVERNMENT ACCOUNTABILITY OFFICE

Mr. GOLDSTEIN. Thank you, Mr. Chairman. I will be brief in the

interest of time. I know you have a lot to do this morning yet.

Mr. Chairman and members of the subcommittee, I am pleased

to be here today to report on our work on the progress made in the

Nation’s transition to digital television. We have a detailed report

on the public and private sector efforts underway to implement the

transition; that will be issued in November 2007. The findings that

I am reporting to the subcommittee today are based on our draft

report and, therefore, are preliminary.

In my testimony today, in particular I will discuss the progress

made by Federal entities in conjunction with other stakeholders in

facilitating the transition; the progress made in educating consumers about the transition; the progress made implementing a subsidy program for converter boxes; the technical issues facing the

broadcast industry in meeting the transition; and the future work

on the progress of the transition that we plan to undertake in the

next 16 months.

In summary, No. 1, the FCC and the NTIA, in conjunction with

other stakeholders, have taken steps to facilitate the transition.

For example, the FCC has conducted periodic reviews to report on

transition progress, and NTIA has issued a contract for administrating a converter box subsidy program. In addition, private sector

industry have begun preparing for the transition. Despite public

and private sector interaction designed to help facilitate the transition, however, we found that no comprehensive plan exists for the

DTV transition. Without such a plan, meaningful guidance for coordinating responsibility and for measuring progress might not be

available to the private or public sector.

Two, several Federal and private sector stakeholders have begun

consumer outreach and education campaigns with both independent and coordinated efforts underway. The FCC and NTIA have developed informational materials and have begun direct outreach to

consumer groups. In addition, private industry stakeholders have

created the DTV Transition Coalition and are voluntarily conducting outreach efforts. However, these efforts are in the planning

stages for the most part, and challenges remain. An expert panel

that we convened identified potential challenges in key practices

for our consumer education campaign, such as defining goals and

objectives and establishing metrics to measure success.

Three, NTIA has made progress in implementing the converter

box subsidy program, but the program’s outcome depends on the

voluntary participation of retailers and manufacturers. The retailers we contacted expressed concerns about the possibility of a re-
230

demption system that would affect their point-of-sale systems, and

they stated they would need more information on IBM’s technical

solution before they could assess the impact on their systems and

whether it would affect their participation. With limited or delayed

retailer participation, consumers might face difficulties in redeeming their coupons for eligible converter boxes.

Four, although most television stations already transmit a digital

signal, technical and coordination issues such as antenna replacement and tower construction may present challenges for broadcasters in preparing for the DTV transition. In addition, cable and

satellite television providers must coordinate with broadcasters to

ensure that they can continue to receive and to transmit the digital

broadcast signals after the transition. Further, select stations that

retransmit television signals, known as ‘‘translator stations,’’ are

not required to cease analog broadcasting. These stations may

choose to retransmit a digital signal or they may convert the digital

signal to analog and continue to broadcast in analog after February

2009.

Five, we plan on reporting on the progress of the DTV transition,

including public and private efforts in facilitating the transition;

the status of consumer education and awareness about the transition; IBM and NTIA’s administration of the converter box subsidy

program; and industry technical preparations throughout the upcoming transition period.

For example, we will continue to monitor consumer education

programs and plan to conduct a series of consumer surveys

throughout the year prior to the transition date. The surveys we

conduct will be aimed at determining the population that will be

affected by the transition and the public awareness of the transition. Throughout the transition process, we will continue to monitor Government and industry consumer education efforts, and will

analyze the efforts compared with key practices for consumer outreach. In addition, we plan to survey broadcasters on the technical

issues that must be addressed prior to the transition date.

Mr. Chairman, this concludes my statement. I would be happy

to respond to any question that you or any member of the subcommittee may have.

[The prepared statement of Mr. Goldstein follows:]
231
232
233
234
235
236
237
238
239
240
241
242
243
244
245
246
247
248
249
250
251
252
253

Mr. MARKEY. We thank you, Mr. Goldstein, very much, and we

thank each of our witnesses.

The Chair will now recognize himself for a round of questions.

I am going to begin with you, Mr. Goldstein.

You have testified here this morning that the Federal Government lacks an overall DTV transition plan, that it has no plans to

monitor the transition and has no contingency plan should the

transition run into problems.

What in your judgment is the biggest threat to the overall success of the transition that could be mitigated if the Federal Government engaged in comprehensive planning?

Mr. GOLDSTEIN. Mr. Chairman, we felt with respect to the overall planning that there were not strategic goals, that there were

not strategies and resources that were defined, that there was not

an identification of key stakeholders, that there was not a risk

mitigation plan that would have included understanding the alternatives, should issues arise that had been undeveloped and unprecedented, and so that really concerned us.

We are not advocating that the Government take over control or

be a czar, but the Government, particularly the FCC in its role of

being in charge, essentially, of the Government’s spectrum and of

the airways, we felt had a broader responsibility to be able to ensure that the risks in the transition be mitigated as best as possible, because otherwise the challenges that we talk about in our

testimony in all of its aspects, whether it is consumer education,

whether it is the ability to have a box, whether it is some of the

technical issues related to ensuring that the footprint of the analog

and digital airwaves that people are still able to receive even if

they—even if you go out and you get a box and you have that box,

if the broadcast companies and the cable companies have not had

sufficient conversation to determine whether or not cable head-ins

can still receive the broadcast signal, you are still going to have

consumers who are in the dark.

So there are still plenty of issues that need to be dealt with. And

we think that greater coordination and greater communication at

all levels are necessary. And this can be done, we think, best

through having a more comprehensive planning process that the

Government at least ensures gets underway with the private sector

involved.

Mr. MARKEY. Thank you, Mr. Goldstein, very much.

We do not want to make anyone a czar either. The Russians

killed the czar. We want to make them Tom Brady. That is our

goal and our effort.

Let me ask you this, Mr. Kneuer. As I understand it, the NTIA

will not reissue a coupon if a consumer’s coupon expires after 90

days. So tell us what would happen in the following situation:

A consumer has a coupon for a converter box. On the 90th day,

the consumer goes to Best Buy to use the coupon, but Best Buy

does not have any boxes in stock. As a consumer, although I have

procrastinated until the last day, I have done what I am supposed

to do.

What happens at that point? Am I out of luck?

Mr. KNEUER. One of the things we are talking with retailers

about is precisely the circumstance you described, that a consumer
254

comes in—whether it is the 90th day or it is the 15th day—and

there are not boxes in the stores. It is whether or not they can conclude that transaction with the consumer in the store, either treat

it as an online transaction for the consumer to come back or to

have it delivered to their home or to have the consumer come back

and pick it up at that time. So we do want to make sure that consumers are not disenfranchised in that circumstance.

The more systematic approach is to encourage the broadest possible participation by retailers and the broadest possible——

Mr. MARKEY. It should not be a requirement, though.

Should it be a requirement that retailers have to honor that coupon if they have walked into the store before the 90th day?

Mr. KNEUER. That is something we can look into making an affirmative requirement as a business case in the program. It is not

currently included in the program.

Mr. MARKEY. No. What I am saying to you is that I recommend

to you that you make it a requirement. That is, if the retailer is

participating in the program and someone shows up and they are

representing themselves to have these boxes, what about the issue

of then should the retailer then have to ship it free of charge to

the consumer if they did not have it in the store?

Mr. KNEUER. I do not think we have authority to require additional subsidies if it is part of their normal mail order process. If

they do things free of charge or if they charge for the mailing of

it, I do not think that in our program we would have the authority

to require that——

Mr. MARKEY. But do you have the authority to require them to

have boxes in stock?

Mr. KNEUER. No, we do not have the authority to require supply

chains. We do not.

Mr. MARKEY. So what do you get for participating? They can represent that they have them. People show up. ‘‘We do not have

them, but we have this wonderful digital TV set here. Why don’t

you buy the digital TV set? We do not know when we are going to

have those converter boxes that we advertised in the newspaper

saying that we have.’’

So how do we handle that situation? It is rife with potential for

a bait and switch.

Mr. KNEUER. Sure. Sure. That is sort of obvious consumer fraud,

a classic bait-and-switch campaign where they advertise ‘‘We are

your DTV coupon eligible box headquarters,’’ and they do not have

boxes; they just have $500 TV sets, and they are doing hard sells

on consumers.

Our vendor, who has responsibility for the retailer relationship,

for certifying retailers, is going to be doing spot checks in stores to

make sure that they are educating their consumers, that they do

have——

Mr. MARKEY. But what conditions can you put on retailers in

order to make sure, if they are going to represent they have these

boxes, that they have them and, if the consumer shows up, that the

retailer will provide them to the consumer and that there is no

extra charge if they are out of those boxes at that time?

Mr. KNEUER. If we found evidence of a retailer that was consistently out of stock, there may, in fact, be times that a retailer does
255

run out of boxes, but if we had reports or evidence that there was

a consistent pattern, we would have the ability to decertify those

retailers.

Mr. MARKEY. Right. So, again, the coupon has expired; there is

no box; it is not the consumer’s fault; it is the retailer’s fault. What

are we going to do for the consumer?

Mr. KNEUER. Irrespective of whether it is the 90th day or the

15th day, in our outreach and in our conversations with retailers

we are raising this issue with them. Can you execute the point-ofsale transaction——

Mr. MARKEY. But what do you do if they do not comply? What

if they don’t? What are you going to do?

Mr. KNEUER. If they do not agree to have those sorts of processes

in place?

Mr. MARKEY. Yes. What are you going to do to them?

Mr. KNEUER. Those are the sorts of things that we are working

through on a business case with the retailers.

Mr. MARKEY. Yes. I think the retailers have to know up front

what you are going to do to them, and then they will comply. If

they think you are going to be counseling them at the 90th day,

just talking to them, then unfortunately there are going to be too

many consumers out there who will be walking around a store,

without any converter box being in it, now being counseled by this

salesman, ‘‘You know these new digital TVs only cost $350. You

should get one of these anyway. Why wait?’’

So why don’t we try to figure out some way of having a real set

of sanctions that can be imposed upon them and that they know

about it and that they are being told very clearly what will happen

to them if they do not honor that coupon as it is being presented.

Mr. KNEUER. Throughout our relationship with retailers and in

designing this program, we want to balance those sorts of requirements on retailers with also having it be a program so that we

have a very broad cross-section of retailers. There may be rural

stores or smaller retailers that are not part of big chains and that

do not necessarily have the capability to do shipping and transactions of that kind. So we want to make sure that we are doing

everything we can to make sure the retailers are educating consumers and that retailers that participate in this program are not

engaging in those sorts of fraudulent activities. But we also want

to make sure that we are not raising burdens that exclude classes

of retailers that may serve people in other communities other than

the large——

Mr. MARKEY. OK. Again, what I am saying is, in my district

where we have all big stores, I just want them to know that there

is going to be a penalty. Now, it sounds like you want to make a

rural America exception, that rural Americans can be treated differently, those consumers. Then if you have got a separate set of

protections for rural Americans that is not as stringent as for

urban and suburban, I would like to hear that. But I think where

there are big stores, there should be.

Mr. KNEUER. No. We absolutely will have sanctions. If there are

retailers that are actively misleading customers and that are consistently out of supply, and we have evidence to the fact that they

are using this simply——
256

Mr. MARKEY. I am saying even beyond consistently.

I am talking about that consumer who is standing there. They

do not know anything, and they have to have some protection. The

store manager has to be there to say, ‘‘But we are going to honor

it. Do not worry. We will get it for you in a week.’’

Mr. KNEUER. That is why we are in discussions with retailers,

to find out what their capability to do that is. It is certainly something that we want them to be able to do, to make it as easy for

consumers and to not disenfranchise consumers when they show up

at the end of the expiration date.

Mr. MARKEY. OK. Well, I think there have to be very firm requirements that are placed upon these stores.

My time has expired.

The Chair recognizes the gentleman from Michigan, Mr. Upton.

Mr. UPTON. Well, thank you, Mr. Chairman.

I have a number of questions as well, and I just want to say that

as I and as Chairman Markey have indicated, do not get between

us and our TVs. We all have our own MOs as we watch the programming that we do, and I for one have already seen the ads that

have been on my cable company a number of times over the last

couple of weeks. In fact, I know, based on some constituent conversations, that our constituents are beginning to get a glimmer of

the changes that are there, and it is not too early for this process

to begin because they want to be ready. Particularly for those with

over-the-air broadcasts—of which, though, I have cable at my home

in Michigan—clearly those questions are starting to be asked. And

I think that it is important for folks to realize if they have—I made

a speech this morning at breakfast. If you have a set with cable

or satellite, really you do not need to worry about getting that cable

box.

The question, Mr. Chairman, that I have for you is: as people are

beginning to watch these ads, they are beginning to say, ‘‘Where

do I need to get the box?’’ it is my understanding that they are

going to be available in many retailers after the first of the year.

Where are we in terms of the number of boxes that are certified?

How many do you think that we will have certified and ready to

go to the store shelf by the first of the year?

I understand that—I think behind Mr. Kneuer—oh, there it is.

Is that bigger than your TV?

Oh, Markey left. I do not know if that is bigger than Mr. Markey’s is. Is that bigger than your TV? Do you see the converter box

over here? You are not going to electrocute yourself.

John, hold it up for him to see.

Mr. KNEUER. I think this is, in fact, the very first box.

Mr. UPTON. Has that been certified?

Mr. KNEUER. This is a certified box. We have certified multiple

boxes from multiple manufacturers. We have a huge expression of

interest from lots of manufacturers.

The way the system works is in order to get certified, they need

to submit boxes to us for testing. We are working under an MOU

with the FCC and are using their labs, but we test them to make

sure that they perform the function for which they are designed,

which is the digital——
257

Mr. UPTON. So how many have been certified already, how many

different boxes?

Mr. KNEUER. We have multiple boxes from multiple manufacturers. I think we have three.

Mr. UPTON. Three so far? How many do you expect that we will

have ready by the end of this calendar year?

Mr. KNEUER. I would not hazard or make a guess as to the total

number, but we have had boxes submitted by major manufacturers

and have a very large expression of interest from multiple supply

sources.

Mr. UPTON. Of those that have been certified, are they already

in production, then? Are they getting them ready in the warehouses to be shipped out?

Mr. KNEUER. That is my understanding, yes.

Mr. UPTON. Mr. Goldstein remarked in his testimony that he was

aware that perhaps some of the major retailers were not quite

ready for the boxes. Have you found that? Have either of you—I

know this is probably more of a question for, I guess, IBM, and we

are going to have another hearing later on this month. What have

you heard?

Mr. KNEUER. One of the things that we focused on in putting out

our request for a proposal was how would you deal with retailers

and how would you make this a program that would be nondisruptive to the ordinary retailer operation.

As to the point-of-sale issues that Mr. Goldstein was talking

about, in fact, it was IBM’s experience in point-of-sale and back-office software sorts of issues that that was one of the stand-outs of

their proposal. In fact, the retailers that we have spoken to are

very comfortable with the IBM point-of-sale system. In fact, IBM

has designed point-of-sale operations for large retailers, so it is a

system that——

Mr. UPTON. So you have talked to Best Buy and to Radio Shack

and to Sears?

Mr. KNEUER. CLC, our vendor who has responsibility for the retailer outreach, is in negotiations and discussions with a large

number of the top, I think, 50 largest retailers. Like I said, then

we are also reaching out to small, local retailers. We are sending

out 25,000 letters to those small retailers.

Mr. UPTON. Do you see any distress signs thus far?

Mr. KNEUER. No.

Mr. UPTON. Again, I know it is going to be the focus of another

hearing.

Mr. Goldstein, where did you get your information? Which retailers seem to be posing some problems or not having the right information?

Mr. GOLDSTEIN. Congressman, we talked to a number of different

retailers, and I would be happy to provide that information to you

later on. We can tell you which ones and the like.

We did talk to IBM just the other day, because we are continuing

our work, of course, and in our discussions with IBM, they did indicate that they are in serious negotiations with 23 large retailers

right now. But they do not have a target date right now as to when

they are going to be ready to redeem the coupons, and they are

seeking input from the retailers for this.
258

Mr. KNEUER. I think part of that disconnect may have been that

the retailers had yet to have those conversations with IBM. And I

think as they are having those conversations, they are getting a

very high degree of comfort that the point-of-sale issues are going

to be very miniscule.

Mr. UPTON. What I have heard from the retailers that I have

talked to is that they are excited about this new product because

they are going to have a new product that will bring people to their

stores, and that they are anxious to get it on the shelves so that,

in fact, they can begin to redeem—I mean, it is a product that they

want and want to be able to sell.

Mr. KNEUER. When we deliver the coupon to consumers, we will

send them not just the list of certified eligible boxes by serial number, but the name of retailers and the locations of those retailers

by their Zip Codes. So, if you request a coupon and it gets sent to

your Zip Code, there will be a geographic range saying, These are

the stores in your community that you can go to. And I think retailers will want to be on that list.

Mr. UPTON. OK. I yield back.

Mr. DOYLE [presiding]. Thanks, Mr. Upton.

The Chair will now recognize himself.

Mr. Kneuer, I just want to follow up on something Chairman

Markey asked you about.

Now, your contractor has the ability to track these individual

coupons through the system from issuance to redemption; is that

correct?

Mr. KNEUER. That is right.

Mr. DOYLE. It seems to make sense to me that if they can be

tracked, you can also track to see if someone’s coupon expires, and

you will know if someone used it.

Mr. KNEUER. That is right.

Mr. DOYLE. So I can think of many good reasons, in addition to

what Mr. Markey brought up, if someone goes to a store a couple

of times and they are out of the boxes, or someone is deployed in

Afghanistan or in Iraq, or some senior citizen’s grandkids are going

to hook up the box and are not going to come until Thanksgiving.

There are just a lot of reasons.

If you can track these coupons and you can see when they have

expired, why not err on the side of the consumer and just put them

to the back of the line and reissue these coupons?

Mr. KNEUER. The statute says that consumers may request up to

two coupons and that they expire within 90 days. So I think the

statute constrains our ability to reissue coupons, to issue more

than two coupons, or to allow them to go beyond 90 days.

Mr. DOYLE. Why not fix the statute? I mean why not make this

consumer-friendly? If we can track these coupons through the system, and we have the ability to do that, I mean why not just

change the statute and make it more friendly to the consumer?

Mr. KNEUER. I would defer to the Congress on the change.

Mr. DOYLE. Yes, I think maybe we should think about doing that

because it should be more consumer-friendly.

Chairman Martin, we do not want a czar, but what is wrong with

a benevolent dictator or a guru or something like that? Why not

have someone at FCC quarterbacking this thing to make sure that
259

all of the various private sector groups that are going to be doing

this outreach and information are coordinated in those activities?

Why not have someone making sure that the message that is being

put out there is clear?

Mr. MARTIN. Oh, I do not think I have any problem with—and

I think the Commission is involved in trying to quarterback a lot

of these issues, as you would say.

I think that the issues that we are discussing from GAO’s standpoint involve technical issues, policy issues and education issues

that are related to the box program. And I think the Commission

is very involved in trying to set frameworks, timeframes, and goals

for us to reach on the technical issues and on the policy issues.

I think that the consumer education issues and the DTV box program are ones that are not solely in the FCC’s control. That is

something that we work on jointly with NTIA, and I think that the

Commission is actively working on coordinating those efforts. Some

of the resources that Congress decided on should be provided NTIA

to coordinate the DTV box program. They should be responsible for

$5 million in the education budget.

As you indicated in your opening, we do not even actually have

the $1.5 million. That is in this year’s budget request. We requested money last year, and we received none from Congress on

doing DTV education.

So I do not have any problem at all with the Commission’s taking an active role and trying to be involved in these issues, and I

think we are.

Mr. DOYLE. As to what you have just said, NTIA is going to

spend $5 million which is a drop in the bucket of what needs to

happen. I mean the bulk of the real money that is going to get

spent educating consumers is coming from the private sector. It is

going to be the cable industry’s spending however much they are

spending and the broadcasters’ spending however much they are

spending. As I said in my opening statement, we have to remember

these people are also competitors, and so the question is: What

kind of message—predominantly, the message consumers are going

to hear is going to be the $200 million cable message and the $500

million, whatever that figure was, broadcaster message. The $500

million NTIA message—we run campaigns here, and we know

what rating points are. If I am spending $50,000 on my message

and Mr. Upton is spending $5 million on his, people are going to

hear his message, not mine, and he is going to win. So the message

that our consumers are going to hear is really going to be a message of the broadcasters and the cable industry who are competitors, and not the government that does not have a vested interest

in the message.

So how do we make sure who on the Government level, whether

it is NTIA or the FCC, is sort of watching all of this and is making

sure that consumers are getting a clear message?

Mr. MARTIN. Oh, I think it is going to relate to the coupon program. I think NTIA has to be the one that is watching it to make

sure that those messages get to consumers about their rights and

their responsibilities related to the DTV coupon program. I think

that has to be NTIA. That program is a part of their responsibility.
260

On the general DTV transition, I think the Commission would

end up being the one watching to make sure that those messages

are not misleading and that they are informing consumers in an

appropriate way.

Now, I am hesitant to say that we would be editing those messages ahead of time. And I think that that is what you were saying

about you are not sure that there is a need for a czar, so to speak,

of this. But I think the Commission is involved, and should be, in

working with the industry to make sure that the messages that

they are going to put out are going to be targeted to be the most

effective.

I think that in addition to the voluntary efforts that the industry

has put forth, we have proposed, as Chairman Dingell and as

Chairman Markey have suggested to us, that we have certain requirements for certain kinds of messages that should be put out.

For example, a PSA campaign in scrawls that would be put out by

broadcasters to inform their viewers, we would dictate that it

would have to be done during certain day parts, and it would increase in frequency as we approach the transition.

On those messages that we are requiring, I think that we would

have a more direct role in supervising them, just like in the message that we require the consumer electronics distributors to put

out for the tuners to say, ‘‘Here is the message you have to tell consumers if you are selling a television without a digital tuner.’’ Similarly, I think we will be involved in the message when we are requiring the industry to actually put that forth. It is different from

the voluntary messages that they are putting out.

Mr. DOYLE. So, if you see messages coming out of the broadcasters or out of the cable industry or out of the private sector that

you think are not clear messages to the consumers, the FCC will

step in and take action?

Mr. MARTIN. Yes. I think that if they were not clear or they were

misleading messages, I think, yes, we would step in.

Mr. DOYLE. OK. I see my time has expired.

I will now yield to the ranking member, Mr. Barton, from Texas.

Mr. BARTON. Thank you, Mr. Chairman.

A point of full disclosure. When we designed this program 2 or

3 years ago, we could have gone either way. We could have had a

regulatory model telling the Government exactly what to do, and

when to do it, and who has got to do it; or we could kind of set

a loose framework, provide some funding and trust in markets. We

decided on the latter, to do the market.

I say that because I have listened with interest to what Chairman Markey and Congressman Doyle have said when kind of

painting these worst-case scenarios. And I would have to say that

if we used the same analysis in each of our campaigns, every member of this committee and in the Congress gets here because we get

elected. We get elected every 2 years, in November.

If the GAO went down to the sixth district of Texas, which I represent, and did an investigation of my campaign today, they would

find out I am not doing any advertising; I do not have my volunteers manning the polls; I am not actively out doing advertising on

radio or TV or in the newspapers. I do have $2 million in the bank.

I know when the election is, and I am comfortable that when the
261

appropriate time comes, I will put the campaign together, and

hopefully the voters will reelect me. But I am not doing it today.

Now, to go to Mr. Markey’s question to Mr. Kneuer, I do not

know how it is going to work in everybody’s households. But in my

household, what will probably happen is, sometime around Christmas of 2008, my wife will say, ‘‘Joe, you know that DTV conversion

is coming up. Have you got the converter boxes?’’ I will say, ‘‘No,

Terri, but I will get it done.’’ And I will not do it. Then on February

the 19 or whatever the exact date is, I will get up and I will turn

the TV on, and I will say, ‘‘Darn, the TV is not working.’’ Terri will

say, ‘‘Well, Joe, did you go get the converter box?’’ I will say, ‘‘No,

I did not.’’ She will say, ‘‘Well, you had better go get it.’’

Now, I do not plan ahead, so I will just go to the nearest place,

which I think is a Radio Shack, and I will walk in with my little

coupon that has been provided to me by mail—or the debit card—

and I will say, I want my two converter boxes.

Now, let us say that there has been a run on converter boxes at

that Radio Shack. They will say, ‘‘I am sorry, Mr. Barton, but we

are out of converter boxes.’’ I am not going to call Mr. Markey or

the FCC, I am just going to go to Wal-Mart. Now, my wife would

call ahead. She would say, ‘‘Do you have converter boxes?’’ but oil

is only $90 a barrel, so I will just hop in the SUV, and I will drive

around until I find one.

I do not think we need a regulatory model where there is a penalty if Radio Shack does not have the converter boxes. Somebody

will have them at Best Buy, Circuit City, K-mart or Wal-Mart. You

can get them on the Internet. Somebody will have a converter box

for the Joe Barton household, you know?

I am just not concerned as much as the chairman and as some

of my friends on the majority that this thing is all going to go to

heck in a handbasket. Because I trust markets, I trust self-interest,

I trust the ability of people to visually become cognitive that something different is going to happen and to take active steps to make

sure that they are ready for it. I just believe that.

Now I want to ask you, Mr. Kneuer: Do you think that you have

got adequate funding to provide the coupons for the converter boxes

that will be necessary? Do you think the money that is in the law

is sufficient?

Mr. KNEUER. I do. If you go by the various estimates that we

have been quoting here this morning, on demand, if we access the

entire $1.5 billion, we have the ability to fund more than 30 million

coupons, and that is in excess of any of the predictions of demand

that we have seen.

Mr. BARTON. I will ask Chairman Martin. Do you feel the FCC

has got a handle on the technical issues that are involved with the

down conversion at the cable head? I know there has been some

concern about that. Do you feel like your staff and the experts at

the FCC can work with the cable industry to make sure that works

OK?

Mr. MARTIN. Yes, I do. I think that we have been working on

that, and that was one of the important issues we tried to address

just recently in September when we made sure that we were working on the requirements to make sure that the cable consumers, including the analog consumers, are still able to watch those——
262

Mr. BARTON. I see that my time has expired, so here is my last

question.

Forget all of the concern about everything else. I want to ask

each of you three gentlemen: On a personal basis, do you feel that

you have enough time to convert your television sets by February

2009, or is there something the Government needs to do to help

you get ready to do that in the next year and a half?

Mr. KNEUER. I am all digital.

Mr. BARTON. You are ready.

What about you, Mr. Martin?

Mr. MARTIN. I am ready.

Mr. BARTON. What about you, Mr. Goldstein?

Mr. GOLDSTEIN. I am ready as well.

Mr. BARTON. All right, that is three. OK. I think we are going

to make it, Mr. Chairman.

With that, I yield back.

Mr. MARKEY [presiding]. I thank the Chair.

The Chair recognizes the gentleman from Texas, Mr. Gonzalez.

Mr. GONZALEZ. Thank you very much, Mr. Chairman.

My questions will go to Secretary Kneuer and to Chairman Martin.

When we had a hearing back in March, in our staff memo—we

need to commend that, by the way. Their memos are so excellent.

Let me read something here.

By law, the coupon program must begin on January 1, 2008 and run through

March 31, 2009. For the initial $990 million minus up to $100 million in administrative expenses, all U.S. households will be eligible to apply for up to two such coupons worth $40 each. If the initial funds are not adequate, the ad permits NTIA

to certify that the program needs additional funds up to $510 million, bringing the

cap total for the coupon program to $1.5 billion, minus up to $160 million in administrative fees. For these additional funds, the NTIA has chosen to restrict eligibility

to exclusively over-the-air households. Households that subscribe to cable or satellite

but that also have over-the-air television sets will not be able to receive coupons for

this portion of the funding. Consumers requesting coupons during this stage will

have to self-certify to NTIA that they do not subscribe to cable, satellite or other

pay television services.

Now we fast-forward, and I will read from today’s memorandum,

because that was March. Come September, the FCC does issue a

ruling, and—if I can find the relevant part here. This is from today’s memorandum:

It has long been assumed that cable operators would accommodate their subscribers with analog television sets by down-converting broadcasters’ digital signals to

analog, and the head-in are providing subscribers with set-top boxes that down-convert a digital program into analog. Though, there was some concern***

and it goes on about a couple of areas

* * * in September, the FCC adopted rules to ensure that all cable television subscribers, including those with analog equipment, can receive all local broadcast television signals after the DTV transition. Approximately 35 percent of all television

homes, or 40 million households, subscribe to analog cable.

It seems to me that, if we had had that in place, maybe we would

not have had that memorandum, Mr. Kneuer, as to how we would

proceed with the first portion of the money and then proceed to the

second. Please educate me on this. It appears to me that you probably, as a result of the FCC’s ruling in September, have captured

a huge audience.
263

Will you now have a situation where people who have no need

for the converter boxes—and you are going to say, ‘‘Why would they

go and get one if they do not have any need?’’ that is because certain things reside in the hearts and souls of certain people in this

country. They would go over there, redeem the coupons, the vouchers, and get a converter, when in fact they have an analog TV, but

because the cable company is obviously reconverting at the headin, there is no need. So why in the world would you do that? Well,

because they know that Mr. Markey and Mr. Barton are probably

right, that there are probably going to be additional outlets for

boxes, black markets and such, because the only ones who would

have had to certify that they truly needed it would have been that

second batch of individuals that seemed to be, really, the total universe that we are going to be mostly concerned with.

What are the consequences of the September accommodation or

ruling by the FCC on the original plan on how we were going to

divvy up the monies? That is the first part of the question. But

time goes on, and I want to give everybody enough time. So that

is the first question to both the assistant secretary and to the

chairman.

Then the second question, Mr. Chairman, is going to be—and I

appreciate what you are doing regarding the multicast aspect of it.

I am just going to assume something. Correct me if I am wrong.

If we allow the reconversion of digital to analog at the head-in,

what does that do to capacity? What does that do to the ability of

the cable company to actually free up that space where we can

have additional channels?

Now, I may be totally wrong on the technology, and I do not understand it, and I do want you to educate me on that because I

know I have checked with my Time Warner people in San Antonio

and, in essence, I think one digital signal is the equivalent of, I

think, six analog signals, the same space. And I am not really sure

if that is an accurate description. How does that impact your vision

regarding multicast? And then you predicate it on additional space.

I always try to reduce it to the most simple analogies.

So the first part of the question: What are we going to do with

all of these people who really do not need boxes, but they purchase

them? Let us just say that could happen.

Mr. KNEUER. When we designed the program and looked at that

issue, looking at the legislative history and the record that we developed, we always expected that cable households would continue

to have television in one form or another after the conclusion of the

transition. There was also the realization that many cable households and satellite households have additional television sets that

may not be hooked up to their service provider. The conclusion was

that this transition was going to have a very broad impact across

households and across American consumers. So we wanted to make

the availability of financial assistance very, very broadly available,

so we had no restriction on eligibility for the first $1 billion. If you

are a cable household and you have additional sets that are not

hooked up to the service provider—you have got Mr. Markey’s set

in the bathroom that you use in the morning—you ought to be able

to get financial assistance if that is what you want.
264

We wanted to shift the focus with the second $500 million to

make sure that if demand started to outstrip the capacity of the

program, that we would focus the resources to make sure that no

household would completely lose access to television, without financial assistance. So those cable households would still have access

to television after the conclusion of the date. Households that rely

exclusively on over the air would be most at risk of losing television

altogether, so we wanted to make sure the money went as far as

it could possibly go to serve those consumers who most need it. And

I would not change our decision based on the action that they took

in September.

Mr. GONZALEZ. Chairman Martin.

Mr. MARTIN. The action that we took in September was in doing

our best to protect as many consumers as possible so that the analog cable consumers who subscribe to analog cable today will be

able to watch broadcast TV the day after the transition, just like

they did the day before.

Some of those consumers may have other televisions that are not

hooked up to cable. And I think that is what Secretary Kneuer was

referring to, that they might still want to apply for a coupon. I

would leave it up to the discretion of NTIA to determine how to utilize their limited resources to prioritize who should be at the top

of and in the front of the line. What we are doing is trying to make

sure that we can do everything we can to put the burden as less

as possible onto consumers.

As to the second question——

Mr. GONZALEZ. And I misspoke. It is one digital equals six analog.

Mr. MARTIN. It is actually—there are disputes about how many

digital signals can fit within what used to be the capacity of taking

up an analog channel on cable. Some people say six; some people

say up to 20. There is something in Comm Daily today that says

up to 20-some, people claim. But regardless, when you switch over

the cable system from an analog channel to a digital channel, you

can fit in a lot more channel capacity. So I think that even if you

just required carriage of the multi-casted signals on the digital tier,

there seems to be significant amount of capacity on the cable systems. They could end up taking that on, and it will have a significant positive impact on the reach of those additional broadcast stations.

Mr. GONZALEZ. Thank you very much.

Mr. MARKEY. The gentleman’s time is expired. The Chair recognizes the gentleman from Oregon, Mr. Walden.

Mr. WALDEN. Thank you, Mr. Chairman. I appreciate the opportunity to ask just a couple of questions. I just want to make sure,

for the record, coupons are due out and available by January 1

2008?

Mr. KNEUER. January 1, 2008.

Mr. WALDEN. And how would somebody get that coupon?

Mr. KNEUER. Either by phone, by mail, by fax, over the Internet.

They can call on the phone and give their information. They can

get on the Internet, and there will be a form available. There will

be forms in hard copy generally available from a variety of sources.

And so they can either mail that in or fax that in.
265

Mr. WALDEN. How many people are likely to apply?

Mr. KNEUER. In January?

Mr. WALDEN. Total number available to apply, you estimate?

Mr. KNEUER. The eligibility is for all U.S. households. And a variety of different sources are coming up with different predictions

on demand. We are doing some polling and things on that as well.

Mr. WALDEN. And what do you think?

Mr. KNEUER. Fewer than the 30-plus million that we have an

ability to fund.

Mr. WALDEN. The reason I ask that is that I am assuming it is

going to be in the $15 to $20 million range, I don’t know. I am kind

of pulling a number out of the air, as we all probably are right

now. I remember going through the signup for Medicare prescription part D. There was an overwhelming of the phone system.

There was a problem with the Internet system, all of that, as consumers tried to sign up for prescription drug coverage. You might

want to talk to your friends at HHS about their lessons learned

from that process as you go into, especially the dial-up part. Because of the waits on phones were very long and very frustrating,

obviously, for folks. So, January 1, the coupons should be available

to apply for. And how long would it take for a consumer to get that

coupon back after they apply, if they go online? What are your folks

telling you?

Mr. KNEUER. For the very early phases of the program, we are

going to manage the distribution of the coupons that we get requests for based on the availability of boxes and the availability of

retailers. So if there is not widespread availability of boxes and

widespread retailer participation in early days of 2008, we probably

wouldn’t send those coupons out until we had that visibility. But

once the full system is in place, it will be a matter of days on the

turnaround getting into the mail from the time we receive the request.

Mr. WALDEN. It strikes me that that is going to be a frustration

point for consumers who apply and don’t get it. And maybe they

were going to go 60 miles away outside of their Zip Code to get a

box, and they can’t do it.

Mr. KNEUER. We have the ability to adjust the program in lots

of different parameters throughout the entire part of the program.

So the early forms will probably indicate expect a number of weeks

for delivery. Or if you call on the phone, they will say the coupon

will be there in a couple of weeks. Later it will be adjusted to

match up with the supply. We don’t anticipate in all of the research

that we have done and the visibility we are getting from our vendors, we do not anticipate a large volume in the early days of 2008.

Mr. WALDEN. What about the rollout of the boxes themselves?

You brought a prototype there.

Mr. KNEUER. This is actually a for market. It is not a prototype.

This is a certified box.

Mr. WALDEN. And are there any certified boxes available today

in a retailer that you are aware of?

Mr. KNEUER. Not coupon-eligible boxes. There are some digitalto-analog conversion devices that are integrated into other devices,

DVD players and such.
266

Mr. WALDEN. And when do the manufacturers tell you they will

have these boxes ready to actually roll out and in the stores in the

retailer outlets?

Mr. KNEUER. Throughout our management of the program, it is

going to be collecting information from the participating retailers,

from manufacturers to the extent we can. A lot of this is very business, proprietary and sensitive information, so they don’t want to

put into a public record, we are shipping X number of units to the

following stores because that can dictate competitive behavior by

others. But we are working with the retailers who are certifying

and getting a sense from them, because, like I said, when we deliver a coupon, we are going to deliver a list to the consumers, the

certified boxes, here is where you go to get them.

Mr. WALDEN. And I am thinking in my district, which is very

rural—and I live in one Zip Code and people not too many miles

away live in another—there is no retailer in that Zip Code. So are

you going to pull multiple Zip Codes?

Mr. KNEUER. We are working on the best way to deal with that

scenario.

Mr. WALDEN. Like within a 20-mile or 50-mile radius?

Mr. KNEUER. It may not be exclusively Zip Code specific. We

have the Zip Code of the consumer because that is where we are

mailing the boxes. And then we may say it may be a geographic

within 10 miles, within 15 miles. We are working through what we

have the capability to do.

Mr. WALDEN. I hope those of us, especially in rural areas, you

will look at how big a swath you need to reach out to. It may be

100 miles. I have parts of my district that are at least 100 miles

to the nearest stop light, and I am not exaggerating, and 5 miles

to the nearest freeway. And so what works in an urban area, as

you well know, won’t work in a rural area. Can I beg your indulgence?

Mr. MARKEY. Only that the roll call is about to break, and I want

to allow the members. I apologize to you.

Mr. WALDEN. I remain deeply concerned about the rollout of the

boxes, would be the one point I would leave you with.

Mr. MARKEY. I thank the gentleman. Just to make sure as many

members can ask questions.

The gentlelady from California, Ms. Eshoo.

Ms. ESHOO. Thank you Mr. Chairman. All the members have

asked really terrific questions. I think the gentleman from Oregon

has really asked some practical ones. The answers give me some

pause, but you still have time to work on them. Now, Mr. Kneuer,

you spent some time, I think in your written statement, certainly

in your spoken statement, about the message. Now, you are responsible for coordinating it. What is the message that you have approved with the various organizations? Do you know it off the top

of your head? Is there a tag line that then has some of the details?

What is it? What is the campaign to inform people?

Mr. KNEUER. What we are spending the most money on of our

$5 million is coming up with tailored messages for tailored——

Ms. ESHOO. Do we have them yet? Do you have them?
267

Mr. KNEUER. They will be market tested and polled so that people understand them as best they can for those particular constituencies.

Ms. ESHOO. I would really like to know what they are when you

come up with them.

Mr. KNEUER. Sure.

Ms. ESHOO. Because I think that it is very important. Now, let

me ask about something that you had in your written statement

about the solution to the challenges of the education program. You

said it is not the establishment of a single digital transition authority or single Government mandated message but that a multiplicity

of messages and sources of information is critical to a well-informed consuming public.

Now, the GAO, in their latest report on the transition, stated

that there isn’t any comprehensive education plan, and without

one, there are no defined goals, objectives or metrics for measuring

success. So have you developed a metric? How are you going to

measure what you are doing?

Mr. KNEUER. We have the ability throughout the program, like

I said, to measure the trends for request of coupons, for redemption

of coupons in different areas.

Ms. ESHOO. I’m sorry, I didn’t hear you. You do have a metric

by which you are going to measure?

Mr. KNEUER. We will measure in real time the geographic and

demographic request for coupons or redemption of coupons. The

point of the testimony was that consumers have lots of different

choices on how best to effect the——

Ms. ESHOO. I understand that you said that you are going to do

that. I am asking you how you are going to measure your objectives? Just to say that you are going to do it doesn’t mean that it

is going to be successful. So once you put it in place, how are you

going to measure it?

Mr. KNEUER. There is going to be——

Ms. ESHOO. That is irritating; isn’t it? I know.

Mr. KNEUER. All of the different——

Ms. ESHOO. You feel like someone is banging on your head.

Mr. KNEUER. We are going to do a measurement on the request

for and redemption of coupons. We are working very broadly on a

public-private partnership with the other Federal agencies, with

other service organizations, with the broadcasters and with the

cable companies. They are doing polling to get information on what

the level of awareness is by demographic, by geography and then

focusing their education based on that polling. We then are working with them to make sure as they are making them aware that

they are also making them aware of the availability of our program. So it is, lots of different market participants and constituency groups that have an interest in a successful transition working together, like I said, in this very broad public-private partnership.

Ms. ESHOO. I think that when you develop these ‘‘messages’’ that

your PR people, or however you are coming up with this, I think

it would be interesting to have it brought back to the committee.

This is essentially a campaign.

Mr. KNEUER. Absolutely.
268

Ms. ESHOO. I think the people up here know something about developing a message and having it be effective and having it be relevant so people really know what is coming and what they need

to do themselves.

Chairman Martin, one of the commissioners has recommended,

as you know, a DTV task force. Do you support that? Do you think

it would be helpful? Do you think that there is another way to go?

I have a sense where you are, but for the record.

Mr. MARTIN. I am happy to end up coordinating as much as possible with the other Federal agencies. What one of the other commissioners has called for is for there to be an intergovernmental

task force like there was in Y2K. That was actually established by

an Executive order. The FCC itself didn’t establish the Y2K task

force. It was an Executive order that established an interagency

task force. And so that is not something that I can end up even

controlling. But I am happy to end up continuing to coordinate

with Chairman Kneuer.

Ms. ESHOO. So where is it, though? Is it going to be that, or it

is not?

Mr. MARTIN. I don’t anticipate that there is going to be a further

DTV task force that will be established across different agencies.

I think that we will already end up coordinating. We have memorandums of understanding on issues, and we can continue to do

that. But that is within our authority.

Ms. ESHOO. Well, first, it is going to be in the pity in terms of

how it works with the American people.

Mr. MARKEY. I thank the gentlelady.

We have time for one more questioner. Then we are going to

break and come back after three roll calls on the House floor. I

would ask the witnesses to please wait because there will be other

members who will be returning to ask questions.

And at this time, I will recognize the gentleman from Georgia,

Mr. Deal. He will be our last questioner at this point, and then we

will break and come back after the roll call.

Mr. DEAL. Mr. Chairman, since my colleague Mr. Shimkus has

been here the whole time and I have had to leave, would it be proper to defer to him, and then I will be back after the break?

Mr. MARKEY. It will be proper for you to defer, and it would also

be a good example for other witnesses as to how somebody keeps

getting reelected and understand how politics works.

So I recognize the gentleman from Illinois, Mr. Shimkus.

Mr. SHIMKUS. Thank you, Mr. Chairman. I want to thank my colleague. I didn’t ask that. He was just very gracious. I will just

make a couple quick points.

I am a supply guy. I am more supply and energy and really more

supply for the consumers. And the thing that gets lost and the

great thing about the digital transition in DTV, it gives the consumer another choice. And I think it was talked about in the opening statements, about more channels. So if we can phrase the debate of buying the converter box and you get more, that is good.

We want cable. We want direct satellite. We want free over-the-air.

We would like to see broadband deployment of video services. That

competition will be great.
269

So I am excited about this. And I am a market person. The market can do this. And I think the market already is. The question

was asked about how many coupons. Different associations have

their own opinion. I think the broadcasters think 23 million. The

communication electronics association thinks 8 million. In its first

24 hours on sale, Mr. Doyle has left, but he would appreciate this,

‘‘Harry Potter and the Deathly Hallows,’’ the seventh and the

first—and final installment of the book, in 24 hours sold 8.3 million

books. Surely we can get, whether it is 8 or 23 million, digital converters out if we allow the market to do it.

I can guarantee you that the Government could never get 8.3

million books out in a 24-hour period. I can guarantee you that. So

let us set some high standards. Let us trust the market. Let us

check it. But the market wins over Government providing goods

and services hands down lowest cost, quickest response time, day

in, day out, bar none.

Chairman Martin, there are a couple concerns, though. One, the

multi-cast must-carry order will affect some small cable companies,

and there is a waiver process that I know of that exempts some of

these companies. Can you describe this process as to how many

waivers have been granted as of today?

Mr. MARTIN. I think you probably are referring to the viewability

order where we said that they have to down convert the digital signals and continue to carry them in analog to their analog customers. There actually haven’t been any requests for a waiver yet.

We just adopted that ruling in September, so there haven’t been

any requests yet.

Mr. SHIMKUS. Mr. Kneuer, there is also concern about the household issue and senior citizen centers, and how are we going to deal

with the definition of a household when you have a community

under one roof in essence?

Mr. KNEUER. It depends on the community and on the senior citizen facility. I know many of them are actually more like apartment

buildings, is the way they are viewed from the postal service, so

that they actually have their own address and their own household,

and they would be able to participate. The sorts of facilities that

don’t have that, that are much more closer to a hospital-like facility, I think for most of those television is supplied as part of that.

But that is, again, the reason that we are working with these trusted intermediary groups, the sorts of organizations and service

groups that provide assistance to people in those sorts of facilities

making sure they understand the program, they understand the

transition and that they can make assistance of the DTV transition

part of the overall assistance they provide.

Mr. SHIMKUS. Thank you.

Two last things. One is advertising does work. We are all examples of that. And I know the industry that wants to sell things will

want to do advertising, and that is where I am going to put my

faith and trust in over the Government doing the advertising.

The second thing is, if the chairman, with the indulgence and because my ranking member is not here, for some brownie points, I

would like to submit into the record Ranking Member Upton’s editorial published in The Hill on October 16 on white spaces.

Mr. MARKEY. Without objection, it will be.
270

Mr. SHIMKUS. And that is all I have, Mr. Chairman. I yield back.

Mr. MARKEY. The gentleman’s time is expired. There are 6 minutes left to go to vote on the floor. So, at this time, we will take

a brief recess. It will actually be approximately 20 to 25 minutes,

and then we will reassemble. This hearing now stands in recess.

[Recess.]

Mr. MARKEY. The subcommittee will reconvene. And we welcome

you all back. I think we are going to have a bit of an uninterrupted

stretch right now. The Dalai Lama is going to be receiving a Congressional Gold Medal. And I honestly do wish I could be over

there, but in a way, we are going to make sure that poor people

and minorities are protected if we can get this hearing to work in

good shape.

Let me turn and recognize the gentleman from Georgia, Mr.

Deal.

Mr. DEAL. Thank you, Mr. Chairman. And I will try to be quick.

First of all, let me follow up, Chairman Martin, with a question

asked by Mr. Shimkus with regard to the dual-carriage issue as it

relates to small cable companies. I believe you said you had not received any request for waivers at this time. One of the concerns we

have heard expressed is that they are concerned that, if they file

a waiver and it is denied, as to whether they would have sufficient

time then to go back and become compliant, have you given

thought to that issue and have you taken any steps in that direction? Maybe for example how long a timeframe would it be from

the time a waiver request is submitted until a determination is

made? Could you elaborate on that please?

Mr. MARTIN. I haven’t given any thoughts to the timeframe, but

I certainly will to make sure they are given that opportunity to

make sure they come into compliance. But I would point out, and

I think this is important in the context of talking about whether

small cable operators who are saying that they need a waiver process, right now all of these same small cable operators are required

and are successfully carrying broadcast channels to all of their

viewers. And all we are saying is that, the day after the transition,

they should have to do the same thing the day after as the day

they are doing before; that all of their customers should still continue to get broadcast channels and that the digital transition for

broadcasters should not be an excuse that a cable operator can remove a broadcast channel from the tier of channels that they are

currently providing them to. So they are not going to be required

to do anything additional, which is one of the reasons why I was

skeptical of their concern in the expression that they have about

why this is going to take up additional capacity. Because right now,

they are already required to deliver those signals to their customers in an analog format, because they have analog customers.

So they are not going to take up any capacity on their systems

than they are doing today. So I am happy to end up looking at individual small operators if they say this is going to be an additional

burden. But I am not sure I understand how it is an additional

burden because, right now, the law requires them to deliver a

broadcast system to an analog cable customer the day after the

transition. All I am saying is and the commission said is, the day

after that transition, they still have to deliver a signal to that ana-
271

log customer. So it shouldn’t be any additional burden than it is

the day before. But we will take a look at the waiver process. But

I think we have to put in context the digital transition should not

be an opportunity for cable operators to disenfranchise consumers

from the broadcast stations they receive today.

Mr. DEAL. Of course, I think their concern is they will then be

in the dual-carriage capacity.

Mr. MARTIN. But our rule did not require dual carriages. Our

rule requires it to be viewable by everyone. If they have digital customers, they are required to deliver it in digital format today. And

if they have analog customers, they are required to deliver in analog to customers today. They have chosen to do dual carriage by the

design of their system. The rule is no different after. So if they

have, if they want to provide set-top boxes to allow for their customers to watch analog signals so that their digital customers can

still watch analog signals, some cable systems design their system

that way and deliver their signals and meet their must-carry requirements in that manner, and they would still be able to do that.

It is not a dual-carriage requirement. Dual carriage in the commission when we considered that was a debate about whether we

should require the cable operators to carry both the analog broadcast signal and the digital broadcast signal. That would have been

two broadcast signals they would have been required to carry to all

of their homes. This is not dual carriage. We did not require that.

Mr. DEAL. Mr. Secretary, I believe you stated previously that you

believe that allowing unlicensed devices to operate in the white

spaces would be an efficient use of the spectrum. Do you still believe that, and if so, would you elaborate on your position on that?

Mr. KNEUER. Sure. The President launched a spectrum initiative

for the entire administration back in 2003. And one of the activities

we have been undertaking as part of that initiative is identifying

efficiencies in spectrum use. We in the 5 gigahertz band were trying to find a way for unlicensed Wi-Fi like devices to operate in the

same spectrum that is allocated to Government radar systems

those sorts of sharing arrangements, different services using the

same allocations of spectrum, present really powerful efficiencies

and are a good way to use the spectrum. It is not easy. When we

did it at five gigahertz for Wi-Fi like devices, unlicensed devices to

co-exist with Government radar systems, we didn’t solve those

technical issues with the first attempt or the second or the third.

It took an awful lot of hard work kicking the lawyers out of the

room, getting the engineers in the room and working out these

issues. I am confident that innovators and technologists can find

these sorts of efficiencies. But the predicate that we had to allowing them into the band was demonstrating that it was on a noninterference basis and that it was technically sound. So I certainly

support efforts to improve the efficient use of the spectrum by having the spectrum that is otherwise lying foul of being put to use.

But you need to do the hard technical work up front. And I think

the commission is working on that and the industries are working

on that. And all I would say is, if at first you don’t succeed, try,

try, because you can achieve these efficiencies, but you have to do

the hard technical work.

Mr. DEAL. Thank you.
272

Mr. MARKEY. The gentleman’s time is expired.

The Chair recognizes the gentleman from Nebraska, Mr. Terry.

Mr. TERRY. Thank you, Mr. Chairman.

Chairman Martin, I am not going to ask you a USF question. I

know that is unusual. But I will ask you something completely different now, an issue that is of concern to several of my small businesses back home that, as you know has a call center capital. And

one of the questions or issues I have been working on is the clarification whether you can call a cell phone that has been left as the

primary phone number to use, for example, if they have missed a

payment or debt collection or something like that. If I recall from

the letter I received back, is that FCC is exploring that, perhaps

an order on that issue. I was just wondering where that is in the

process? And I know you didn’t come prepared to answer that question today, so if you need to get back to me on that, I would appreciate it. But all I want to know is where it is in the process.

Mr. MARTIN. Absolutely. And if I could, I would prefer to make

sure I give you the most accurate information and get back to you

on it.

Mr. TERRY. I would appreciate that. Now, it has been pretty thoroughly discussed, but the one issue that I really wanted to go

through is the supply of these set-top boxes starting in January

when the coupons become available. This committee went through

pure hell on the part D rollout. And we had CMS in front of us

look us straight in the eye blinking 100 percent confidence, that

they had it all under control and there was going to be no issues

on the rollout. And it was one of the biggest fiascos that we have

been put through because they did not anticipate that on the first

day of eligibility to sign up that there would be a mass of people

signing up. The system was not prepared. The vendors weren’t prepared. CMS wasn’t prepared for that. And I just want to cover,

once again, what the process is when people are going to, or in January 2008 when the coupons first become available, what the protocol or the system to make sure that there are adequate number of

boxes sitting on the shelves. So, Mr. Kneuer and Chairman Martin,

that falls in your jurisdiction. Again, set out how we are going ensure that there is enough set-top boxes on the shelves.

Mr. KNEUER. The statute calls for us to be ready to begin processing coupons in January 2008. Everything we have done is to encourage as much market participation by the market actors to be

engaged as early as possible. The way I think we are going to manage January 2008 is syncing up the public education campaign

with the availability of boxes and retailers. There has not been a

very large public education campaign as of right now driving people

to our program. And that is one of the ways that we coordinate in

this public and private partnership with NAB and others, the

broadcasters, the cable industry and others to say link it up as the

availability comes up.

Mr. TERRY. So if I am interpreting somewhat sarcastically, if

they don’t know about it in January, they won’t go get a box?

Mr. KNEUER. That’s right. So we want to manage consumer expectation. If we have visibility into the supply chain from both the

retailers and the manufacturers that we hear from large national

chains that actually, do you know what, we are ready January 1,
273

then we will start driving the public education campaign to make

sure that people are taking advantage of that. While we don’t have

those levels of commitment. We haven’t heard from a major retailer

saying, let them know we have got a warehouse full of these things

today, and we have got our point of sale done, and we are ready

to go January 1, 2008. I haven’t heard explicitly otherwise either.

While the vote was going on, I just got an announcement from Best

Buy. They had removed all analog sets from their inventory. They

are all digital. They have announced their intent to take part in

our program and to have coupon eligible boxes in their stores in

early 2008. They haven’t said January 1; they said early 2008. So

everything I have seen from interest from manufacturers, from the

certifications we have been doing, from the expressions of interest

that our vendors are having and the discussions they are having

with retailers, we are going to have broad availability of retailers,

broad availability of boxes with plenty of time for consumers to

take advantage of this program before February 2009. If it is not

necessarily January 1, 2008, we want to sync up our consumer education activities so we don’t misalign their expectations. But we are

ready on January 1, 2008.

Mr. MARKEY. The gentleman’s time has expired. So Best Buy announced today they are not going to sell any more analog TV sets?

Mr. KNEUER. That they have removed them all from their inventory was the announcement.

Mr. MARKEY. It is like announcing you are not going to sell any

more black and white TV sets since October 2007. So, thank God.

Maybe other companies will. Because we will have a hearing here

by the way. We will be having a hearing here like in the middle

of January 2008, like 15 days in so that we can see how close it

is to CMS. And so that will be a big moment. So Best Buy is at

least trying to start to move where they are going to be hopefully

by that date.

Let me turn and recognize the chairman of the full committee,

the gentleman from Michigan, Mr. Dingell.

Mr. DINGELL. Mr. Chairman, I thank you.

Gentlemen, thank you for being here. I am going to make several

statements, and then I am going to ask you if you agree or disagree. It is vitally important that the DTV transition proceed

smoothly. It is important that consumers be fairly treated, properly

informed and prepared for the transition, and that there must be

close cooperation amongst the different Federal agencies. Is there

any disagreement with that statement?

Mr. MARTIN. No.

Mr. DINGELL. Gentlemen, yes or no, do we need an interagency

task force focused on the transition in order to see to it that the

responsibilities of the different agencies are properly carried out?

Beginning on the right with NTIA.

Mr. KNEUER. I don’t know that we necessarily need a formalized

task force in practice and day in and day out. We are coordinating

with the FCC, with 13 other Federal agencies. So I think we have

the functional equivalent of a task force in place.

Mr. DINGELL. All right.
274

Mr. MARTIN. I don’t know that we need a task force. I certainly

think we need coordination, and I think we are working hard at

doing that with NTIA and FCC today.

Mr. DINGELL. All right, sir.

And Mr. Goldstein.

Mr. GOLDSTEIN. We haven’t recommended a task force. We have

recommended much greater comprehensive planning, as I indicated, so that you do have better risk mitigation so we understand

the kinds of issues that may crop up and how to deal with them

at this point.

Mr. DINGELL. Now, Mr. Martin, I believe you told Ms. Eshoo that

certain agreements amongst Federal agencies and departments

have been made concerning the DTV transition. Is that so?

Mr. MARTIN. Yes.

Mr. DINGELL. Would you see to it that the committee is made

privy to those agreements, that copies are submitted to us for purposes of the record and that we understand what is in them?

Mr. MARTIN. Yes.

Mr. DINGELL. What are those agreements and with whom are

they made and what do they do?

Mr. MARTIN. We have an agreement with NTIA to test the converter boxes to make sure that our engineering labs can test them

to make sure that they can function appropriately. And I believe

that either—I know that that memorandum of understanding, the

existence of it I have made public before in either questions to this

committee or to the Senate Oversight Committee, but I haven’t provided the actual memorandum of understanding but of course I

will.

Mr. DINGELL. Now, Mr. Goldstein, would the FCC need additional statutory authority to convene a task force to accomplish the

proper coordination amongst the different departments that are

going to be addressing these questions?

Mr. GOLDSTEIN. I don’t believe so, sir. I believe that they have

that authority today.

Mr. DINGELL. You think it can be done under existing authority.

Now, would anybody disagree that the lead agency in addressing

these questions should be the FCC? Yes or no.

Mr. MARTIN. I wouldn’t agree that it should be addressing all of

these questions. I certainly think we have an important role. But

certainly, in the converter box program and the education in the

spending of the $5 million that Congress gave to NTIA to spend on

education, NTIA has to be the lead agency on those two because

that is what Congress determined that they should be.

Mr. DINGELL. Now, Mr. Martin, this question. You have been

given $2 million for DTV consumer education that is up from $1.5

million that the FCC had requested. The In Berlin, The German

Government spent $1 million on consumer education in just one

city with 3.4 million people. There are over 300 million people in

the United States. Do you have enough money to provide the necessary education and public information on this matter? Yes or no.

Mr. MARTIN. No. If we are solely responsible for educating all the

consumers, I think additional money would be necessary.

Mr. DINGELL. And I think that, Mr. Goldstein, you would agree

that the FCC could do a better job with more money?
275

Mr. GOLDSTEIN. We haven’t looked at it, sir, specifically.

Mr. DINGELL. How much money does the FCC need to conduct

a proper information and education program for the people on what

is going to happen when this DTV changeover takes place? Could

you give us that answer either now, Mr. Goldstein, or could you tell

us at some future time in response for purposes of the record?

Mr. GOLDSTEIN. I can’t give it to you today, sir.

Mr. DINGELL. Would you please submit that answer for the

record?

Mr. Martin, what is the amount of money you in fact need?

Mr. MARTIN. I can provide that to you, although I am not sure

I can provide in public the amount of money we requested this year

in our budget, but I will provide that to you.

Mr. DINGELL. I would like to have the answer, then, for purposes

of the record.

Mr. Martin, I believe you have asked for more money than you

have been given by either the OMB or the Appropriations Committee. What is the amount you asked for?

Mr. MARTIN. That I am happy to end up providing. I am not sure

I am able to provide the amount.

Mr. DINGELL. Please submit it. This is a congressional committee. We have jurisdiction over your affairs. We are entitled to have

this information. It should be public. I expect to get it. I hope that

you will cooperate in seeing to it that we do so. And I would assure

you that this committee will have the answer. And I am requesting

that you submit it for purposes of the record.

Mr. Martin, if you would then please inform us, if you would receive additional funding, how would you use these funds? Would

you please submit that for the record if you please?

Mr. MARTIN. Sure, of course.

Mr. DINGELL. Mr. Chairman, I have a number of other questions

to ask. I will defer until the proper time. But I would like to know

about the coupon funding and a number of other matters related

to that. And I commend you for this hearing. And thank you. And

to our witnesses, I also say thank you.

Mr. MARKEY. The chairman could have more time if he wants,

of course.

Mr. DINGELL. If the Chair would be so gracious and I would not

offend any of my colleagues, I have just a couple more questions.

Mr. MARKEY. Would any of my colleagues be offended if Mr. Dingell is given more time? The Chair hears no objection, Mr. Dingell.

I think the objection might come from the witness table.

Mr. DINGELL. I have great respect for my colleagues, and the last

thing I want to do is to affront them.

Gentlemen, this is a question for the GAO and for NTIA. NTIA

has $1.5 billion to operate the converter box coupon program. The

program is being launched, I understand, in two phases. First,

$890 million for any consumer who wants to take advantage of the

program. The last $450 million is reserved for analog-only over-theair households. I understand we expect a surge in coupon requests

at the end of the program in late 2008 or early 2009. Would you,

Mr. Martin or Mr. Kneuer, give us the answer, do you expect those

surges, and is that a fair statement? Yes or no.
276

Mr. KNEUER. I would expect that the demand for boxes will increase as we get closer to the date as the education campaign

ramps up, as consumers become aware that actually this date is

rapidly approaching.

Mr. DINGELL. Thank you. I am transgressing on the time of my

colleagues, so I have got to hold these answers very short. Mr. Martin, your comment.

Mr. MARTIN. I expect that Secretary Kneuer is correct, that it

would ramp up as we got closer to the date.

Mr. DINGELL. Now, I would like to ask each of you gentlemen,

is it possible that some people who need a coupon will not be able

to get one because there will not be enough money provided? Starting with Mr. Kneuer and then Mr. Martin and Mr. Goldstein. Is

the answer to that yes or no?

Mr. KNEUER. No, I don’t think there will be anybody left behind

for want of resources. All the demand estimates we have seen we

have got adequate resources.

Mr. DINGELL. Mr. Martin.

Mr. MARTIN. I guess I am not as confident in that. I would have

to look at all of the figures that they have seen. Because, as I understand it, there is a cap on the amount of money the program

can provide, and the demand could exceed that cap. So, yes, I think

they could exceed that cap.

Mr. DINGELL. Mr. Goldstein.

Mr. GOLDSTEIN. I am not as confident either, sir. I think it is unclear how many people at this point will try to redeem coupons.

Mr. DINGELL. Have you performed any studies, beginning with

Mr. Kneuer, Mr. Martin and Mr. Goldstein, to tell us what the answer is? Do we have every reason to believe there will be sufficient

money on the basis of any study or not?

Mr. KNEUER. We have been looking to studies from market participants and other enemies. And as I think there have been testimony earlier this morning, those estimates range from——

Mr. DINGELL. Have you performed a study?

Mr. KNEUER. We have not performed a proper analysis.

Mr. DINGELL. Has anybody, to your knowledge, performed a

study?

Mr. KNEUER. Yes. Industry and market participants.

Mr. DINGELL. Who?

Mr. KNEUER. The consumer electronics industry, as well as the

public broadcasters.

Mr. DINGELL. Would you please see to it that your communications with the consumer electronics industry are submitted to the

committee so we may know what has been accomplished, sir?

Mr. GOLDSTEIN. As part of our work ongoing for the Congress, we

are going to be doing a survey to try to undertake and understand

much better what the demand is going to be, how many households

are out there and what the awareness is.

Mr. DINGELL. Would you see to it that anything relevant to that

and to the question asked is submitted for the record please?

Mr. GOLDSTEIN. Yes, sir.

Mr. DINGELL. Mr. Goldstein, could NTIA use more money to fund

the coupon program or not? If so, why and how much?
277

Mr. GOLDSTEIN. We don’t know yet, sir. I think it depends on

how much we expect demand to be. And as I indicated, that is

something we don’t know yet.

Mr. DINGELL. As a student of these kinds of matters, Mr. Goldstein, would you tell us whether adequate study and thought has

been given by the two agencies, the FCC and the NTIA, as to

whether the funding in the programs are adequate?

Mr. GOLDSTEIN. I would like to try to answer that for the record.

I am not sure that I could do it off the top of my head. Let me get

back to you, sir.

Mr. DINGELL. Would you submit then a proper answer to that

question for purposes of the record.

Mr. GOLDSTEIN. Yes, sir.

Mr. DINGELL. Mr. Chairman, you have been very gracious, and

my colleagues you have been very gracious. Mr. Chairman, I would

like to submit a letter to the three agencies asking a number of

questions. And I would ask that the record remain open so that

that may be submitted to the agencies if you please.

Mr. MARKEY. Without objection, the questions will be submitted

to the witnesses and their answers will be included in the record.

Without objection, so ordered. The gentleman’s time has expired.

Mr. Martin and Mr. Kneuer, have you met on this issue in person in the last month?

Mr. KNEUER. We have spoken on the phone about it. I don’t

know that we have gotten together. Maybe in the park with our

kids, but mostly on the phone.

Mr. MARKEY. You talk about DTV in the park?

Mr. KNEUER. On occasion. That is the kind of life that we do in

fact live.

Mr. MARKEY. I would recommend that the two of you meet.

Mr. KNEUER. But also I would be remiss not to point out that,

on September 25, we had a public forum that Chairman Martin

was gracious enough to address our group. Ours was coordinated

with theirs, which was the next day, and our staff was there. I was

unable to be there because of other commitments.

Mr. MARTIN. We were together on September 25, but we have

spoken several times on the phone.

Mr. MARKEY. Excellent. And I think the committee would feel

good if we knew you were meeting over the next 3 months in person.

The Chair now recognizes the gentleman from Michigan, Mr.

Stupak.

Mr. STUPAK. Thank you Mr. Chairman. And welcome again to

our witnesses.

Chairman Martin, if I may, I know Mr. Deal asked some questions about the small cable operators, but let me ask you a few

questions if I may. Just last month, the FCC issued an order requiring cable companies, large and small, to pass along a digital

signal of must-carry broadcasters in both digital and analog formats to their subscribers. It did not provide for an exemption for

small operators. But cable systems with limited capacity may file

for a waiver to relieve them of this obligation. I am troubled with

this, especially as I reflect on my district, as I have some of the

smallest mom-and-pop cable operators in the country with a sub-
278

scriber base as small as 133 subscribers. Now, the further notice

of proposed rulemaking stated it would examine the impact of this

requirement on small and midsize cable operators. So what steps

do you plan to take in your further notice of proposed rulemaking

to take into account the limited financial resources of small rural

cable operators?

Mr. MARTIN. Well, first, I would like to start out by correcting

what the rule did last September that we adopted. It didn’t require

them to always pass along both a digital and an analog signal. It

required them to make the signal viewable to all of their subscribers just as it is viewable today.

Mr. STUPAK. So they have to carry two of them, right?

Mr. MARTIN. No, not necessarily. It could be a system that only

had analog customers. They would only have to carry an analog.

Or it could be that there are set-top box converters that actually

have an analog tuner included so then all viewers would still be

able to view all of the signals. So it depends upon the design of the

system. But the important thing to remember is that those momand-pop cable systems in your district are required today to make

sure that the analog broadcast signal is carried so that it is

viewable by all the subscribers. All we are saying is that the switch

from analog to digital broadcasting by broadcasters should not result in the removal of any of those signals from the cable system.

However, they are delivering them today; they have to continue to

deliver them. And that shouldn’t require any additional capacity on

the system because they are required to be delivering them today,

and they are doing so successfully. What I would imagine us doing

is understanding how a cable operator in your district is going to

have the amount of capacity they have to dedicate to this increase

when they are successfully delivering it today. So today they are

taking an analog——

Mr. STUPAK. Why don’t you just waive for these small cable operators? If it is a signal they have always been using, why can’t they

just continue to use that same signal as opposed to having to come

back for a further notice of proposed rulemaking, which is expensive and time-consuming for small cable operators?

Mr. MARTIN. Because waiving the rule would mean that your

constituents who are served by those subscribers would no longer

get access to broadcast signals. Today a broadcaster puts out an

analog signal, the cable operator takes the analog signal and delivers it to all of its subscribers. That means that he has analog subscribers that he delivers it in an analog format. All our rule says

is that because we are requiring the broadcaster to switch from

analog to digital broadcasting, the cable operator must deliver that

digital signal’s content to those analog homes. And they should not

be able to stop delivering it only because the broadcaster was required to switch from analog to digital. Some of the cable operators

wanted to reclaim capacity and no longer use it for broadcast signals and, in effect, stop providing broadcast signals to their customers. And what we said is, you can’t do that. The digital transition is not an excuse to reclaim capacity and stop delivering broadcast signals. They can do it exactly as they are doing it today, so

there is no additional burden whatsoever.
279

Mr. STUPAK. So you can craft a rule in which these small operators were exempt from this? I just think, when you have a 133 subscriber base, it is very expensive to keep coming back to the FCC.

Mr. MARTIN. If we exempt them from that that means they will

not receive their broadcast signals and that will increase the demand on the set-top box converter program, and then that will increase the problems associated with the DTV transition. So I don’t

see why we should have the digital transition be an excuse for

cable operators to no longer carry broadcast signals they were already required to be carrying.

Mr. STUPAK. I guess we will disagree on this. Let me ask you this

one then. As you know, not all broadcasters are making the DTV

transition on February 17, 2009. I am referring to the low powered

television stations, class A stations and translators. Consumers in

those markets might have different viewing options and therefore

might require different consumer education efforts than the consumers in the rest of the country. In fact, the GAO points out in

their report perhaps the hardest group to educate is a group of consumers who have to do nothing for the DTV transition. So how are

you addressing these consumers as a larger part of your consumer

education program?

Mr. MARTIN. Well, when Congress established the hard deadline,

they did exempt out certain kinds of broadcast stations that

weren’t required to make that transition. While you are right they

are not required, those consumers are not required to get a converter box at the same time, those stations are still going to have

to go through a digital transition. So these consumers still trying

to go get access to converter boxes is important.

Mr. STUPAK. Well, do you have any kind of hard date set?

Mr. MARTIN. No. We have allowed those stations to transition at

the same time if they want to, but we haven’t established a hard

date to require them to.

Mr. STUPAK. Do you have any plans to speed the transition for

these broadcasters, or it will allow them to broadcast on analog indefinitely, because most of them are on analog?

Mr. MARTIN. Most of them are on analog. And we have allowed

them all to transition, if they would like to, to digital at any time,

but we haven’t required it because of the expense that they would

incur. And it was actually as I said Congress’s judgment that they

decided that a hard date would not necessarily apply to those new

stations.

Mr. STUPAK. If we exempt out the class A stations and the lowpower ones, it seems to me it would have been easier to do it with

the small cabler operators on my previous question. I don’t deal

any more with congressional direction, but it would have been easy

to do it, too, because of the same factors. Thank you.

Mr. MARKEY. The gentleman’s time has expired. I don’t see any

other members who are on the subcommittee. And so the

gentlelady from Tennessee, Mrs. Blackburn, who faithfully attends

all of our telecommunications hearings, even though she is not a

member of the subcommittee, and sits through all of the eye-watering detail in a way that would put her in the upper percentile of

most attentive members, is recognized for a round of questions.
280

Mrs. BLACKBURN. Thank you, Mr. Chairman. I appreciate your

courtesy to continue to follow this issue. I enjoyed my service on

the Telecommunications Subcommittee and continue to work on

these issues. Secretary Kneuer, from the hearings we have had in

the past, I honestly believe the market is going to take care of a

lot of this information with the public and the retailers such as the

move made by Best Buy today. They are going to do what is in the

best interest of their customers. We know that that is going to take

place. But I have found it so interesting, Mr. Goldstein, the survey

that you referenced, the NAB survey that you referenced in your

testimony, in which they found only 57 percent of over-the-air only

customers were not aware of the DTV transition. And as you look

at that and reread it, you realize their finding was that 43 percent

of all of those customers know that that transition is taking place

and have an awareness of that. And I find that a remarkably high

number. And being here on Capitol Hill, I do not know if you

walked around out here and randomly conducted that survey if you

would find 43 percent of those that you encountered aware that

this transition is taking place. So I would love to hear from you a

little bit more about that survey, about the methodology that was

used, how they came to the universe that they surveyed. Do you

have that information or can you get that to share with us?

Mr. GOLDSTEIN. I would be happy to get that information for you.

It is a NAB survey, not our own, so I would like to work with them

a little, and I will be happy to supply that information to you.

Mrs. BLACKBURN. I think as background for that statement that

it would be interesting to us. Because so many of our questions

have centered around the awareness that people have and people

knowing the steps to take, the time line to follow to make certain

that they are not left in the dark and that they are still receiving

some transmission. Also, Chairman Martin, the Intergovernmental

Advisory Committee that was rechartered in June, it is made up

of your 15 representatives. And what I would love to know is how

often this group is meeting, what the results are that have been

yielded to that, the recommendations if those are going to be public

recommendations. And the chairman touched briefly on interfacing

with the NTIA, what you all are doing there. And I think the Secretary, you and the Secretary mentioned that. And the other component of that is to know if you all are taking this information to

local governments? Because we all know as this transition becomes

imminent that the city halls and those city commissioners are

many times going to be the ones that pick up that phone and take

that call. So I would like to know a little bit more of the detail that

is surrounding that process, if you will please, sir.

Mr. MARTIN. Sure. The Intergovernmental Advisory Committee

as you referenced, the commission just adopted an order reconstituting that organization. We just recently announced what the

parties were going to be, who the individual Government representatives were going to be on that committee. When we reconstituted

it in the spring, we actually asked for applications who wanted to

be a part of it. We just announced who are those people that will

be a part of it. Asked them to meet and actually asked them to address this very issue. How do we incorporate the local governments

into this process? Just as we have done on the consumer side
281

where we have already met with consumer organizations and gotten feedback from them on how we can better integrate their ideas

and those organizations into our information process. And we have

done things successfully at the local level like on the American Library Association, but we haven’t at the local government level,

which is what we have asked that group to look at.

Mrs. BLACKBURN. If I may interrupt just a moment then, so with

this group you do have a plan of action for moving forward with

local governments?

Mr. MARTIN. Yes.

Mrs. BLACKBURN. OK.

Thank you, Mr. Chairman. I yield my time back.

Mr. MARKEY. Thank you. And we thank the gentlelady for participating. We are going to complete this panel.

Chairman Martin, if you could let the committee know when you

are going to finalize the technical rules for the transition that

would be very helpful to us. You can do it in writing or you can

just give us the——

Mr. MARTIN. Sure. Most of the technical rules have actually been

completed. We released the final DTV table of allotments in August. There are several recompetitions. Some people didn’t like the

channel assignment they got and have come back in and asked.

And we also had several waivers for people that missed the original

deadline that then went to the bottom of the list. But we released

the final DTV table of allotments. We have got some recompetitions

that we will be dealing with in the next few months. But 99 percent of the channels have already been dealt with. We have also

got one final order on the maximization of replication issues that

is due out by the end of this year.

Mr. MARKEY. If there is anything remaining to be finalized,

please do so. And we would also request that you also work with

Secretary Kneuer on this issue of retailers taking advantage of people who might not fully understand that they are being moved over

to a digital TV set when they actually qualify for a converter box

that would work very well with their old TV set. So if you could

have a partnership with Secretary Kneuer to accomplish that goal.

Mr. MARTIN. Sure.

Mr. MARKEY. Thank you. This has been a very productive hearing. What I would like, at the indulgence of the members, just to

give each one of you to give us the 1 minute you want us to remember from your testimony as we are finishing right now. Just give

us your 1 minute summary, here we are nearing the end of October.

Mr. Goldstein.

Mr. GOLDSTEIN. I think, Mr. Chairman, that the transition is

moving along. We have seen a lot of progress. And I think the other

witnesses have told what a lot of that progress is. However, we are

concerned still that there are a lot of things that are left to be

done, a lot of which is voluntary. It is not required by private industry that they participate. A lot of private industry will participate. And there is already evidence that it is doing so. But this is

a very big transition. And to leave it all or mainly to voluntary participation and to some planning, but not extensive planning that

really analyzes all the potential problems and loopholes and the
282

like, I think we feel is probably not in the best interest of the Government at this point in time. And so we do think there is additional work that the Government, principally FCC in conjunction

with NTIA, still needs to do.

Mr. MARKEY. Thank you Mr. Goldstein, and thank the GAO for

their good work.

Chairman Martin.

Mr. MARTIN. I think we have made significant progress on the

technical policy, on the technical policy issues. Additional work

needs to be done on the educational front. But I think the single

most important thing that we can end up doing is changing our

message from a negative one, that if you don’t go buy a converter

box, we are going to take away your TV signal, to a positive one,

which says that if you go buy a converter box, you will get something additional out of it. And I think that the most important

thing we can end up doing there is facilitating multi-casting so that

over-the-air homes can have access to multiple broadcast signals

without having to go and take advantage of the digital transition,

without having to go buy an expensive HDTV set.

The over-the-air homes are disproportionately lower income. Telling them that the only way they will get advantage of this is to

go buy an expensive HDTV set is I think a negative message for

them. And I think if we are going to expect them to go out and purchase over-the-air converter boxes, even with the coupons that have

been provided, they should be getting something for it. And I think

to do that, we have got to facilitate multi-casting.

Mr. MARKEY. Thank you.

Secretary Kneuer.

Mr. KNEUER. It may look like we are down 3–1, but the series

hasn’t started.

Mr. MARKEY. I like that analogy.

Mr. KNEUER. The efforts that some view as voluntary are actually being driven by enormously powerful market self-interest, and

I expect them to continue. And we have got a program that has

been put in place and is going to be run effectively and efficiently

for the American people.

Mr. MARKEY. Thank you.

And we thank this panel. It has been very helpful to this committee. Thank you.

And now we will just take a brief moment here while we allow

the first group of panelists to move on. And we will have the second group of witnesses come up and sit in front of their names.

So we welcome our second panel. We apologize to you for the

length of the first panel, but obviously these issues are very important to the American public. And this panel is equally as distinguished as the first and is critical in our ability to understand the

issues.

We will begin with Claude Stout. He is the executive director for

telecommunications for the Deaf and Hard of Hearing, Incorporated. He is testifying on behalf of the Coalition of Organizations

for Accessible Technology, which promotes the development of accessible communications devices for people with disabilities.

We welcome you, Mr. Stout. Whenever you are ready, please

begin.
283

STATEMENT OF CLAUDE STOUT, EXECUTIVE DIRECTOR, TELECOMMUNICATIONS FOR THE DEAF AND HARD OF HEARING,

INC., ON BEHALF OF THE COALITION OF ORGANIZATIONS

FOR ACCESSIBLE TECHNOLOGY

Mr. STOUT. OK. Thank you, Mr. Chairman.

Chairman Markey, Ranking Member Upton and members of the

House Subcommittee on Telecommunications and the Internet, I

am honored to have this opportunity to testify on an issue that affects millions of television viewers with disabilities.

My name is Claude Stout, and I am the executive director of telecommunications for the Deaf and Hard of Hearing, Inc., also the

Chair of the Deaf and Hard of Hearing Consumer Advocacy Network. I am pleased to offer my testimony today on behalf of the Coalition of Organizations for Accessible Technology, COAT. This is

a coalition of more than 130 national, regional and communitybased organizations.

If all goes well, digital TV captioning would be the best invention

since, hmm, analog TV captioning. You see, when I was young, I

could not understand why my family was laughing while they were

watching Jack Benny, Lucille Ball, Johnny Carson, as well as other

comedians. Now I understand because of the DVDs that are out

today with captions. And it was only when I entered Gallaudet

University in the late 1970s that I was able to watch the ABC

World News Tonight, not at 6:30 p.m. with everyone else—at dinnertime—but past my bedtime, at 11:30 p.m. Today, with grateful

appreciation and tinged with anxiety, we are about to take the next

step towards full integration in television.

The COAT Coalition represents more than 31 million individuals

with hearing loss, 10 million individuals who are blind or who have

vision loss, and millions of other individuals with other disabilities

who benefit greatly from accessible television programming. Along

with access to televised news, information and entertainment, access to televised emergency information enables these populations

to understand and to appropriately respond to warnings of hazardous weather and other emergency conditions. COAT affiliate members are excited by the promise of digital television—the better television quality and multicasting.

Like most consumers, we look forward to the benefits of technological advances. Unfortunately, in the history of technological advances, people with disabilities are often left behind. In fact, we are

already witnessing this phenomenon with digital television. Increasing numbers of individuals are seeking to purchase digital television sets or components and systems that provide digital video

programming, and distributors are offering expanded digital programming. At the same time, we are receiving increasing reports

of significant technical difficulties with the pass-through and the

display of closed captioning. Time and again, our constituents report disappearing, delayed, garbled or otherwise unintelligible captioning on television shows that previously provided relatively

problem-free captions.

A major difficulty for us in the DTV transition experience is determining the cause of these closed-captioning problems. For example, the failure to receive captions can be the fault of the local TV

station or cable TV service that has begun broadcasting or offering
284

digital programming, the inability to pass through captions on the

program distributor’s set-top box, or a failure in the equipment

used to receive and display the DTV programming, such as the receiver or its connecting components.

In addition to these technical difficulties associated with the DTV

transition, there is some dispute over the extent to which TV networks now covered by the captioning rules are obligated to continue providing captions as they shift to digital programming.

When a standard definition analog network, whose programming

has already been captioned, converts to or creates an HD channel

with a similar programming lineup, the new HD channel should be

held to the same closed-captioning obligation as its analog predecessor. However, some broadcasters and cable networks have taken

the position that their new HD channel is a, ‘‘new network’’ that

qualifies for an exemption from the FCC’s captioning rules during

the first 4 years of the network’s operations.

If this interpretation were to be upheld, consumers would find

themselves having to wait an additional 4 years to see captioning

on programming which, but for its HDTV status, would already

have to be captioned. This new network interpretation of the captioning rules violates Congress’s intent to ensure the uninterrupted

provision of closed captions with the onset of advanced technologies. It is commonplace for television viewers to select their

channels and other TV settings from on-screen menus, but if you

are blind or have low vision, you cannot access this information

through a point-and-click, if you will, remote control or even use

these menus.

Nevertheless, individual manufacturers have already demonstrated the technical feasibility of incorporating accessible user

interfaces. When accessible user interfaces are required on all video

devices, the incremental costs of adding these features will become

negligible.

Caption viewers have also reported considerable problems navigating menus, some of which are hidden to activate captions after

connecting the receivers, the monitors, set-top boxes and recording

play-back devices that compromise their digital equipment. Often

the interface that controls captions is buried several layers into an

on-screen menu that is difficult, if not impossible, to find.

We know from experience that most manufacturers will not incorporate accessible user interfaces on their television sets or components unless mandated to do so. Virtually all technology-related

access features have come about only after they were mandated by

Federal law; for example, televisions with built-in closed captioning

decoders. This is because the disability market still is not large

enough, forceful enough, or wealthy enough to impact the manufacturer product design. No manufacturer wants to be the only one

putting resources into accessibility features.

Consumers with disabilities have also encountered significant

barriers when attempting to contact distributors of video programming and manufacturers of DTV equipment with concerns about

accessing closed-captioning or video description. Customer service

representatives or technical support personnel are often unfamiliar

with closed-captioning and video description. Furthermore, many

consumers with disabilities remain unaware of their right to file in-
285

formal complaints with the FCC or the Commission’s ability to mediate and to resolve their problems. Additionally, even consumers

with disabilities who may be aware of the complaint procedures

often choose not to use those procedures because they find the complaint process too difficult to navigate. This is because the process

for filing informal closed-captioning complaints with the FCC requires consumers to first notify distributors responsible for the delivery and the exhibition of the programming.

In summation, in order to smooth the transition to digital television for people with disabilities, COAT urges Congress to take

the following steps: Direct the FCC immediately to clarify that it

is the responsibility of broadcasts and other networks to continue

captioning programs on their HD digital networks and show

precaptioned programming with captions at all times.

Number 2, reinstate the FCC’s video description rules.

Number 3, direct that digital televisions be designed so that individuals with vision and other disabilities can access all their functions.

Number 4, direct the FCC’s complaint procedures so that the

consumers with hearing loss and who are having difficulty accessing closed captions on DTV have a user-friendly means of seeking

assistance and resolution from the FCC.

I am going to jump to the end. Remember, just as colors bring

out extra meaning in video, captions or video description gives us

a complete experience in television viewing.

I want to thank you, and I would like to leave my oral statement

for the record with you as well. Thank you.

[The prepared statement of Mr. Stout follows:]
286
287
288
289
290
291
292
293
294
295
296
297
298
299

Mr. MARKEY. I thank you very much, Mr. Stout, and all of your

testimony will be included in the record in its entirety.

I will note that I see Karen Strauss sitting right behind you. And

you might have noticed me limping in and out of the committee

hearing room, but that is because I actually had an Achilles rupture while playing basketball with nine 20-somethings outdoors,

and that included her son, Jeremy, which is something I probably

will not be doing again.

Ms. STRAUSS. I hope you feel better.

Mr. MARKEY. Thank you. I appreciate it.

The next witness will be Amina Fazlullah, who is an attorney for

the U.S. Public Interest Research Group. The U.S. PIRG recently

conducted research into DTV consumer education efforts by retailers.

So we welcome you. Whenever you are ready, please begin.

STATEMENT OF AMINA FAZLULLAH, STAFF ATTORNEY, MEDIA

AND TELECOMMUNICATIONS, U.S. PUBLIC INTEREST RESEARCH GROUP

Ms. FAZLULLAH. Thank you, Chairman Markey, Ranking Member

Upton and members of the committee.

My name is Amina Fazlullah, and I am a media and telecom

staff attorney for the United States Public Interest Research

Group. U.S. PIRG is the Federation of State Public Interest Research Groups, a nonpartisan, nonprofit public interest advocacy

organization that is based in 30 States.

On behalf of our members across the country, I want to thank

you for the opportunity to testify at today’s hearing on the upcoming digital television transition.

It has been nearly 2 years since Congress established the official

transition date from analog television broadcasting to digital. Yet,

virtually no U.S. consumer knows what will happen on February

17, 2009. I know that there was a 46 percent number that was out

there, but I think that there are plenty of consumers who are still

out there who are not aware. On that date, television broadcasters

will switch from analog to digital signals.

The transition offers the country the return of a valuable

‘‘beachfront property’’ spectrum, that can be used to enhance emergency communications, to spur innovation, and to improve

broadband connectivity.

One other thing will happen on February 17. Every consumer

who watches over-the-air television with an analog set will have

their set go dark, including the estimated 22 million customers in

this category, or 8 million households, with at least one member

who is older than 50.

The Government is, of course, at least aware of this problem, and

Congress has allocated funding for an education program. The relevant agencies have required that manufacturers stop producing

new analog televisions and that retailers properly label their remaining analog televisions at the point of sale, a problem that we

find in the stores to still be occurring.

Congress has also allocated funding to provide coupons to help

consumers pay for the necessary converter boxes to get their analog

television sets to work again. Yet, based on preliminary U.S. PIRG
300

research which we will discuss today, neither the Government nor

the retailers are adequately preparing consumers for the impending DTV transition.

Industry stakeholders have made substantial promises to inform

the public, and I am heartened to hear today of moves on behalf

of Radio Shack and Best Buy.

While U.S. PIRG agrees that this transition cannot be successful

without the support of industry, we believe that industry’s participation must be mandated and closely monitored to ensure that consumers receive full protection throughout the transition.

As of August 2007 and, actually, as recently as the end of September, U.S. PIRG completed preliminary studies that surveyed

the top five electronic retailers in the DC Metro area. As a quick

update to our study, we are starting to push those studies into 10

different States across the Nation to follow up on our preliminary

results.

Our initial findings in the DC area were based on interviews

with clerks and supervisory personnel, and they are alarming.

They show that despite industry promises to educate and prepare

personnel, all five top retailers have personnel who provided inaccurate or even misleading information.

Our surveyors found that, when asked, retailers did not acknowledge the existence of converter boxes or the coupon program. In

many cases, the retail staff told surveyors that, to continue to receive broadcast signals, that their only choice would be to buy a

brand new television set or even an upgraded HDTV—a more expensive, high-definition television—which is not necessary to receive digital television signals.

In the Virginia area Wal-Mart, our surveyors were told that their

only option was to buy a brand new HDTV or sign up for cable

service. In a Virginia area Best Buy, our surveyors were told that

the upcoming transition meant that signals would now all be

HDTV signals, and consumers would have to buy a brand new

HDTV to continue getting their over-the-air television.

In another Virginia area Best Buy, our surveyors were told that

to continue receiving television signals after the transition, they

would have to purchase a useless HDTV tuner, which would have

cost them at least $170.

In a Virginia area Target, our surveyors were told of converter

boxes, but were told that there were no discounts, that there was

no Government program, and that a brand new digital television

set would actually be cheaper than the converter box program at

initial cost.

In almost every store surveyed, we found a number of analog television sets on the shelves, sometimes labeled on the box or on the

shelf; but in all stores, it could be easy for consumers to miss the

warning labels. Throughout this fall and this year’s holiday shopping season, it is crucial that bargain hunting shoppers are not

duped into purchasing a slightly discounted analog television set

when they will have to purchase a converter just months later.

Our surveys were designed to account for a lack of boxes on the

shelves and the—at that time—unknown manager of the coupon

program, but Best Buy was the only store at that time to provide

print information in both Spanish and English. Unfortunately,
301

their store representatives had clearly not read the brochure and

were unable to repeat or even reference the brochure.

We have only a few months to ensure that the benefits of the

transition do not come at a cost to our most vulnerable consumers.

And while the return to Spectrum holds exciting new opportunities

for nationwide, broadband or wireless service, we have got to make

sure that we put efforts into the transition and efforts into research

and into preparing consumers.

Thank you.

[The prepared statement of Mr. Fazlullah follows:]
302
303
304
305
306
307
308

Mr. MARKEY. Thank you. We very much appreciate it.

Mr. MARKEY. Our next witness is Michael Benjamin. He is the

executive director of Family, Career and Community Leaders of

America. That is a national nonprofit student organization that

will participate in a grassroots campaign to educate consumers

about the DTV transition.

Welcome, sir. Whenever you are ready, please begin.

STATEMENT OF MICHAEL BENJAMIN, EXECUTIVE DIRECTOR,

FAMILY, CAREER, AND COMMUNITY LEADERS OF AMERICA

Mr. BENJAMIN. Thank you very much, Chairman Markey, Ranking Member Upton and members of the committee. We thank you

for the opportunity to provide you with the information about the

role that Family, Career and Community Leaders of America will

play in this transition event that will take place on February 17,

2009.

As the executive director of Family, Career and Community

Leaders of America—and I will refer to ourselves as ‘‘FCCLA’’ for

it is just too long of a name—I am pleased to be representing an

exemplary youth organization that will be involved in assisting citizens throughout the United States to become more aware of the

analog to digital television coupon program.

As you mentioned, FCCLA is a national nonprofit student organization that helps young men and women become strong leaders in

families, careers and communities through family and consumer

sciences education programs. FCCLA has been in existence since

1945, and for most of you, it looks as though you are older than

25. So up until 1999, it was known as the Future Homemakers of

America, FHA. So in 1999, we changed our name to reflect the

changes that obviously were taking place in society.

FCCLA members are students in middle schools and high schools

who are organized by local chapters in school settings. FCCLA

membership is open to students of all races and religious beliefs

and can be found in public, private and homeschool settings. Family and consumer science teachers serve as FCCLA chapter advisors. Throughout the United States, we have more than 225,000

students and nearly 7,000 local chapters in all 50 States, Puerto

Rico and the Virgin Islands. FCCLA is one of the largest career

and technical student organizations as endorsed by the U.S. Department of Education, the Office of Vocational and Adult Education.

For over 60 years, FCCLA members have been achieving positive

student outcomes and successes through national programs based

on identified community needs. One example of a FCCLA program

that has addressed a youth-related concern is what we call STOP

the Violence. It is students taking on prevention. STOP the Violence was created in 1999 following the Paducah, KY school shooting after the local chapter president was injured. The STOP the Violence program empowers youth with attitudes, skills and resources to recognize, report, and reduce youth violence. The program was funded by the U.S. Department of Justice and the Office

of Juvenile Justice and Delinquency Prevention until 2006. During

that period of time from 1999 through 2006, FCCLA trained 38,000

individuals in almost 6,000 chapters with this program.
309

So why is FCCLA involved in this program? We have labeled our

campaign ‘‘Keep Your TV On.’’ For this initiative, FCCLA has

partnered with the Best Buy Company, Inc. and Geek Squad and

has involved NTIA and other partners, including media outlets, to

increase awareness of FCCLA and the digital television converter

box coupon program.

NTIA provided the opportunity for FCCLA to connect with partners involved in the transition. Project ideas were being made

available to FCCLA advisors to integrate this campaign into their

classrooms. Best Buy Company, Incorporated, and Geek Squad

have provided FCCLA with $50,000 to be used as incentive awards

and publicity for the campaign. FCCLA youth leaders will take the

lead on this consumer education, grassroots effort that will benefit

communities nationwide, utilizing the Best Buy ‘‘blue shirts’’ and

Geek Squad agents where available.

We will begin promoting this full-time campaign at our 2007 national/regional meetings at which over 9,000 students and their advisors will come together in four cities throughout the United

States: Atlanta, GA and Buffalo, NY on November 9 through the

11th; Denver, CO and Minneapolis, MN on November 16 through

the 18th.

Following the campaign kickoff in January 2008, Keep Your TV

On Awards will be given out each month between January and

May, and each month up to 10 chapters will receive $500 gift cards

from Best Buy. In June, all national winners will be enrolled in a

grand prize contest of $3,000. The contest and campaign will be

highlighted in our various publications, such as Teen Times, and

through our various networks to our teacher advisors.

Mr. Chairman, FCCLA is involving youth across the country in

community engagement by doing its part to help raise awareness

of the analog-to-digital transition and the converter box coupon

program. We appreciate the opportunity to appear before your committee and to provide you with this update on how FCCLA will be

involved in this effort.

Thank you.

[The prepared statement of Mr. Benjamin follows:]
310
311
312
313
314
315

Mr. MARKEY. Thank you, Mr. Benjamin, very much.

Our next witness, Nancy Zirkin, is the vice president and director of public policy for the Leadership Conference on Civil Rights.

LCCR is one of the Nation’s oldest coalitions of civil rights organizations, and it is a founding member of the DTV Transition Coalition.

We welcome you. Whenever you are ready, please begin.

STATEMENT OF NANCY M. ZIRKIN, VICE PRESIDENT/DIRECTOR OF PUBLIC POLICY, LEADERSHIP CONFERENCE ON

CIVIL RIGHTS

Ms. ZIRKIN. Thank you very much, Mr. Chairman, and thank you

for inviting me to actually testify today.

As the chairman said, I am Nancy Zirkin, vice president and director of public policy for the Leadership Conference on Civil

Rights. LCCR is the Nation’s oldest and most diverse coalition of

approximately 200 national, civil and human rights organizations.

Imagine for a moment that it is February 17, 2009. You are an

ordinary citizen—a mother or a grandpa from Kalamazoo—and you

turn on your TV to see the weather, and it is blank. You did not

get the message that our Government has mandated that all signals had to be digital.

The great switch from analog will have a profound impact on

millions of Americans, especially seniors, the poor, the minority

community, people with disabilities, and those whose first language

is not English. But the reality today is that everybody needs a TV,

not just for entertainment but for the news—what is happening locally, nationally and worldwide. Imagine 9/11 without TV coverage,

and you understand how important having a working television is

to the 21 million American households who now rely solely on free

analog TV.

LCCR believes that access to all communications in the 21st century is not a luxury but a fundamental right of every American.

And the challenges involved in preparing Americans for the digital

TV transition are of such magnitude that a strong congressional response is required, for in the end, voters will look to Congress if

their TVs go dark.

LCCR applauds Congress for recognizing the need for Government support to help consumers know about the coupon program,

but we are as troubled as Mr. Doyle is. The $5 million allotted by

Congress to educate consumers about the coupon program is a tiny

amount to support the kind of public education effort that is required. Since the goal of the DTV public education campaign is to

research everyone in each State, it is not unlike State Senate campaigns; and to put it in perspective, California, Ohio and Pennsylvania have a combined population of about 21 million households,

and the combined cost of last year’s Senate campaigns in these

States was $22 million. Five million dollars to educate all 50

States? I don’t think so.

Our fear is that people who will be most affected by the change

will not hear about it and will not have access to any of the coupons. We are also concerned that our most vulnerable populations

will be the least likely to receive the first-come, first-served limited

number of coupons for the converter boxes, leaving them with only
316

unaffordable options. Congress can help make sure that that does

not happen by actually determining that the coupons go to those

who need them most. We urge you to consider the following unmet

needs as you assess the status of the DTV transition.

First, there needs to be sufficient funding appropriated to ensure

a smooth transition, including funding private charitable groups

that work directly with the populations most at risk.

Second, there needs to be a comprehensive plan in place to attract how the education effort is progressing. It should include research, outreach and rapid response to ensure that those who are

most at risk of losing service know about the transition and how

to obtain getting a coupon.

Finally, there needs to be coordination among all Federal agencies on educational outreach, with the replication of these efforts at

the State and local levels.

Finally, let me say that LCCR, through our member organizations representing over 60 million Americans, will do our part to

educate consumers. But we and the DTV Coalition cannot do it

without additional help and oversight from the Congress and from

NTIA.

Thank you, Mr. Chairman.

[The prepared statement of Ms. Zirkin follows:]
317
318
319
320
321
322
323
324
325
326

Mr. MARKEY. Thank you, Ms. Zirkin.

Our final witness is Tom Romeo, who is the director of Federal

Services for Global Business Services, IBM Corporation. Mr. Romeo

directs IBM’s contract from the Federal Government to manage the

Digital-to-Analog Converter Box program.

We welcome you, sir. Whenever you are ready, please begin.

STATEMENT OF TOM ROMEO, DIRECTOR, FEDERAL SERVICES

FOR GLOBAL BUSINESS SERVICE, IBM CORPORATION

Mr. ROMEO. Thank you, Chairman Markey and members of the

subcommittee, for the opportunity to testify before you today. My

name is Tom Romeo, and I am the director of Federal Servicess for

IBM’s Global Services Business for the public sector. I am here

today to talk about IBM’s role in implementing the NTIA Digitalto-Analog Converter Box Coupon Program.

As you know, NTIA awarded IBM the contract to provide services for the coupon program on August 15, 2007. IBM and its business partners—Ketchum Public Affairs, Epiq Systems, and Corporate Lodging Consultants—will provide services in four areas:

consumer education about the converter box coupon program; coupon distribution and redemption; support for retail store participation; and financial processing to reimburse retailers to maintain

records and to prevent waste, fraud and abuse. Let me explain our

goals for the program.

IBM designed the coupon program to be consumer-focused, easy

to use, and to provide maximum choice and access for both consumers and retailers. Our goal is to successfully communicate the details of the converter box program to targeted consumers, to distribute coupons and to complete the redemption process with minimal waste, fraud and abuse.

The IBM team brings a diverse set of business process skills to

the project. IBM will act as the system integrator and will provide

overall project oversight. The team includes three primary partners, with extremely relevant experience supporting key elements

of the program.

Ketchum is a global public relations agency IBM has worked

with for more than 10 years. They will provide consumer education

and outreach. Epiq Systems has deep experience in executing consumer programs with geographically dispersed, hard-to-reach populations. They will staff the critical consumer-facing help desk and

manage coupon distribution to consumers. Corporate Lodging Consultants, CLC, will work with retailers through the certification

process and financial processing to reimburse retailers.

Now, let me briefly describe the four areas of service. For the

consumer education program, we have four primary work streams.

First, we are developing messages and materials that educate consumers about the coupon program. Secondly, we are building on

the outreach that NTIA has already done to over 150 public and

private sector partners. Third, we have created a strategy to leverage earned media across TV, radio, print, and online outlets.

Fourth, we are establishing metrics to determine the saturation of

the message. This will allow us to adjust both messaging and target audiences over the course of the coupon program.
327

Consumer support begins with the coupon application. The application and distribution process is simple, consumer-focused, and

provides multiple channels for access. Consumers can apply for

coupons via the phone, Web, or by picking up a paper application

available in their community, and mailing or faxing it in to the

Consumer Support Center. Web and phone support will be available 24 by 7, in six languages in addition to English, and will include support for those in need of hearing-impaired access. Consumers can expect to receive their coupons within 2 to 3 weeks

after the order. The coupon is plastic and resembles a gift card,

something familiar to consumers, and is easy to use. Information

about where to purchase a coupon-eligible converter box in their

local area is included with the mailing.

Our retailer program has a two-pronged approach to recruit both

national retailers and smaller local retailers to participate in the

program. The Retailer Support Center opened on October 1 with

live operators. The system provides multiple channels for both

large and small retailers to certify their eligibility and enroll. All

participating retailers will receive training about the coupon program. Making sure the sales associates are knowledgeable about

the program will help achieve the best possible consumer experience.

The coupon redemption process is also designed to maximize retailer participation and to minimize waste, fraud and abuse. Six

different redemption options are offered to retailers. All are based

on real-time coupon authorization at the point of sale. For smaller

retailers, Internet and automated telephone options are also available and will operate in realtime, making a telephone the minimum technology required to participate in the program.

In a typical chain-store experience, the consumer will present the

coupon card, which is then swiped at the cash register just like a

credit card or a gift card transaction. The system authorizes the

transaction. The consumer pays any cost above the $40 value of the

coupon, and leaves the store with a converter box. Authorization

data is then matched up with sales data and audited before the information is transferred to the U.S. Treasury for retailer reimbursement.

In conclusion, the NTIA coupon program requires innovative

thinking, leading technologies and cooperation among retailers,

broadcasters, Government agencies, and many community-based

organizations.

The IBM team is pleased to be part of this vital program and recognizes there are many challenges along the way to February 17,

2009. Our team is ready to meet those challenges and to work to

ensure that consumers across the United States have continued access to free television broadcasting, including educational, entertainment, emergency, and homeland security information.

Thank you for the opportunity to testify, and I am happy to answer any questions.

[The prepared statement of Mr. Romeo follows:]
328
329
330
331
332
333
334
335
336
337
338
339
340
341
342
343

Mr. MARKEY. Thank you, Mr. Romeo.

So that completes the opening statements from the witnesses.

The chairman will now recognize himself for a round of questions.

Ms. Fazlullah, you are bringing very troubling findings to our

committee. People in your organization went out to stores, and they

found out that people were not being given the accurate information by those who worked in these stores. Target has already been

fined for not properly labeling their analog TV sets.

Are you concerned that in January, Target will be how that store

views a consumer walking into the store, as someone who might be

moved up to an HDTV set that costs $500 or $1,000, when all they

need is a converter box for their analog TV set in order to be able

to receive a digital signal?

Ms. FAZLULLAH. Yes, definitely. I think any of the top five retailers still have personnel in their stores who are not aware of the

appropriate pieces of the transition, and as a result, upselling is a

serious problem.

We do not make any conclusions in our report as to whether or

not it is on purpose or anything like that. I think there is a lot of

confusion out there in terms of what the details are. What we find

troubling is that, when you go to a store representative, you expect

them to have some expertise on the question or, at the very least,

be able to guide you to the appropriate resources.

Mr. MARKEY. So you are not sure they are taking advantage

right now?

Ms. FAZLULLAH. I would say that what they are doing in the

stores right now definitely takes advantage of consumers, but I

cannot say if it is on purpose or for just a lack of training.

Mr. MARKEY. Ms. Zirkin, do you think that there is a real risk

here that these retail stores will take advantage of consumers?

Ms. ZIRKIN. I absolutely do. And for our communities, Mr. Chairman, the problem is that a TV is a total luxury; 48 percent, I believe—and I can check on that—of all over-the-air households have

an income of under $30,000 a year. So, for them, it is a real stretch

even to be able to afford what they would have to put up in terms

of the coupons, and that is why we are so concerned.

Mr. MARKEY. Thank you.

Mr. Stout, I share your concern that the closed captioning is not

adequately supported by new digital television equipment, even

though the manufacturers have a legal obligation to ensure that

that function is included. The FCC just circulated a consumer advisory on closed captioning. Does that alleviate your concern?

Mr. STOUT. I have not read that consumer advisory that was just

released yesterday, but I will give you our feedback to be added to

the record at a later date.

Mr. MARKEY. OK. Please do so. I have been working with Karen

and with everyone associated with you going back to the late 1980s

in terms of closed captioning being built into the law, and I would

like to ensure that we do everything to maximize the accessibility

for your community.

I also want to make sure that everyone knows that Karen’s son,

Jeremy, was not covering me when I ruptured my Achilles tendon.

Just so that is clear for the record.
344

Mr. Romeo, I am concerned that retailers are not opting into the

converter box program. Many of the retailers argue that the system

upgrades they must make to process coupons are too onerous to implement before the Christmas rush.

How difficult are those system upgrades? Can they be accomplished before this holiday season so retailers can stock boxes in

January 2008 when the coupons become available?

Mr. ROMEO. Sir, we are just starting to engage now in conversations with those retailers, but they have happened very quickly. We

have talked to 23 of the largest retailers.

Mr. MARKEY. Is it a big deal? How hard is it?

Mr. ROMEO. We have given them six options to participate.

Mr. MARKEY. Is it a big deal? Is it hard to do?

Mr. ROMEO. It is not a big deal. It is not hard to participate.

With the simplest option, they can send paper, too.

Mr. MARKEY. So if they do not have it done on January 1, they

will have no excuses?

Mr. ROMEO. If they choose an option which is more automated

for them, they would have to make a modification to their system.

And during the Christmas season, they may choose to defer that

until later next year, but I expect that we will have very broad participation by the retailers.

Mr. MARKEY. Yes. I mean my feeling is that since this program

is not very difficult for retailers to participate in, my expectation

would be and the committee’s expectation would be that they would

be ready on January 1 to deal with this rush of consumers who

would be coming to their stores. And we are going to be making

that very clear to the retail community.

I will now turn and recognize the ranking member of the committee, the gentleman from Michigan, Mr. Upton.

Mr. UPTON. Well, thank you, Mr. Chairman.

I am sorry I missed some of the testimony, but I was glad to get

pieces of it, and I have got a couple of questions that I want to ask.

First of all, Ms. Fazlullah, you indicated in your testimony a couple of retail stores. I just wondered if they were in my neighborhood when you mentioned Target and Best Buy. They all seem to

be together in my neighborhood right off Route 1 in Alexandria. Is

that where they were?

Ms. FAZLULLAH. Those were some of the stores that we went to,

yes.

Mr. UPTON. How long ago was it that you were there? My son

seems to want to go there every week for something, so——

Ms. FAZLULLAH. Actually, we went to those stores, I believe, at

the end of September; but we also visited them over our preliminary survey, which was in August.

Mr. UPTON. In August. The ads, at least as I have seen them as

a consumer, have just started to run, and NAB is beginning to run

their ads, I believe, this week, right? This week. So the word is

now, unless you were in line in this committee room to get in over

the last number of months, I would venture that most consumers

do not know yet about the change, and that information is going

to get out there.

I understand, Mr. Chairman, that we are going to have another

hearing in a couple of weeks, right? At the end of October?
345

It will be in 2 weeks with a lot of the consumer groups, with the

retail association, and we will be anxious to see the progress that

they have made. But I will be checking with my folks, and I will

visit some of those stores and see what is going on to make sure

that they, in fact, have the information.

One of the concerns that I have heard already from a consumer

who saw the ad was ‘‘I want to get my box now,’’ but because they

are not ready yet—they are not actually delivered—there is a reason why the cards have not been shipped out yet for people then

to actually go get them. As we have seen in the demonstration, one

of the selling points—and I have urged the NAB to do this—is that

consumers will actually get a better picture when they convert it

to digital than on their analog sets, so there will be an advantage

to them to, in fact, get a better reception with the card.

Mr. Benjamin, in your testimony, one of the concerns that has

been expressed is how hard or how difficult it will be to reach certain segments of the demographic groups that are out there. What

is your reach of the organization, both in terms of geography and

demographics, in terms of communicating with folks who may hear

that message?

Mr. BENJAMIN. I would say, of the 225,000 members who we

have had over this past year, a large percentage of those are located in the Midwest and southern region parts of the United

States, which tend to be more rural than, perhaps, other sectors of

the country. In fact, in many of our cases, we have chapters in

schools that have 150 students in the high school, which, really, is

indicative of the size of that community. So we think that we will

have a significant outreach into the more rural areas of the country. Although, we are in, as I indicated, all 50 States.

Mr. UPTON. Well, again, as I have sat down with my local broadcasters—and my district is the southwest corner of Michigan, so we

get Chicago over-the-air TV, but we rely a lot on South Bend, Kalamazoo, and Grand Rapids. We have some fairly rural areas in my

district, but that is why it is so important for the broadcasters

themselves, now that they have the message and now that they

have the ads, to beam it into those of us who watch in order to get

our attention and so that, in fact, those with just over-the-air will

get that message, and then we need to obviously follow through

with them to make sure that they get the card and are able to install the converter boxes as they become available.

Mr. Romeo, do you suspect that there will also be, in essence,

mail order or Internet sales of the boxes through the retailers in

addition to individuals just going to Best Buy or to Target or to

Sears or wherever?

Of the retailers that you have talked to initially, are they planning to do the same thing? Is it going to be in a catalog?

Mr. ROMEO. Yes. So online retailers are we talking about? Yes.

We believe there will be strong participation on that front.

Mr. UPTON. As they get that card, that gift card that they otherwise would swipe, will there be a number there to identify on the

Internet so that they will be able to claim the credit?

Mr. ROMEO. There will be.

Mr. UPTON. I yield back.

Mr. GONZALEZ [presiding]. Thank you very much.
346

Let me just ask the witnesses: How much will the consumer have

to pay for that converter box that has been approved and that is

the genuine article? They are going to get a coupon for $40. What

is it actually going to cost, do we know?

Mr. BENJAMIN. I heard the cheapest one is about $70, somewhere in that area, but I believe it is going to be more than the $40 coupon.

Mr. GONZALEZ. Yes. I am under the impression—and members of

the committee and, I know, Mr. Markey would probably have the

answer—that it is anywhere from $50 to $70, which means it is

more like $70 to $100 or whatever. But I am not sure that the consumer is aware that it is going to cost more than the $40 coupon

when they get up there. I think that is actually an important piece

of information.

Ms. Zirkin, you pointed out something that is so important because it is my concern, but I do not know what we are going to do

about it, and that is that the coupons should go to those who need

it the most. My fear is, the way it is set up, it is the least likely

scenario, and that is not going to be the result, because I do not

think we have any priorities, and let me explain, and then I will

ask you what we do about it.

Let us say we have someone who has cable access at home but

that not all of their televisions are cable-connected, and so they

need the box for the other TVs. The cable companies, obviously, at

the head-in are going to reconvert, and they are fine, all right?

That person probably is the best informed of any because we have

the broadcasters, and we have the cable industry out there bombarding them with the information, so they are probably going to

constitute the greatest number of coupon redeemers.

Then I have got somebody who has got a vacation home and decides, ‘‘We do not have cable or satellite out there, and I will get

one for my vacation home.’’ Then we probably have the person who

needs it the most, that person who truly has the old set—analog—

and so on. Quickly, because I have a question for Mr. Romeo: What

do you propose we do? Because it does not look like that particular

category of consumer is going to be really a priority.

Ms. ZIRKIN. And the other thing about that particular community

is that they do not have Internet access. So that all of the fancy

things, they are not going to get. I mean we believe we are looking

at a disaster for these 21 million households, and what we are proposing at LCCR—and we cannot do it alone because all of our organizations are all public interest. Many of our organizations have

conventions, have workshops. We can penetrate with the materials

if we can get help, which is why we have stressed over and over

again that $5 million for public education is simply not enough.

Mr. GONZALEZ. Ms. Zirkin, I am going to try to get this question

in real quick to Mr. Romeo there.

I do not know if you can address this, because the person who

is doing all of your outreach—is it Ketchum? What is the name?

Mr. ROMEO. Ketchum, yes.

Mr. GONZALEZ. All right. Do you know what partnerships they

are actually entering into? It might be with Mr. Benjamin’s group

or so on. But what I am saying is that it is a noble effort and we

need to do it. But what is obvious to me is: What does everyone
347

have in common who may have an analog television? That is, it has

got to get plugged in, right? So they have to have electricity. That

means they have to have utilities. That means they are probably

getting a utility bill.

Are we thinking in terms of how we are going to piggyback on

other governmental entities at the Federal, State and local levels,

and especially utility companies?

You all may have already thought this through, and you are

going, ‘‘Wow, Charlie, you are a genius,’’ but are you aware of anything like that? Because that is the only way you are going to get

into that house.

Mr. ROMEO. Sir, we are working closely with NTIA to take advantage of existing relationships, but I know there are discussions

with all of the other Federal agencies to use their outreach to take

advantage and to get the consumers that way.

Mr. GONZALEZ. I will really suggest, sir, that that effort is at the

local government and utility level and, if we have any obstacles/impediments, that we start figuring out what that is now because tomorrow or January 1 is basically here.

Really quick, Ms. Fazlullah. I go into the electronics store. I have got a $40 voucher, and I have got a salesperson who says, ‘‘Hey,

for another $100 or another $150, I can get you something that

converts to signal but also allows you to play a DVD. For another

$150, I can get you something that converts a signal, plays a DVD,

and you can even record.’’ What can we do about that?

Ms. FAZLULLAH. I think it is important that the Government step

in and set actual guidelines as to what retailers are saying to the

consumers about the DTV transition. Having set guidelines that

put down on paper, ‘‘These are the pieces of the DTV transition

that need to go into the hands of your personnel so that they can

then say the correct things to consumers’’ is important.

Then, on the other side, if there are retailers that are actually

upselling, then we have got to have a process in place to actually

punish them for that.

Mr. GONZALEZ. Fine.

Ms. FAZLULLAH. I do not know if that is really adequately in

place.

Mr. GONZALEZ. I do not think we are going to be able to do that,

but I appreciate it because I think it is a real quandary. My time

is up. Thank you very much for your testimony today.

At this time, I recognize Mr. Walden.

Mr. WALDEN. Thank you, Mr. Chairman.

I just have to follow up on this. Are you really saying that, if a

clerk says to me when I go in, ‘‘Here is what your coupon is good

for, for this converter box.’’ Or, ‘‘Mr. Walden, we also have these

other options available to you,’’ that somehow that retailer should

be punished for upselling? That is what I heard you say in response to Mr. Gonzalez’s question.

If they say, ‘‘Oh, and this one has got a DVD player, and this

one will do that and has,’’ you know, ‘‘a big, new picture,’’ you said

we have got to take care of that and have a script. Are you serious?

Ms. FAZLULLAH. Well, I am serious about the fact that we need

to have adequate information for consumers in these stores. I think

it is a really confusing process.
348

Mr. WALDEN. That is not my question here.

My question, though, was this went further than just somebody’s

scamming a customer and a bait and switch and a fraud, which I

am with you all the way on. If they say ‘‘Yes, come in and use your

coupon’’ and then they do not happen to have boxes for, oh, a year,

that is a different deal. But what I heard was we have got to regulate from the Federal Government what a salesperson says in

terms of other options a consumer might want to take advantage

of.

Ms. FAZLULLAH. I don’t think that—I’m sorry if that is what it

appeared. But I would actually like a process for fraud and

upselling, which I think is very confusing. In conversations that I

have had with the FCC and with the FTC, it is unclear what you

do with consumer fraud situations with upselling. Do you go to the

NTIA when there is a problem with the coupon program, or do you

go to the FCC when there is a problem with the——

Mr. WALDEN. I am reclaiming my time because there is a difference between bait-and-switch and upselling, I think, as I understand it, which is offering consumers other opportunities and

choices. Is that a problem? Do you call that a fraud?

Ms. FAZLULLAH. I would say maybe my definition of upselling is

actually where you don’t provide the adequate information about

the converter box program or alternative situations as opposed to

just jumping ahead and trying to sell an HDTV.

Mr. WALDEN. I think you need to train, and I think you need to

make sure that the customer representatives know the whole deal

on the consumer box. I fully agree with that. But if we start trying

to write scripts for every salesperson in every retail outlet in America and then have the speech police come in and decide, I can’t tell

you that that TV has a converter box and a DVD player, and by

the way, this one also has a stereo or whatever in it, and these are

your options, then I think we have got a problem.

I am going to go to Mr. Romeo. Tell me how the process is going

to work if I am a consumer and I apply for a card in January? I

heard earlier today from the Secretary that they are going to delay

the rollout of those cards commensurate with the product rollout.

Now, what I want to get at is an issue that I apply. I live in a little

town, but it is 60 miles from a major city in Oregon—Portland. Tell

me how this database is going to work where you are going to list

the stores I can go to that will have these converter boxes? How

do you know where I shop or where I want to shop, and am I going

to be limited? I know I can use that coupon anywhere. But let us

say, on January 10, I am ready to go celebrate my birthday by getting my coupon that I ordered and going into Portland to a Best

Buy and buying one of these converter boxes because I know they

have them when perhaps the Radio Shack in Hood River doesn’t.

Who is going to decide for me when I get that coupon?

Mr. ROMEO. If you order the coupon, so we are working with

NTIA on the rollout details. But in that scenario, we haven’t talked

about—we have the information from where you live when you

order the coupon. We have your address. We have a list of certified

retailers throughout the country. So we can send you the list of certified retailers in your geography. And that could be Zip Code or

much broader than that. We are still working with NTIA on that.
349

Mr. WALDEN. And I concur that is a good idea to get the list or

at least allow me somewhere where I can go and get a list. I have

a district that is 70,000 square miles. It would stretch from the Atlantic to Ohio. It is an enormous district. And so when you limit

to a Zip Code or a 15-mile radius or something——

Mr. UPTON. If the gentleman will yield just for 1 second. But you

are also going to be able to get them through a mail order house

or on the Internet where they can actually get them delivered.

Mr. ROMEO. And those would also be listed on the mailing, that

you can order online. If there are retailers who provide the box online, they would also be listed.

Mr. WALDEN. I guess I am just trying to get to where consumers

have as many options at their disposal as possible to get a coupon

whenever they want to get it, get it returned to them, and then

they make the decision. Because the Government doesn’t always

know—I know I am slightly over. I am kind of like the last one

here, other than Mr. Terry. But anyway, I will quit. Thank you.

Mr. GONZALEZ. And to follow up on Mr. Walden, in my discussion, I don’t mean to infer that someone is going to be able to get

credit for the $40 on the upgrade. But I am also in the real world

where I can see $40 rebates being offered by certain sellers when

they do go and they upgrade.

Mr. WALDEN. So what would be wrong with that? If it is not the

taxpayer subsidizing, it is some other company.

Mr. GONZALEZ. I am just saying that if you have somebody there with a $40 coupon, the consideration for the consumer is that they

are getting credit for the $40. If they upgrade, they are not going

to be able to apply that $40 credit. Therefore, I think what would

happen is simply, it would be replaced by what would be, again,

a $40 rebate just to go ahead and address the $40 that they are

not going to be able to actually, I guess, cash in on. I do see a problem with that. I think people are going in there with the intention

of what is a Government mandated arrangement, and it is not baitand-switch, but definitely you have a captive audience, and you

have certain individuals. I don’t know the degree of sophistication.

But I think you are going to run into some problems, and you need

to anticipate it. To the extent that we educate individuals I think

will go a long way. But I am saying, Mr. Walden is not wrong to

say there is only so much we can do to protect any consumer.

The Chair at this time would recognize Mr. Terry from Nebraska.

Mr. TERRY. I appreciate that Mr. Gonzalez.

Mr. Romeo do you realize that it all stops with you.

Mr. ROMEO. I do.

Mr. TERRY. Everything we are talking about is going to be put

on your plate. And I was asking some of my colleagues earlier on

an issue that kind of bothered me. We talked a little bit about the

bait-and-switch and the consumer or potential fraud on the consumer. I want to switch the discussion now, since we have discussed that, to fraud on the program. Because it seems by, just the

system as it has been described to us, you sign up for this voucher,

the debit card. You get it. You take it to your electronics retailer

and get a box. It seems to me that it is ripe for fraud in a lot of

different areas. And the first is asking for the debit card. What
350

would prevent me from going up and down my block in my neighborhood knowing that every household is entitled to two, and you

go up and down most blocks. And frankly, in Omaha, no matter

what part you go to, even in the poorer section, you are going to

find that most houses, every TV is already hooked up to cable. So

they will sit there and say, I will give you 20 bucks, you give me

your two vouchers or give me your access to these two vouchers.

Or likewise, developing a black market in some way for the equipment. I see a lot of different ways to turn this into cash for people

at the expense of the program. Has IBM thought through this?

How are they going to stop? Where do you anticipate potential

fraud? Because, believe me, this will turn into fraud. There will be

stories on it. Have you thought through the points that are most

vulnerable, and what are you doing to prevent it?

Mr. ROMEO. Yes we have thought through many of the points of

fraud. The coupon itself will only be redeemed. So the financial

payment for the coupon will only be made when it is matched to

a certified box sold at a retailer. And the retailer will get that

money directly. So having a large value of coupons means that you

will have to go to a retailer and redeem those coupons for certified

boxes in that retailer. We also will look for patterns. So if there

were a neighborhood that just ordered a tremendous volume of coupons and they were maybe redeemed in another State, we would

see a fraud pattern in that and start to turn that over to NTIA for

investigation.

Mr. TERRY. I am not sure that gives me a great deal of confidence. What type of system do you have in place to track whether

you see a bump in what you would determine as fraudulent activity

besides just out-of-State activity with the coupon?

Mr. ROMEO. Without getting into too much detail on the security,

protections on the system, this is a credit card provider using the

system that they use for credit card transactions. And they have

a variety of methods to ensure that they are not defrauded from

the use of their cards. So we are employing a lot of the pattern recognition that they would employ in their credit card systems today.

Ms. ZIRKIN. If I could say something, Mr. Terry. I think you have

a very good question. And I think that there are two issues here.

Fraud is one. But who is getting the boxes? And it is going to be

very important in our opinion that the Congress with GAO track

where it is going. Because it has to be an independent tracking.

Nobody wants to wake up on February 17, and you all are going

to be called, not me. And so I think it is in everybody’s best interest

to have the tracking done by the Congress and GAO so that you

can see patterns.

For instance, in Detroit, if you see in the inner city that really

many fewer coupons are being redeemed, then you have to think

about or ask what is happening in terms of the public education.

Or, in New York City, 10024 Zip Code, if there are a lot of them

being redeemed, what is happening here? So I think the fraud

point is important, and who is getting it is very important. Thank

you, sir.

Mr. TERRY. That is a very good suggestion. And I will then suggest to our chairman that we follow through on those.

Mr. MARKEY. And I will follow your suggestion.
351

I will now turn and recognize the gentleman from Illinois, Mr.

Shimkus.

Mr. SHIMKUS. Thank you, Mr. Chairman, and I appreciate you

all for being here. You are competing with the Dalai Lama, which

is big competition, but I believe, on February 17, 2009, the Dalai

Lama is not going to have a complaint about whether his TV goes

dark, but we will be receiving some of those. So thank you for your

interest obviously and being here during this period.

A couple quick questions, if you will. And Mr. Romeo first. I was

talking to one of my staffers. IBM administers one of the welfare

programs in Indiana. Is that correct? Is that the right State?

Mr. ROMEO. It is.

Mr. SHIMKUS. And successfully?

Mr. ROMEO. Right.

Mr. SHIMKUS. And it is credited with obviously providing the

services in a timely beneficial manner. I wish I knew all the details, but I just put the connection together. So you have experience

in dealing with stuff like this.

Mr. ROMEO. We also run a very large portion of CMS’s financial

reporting, so depending on claims for CMS.

Mr. SHIMKUS. So it is probably safe to say that you have confidence you are going to be able to track the supply of the converter

boxes as well as the coupon demand and redemption to ensure that

the program runs smoothly?

Mr. ROMEO. Yes.

Mr. SHIMKUS. And I think the track record speaks to that so far.

But we are pretty gun shy. We had a very successful Medicare prescription D program now. But the implementation of it led a lot of

us to have concerns about that the first couple of months. So if

there is skepticism, that is kind of the short term where Members

have had to deal with that.

Mr. Benjamin, the question is, won’t your program have consumer education benefits on multiple levels? First, you will be educating your 225,000 student members. Second, they will likely educate their parents. And third, they will be able to educate their

communities. And doesn’t this show how a simple grassroots idea

can be used to leverage awareness.

Mr. BENJAMIN. Yes. We are looking at a multiplier effect. And

you are absolutely correct. Starting with the individual members—

and let me just say that, even though we talk about 225,000 members, that usually translates more or less into a 10–1 ratio because

those are members; they are not students in a class who may not

be members but who will be getting this information. So it starts

in the classroom. Then it works to the school. They have student

body rallies and what have you. So there it would be at the school

level, then the parents and then, of course, connecting with the

community. And we are working with the various partners, the National Association of Broadcasters, so that hopefully we would be

linking up with local television stations as well. So it is a tremendous multiplier effect that we hope to see out of this effort.

Mr. SHIMKUS. And actually more than I would have even imagined. But we do know that it is the youth that really push technology. I remember going to a communications electronics show,

and the MP–3, they were just rolling it out. And I was amazed at
352

how just the demand for music really driven by current kids was

really pushing technology. So I imagine these kids are going to be

saying, hey, mom, dad, we better be ready.

Mr. BENJAMIN. The other thing that is going to drive, I think,

our chapters to be involved is the fact that they will be able to get

some of these electronic gadgets, if you will, as a result of the

prizes that will be offered. And they do love competition.

Mr. SHIMKUS. That they do. And I will try to finish on this last

question. Ms. Zirkin, your concern is this first-come, first-served

nature of the converter box. I kind of mentioned that, in the first

panel, with the 8.3 million books sold, the Harry Potter books sold,

which I stood in line for and bought three with my two sons, so

I am very aware. And some of those came in a bookselling beforehand. This is a tradition of the Shimkus family now. I am glad the

series is over. But where we stood in line for a couple hours at midnight, bought our two books, went to bed at 3:00 in the morning,

got up whenever and about 10:00, another book came in the mail.

So we had, in essence, three books, but we did the pop culture

thing to do. And the NTIA, we talked about the numbers, about

what is projected. The CEA says 8 million, broadcasters think,

what, 23. The budget that is in place is for about 33.5 million coupons. And so we are pretty comfortable with that. But shouldn’t we

have focused on a—we had a debate when we moved the bill about

doing a means testing. Should we have addressed a means testing

as to really those who can’t afford it deal with the coupons versus

a coupon for everybody even if they don’t need it?

Ms. ZIRKIN. I think your Harry Potter analogy is very, very good,

and that goes to my concern. Harry Potter, unless you have been

under a rock for the past 8 or 10 years, everybody knows about

Harry Potter. Not everybody, my concern, is going to know about

this. And that is why, in my testimony, I really stressed the whole

public education effort. I think that if people know about it, people

are going to go get it. My concern is reaching those people, many

of whom are poor or working poor.

Mr. SHIMKUS. Shouldn’t we have means tested the coupons?

Ms. ZIRKIN. I can’t speak to that.

Mr. SHIMKUS. We will probably find out. If we have enough,

there won’t be an issue. If we don’t have enough, it might have

been part of the debate that we should have addressed.

Ms. ZIRKIN. I think NTIA attempted to in the last half billion

dollars that is allocated. But I am not sure how that is going to

work. And that is why we really are advocating oversight, which

Chairman Markey is doing and others. But I think it is going to

be critical. Because if there is a problem and if we see problems

next year in terms of who is getting them, then I think Congress

is going to have to step in at some point so that this is not a disaster.

Mr. SHIMKUS. I think Chairman Markey will do a great job of

oversight.

Ms. ZIRKIN. I do, too. Thank you.

Mr. MARKEY. Thank you. And I thank the gentleman from Illinois.

Mr. SHIMKUS. H.R. 608. I yield back.
353

Mr. MARKEY. Anyone watching this has no idea what H.R. 608

is.

Mr. WALDEN. Maybe we should have a hearing on it.

Mr. MARKEY. We will have a hearing, by the way, in another couple of weeks with industries that are responsible for making this

work. And by the way, this thing is coming this Thanksgiving; it

is coming in 5 more weeks, 6 more weeks. People are going to be

in department stores all over America in 4 or 5 weeks. And this

is going to be a big moment where these stores better be ready to

give people the honest information they need. The broadcasters, the

cable industry, they better have already explained to people that

they may be walking into a trap; they may be walking into situations that are going to be very dangerous for them as they purchase their new TV set. So let us do this. Let us have each one of

you give us your best 1 minute for what it is that you want the

committee to remember about your testimony. So I will begin with

you Mr. Romeo.

Mr. ROMEO. Thank you. I just would like to say that IBM is in

a position with our partners to execute the program in a successful

manner. And we will be ready and operational on January 1. And

we have designed the program to ensure that both the consumer

and the retailer have a satisfactory transaction in the process.

Mr. MARKEY. Ms. Zirkin.

Ms. ZIRKIN. At the risk of repeating myself again, I urge that the

Congress provide intense oversight with the General Accounting

Office and be ready to actually step in so that nobody’s TV goes

dark. Because remember who folks are going to be coming to on

February 7, 2009.

Mr. MARKEY. Who is that?

Ms. ZIRKIN. I think it is every Member of Congress. It might be

every Member of Congress. It is certainly not going to anybody at

this table. Thank you, Mr. Markey.

Mr. MARKEY. Thank you. I appreciate it.

Mr. Benjamin.

Mr. BENJAMIN. I think FCCLA with its 225,000 students, 7,000

chapters, will be prepared to engage in larger communities with

our keep your TV on campaign.

Mr. MARKEY. Thank you for your work, Mr. Benjamin. Do you

guys give out merit badges? Is there something you can win for

doing this?

Mr. BENJAMIN. Well, they do give competitions. And in this case,

the chapters, depending on how they stack up with other chapters,

will get $500 coupons to purchase electronic equipment from Best

Buy.

Mr. MARKEY. That is excellent. For turning in Best Buy, they

will be able to get a certificate to go into Best Buy. That is great.

Ms. Fazlullah.

Ms. FAZLULLAH. I think one of the most important statements

that is in our testimony is that we need to have a coordinated effort from Government on this. And I think the GAO noted this earlier, that there isn’t really a leader. And we need have coordination

among the different pieces of Government that are acting on this

so that there can be a guiding hand for the retailers, for the public

interest folks and for the consumers at large.
354

Mr. MARKEY. Thank you.

And finally, you, Mr. Stout.

Mr. STOUT. OK. I just wanted to clarify one part with you. Earlier you had asked me about the consumer advisory that was sent

out yesterday. And I had just talked with some of my staff. And

they said that the advisory doesn’t address any of the issues that

you had. In closing, I just wanted to emphasize, just in 1996, Congress finally mandated the FCC and the industry to provide us

with closed captions. And it is one thing that you would get access

to; it is also another thing to see the access continued. We have experienced the change from analog over to digital programming. We

want to be able to experience complete accessibility there. We are

like all other Americans; we deserve full TV access. Thank you.

Mr. MARKEY. Thank you, Mr. Stout.

And this committee agrees with you, and that is why we have

consistently passed legislation to accomplish that goal. And we will

take whatever action it takes in order to ensure that that happens

in this area as well.

So today’s hearing has given us an emergency broadcast system

alert that the transition to digital TV is fast approaching, and several challenges loom. We have established that the FCC is the

quarterback of the transition, but we need to see better coordination, better planning and contingency work being done, as the GAO

recommended in their testimony here today. We obviously have

consumer groups and hard-to-reach citizens for whom a comprehensive consumer outreach and education program is the top priority.

In 2 weeks, we will have another hearing to obtain testimony

from key industries. We will have an opportunity to assess industry announcements regarding outreach and education at that time.

And we then will about 3 weeks before Thanksgiving and the

Christmas sales season opens have a real idea of where we are.

This has been an excellent panel. We thank you for your testimony.

The hearing is adjourned with the thanks of the subcommittee.

[Whereupon, at 2:35 p.m., the subcommittee was adjourned.]

[Material submitted for inclusion in the record follows:]
355
356
357
358
359
360
361
362
363
364
365
366
367
368
369
370
371
372
373
374
375
376
377
378
379
380
381
382
383
384
385
386
387
388
389
390
391
392
393
394
395
396
397
398
399
400
401
402
403
404
405
406
407
408
409
410
411
412
413
414
415
416
417
418
419
420
421
422
423
424
425
426
427
428
429
430
431
432
433
434
435
436
437
438
439
440
441
442
443
444
445

(447)

STATUS OF THE DTV TRANSITION—PART 3

WEDNESDAY, OCTOBER 31, 2007

HOUSE OF REPRESENTATIVES, SUBCOMMITTEE ON TELECOMMUNICATIONS

AND THE INTERNET, COMMITTEE ON ENERGY AND COMMERCE, Washington, DC.

The subcommittee met, pursuant to notice, at 9:35 a.m., in room

2123, Rayburn House Office Building, Hon. Edward J. Markey

(chairman) presiding.

Present: Representatives Doyle, Harman, Gonzalez, Inslee, Boucher, Towns, Eshoo, Stupak, Engel, Green, Capps, Solis, Dingell,

Upton, Hastert, Stearns, Wilson, Radanovich, Walden and Barton.

Staff present: Amy Levine, Mark Seifert, Tim Powderly, Colin

Crowell, Maureen Flood, David Vogel, Philip Murphy, Neil Fried,

and Courtney Reinhard.

OPENING STATEMENT OF HON. EDWARD J. MARKEY, A REPRESENTATIVE IN CONGRESS FROM THE COMMONWEALTH

OF MASSACHUESTTS

Mr. MARKEY. Good morning, ladies and gentlemen. We welcome

you to this very important hearing on the digital television transition. As all of our Members can see, we have the single largest

panel ever gathered to testify on any one subject in the history of

the United States Congress, and in order for us to be able to accomplish this goal, beginning with the chairman, who is going to

limit himself to 1 minute, I am going to ask if each of the members

of the subcommittee would also limit themselves to 1 minute in

their opening statements so that we can get to these witnesses and

end it before the children begin trick-or-treating this evening. That

would be my goal.

And so I will begin by recognizing myself. Happy Halloween. In

a little over a year, millions of American consumers will find out

if the digital television transition is a trick or a treat. Will stores

trick them into buying equipment they don’t need? In February

2009 will they see their screens summarily turn as black as a Halloween cat? Will they long for the old analog signal even with its

friendly ghosting; or conversely, will it be a wonderful treat? Will

it be a bag full of digital delights, including the eye candy of a better pristine picture, breathtaking high-definition programming and

perhaps multiple streaming of new sources and channels?

Nothing is scarier this Halloween than the prospect of millions

of consumers disillusioned and upset with a Government-mandated
448

transition that has gone awry. For this reason we are holding today

yet another digital television oversight hearing.

We obtained testimony just 2 weeks ago from consumer groups,

the chairman of the FCC, the head of the NTIA, as well as important testimony from the GAO about the status of the transition and

suggestions for improvement.

Today we have an expert panel of witnesses, of industry stakeholders to inform the subcommittee about their perspectives of the

transition with just over a year to go prior to the hard date and

just 2 months before the Government converter box coupon program begins. We will be working with the FCC and the industry

on these issues. I want to thank the witnesses for their willingness

to testify today and sincerely hope that this hearing goes well.

The Chair recognizes the gentleman from Michigan, the ranking

member of the subcommittee, Mr. Upton.

OPENING STATEMENT OF HON. FRED UPTON, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF MICHIGAN

Mr. UPTON. Thank you. I will try to be as brief as well. I just

note that the clock didn’t start until you were well into your statement.

I am just glad that daylight savings time has not switched until

Sunday with trick or treat, so our trick-or-treaters tonight have

that extra hour of sunlight, one of the things that you and I worked

on together in the last Congress as the 2005 bill, so that hopefully

we won’t have as many accidents today.

Mr. MARKEY. And I want to congratulate you on that, Mr. Upton.

Mr. UPTON. We worked together. It was a good thing.

I thank you for holding this hearing on the transition to DTV.

We welcome our panel and our many witnesses that are here

today.

I would just note that in February 2006 President Bush signed

into law the legislation that designated midnight February 17,

2009, as the date to complete the transition from analog to digital

TV broadcasting. The transition from analog to digital television

represents the most significant advancement of TV technology

since color TV was introduced decades ago. And I would remind all

of us here that there was legislation introduced early on in this

Congress, H.R. 608, the Barton-Upton-Hastert DTV Consumer

Education Act, which goes a long way to assure folks that, in fact,

we will see that transition move in an orderly way.

Who will be affected once the proverbial switch is flipped? Cable,

satellite and TV companies will take steps to continue providing

service for their TV subscribers. These consumers will not be noticeably impacted by the DTV transition. The cable and broadcast

industries have already stepped up to the plate to help educate the

public about digital TV transition with still more than a year to go.

Thank you. By introducing public education campaigns that will

total nearly a billion dollars, B as in big, it is comforting to know

that industry understands the critical importance of educating

Americans on this issue so that, in fact, a seamless transition can

take place in February 2009.

Mr. Chairman, I am going to ask my full statement be part of

the record. I look forward to interacting with our distinguished
449

panel today to make sure that, in fact, this is a success, and not

only today, but at the end of the day. And I yield back.

Mr. MARKEY. The gentleman’s time has expired.

The Chair recognizes the gentleman from Pennsylvania, Michael

Doyle.

Mr. DOYLE. Thank you, Mr. Chairman. And my treat to you

today will be to waive my opening statement so we can get to our

witnesses. I yield back.

Mr. MARKEY. The Chair recognizes the gentlelady from California, Jane Harman.

OPENING STATEMENT OF HON. JANE HARMAN, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF CALIFORNIA

Ms. HARMAN. Thank you, Mr. Chairman.

I would point out that if our witnesses were female, it would take

far fewer of them to communicate this information. That is not part

of my opening statement.

Good morning, Mr. Chairman, and welcome to our witnesses.

Our lengthy witness list today is ample evidence that a broad

range of industries, not to mention 300 million Americans, have a

stake in the DTV transition. Six years after the 9/11 attacks, first

responders still cannot communicate horizontally or vertically on a

national basis.

My views are well known. The 700 MHz TV spectrum should

have been cleared by 2006. Any delay beyond February 2009 is totally unacceptable and dangerous. February 2009 is less than 16

months away. Half of all Americans are clueless about what the

DTV transition is. Education efforts by industries represented here

today must hit the streets now.

I am fond of saying that perfection is not an option, but failure

to complete this transition is not an option either. When we are attacked again, sadly that is my prediction, we will be measured by

our response. A national, integrated, fully interoperable network is

the indispensable requirement.

I yield back the 13 seconds remaining.

Mr. MARKEY. The gentlelady’s time has expired.

The Chair recognizes the gentleman from Texas Mr. Gonzalez.

Mr. GONZALEZ. Waive opening.

Mr. MARKEY. The Chair recognizes the gentlelady from California Ms. Eshoo.

OPENING STATEMENT OF HON. ANNA G. ESHOO, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF CALIFORNIA

Ms. ESHOO. Thank you, Mr. Chairman, for holding yet another

hearing on this important issue.

There are several points that I wanted to make. I am going to

drop some of them, but I do want to say this: Last week the committee heard the testimony of the FCC Chairman Martin in support of a multitasked must carriage. The chairman, of course, believes that cable providers must be mandated into carrying all five

digital channels. The theory purported by the chairman asserts

that if carriage is mandated, broadcasters would produce the content on their extra channels.
450

Right now in my district, not one commercial broadcaster produces additional content on these extra channels except some who

air the weather radar 24 hours a day. But public television stations

across the country are using additional channels. In my district

KQED has five new channels they are broadcasting, and they have

a channel that is dedicated to children’s programming and another

24-hour Spanish-language channel.

So what I would like today is to hear from the broadcasters and

have them explain to the committee why commercial broadcasters

are not producing content for these extra channels and why public

television is able to do so and air this content while commercial

broadcasters are leaving these channels fallow.

I think there is a lot of work to be done as we roll out this transition. I think it needs to be coordinated, both by industry and the

Government. And I look forward to hearing the comments that our

witnesses are going to make today.

Thank you, Mr. Chairman.

Mr. MARKEY. The gentlelady’s time has expired.

The Chair recognizes the gentleman from Oregon Mr. Walden.

Mr. WALDEN. Thank you, Mr. Chairman. I am going waive my

opening statement.

Mr. MARKEY. The Chair recognizes the gentleman from Texas

Mr. Green.

OPENING STATEMENT OF HON. GENE GREEN, A

REPRESENTATIVE IN CONGRESS FROM THE STATE OF TEXAS

Mr. GREEN. Thank you, Mr. Chairman, for holding the hearing.

I welcome our panel.

This is the third hearing specifically on DTV this year, as well

as the issue brought up when we had the FCC Commissioners in

front of our subcommittee this year. And I will keep my remarks

less than 1 minute.

In previous hearings we have yet to hear convincing testimony

that there is a concerted effort to coordinate consumer education

campaigns and make sure Americans know that DTV transition is

coming, let alone what will be happening in 2 months when they

can start applying for the converter box coupons. It is troubling

that the NTIA and the FCC outreach efforts of an Internet base is

not going to help groups such as the elderly and non-Englishspeaking households that typically rely heavily on over-the-air

broadcasts, that do not access the Internet at high rates. I look forward to the testimony and any efforts that Congress, the FCC or

NTIA need to implement to ensure the smooth transition.

Last Monday’s commitment by the National Association of

Broadcasters has spent $700 million on DTV education and advertising, a promising sign that broadcasters nationwide are committed to ensuring there is a transition; the cable industry’s commitment of $200 million in advertising as well. And I hope to see a

similar commitment by all the parties involved.

And, Mr. Chairman, again I thank you for holding this third

hearing, and I am sure before February 2009 we will have many,

many more hearings.

Mr. MARKEY. I thank the gentleman. The gentleman’s time has

expired.
451

The Chair recognizes the gentleman from Florida for 1 minute,

Mr. Stearns.

OPENING STATEMENT OF HON. CLIFF STEARNS, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF FLORIDA

Mr. STEARNS. All right. And I see it is 1 minute.

Thank you, Mr. Chairman. Thank you for holding this hearing.

My staff has indicated we have had in the last two Congresses—

this one is not done—we have had almost 10 hearings on this subject, so there certainly is an ample opportunity for us to comment

on this.

I would like to make my full statement part of the record.

Our position, or at least my position, is a free market is working

to help the transition go as smoothly as possible. Consumers continue to connect their televisions to video services offered by cable,

satellite and new telephone providers. Furthermore, under FCC

rules all television receivers manufactured since March 1, 2007,

must be able to receive digital signals over the air. Moreover, many

TVs not connected to cable or satellite are sitting in people’s attics

never turned on and are used only for videotapes, DVD or video

games. At least that is the case in my house. We have these TVs

all over the place. My son uses them for video games. None of the

consumers in these situations will need converter boxes.

So, Mr. Chairman, I think we are making great strides here, and

I think we are bringing ample opportunity for hearing on this

issue, and I appreciate the opportunity to talk. Thank you.

Mr. MARKEY. The gentleman’s time is expired.

The Chair recognizes the gentlelady from California, Hilda Solis.

OPENING STATEMENT OF HON. HILDA L. SOLIS, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF CALIFORNIA

Ms. SOLIS. Thank you, Mr. Chairman. And I would like to welcome our witnesses this morning.

I am really excited that Univision is here today because they are

one of the few broadcasters that I know of that has already

launched radio ads and PSAs to help provide information to the

Spanish-language community regarding the transition that is going

to be before us. So I want to applaud you for that, and also say

that we also have to focus in on low-power television stations in the

DTV transition. And I will submit my statement for the record.

Mr. MARKEY. The gentlelady’s time has expired.

The Chair recognizes the gentleman from California Mr. Radanovich.

OPENING STATEMENT OF HON. GEORGE RADANOVICH, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF CALIFORNIA

Mr. RADANOVICH. Good morning, Mr. Chairman. Thank you for

holding this hearing.

I, like many of my colleagues, are primarily concerned about consumer education on this issue. For future business models to succeed, the private industry needs a smooth transition, and the market forced necessary to motivate these businesses to make that ef-
452

fort are obviously in place. We have seen this thus far in the consumer education campaigns that are already going on. Cable television, for example, was a leader in this effort when it announced

a $200 million comprehensive consumer education campaign back

in early September and has provided a great service. Many retail

stores are participating in educating their consumers, placing signs

in their stores and alerting their consumers about the transition.

Just a few weeks ago the broadcasters announced their own comprehensive $697 million campaign, including television commercials, educational outreach and community activities, to help inform their many customers. You basically cannot watch TV anymore without seeing a commercial where a very nice elderly woman

tells you what is about to happen to your TV signal.

This type of outreach is necessary. I commend you for all of your

efforts that you have made thus far, and I look forward to the hearing in these efforts.

Thank you, Mr. Chairman.

Mr. MARKEY. The gentleman’s time has expired.

The Chair recognizes the gentlelady from California, Mrs. Capps.

OPENING STATEMENT OF HON. LOIS CAPPS, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF CALIFORNIA

Mrs. CAPPS. I will be brief, Mr. Chairman.

Thank you again for holding this hearing. Your leadership on

this issue means that media and consumers are taking note and

learning more about the digital television transition and how it will

affect them.

I want to thank Chairman Dingell and my colleagues on the Energy and Commerce Committee for passing the 911 Modernization

Act yesterday. The recent widespread wildfires in central and

southern California were a stark reminder of why 911 modernization is vitally important. So I hope we can continue this focus on

public safety by strengthening 211 services so that families and individuals can seek and obtain critical services in times of need.

The wildfires have also brought to the fore that unexpected

events can have powerful consequences on the DTV transition. In

this vein it is my hope that the FCC is taking into consideration

the impact that wildfires and other disasters can have on broadcasters that are trying to meet the DTV transition statutory deadline.

I will submit my further statement to the record, Mr. Chairman,

and yield back.

[The prepared statement of Mrs. Capps follows:]

PREPARED STATEMENT OF HON. LOIS CAPPS, A REPRESENTATIVE IN CONGRESS FROM

THE STATE OF CALIFORNIA

Mr. Chairman, I’d like to thank you again for holding this hearing. Your leadership on this issue means that media and consumers are taking note and learning

more about the digital television transition and how it will affect them.

I’d also like to thank Chairman Dingell and my colleagues on the Energy and

Commerce Committee for passing the 911 Modernization Act yesterday.

The recent, widespread wildfires in central and southern California were a stark

reminder of why 911 modernization is vitally important.

I hope that we can continue this focus on public safety by strengthening 211 services, so that families and individuals can seek and obtain critical services in times

of need.
453

The wildfires have also brought to the fore that unexpected events can have powerful consequences on the DTV transition.

In this vein, it is my hope that the FCC is taking into consideration the impact

that wildfires and other disasters can have on broadcasters that are trying to meet

the DTV transition statutory deadline.

I also expect that the FCC will take into consideration stronger protections for

small cable providers in complying with the recent dual-carriage order.

I would like to extend thanks to our panel today for coming in to testify; I am

very interested to hear what actions you all have pursued to ensure that adequate

consumer protections are in place throughout the transition.

Government, retailers, service providers, and broadcasters are all holders of the

public trust.

Some of the most vulnerable members of our society are counting on us to guide

them through this transition, and I hope that you all will join us in ensuring that

their trust in our intentions is not misplaced.

Thank you again, Chairman Markey, for holding this hearing.

Mr. MARKEY. The gentlelady’s time has expired, and all time for

opening statements by members of the subcommittee have expired.

So we will turn to our panel, and we will begin by recognizing Mr.

Ron Bruno. Mr. Bruno is the president of the Community Broadcasters Association and President of Bruno-Goodworth Network,

Incorporated.

Welcome, Mr. Bruno. Whenever you are ready, please begin.

STATEMENT OF RON BRUNO, PRESIDENT, COMMUNITY

BROADCASTERS ASSOCIATION, PRESIDENT, BRUNOGOODWORTH NETWORK, INC., PITTSBURGH, PA

Mr. BRUNO. Thank you, Mr. Chairman, Ranking Member and

members of the committee. As you said, my name is Ron Bruno,

and I am recently elected the president of the Community Broadcasters Association. We are the trade association that represents

the Nation’s class A and low-powered television stations. I am also

the president of Bruno-Goodworth Network, as you said, a company

based in Pittsburgh. We own and operate 11 class A television stations in Pennsylvania, Ohio and West Virginia. I appreciate the opportunity today to testify.

Class A television stations were created in 1999 by Congress because it recognized the benefit of local programming. These stations are small businesses that boast the largest percentage of minority ownership in the television broadcast industry. They agree

to adhere to a strict set of regulations, one of which is to provide

a minimum of 3 hours a week of local programming every week.

In fact, class A stations are the only stations mandated by law to

produce local programming. AM stations, FM stations, full-power

television stations are not mandated by law. Class A LPTV stations

are the only stations mandated by law to produce local programming.

Simply put, Mr. Chairman, long before localism was a buzzword

in this industry, class A stations were serving their local communities with local programming. There are 910 class A and class A

qualified stations providing local programming to underserved communities. Despite following the same regulations as full-power stations and providing the mandatory hours of local programming

each week, these stations are not entitled to carriage rights with

the exception of those in very small communities. As a result of

this inequality within the broadcast industry, my flagship station
454

in Pittsburgh, WBGN, has recently been forced to lay off 75 percent

of our staff. We have eliminated our local news segment. We have

cut all high school sports and other programs. WBGN was once

thriving with more than 18 hours of local programming every week

and drawing tremendous cumulative ratings of 10 percent in the

market. We are now broadcasting less than 6 hours of local programming weekly.

Mr. Chairman, if the playing field between full-power stations

and class A stations is not leveled, mandated local programming by

many small community-based broadcasters will cease to exist in

the digital world. In 1992, approximately 80 percent of the television viewers in this country watched TV over the air with an antenna; 25 years later we are barely at 12 percent. Broadcasting exclusively over the air with no cable or satellite is no longer a viable

business model.

As a result class A stations have attempted to make private arrangements with cable companies in an effort to obtain carriage.

The demands of these cable systems have been too onerous, and

class A stations across America are dying. In my specific case,

Comcast recently cancelled my original arrangement to be on their

system, which was I would pay Comcast a quarter of a million dollars annually to be carried in Pittsburgh. Their new offer was for

me to pay $2.4 million annually for carriage, which was the highest

implicit rate formula they could get out of leased access. As stated,

we are a small business dedicated to providing local programming,

but the charges demanded by Comcast for us were simply too high,

and they would be too high for any class A operator in America.

After an extended negotiation with Comcast, the result has been

that we are now carried on less than half of the Comcast system

in our market at substantially more money. The real tragedy in all

of this is Comcast isn’t presenting anything on the channel that we

used to use. They just display a slide on the screen that says

‘‘Leased Access Channel,’’ and they use a bad font at that.

The tragedy like this is happening all across America; California,

Texas, Washington State, Oregon, Massachusetts, Michigan, Florida, Georgia, Mississippi, New York, New Jersey—I could go on

and on—where local programming is dying, jobs are disappearing

and businesses are being destroyed.

Class A broadcasters really enjoy broadcasting, Mr. Chairman.

We enjoy providing local programming to our communities. We

know that we will be out of business unless Congress acts to level

the playing field on carriage rights, and to that end we have put

forth a proposal that is very simple and fair and would ensure

mandated local programming from class A stations will continue to

exist in a digital world.

Our proposal calls for willing class A stations to immediately

cease analog broadcast and convert straight to single-digital-only

operations. This will expedite the transition to nationwide digital

TV service as well as free up valuable analog spectrum for Government use or auction. In exchange for moving directly to digital on

a single channel, these stations would be granted carriage rights

within the grade B contour on the basic tier of the digital cable system, not the analog, the digital cable system.
455

Let me be clear about our proposal, Mr. Chairman. It does not

include carriage rights throughout the designated market area. We

are not trying to be superstations. We only want to be seen to the

areas that we cover in the areas that we cover within our grade

B contour, which is how far our stations extend, no more no less.

Mr. Chairman, I appreciate this time today and sincerely hope

that you and the members of the committee will recognize the urgency of this industry’s situation and act in a manner that benefits

small businesses, local programming and, most importantly, consumers. Thank you very much.

Mr. MARKEY. Thank you, Mr. Bruno, very much.

[The prepared statement of Mr. Bruno follows:]
456
457
458

Mr. MARKEY. Now we will turn and recognize Mr. Patrick Knorr,

who is the president and general manager of Sunflower Broadband.

Welcome, sir.

STATEMENT OF PATRICK KNORR, PRESIDENT AND GENERAL

MANAGER, SUNFLOWER BROADBAND, LAWRENCE, KS

Mr. KNORR. Thank you, Mr. Chairman and members of the subcommittee.

As you said, my name is Patrick Knorr, and I am general manager of Sunflower Broadband, an independent cable business in

Lawrence, Kansas. We serve about 35,000 customers providing advanced cable, high-speed Internet and local phone service.

I am also chairman of the American Cable Association. The ACA

is the voice for nearly 1,100 small and medium-sized cable companies together serving about 8 million households. Our members

range from family-run businesses serving one community to multiple-system operators focusing on smaller markets in rural areas.

In fact, more than half our system serves less than 1,000 customers, and most serve rural communities with only a few hundred

homes.

Small cable operators are important businesses in their communities. Along with providing broadcast and cable programming,

many of our members offer community programming not carried by

other operators. In addition to providing competitive voice services

in many smaller communities, our members are the only providers

of high-speed Internet access and are stepping up to provide competitive voice services that Congress has desired.

ACA and its members are committed to ensuring a successful

digital transition, and know we have a role in educating consumers

about that transition. ACA is an active member of the Digital Television Transition Coalition working with other businesses, trade

and industry groups to ensure no customer is left without broadcast television because of a lack of information about the transition.

Our ACA Web site features a graphical link to the DTV transition

Web site, and already some of our members are airing public service announcements on their system about the transition.

ACA has already hosted two events this year focused on the transition. At our independent show, an annual gathering of small

cable operators, the ACA held an educational panel discussing the

transition. And more recently we hosted an event in Washington,

DC, where NTIA’s assistant secretary for communication and information, John Kneuer, spoke to our members about the transition

and the Digital-to-Analog Converter Box Coupon Program.

While ACA and its members are committed to the digital transition, we also know the switch to digital will produce unique burdens on our systems, which, if not appropriately dealt with, will

cause harm to consumers and especially in those small markets

and rural areas. Small cable operators want all their customers to

continue to receive the same broadcast stations after the transition,

including all must-carry stations. For this reason the ACA filed

comments with the Federal Communications Commission earlier

this year seeking flexibility to convert broadcasters’ digital signals

to analog and address the lack of standards in converting high-defi-
459

nition signals to standard definition, including analog, which remains unresolved.

In September, to our dismay, the Commission adopted new rules

that effectively force many small cable operators to offer mustcarry broadcast stations in both analog and digital, a dual-carriage

obligation, after the digital transition.

For the foreseeable future it is a finance infeasibility for many

small cable operators to comply with this order without significant

harm to consumers. The dual-carriage obligation requires operators

to purchase costly equipment and set aside additional bandwidth.

Many small operators do not generate the revenue necessary to

support the expensive equipment, and others do not have the spare

capacity to carry each must-carry broadcaster’s signal twice.

While the order does permit cable systems with channel capacity

of 552 MHz or less to file a waiver from the dual-carriage obligation, it unfairly requires systems with limited financial resources

to engage in a process with the FCC with an unsure outcome. If

an operator can’t afford the equipment, what makes the Commission think they can afford a lawyer?

The FCC plans to issue a Further Notice of Proposed Rulemaking on this order’s impact on small operators. And we ask

members of this committee to urge the FCC to devise more flexible

rules for systems with both a small base of customers and with

those with limited channel or bandwidth capacity, or Congress

should pass legislation to do so.

Finally, we urge Congress to find ways to help small operators

provide local broadcast services in digital to consumers in smaller

markets and rural areas. Let me be clear, all small cable operators

want to provide their consumers with digital television services,

but in reality, owners of small systems can neither afford to upgrade their facilities nor purchase the digital set-tops necessary to

offer this advanced service.

In 2005, Congress recognized the financial hardship that lowpower and translator stations face in upgrading their facilities from

analog to digital and set aside significant funds to assist in their

transition. The ACA believes a similar program should be considered to help small cable operators.

Mr. Chairman and members of the committee, thank you again

for the opportunity to testify.

Mr. MARKEY. Thank you, Mr. Knorr, very much.

[The prepared statement of Mr. Knorr follows:]
460
461
462
463
464
465
466
467

Mr. MARKEY. Next we are going to hear from David Barrett, who

the is the president and chief executive officer of Hearst-Argyle

Television. He is representing the National Association of Broadcasters here today.

Welcome, Mr. Barrett.

STATEMENT OF DAVID J. BARRETT, PRESIDENT AND CHIEF

EXECUTIVE OFFICER, HEARST-ARGYLE TELEVISION, INC.

NEW YORK, NY

Mr. BARRETT. Thank you, Mr. Chairman. Good morning, Ranking

Member Upton and members of the subcommittee. My name is

David Barrett. As Mr. Markey noted, I am the president and CEO

of Hearst-Argyle Television. I welcome the opportunity to participate in today’s discussion about the digital television transition.

In just 475 days American broadcasters will complete the most

significant advancement of television technology since the advent of

the color television as we cease analog transition in February 2009.

At that point our digital signals, which provide vastly superior

video and audio quality, enhanced viewing choices and the potential for greater program diversity, will be available for American

television consumers.

Unquestionably the transition presents an enormous challenge

for broadcasters, but the transition is a critical business imperative

for those of us in the television industry. The livelihood of all of us

in this industry depends on getting it done and done well. Be assured that we are committed to doing everything we can to make

the transition seamless for our viewers. Our objective and our commitment is that Americans will be fully educated and fully informed about the transition, and that they will understand their

options that no set will go dark due to a lack of information.

As evidence of this commitment, on October 15th NAB announced the largest, most impressive, and the most pervasive volunteer effort in television history to educate consumers on the

switch to digital television. Over 1,000 stations have committed to

participate in a multifaceted marketing program valued at close to

$700 million. This marketing program is unprecedented and will

far exceed the most ambitious public service announcement programs that have ever aired in the history of television or radio.

The program will consist of DTV action spots today available in

English and Spanish. And I would add that these spots are already

being adapted in multicultural languages in markets like Los Angeles. All these spots will be closed-captioned. These spots, along

with the production tool kit for local customized application, will be

distributed to every television station in America, including our

friends at public television stations across the country. Stations

will air 30-minute DTV education programs, use crawls for reminder messaging, and feature a 100-day countdown clock to the

February 2009 deadline.

NAB’s road show Trekker will visit over 600 locations nationwide. A speaker’s bureau has been established to touch every locality at the grass roots, senior centers, high schools, churches, rec

centers and the like. And stations will use their Web sites and are

using their Web sites to inform, educate and market our message

through the transition. I will note that there have already been
468

over 5,000 new stories reported about the transition, and I believe

that number will grow exponentially.

Every single television network is participating in this campaign

along with 113 broadcasting companies representing 1,078 TV stations nationwide. And this is only beginning as we expect more to

join as we move forward in the coming days.

The combined elements of this multiplatform, multifaceted marketing campaign will generate 98 billion advertising impressions,

which is a marketing measurement for the number of persons

reached with a given message. Therefore, we in good faith do not

believe it is necessary for Congress or the FCC to impose mandatory PSA requirements on television stations.

It is plainly in our self-interest, aside in addition to our overall

public stewardship, to make sure that American people are fully informed about this transition. We will leave no viewer behind, and

we look forward to working with Congress, the subcommittee,

Chairman Martin and the FCC to report our efforts periodically to

make it very transparent and to work together to assure a successful transition.

This effort only builds upon what broadcasters have already

done, including the creation of an industry and Government coalition of over 170 groups and organizations, including the FCC and

NTIA; the launch of a Web site, www.DTVanswers.com; delivery of

DTV tool kits to every Member of Congress; and congressional staff

briefings on how Members can educate their own constituents.

In my view, the key to making the DTV consumer information

and education effort work is to empower creative, innovative and

localized marketing by stations who know best how to communicate

with their local communities. The NAB program I briefly described

will achieve that goal.

Finally, I respectfully encourage members of the subcommittee

and the Commission not to jeopardize the success of the digital

transition by prematurely opening up the television broadcast spectrum to personal and portable unlicensed devices that FCC testing

has found to cause harmful interference. We share your sense of

urgency and that of FCC Chairman Martin to accelerate industrywide consumer information and educational efforts that will fully

inform and educate Americans about the digital transition.

Thank you, and I look forward to responding to your questions.

Mr. MARKEY. Thank you, Mr. Barrett, very much.

[The prepared statement of Mr. Barrett follows:]
469
470
471
472
473
474
475
476
477
478
479
480
481
482
483
484
485
486
487
488
489
490
491
492
493
494
495
496
497
498
499
500
501
502
503
504
505
506
507
508
509
510
511
512
513
514
515
516
517
518
519
520
521
522
523
524
525
526
527
528
529
530
531
532
533
534
535
536
537
538
539
540

Mr. MARKEY. Our next witness is Michael Willner, who is the

vice chairman and chief executive officer of Insight Communications. He is representing the National Cable and Telecommunications Association before us today.

Welcome, Mr. Willner.

STATEMENT OF MICHAEL S. WILLNER, VICE PRESIDENT AND

CHIEF EXECUTIVE OFFICER, INSIGHT COMMUNICATIONS,

NEW YORK, NY

Mr. WILLNER. Mr. Chairman, thank you. I have noticed—I think

this is my third or fourth hearing on DTV, and the font on my

script gets larger and larger each time I come back so I can see it.

I would like to thank you and Ranking Member Upton and the

members of the committee for inviting me today. My name is Michael Willner, and I am the vice chairman and CEO of Insight

Communications, and we are the ninth largest cable operator in

the United States.

The transition to digital television will make it possible for our

Nation to reclaim and reallocate valuable spectrum for enhanced

public safety communications and increased wireless broadband

services. It is critically important for all affected industries to work

with the Government in a cooperative and coordinated manner. We

need to educate Americans in what they need to do to get ready

for and how they will benefit from this successful transition.

When I testified before the subcommittee in 2005, I suggested

that you could and should set a hard date for the end of the transition, and I committed at that time that whatever date you chose,

the cable industry would be ready, willing and able to ensure a

smooth and seamless transition for our customers. You chose February 17, 2009, and we are ready, willing and able to meet that

date.

We are proud to be one of the founding members of the DTV

Transition Coalition, working with the broadcast consumer electronics industries, satellite, as well as many other organizations to

educate Americans about the digital transition. We are committed

to helping the coalition develop and implement a unified message

that can be reinforced across multiple platforms.

In early September the cable industry launched our extensive

consumer education campaign, including English- and Spanish-language TV advertising valued at over $200 million. These spots are

designed to reach millions of cable and noncable viewers with useful information about the DTV transition. The industry is now in

a second round of advertising spots focused on alerting customers

to the NTIA’s coupon program for digital-to-analog converter boxes.

Those ads are scheduled to run on our systems, I know, as early

as this week.

Our commitment extends far beyond simply running television

ads, though. NTIA revamped its entire Web site, which now focuses

predominantly on the digital transition. And we have created

English- and Spanish-language Web sites linked to our home page

to provide consumers with easy-to-understand information.

The NTIA will also distribute a communications DTV tool kit to

cable systems nationwide, which will include bill stuffers, on-screen

scrolls, telephone on-hold messaging, sample e-mails for broadband
541

customers, Web site banner ads for company Web sites, employee

education materials, very important, and brochures for distribution

at community events.

I would note that many of the components of our education campaign are based on ideas that were suggested by the leadership of

this very committee, and we remain open to additional ideas on

how we can further advance the DTV educational efforts as we

move forward.

I do, however, have one area of concern regarding the carriage

of digital broadcast signals after the transition. We are committed

to provide a seamless transition to all of our customers. We do

question the constitutionality of a Government mandate that requires cable operators to carry all must-carry broadcast stations in

both digital and analog formats. Nevertheless, in 2005 we worked

with you to include a carriage commitment in legislation that was

approved by the committee. Although that DTV carriage provision

was not included in the final bill, we did craft a 3-year voluntary

carriage commitment with you and your staffs. The FCC approved

an order 7 weeks ago which is supposed to mirror our voluntary

3-year plan; however, we are still very anxious to review the actual

text of that decision which has not yet been released.

And based on our information that we do have up to now, the

FCC’s order is clearly deficient in one major respect as you heard

earlier today, and that is that the Commission declined to provide

an exemption for very small cable systems as the committee did in

2005. And this doesn’t affect my company or many of the members

of NTIA, but this is a serious issue in rural America. And we hope

that the Commission will be guided by your actions in the past to

use a further notice to provide clear and unconditional exemptions

for small cable systems in its DTV carriage order.

Mr. Chairman, the cable industry has made a massive commitment to ensure a smooth transition to digital broadcasting. We continue to stand ready to work with you and the members of the subcommittee and to remain a leader in making sure that we all get

it done right.

Thank you again for the time to testify before you, and I will be

here to answer questions.

Mr. MARKEY. Thank you, Mr. Willner, very much.

[The prepared statement of Mr. Willner follows:]
542
543
544
545
546
547
548
549
550

Mr. MARKEY. Our next witness is Joe Uva, who is the chief executive officer of Univision Communications.

Welcome, sir.

STATEMENT OF JOE UVA, CHIEF EXECUTIVE OFFICER,

UNIVISION COMMUNICATIONS, INC., NEW YORK, NY

Mr. UVA. Thank you, Mr. Chairman. Good morning, Ranking

Member Upton and members of the subcommittee.

My name is Joe Uva, and I am the chief executive officer of

Univision Communications, Inc., the largest Spanish-language

media company in the country and the fifth largest broadcast network. Our operations include the Univision Network, the mostwatched Spanish-language broadcast television network in the Nation, reaching 99 percent of U.S. Hispanic households; the

Telefutura Network, the third most-watched Spanish-language network; the Univision Television Group, which owns 63 television

stations in major U.S. Hispanic markets, including Puerto Rico;

and Univision Radio, the leading Spanish-language radio group,

which owns 74 radio stations in 16 of the top 25 U.S. Hispanic

markets, including 5 stations in Puerto Rico.

Hispanic Americans are more than our viewers. They are our

constituents, and we are privileged to inform and entertain them.

With that comes responsibility. In these past few months you have

seen us strive to meet that responsibility as never before. You have

seen it in our initiative to register Hispanic voters in our first-ever

Spanish-language Democratic presidential forum and with the

launch of our weekly public affairs program, Al Punto, bringing

Hispanic audiences into the national Sunday morning conversation.

I am proud to say that the relationship Univision has with its

viewers is unique because people who invite this network and its

programming into their lives give back an incredible measure of

loyalty, affection and trust. This mutual trust and commitment is

the essence of the relationship Univision has with its audiences.

Our viewers consider us to be part of their community, and with

good reason. From 2004 through 2006 alone, Univision contributed

nearly $850 million in cash and in-kind value to support the U.S.

Hispanic community.

In continuing to earn this trust and meet our responsibilities to

the community, we take seriously our part in ensuring the success

of the digital television transition and in ensuring that our Hispanic viewers benefit from its results rather than suffer the consequences of being left behind. The impact of the digital transition

on our viewers is a particular concern to us because nearly 28 percent of Hispanic households and 43 percent of homes where Spanish is the primary language watch TV only via over-the-air broadcast, and that is according to a 2005 NAB report to the FCC.

Unfortunately most Hispanics, particularly our non-Englishspeaking viewers, are not informed about the digital transition and

the impending analog cut-off date of February 17, 2009. Unless we

use the time left to educate and inform viewers on how to prepare

for the digital transition, a disproportionate number of Hispanic

viewers will no longer be able to rely on over-the-air broadcast for

critical news, weather, local programming and emergency updates.

Hispanics could be uniquely affected, and we want to make sure
551

that they are the best educated segment of the population about

what the analog cut-off date means and what they can do to prepare for it.

It is therefore with pride that I can say on October 1 Univision

became the first major network to launch a multiplatform public

service ad campaign preparing our Hispanic television viewers for

the analog-to-digital transition. Our campaign will use Univision’s

media assets to raise awareness and educate consumers about the

digital transition, creating a clear and positive message promoted

on air and enhanced by local community outreach.

Our efforts go far beyond 30-second public service announcements. They will include a Web page, multiple 30-minute television

specials, local newscasts, radio PSAs, local outreach events, and we

will promote the Spanish-language toll-free telephone number that

is being set up by the FCC and the NTIA.

Additional components of our campaign include offering our

viewers general information on digital television and how to receive

it. We will educate consumers on the NTIA’s converter coupon program to make sure that our eligible viewers apply for and redeem

their coupons in a timely manner. We will also provide Latinos

with information on the resources and services available to assist

them with the digital transition, and we will work with retailers

to help ensure that they have appropriate Spanish-language signage and in-store materials about digital TVs in markets where

there is a high-density Latino population. Univision will be working with the Hispanic Technology and Telecommunications Partnership, NCLR, the National Hispanic Council on Aging, and

NALEO.

Sixteen months from now our Nation will take the final step in

moving from analog and crossing over into the digital era of television broadcasting. While we still face many challenges, rest assured Univision is dedicated to doing its part to inform and prepare

its viewers for that transition.

Chairman Markey, Ranking Member Upton and members of the

subcommittee, we look forward to working with you to ensure that

digital transition takes place as planned and that its full benefits

become a reality for all members of our national community. Thank

you for inviting me to participate today.

Mr. MARKEY. Thank you, Mr. Uva, very much.

[The prepared statement of Mr. Uva follows:]
552
553
554
555
556

Mr. MARKEY. Our next witness is Dennis Swanson. He is the

president for station operations of the Fox Television Stations, Incorporated.

We welcome you, Mr. Swanson.

STATEMENT OF DENNIS SWANSON, PRESIDENT, STATION OPERATIONS, FOX TELEVISION STATIONS, INC., NEW YORK, NY

Mr. SWANSON. Chairman Markey, Ranking Member Upton and

members of the subcommittee, thank you for this opportunity to

testify today on the digital television transition.

From the outset Fox has strongly supported the transition and

took the mandate to deploy digital broadcasting, especially in highdefinition, very seriously. Antiquated analog broadcast equipment

was abandoned, millions of dollars were spent, thousands of

manhours were expended to build out new digital facilities and infrastructure. Fox worked with numerous vendors and manufacturers to design and build new digital cameras, production trucks, digital recording equipment and satellite systems.

The culmination of those early months of planning and work was

the realization of an all-digital network broadcast center which is

fully HD-capable to transmit content and commercial traffic to all

Fox affiliates. Our viewers will be able to receive network and local

programming in the new digital world.

Since the fall of 2004, Fox has produced and distributed more

than 1,000 hours of sports in high definition. Our coverage has included weekly sports programming from the NFL, Major League

Baseball and NASCAR, as well as major sporting events such as

the just-completed 2007 World Series.

Congratulations to the Red Sox and to Chairman Markey on his

team.

Being the home of prime-time hits such as House and American

Idol, we also knew that viewers would not be fully satisfied without

high-quality entertainment programming, and as a consequence

Fox has aired approximately 1,300 hours of HD programming in

prime time from September 2004 through August 2007, now including 100 percent of our scripted shows.

In addition to the operational build-out, a significant consumer

awareness and education effort is necessary to facilitate the transition. Once again, we at Fox have pledged to commit considerable

resources in support of the industry’s collective effort to alert viewers. In order to make important information widely available, we

have committed to the airing of public service announcements.

They are already running in prime time on the Fox network and

in various day parts on each of our 35 Fox-owned television stations.

We strongly believe that a voluntary industry plan is the most

effective way to reach the public. But why is that? Because it recognizes that getting the message out is about more than just PSAs.

It is about all the creative things we as broadcasters can do to

reach our viewers, whether it is through our news and public affairs programming, creative campaigns or informational links on

DTV transition on our Web site, just to name a few. Broadcasters

are in the business of reaching viewers with both entertainment

programming and important news and information. Therefore,
557

broadcasters are the most qualified to determine how to reach

viewers with the message about DTV transition.

It bears restating that the transition will be successful if benefits

to viewers are maximized while disruptions are minimized. Two

issues have the potential to disrupt the transition: an FCC proposal

to allow unlicensed devices in so-called white spaces in the television broadcast band and the protection of broadcast content from

unauthorized redistribution over the Internet.

With respect to the white space issue, we support the use of fixed

devices, but we have grave concerns about introducing personal

and portable unlicensed devices in the television broadcast band.

We are concerned that interference from these devices would disenfranchise millions of consumers who have purchased expensive

new digital television sets. The converter boxes funded by the program authorized by this committee would be subject to the same

interference.

The transition could also be negatively impacted if the broadcast

flag is not adopted to help protect high-quality broadcast programming from being illegally redistributed over the Internet. Currently

DTV stations are legally obligated to broadcast content in-the-clear

with no protection. As a result content providers, networks and

broadcasters face a grave threat from rampant piracy and theft due

to the fact that perfect copies of digital programming can be easily

captured and retransmitted without authorization. Without the

protection of the broadcast flag, high-value content could move

from broadcast to cable or satellite, thereby threatening the future

of free over-the-air television.

In closing, we will continue to work toward our collective goal of

a bright future for digital television. Thank you, and I will welcome

your questions.

Mr. MARKEY. Thank you, Mr. Swanson, very much.

[The prepared statement of Mr. Swanson follows:]
558
559
560
561
562
563
564
565
566

Mr. MARKEY. Our next witness, Michael Vitelli, is the senior vice

president for merchandising for Best Buy Company, and he is representing the Consumer Electronics Retailers Association.

We welcome you back, Mr. Vitelli.

STATEMENT OF MICHAEL VITELLI, SENIOR VICE PRESIDENT

AND GENERAL MANAGER, HOME SOLUTIONS OPERATING

GROUP, BEST BUY, INC., RICHFIELD, MN

Mr. VITELLI. Chairman Markey, Ranking Member Upton, thank

you for inviting me again before your subcommittee on behalf of

Best Buy and the Consumer Electronics Retail Coalition. I was

privileged to participate in the first part of this oversight hearing

on March 28 of this year. The last time I was here, we had few

specifics because there were few to be had. Today we have more

to report.

Two weeks ago I signed a filing in the FCC’s DTV consumer education docket, and in that filing we were much more specific than

I could be 7 months ago. We assured the Commission, and I confirm today, that Best Buy has made the following commitments.

First, on October 1 Best Buy stopped selling analog tuner TVs and

video equipment. We explained this to our consumers as an element of the DTV transition. The news coverage alone of our decision has already done much to alert the public about the transition

itself.

Best Buy announced it will participate in the NTIA Converter

Box Program. We still have technical issues that we are working

on with the IBM team. We also have concerns about some FCC policy issues and the potential for parallel and perhaps conflicting

NTIA and FCC enforcement regulations. But Best Buy is beyond

the point of no return.

Third, Best Buy will continue to train our staff to help prepare

our customers for the transition.

Fourth, we will provide information to our customers regularly

through material in our ads, video loops shown on the TVs in our

stores, our version of PSAs, in store signage and pamphlets and

educational information on our Web site, all in English and Spanish. And soon we will have a DTV transition notice on the back of

all of our sales receipts.

Other CERC Board members, including Circuit City, Radio

Shack and Target, have made similar commitments, but there are

still items requiring attention. First we need to develop a tenor or

partnership between the public and private sectors involved. In the

DTV Transition Coalition we have established a constructive and

effective partnership with the members of broadcasting, cable, electronics and entertainment industries and with public interest

groups such as the Leadership Conference on Civil Rights. But in

order for the transition to be ultimately successful, we need a similar partnership with the FCC, the NTIA and with Congress itself.

The second open item is to provide clarity on the roles of those

partners. I do have concerns about potential efforts to extend the

reaching authority of the FCC into areas with which they have neither experience nor clear delegated authority. In our view, doing so

would likely be counterproductive to this transition, to our very important FCC partnership, and to the vital success of the NTIA pro-
567

gram. It is crucial that we have one enforcement mechanism related to the coupon program so that expectations are clear and customer needs are met.

The third open item requiring attention is the need to provide

clarity to the participants and to consumers about the coupon programs and the key dates. The central questions are when will retailers be prepared to accept coupons and deliver converter boxes?

How many and when can boxes be produced by manufacturers each

month? And when should the NTIA mail out the coupons? Obviously all these issues are linked.

We are working frequently and aggressively with the members of

the IBM team that is assigned to the retailer implementation, and

as of today, here is my best estimate and advice. The date we have

estimated to have our point-of-sale and payment systems modified

and thoroughly tested to satisfy the NTIA regulations and to avoid

fraud or consumer disappointment is closer to April 1 than January

1. And accordingly, my recommendation today is for the NTIA to

tell consumers who send in their coupon applications in early January not to expect to receive their coupons before April 1. Now,

doing so will ensure that the critical systems will work, that we

will be able to provide early demand information to the manufacturers for production to allow early application data to help all of

the participating retailers match inventory with demand and get

the product in the right place, and to provide clear direction to consumers.

If Government and industry working together can exceed these

customer expectations, that is going to be great. What we don’t

want to do is to leave the same customers and constituents apprehensive or to set unrealistic expectations or, worse yet, open the

system up to fraud, failure or consumer inconvenience. This would

only lessen the public’s confidence in a very vital program to which

we are very committed and we think can be very successful.

In conclusion, Best Buy has become the leading consumer electronics retailer by meeting and exceeding our customers’ expectations and needs. We want them to be Best Buy customers for life.

We face stiff competition from other retailers who also seek their

allegiance and loyalty, and this alone is a powerful motivator to us.

We in the private sector have demonstrated that we are capable

of partnership with each other and with the Government, and we

are now reaching out to the Government to help forge a coherent

and effective solution, and in return we need partnership, not confrontation.

I am reminded of an old fable of a contest between the wind and

the sun, and they spotted a man wearing a very heavy coat and

made a bet of whether or not they could get this coat off. And the

wind blew ferociously, and the man hugged his coat tighter. The

sun’s plan worked a little bit better, and we believe it is time to

let the sun shine in on the DTV transition.

Thank you very much.

Mr. MARKEY. Thank you, Mr. Vitelli, very much.

[The prepared statement of Mr. Vitelli follows:]
568
569
570
571
572
573
574
575
576
577
578
579
580
581
582
583

Mr. MARKEY. And our next witness, Jonathan Abbott, is the

president and chief executive officer of WGBH in Boston. He is

here representing the Association of Public Television Stations.

Welcome, Mr. Abbott.

STATEMENT OF JONATHAN ABBOTT, PRESIDENT AND CHIEF

EXECUTIVE OFFICER, WGBH, BOSTON, MA

Mr. ABBOTT. Thank you, Mr. Chairman. Mr. Chairman and Mr.

Ranking Member, thank you for inviting me to testify about the

digital television transition. I am honored to be here today representing not only my station, WGBH, in Boston, but also the Association of Public Television Stations, APTS, and my colleagues from

the 364 locally owned and operated public television stations across

the country.

As the leading producer of programming for PBS, WGBH views

the digital transition as an extraordinary opportunity to enhance

our public service mission. We create content that makes a difference in the lives of our audiences, whether it is science on

NOVA, history on American Experience, drama on Masterpiece

Theater, or literacy with Curious George and Arthur. The digital

transition will allow WGBH and public television to provide greater

access to this rich educational content, reaching viewers through

new services that maximize the investment this country makes in

public broadcasting.

My colleagues and I in public television have been strong supporters of the digital transition from the very beginning, recognizing the promise it holds for audiences. To educate consumers, public television has joined with the National Association of Broadcasters in a major commitment of airtime to inform viewers of the

analog shut-off. Across public television the value of this in-kind

communications contribution exceeds $50 million.

I am pleased to tell you, Mr. Chairman, that WGBH is a key participant in these efforts, using our prime-time and weekend programming. In combination with our extensive network of outreach

to families, we will target hard-to-reach populations like seniors

and ethnically and economically diverse households.

And WGBH is also uniquely suited to help reach people with disabilities. As you know from your leadership in this area, Mr. Chairman, television is a life-line service for the millions of Americans

with hearing and vision impairments. WGBH has been a pioneer

in not only providing captioning and description services, but now

in advising public and private parties on how to do this effectively

as the transition nears.

Still we realize that much more needs to be done in the way of

public education. The latest survey research from APTS indicates

that more than 50 percent of Americans have no idea that the transition is even occurring. Even fewer have awareness of their options to continue their television service. Additionally, few people

understand why they must make a change. The majority of people

surveyed said the Federal Government is on the wrong track when

it comes to the transition. That distrust is even greater among people who have the least awareness of the switch-off.

Based on this survey data and other findings, WGBH joins with

APTS in recommending the following actions by Congress and
584

other key players. First, Congress should make a real financial investment in consumer education. Congress has set aside only $5

million, which is narrowly limited to education about the NTIA

coupon program, yet the Federal Treasury is expected to receive

$12.5 billion in revenue at a minimum from the spectrum auction.

A greater investment in consumer awareness at this time is just

a sound business decision.

To fund a true grassroots campaign, we are asking Congress to

invest at least an additional $20 million towards consumer education by public television and its partners in its communities, and

it is critical that these funds be obligated in this appropriation

cycle. Thanks to the leadership to Congressman Eliot Engel and his

introduction of H.R. 2566, the National Digital Television Consumer Education Act, we are now headed in the right direction.

Mr. Chairman and Mr. Ranking Member, we ask that you expedite

consideration of this important legislation.

Second, Congress and the FCC must ensure that the digital signals of local public television stations are carried by satellite providers. APTS has reached landmark agreements with NCTA, ACA

and Verizon to carry the HD and multicast programming from all

public stations, including the new digital channel services, World

and Create, which were developed by WGBH and 13 WNET New

York.

For DBS, however, the situation is far different. Neither DirecTV

nor EchoStar are carrying the HD signals of WGBH or any other

public television station in the country, let alone our multicasting

services. However, both companies are carrying the local HD signals of the commercial network affiliates. I admit it was nice to

watch our Boston Red Sox win the World Series in HD, but I can

imagine many public television shows that would be similarly enhanced.

While we would prefer a private carriage agreement with satellite, time is short. We need Congress to help ensure that the

American people have access to the public television stations they

help fund.

Finally, we urge Congress to continue to support public television

in creating the new content and services that will drive consumer

demand and interest in digital television.

Mr. Chairman and Mr. Ranking Member, in an era when media

ownership is concentrated in fewer and fewer hands, public stations like WGBH are often the last locally owned and operated

media outlets in their communities. The key policy goal of this

transition must be the preservation of free over-the-air television,

both commercial and public. It is essential to the health of this Nation’s media marketplace and, more importantly, to our democracy.

We appreciate your enduring support for public television and

radio. We share your desire for a successful transition. Our recommendations today are delivered in that spirit.

Thank you. I look forward to your questions.

Mr. MARKEY. Thank you, Mr. Abbott, very much.

[The prepared statement of Mr. Abbott follows:]
585
586
587
588
589
590
591
592
593
594
595
596
597
598
599

Mr. MARKEY. And our final witness is John Taylor. He is the vice

president for government relations and communications for LG

Electronics.

Welcome, sir.

STATEMENT OF JOHN TAYLOR, VICE PRESIDENT, GOVERNMENT RELATIONS AND COMMUNICATIONS, LG ELECTRONICS, LINCOLNSHIRE, IL

Mr. TAYLOR. Thank you, Chairman Markey, Congressman Upton,

members of the subcommittee, for the opportunity to testify today.

I would like to touch on three brief issues: the overall efforts supporting the digital television transition, the converter boxes, and

the all-important issue of consumer education.

First, the overall effort. LG Electronics is totally committed to

the digital television transition. After all, it is in our business interest to do so. We plan to build millions of converter boxes. We

are also committed to joining with Government and others in the

private sector. We are proud to be a founding member of the DTV

Transition Coalition, joining with our partners in cable, satellite

broadcast, and the Leadership Conference on Civil Rights, AARP

and others to help make sure this transition is a success, but making it work will require a concerted effort, a joint effort on the part

of Government and industry. And as you have heard today, the voluntary efforts are making progress.

Second, the converter box. The NTIA set clear standards for the

converter box. LG designed our product to those standards, and I

am proud to announce that our box has been certified. And beginning next week we will start production for delivery of this converter box to retailers starting in early 2008. We expect the box to sell for around $60, and it has the features—as you know, the NTIA had a series of required features

and permitted features.

Perhaps of special interest to this subcommittee, the box includes

an electronic program guide to help consumers navigate through

the additional channels they will get with multi-casting. It, of

course, has V-Chip, a remote control, closed captioning.

As an aside, 6 months ago, when we met with the disability community and our friends from WGBH, we were doing basically black

and white captions; and we had a menu button to get to the captions. The final implementation, thanks to that input, has a closed

caption button right on the remote control, full digital captions that

allow you to choose the colors and fonts and size. We think that

goes a long way to help improve the overall experience of the converter box, and, finally, while not required, a permitted Energy

Star. And I am happy to report that our box exceeds the Energy

Star standards of 1-watt passive and 8-watt active mode.

On the converter box, the Consumer Electronics Association estimates between 22 and 28 million of these boxes will be required.

We are planning to build millions, as I said.

Moving ahead to consumer education, it is essential that broadcasters, cable, consumer electronics industry, retailers and others

all do their part. CEA particularly has been very active in producing informative videos, a series of Web sites that help consumers

with antennas and connections and even creating a database that
600

will help consumers understand whether they have a digital television set or not and will need a converter box.

From my company’s standpoint, we think it is essential that we

communicate with our consumers as well. We stepped up our sales

training efforts. Our call center is being enhanced. We just added

another 150 agents to our call center who speak Spanish in preparation for the launch of this product and will be including with the

product a simple setup guide—this is actually the one from CEA;

ours will look very similar—to help consumers as soon as they open

the box just hook up the product and begin to enjoy it.

So what is left to do? Maintain the date, February 17, 2009, to

provide the certainty we need, continue the coordination between

manufacturers, retailers and the NTIA to make sure the coupon

program is a success and work together to educate consumers

about the benefits of digital and the options available to them to

make a smooth transition.

Mr. Chairman, thank you again for the opportunity, I look forward to answering your questions.

Mr. MARKEY. We thank you, Mr. Taylor, very much.

[The prepared statement of Mr. Taylor follows:]
601
602
603
604
605
606
607
608
609

Mr. MARKEY. All time for opening statements has expired. The

Chair will now recognize himself and then the other members for

a round of questions.

Let me begin then by ask you quite briefly, Mr. Abbott, you mentioned that public broadcasting stations have yet to reach an agreement with DirecTV and Echostar on digital carriage of public TV.

Where are those negotiations right now?

Mr. ABBOTT. Mr. Chairman, we do not have an agreement; and,

actually, around the country there is no carriage of local, interlocal,

high definition services, much less multi-cast. There have been discussions with DirecTV, very little movement with Echostar, but as

yet even those discussions with DirecTV have not produced an

agreement.

Mr. MARKEY. Thank you for bringing that issue to the attention

of the committee. We will try to focus on that.

Mr. Barrett, Mr. Dingell and I wrote to FCC Chairman Martin

earlier this year to ask him to undertake measures to educate consumers about the DTV transition. The NAB, and you mentioned it,

today has announced a huge voluntary public education program.

Mr. BARRETT. Yes, sir.

Mr. MARKEY. Nearly $700 million. But you oppose the FCC’s proposal. How does the NAB expect to mandate stations that don’t

broadcast these public service ads to help people understand about

the transition to digital, force them to in fact educate the public

without some club that the FCC would have to move those recalcitrant stations in the right direction?

Mr. BARRETT. Sir, I believe the most effective business course of

action here is to enlist the voluntary support of this industry, and

we have demonstrably done that with commitment from all the

networks and from over a thousand stations.

It is my view that the makings of this program will encourage

innovation and will go beyond the notion of just doing a minimum

threshold campaign mandated by the FCC. This is an exercise that

is much more important than making Smokey the Bear an icon in

a PSA-driven campaign. This has to be a multi-market campaign.

It has to be creatively executed in every local market in the country.

I would observe that there is such a large number of stations,

groups, companies that have already committed, who are prepared

to deliver a quarterly report to the FCC or to this committee and

demonstrate the execution of this program that I would be concerned about establishing a lower——

Mr. MARKEY. I understand. The problem is that the NAB always

sends in their best broadcaster to testify, and so no one is doubting

that Hearst-Argyle is going to do it, but we need the regulations

for the bad guys.

Mr. BARRETT. I don’t believe we do, sir. There are 1,100 stations

who are already committed to this; and I would observe, based on

my business experience, that in every walk of life, in every station

and every business endeavor there are some who perform better

than others.

Mr. MARKEY. How would you feel about the broadcasters that

shirk their responsibility?
610

Mr. BARRETT. I think this is a matter of self-interest for the

broadcasters.

Mr. MARKEY. What if they do shirk it?

Mr. BARRETT. If they shirk it, I think they will marginalize their

own business prospects in the marketplace.

I believe, sir, that when you are talking about 98 billion advertising impressions that will be delivered by those that are participating that the consumers will not be shortchanged on this. These

messages are going to reach 93 percent of American television

viewers, and they are going to hear the messages that we broadcast

some 400 times. This is a staggering program.

Whether people are left behind, whether some bad actors in the

industry choose not to participate, that will not have a bearing on

public awareness. And I think again in every walk of life there are

some people who take a free ride. I think in a free enterprise system that is a reality. It is a reality in the halls of Congress, and

it is a reality in our business.

Mr. MARKEY. I understand, Mr. Barrett. But here the consequence is if ordinary people don’t get the message is that they

pay the price. So we will have to figure out something here to ensure that the shirkers——

I will have to ask one quick question over here of Mr. Abbott and

Mr. Uva, and that is on the disabilities aspect of this and making

sure that closed captioning will be available on HD. Can you talk,

both of you, quickly about what you are doing to make sure that

there is closed captioning and services for other disableds, Mr.

Uva?

Mr. UVA. Yes, Mr. Chairman. We fully intend to make sure that

in all of our public service messaging and in all of the services that

we will be offering over the years to our communities there will be

not only be closed captioning but Univision is tied into a network

of over 2,000 local community organizations that we will be working with to help support people with disabilities.

Mr. MARKEY. Mr. Abbott?

Mr. ABBOTT. Yes, Mr. Chairman.

First off, WGBH is very active in the captioning area, as a number of those testifying have mentioned. We have actually been

working with the NAB to caption their on-air messages that they

have been developing in their toolbox, as well as work on accessibility for their online messaging. Public televisions messages will all

be closed captioning.

Our challenge with captioning in the digital transition, of course,

is it is a bit of a perfect storm. Because there needs to be the right

commitment and coordination, not just from the broadcasters but

also from the set-top manufacturers and others, and you heard that

presentation today, to really ensure that at the point of transition

the interface with those devices fully supports and creates real utility and ease of access to those captions for all consumers.

Mr. MARKEY. Thank you, Mr. Abbott.

The Chair recognizes the gentleman from Michigan, Mr. Upton.

Mr. UPTON. Thank you, Mr. Chairman.

I just want to say in the last couple of weeks I have already seen

a number of the PSAs, and even though I have a cable system,

both the cable industry as well as I have seen the NAB—in fact,
611

it might have even been during the Boston Red Sox game—reminding people that this program was going to be available. So I am

anxious to watch that pick up in the months ahead before the coupons are ready.

Mr. Taylor, you made a good closing point about the date and the

reason that it should not slip. I have to tell you that, as one that

helped write this legislation with others on the panel here in a bipartisan way, we want to make sure that date does not slip. We

will make every effort to make sure that it doesn’t, and I don’t see

any storm clouds that it will. Does anyone here disagree with that

statement in terms of the panel?

Mr. Vitelli, you say that the FCC lacks jurisdiction over retailers;

and I don’t know whether you have looked at the bill that Mr.

Hastert and I have introduced with Mr. Barton, H.R. 608, but it,

in essence, gives the FCC the jurisdiction if the voluntary efforts

do not go far enough. Do you think that it is crucial that we pass

that bill or do you think things will happen on their own and you

will not need it?

Mr. VITELLI. I have looked at it a bit. It is not what I do regularly, but I looked at it before today, and the part that I noticed

specifically about retailers was about the labeling of analog televisions. In Best Buy’s case, that is a moot point now.

Mr. UPTON. Yes, you have done that.

Mr. VITELLI. They are actually gone. And I would say it is actually a very minuscule part of the business left for the rest of retailers. It is almost to the point that almost every product being sold

today is a digital TV. That is the only thing being made. I think

that issue will be gone rather quickly every place in retail.

As far as education is concerned, we have in discussions with the

FCC have taken virtually every voluntary step, all the major retailers, to do the things that are being proposed, from putting things

like this pamphlet in both English and Spanish in all of our stores.

Our Web site has the same information. We run a text and graphics version of the DTV transition and the three options that everyone has on our video wall six times a day in both languages as

well. So I think all the major steps that are talked about there are

actually in play.

Mr. UPTON. Do you feel that your customer personnel are well

educated to tell the average consumer of the changes that are coming their way as well? I only note that because Mr. Barton, who

is usually here, our former chairman, has the funny tale of going

and buying the biggest TV that he ever saw. And I want to say I

think he went to Best Buy, and he ended up with an analog set.

But that was about 2 years ago before things really began to

change.

Mr. VITELLI. Sure. Again, the first thing that is happening right

now is, to the point here, is we did in fact say let us get rid of

those. We don’t actually have to have the education about a TV in

our store. But the bigger point is what about TVs that people have?

This is precisely what that education is. Your three options are a

converter box, to subscribe to a service——

Mr. UPTON. How many different converter boxes do you think

Best Buy will offer?
612

Mr. VITELLI. That is a great question. There are two that are certified, two manufacturers certified today, several in the works. It

is very likely we will have more than one. It is important to have

multiple suppliers because the demand projections here, both in

quantities and timing, have never happened. There’s never been a

product like this before. And that is going to be, I think, the biggest

challenge for both the retailers, the manufacturers, and the NTIA

in releasing coupons, is both the production availability, when the

coupons are released, what stores do they go to around the country?

Best Buy is, on a really good day, 20 to 25 percent of the industry. So we are a big part of it, and we are aggressively trying to

work that out with manufacturers. We need all of us to work together.

Mr. UPTON. As a Best Buy customer, I look forward to seeing one

of those come on sale. I will notice it.

Mr. VITELLI. You certainly will.

Mr. UPTON. I won’t need one, because I have cable, I want you

to know.

Just to follow up on Mr. Markey’s question, I have to say for the

broadcasters they have every reason to put out the PSAs because,

otherwise, they will lose audiences. They don’t want to lose audiences. Whether it is in a rural or urban area, they don’t want a

single customer not to know of the changes that are coming—overthe-air TV.

Mr. BARRETT. We are in a very competitive business. Our

viewership is measured on a daily basis in top 50 markets and

more to come, and it is imperative that we not leave any viewers

behind, no sets behind.

Mr. UPTON. Thank you.

Mr. MARKEY. Leave no sets behind, that will be the motto for

this hearing.

The Chair recognizes the gentleman from Michigan, the chairman of the full committee, Mr. Dingell.

Mr. DINGELL. I thank you for your courtesy. I commend you for

the hearing.

These questions are for Mr. Barrett, and I think they are mostly

yes or no responses.

Mr. Barrett, I am sure you agree that it is important that the

maximum should be information made available to consumers with

regard to how this program for the digital switchover is going to

be conducted; is that right?

Mr. BARRETT. Yes, sir.

Mr. DINGELL. Now, I want to commend you and the NAB members for the campaign that you are putting on to inform consumers,

and I applaud that.

Now, I note that, with regard to the DTV transition, networks

are going to be putting out public service announcements, or PSAs.

It is possible for local affiliates to sell their own ads in lieu of the

public service announcement; is it not? Yes or no?

Mr. BARRETT. Yes, to the extent of sponsored messages.

Mr. DINGELL. It is possible to do that.

Mr. BARRETT. Yes, sir.
613

Mr. DINGELL. And that would be, I think, bad public policy were

that done, is that not so?

Mr. BARRETT. I don’t think it would be bad public policy. It would

be a sponsored message.

Mr. DINGELL. If they are going to sell over. Because we want the

consumers to get the maximum amount of information, and we

want those public service announcements from the networks to

reach the consumers, rather than an advertisement for a potato

peeler or something like that.

Mr. BARRETT. I think it depends how it is structured, sir. If there

is a 30-second DTV action spot followed by a 30-second spot from

Best Buy, I think that that is perfectly acceptable.

Mr. DINGELL. Well, I applaud Best Buy, because they have done

some good things here, too.

But I would observe if the PSA is sold over with some kind of

advertisement for a potato peeler or a kitchen mop or something

of that kind, the consumer will not receive the information that he

needs to make the necessary judgment about the change from the

current practices with regard to television to the future after the

DTV transition, is that right?

Mr. BARRETT. If there is an irrelevant sponsor attached to that

PSA, I would agree with you; if there was a relevant sponsor, I

think that would be acceptable.

Mr. DINGELL. Now, gentlemen, this to you, Mr. Barrett, Mr.

Swanson, Mr. Abbott. Just yes or no, would you agree that much

needs to be done to make the transition work from a technical

standpoint by the Government agencies and everybody else involved?

Mr. BARRETT. Yes.

Mr. DINGELL. I assume that indicates yes on the part of all three.

Mr. SWANSON. Yes.

Mr. ABBOTT. Yes.

Mr. DINGELL. Gentlemen, would you agree that the FCC has not

completed the rules needed to allow for a smooth transition from

a technical standpoint?

Mr. SWANSON. Yes.

Mr. BARRETT. Yes.

Mr. ABBOTT. Yes.

Mr. DINGELL. Now, gentleman, has each of your companies purchased all the necessary equipment to make the move from analog

to digital broadcasting?

Mr. BARRETT. If I could go first, sir, we have purchased most, not

all. There is still some antenna pending finalization of the FCC

proceedings.

Mr. SWANSON. We would have the same answer. We purchased

virtually everything, but we are waiting for the final technical

specs from the FCC in the antenna, because some of our stations

will be changing channel numbers.

Mr. DINGELL. So you are fully ready then for the transition?

Mr. SWANSON. We do need the FCC to complete the proceedings

on some of the technical issues so that we can finalize the details,

particularly on channels, on our stations that will be changing

channel numbers.

Mr. DINGELL. Sir?
614

Mr. ABBOTT. We are very close to that. The majority of stations

are fully converted and broadcasting. We await final clarification in

a number of——

Mr. DINGELL. Are all three of you in a situation where your companies have arranged for the engineers and contractors needed to

make physical changes to towers to effectuate the transition? Yes

or no?

Mr. BARRETT. Yes.

Mr. SWANSON. Yes.

Mr. ABBOTT. Yes.

Mr. DINGELL. Are you required to report your status in completing these tasks to the Federal Communications Commission?

Mr. BARRETT. Yes.

Mr. SWANSON. Yes.

Mr. ABBOTT. Yes.

Mr. DINGELL. Now, these questions are for Mr. Taylor. In view

of the time, I have to do this in kind of a discourteous way, and

I apologize. There will be a series of questions, yes or no. Would

you disagree that the converter box coupon program is a vital part

of the smooth DTV transition? Would you disagree that consumers

should have many choices of converter boxes available to them?

Mr. TAYLOR. I agree that consumers should have many choices

available to them, and the converter box convert, the coupon program is a key element to the transition.

Mr. DINGELL. Now, I think that your firm or your company has

certain patent rights, and so it is perhaps almost the sole supplier

in these matters; is that correct?

Mr. TAYLOR. No, sir. We expect that there will be a variety of

manufacturers on the market. My company does hold some of the

patents for the digital television transmission system, but we are

one of many patent holders. And I would add that the royalties on

this box are comparable to or lower than the royalties for a $40

DVD player. The royalties is a minimum issue, and we anticipate

some healthy competition in the marketplace with a variety of

manufacturers.

Mr. DINGELL. Now, this question is to Mr. Vitelli. Mr. Vitelli,

would you disagree that if a retailer chooses to become certified to

participate in the DTV converter box program that the retailer

should commit to having an adequate supply of converter boxes on

its shelves for purchase?

Mr. VITELLI. Yes.

Mr. DINGELL. Would you agree or disagree that if a certified retailer does not have converter boxes on the shelf when a customer

arrives to purchase one with a coupon, the onus is on the retailer

to ensure that the consumer or the customer can use her or his

coupon at the time in order to purchase a converter box?

Mr. VITELLI. Yes.

Mr. DINGELL. Now, by the way, I want to commend you at Best

Buy for the way you have been proceeding, but I do still have some

concerns.

Would you agree that when a consumer wants to use a coupon

but through no fault of the customer the certified retailer is out of

converter boxes that the consumer should not be required to bear

additional costs such as shipping and handling?
615

Mr. VITELLI. I think that is going to be up to each individual retailer and the practices that they have. Being out of stock on products, unfortunately, is a general nature of doing business. And I

also think it is going to be abnormally and possibly prevalent here

because of the difficulty in predicting demand for this product, because it doesn’t model with anything else that has been in the consumer electronics industry before.

Mr. DINGELL. But it is fair to say that Best Buy is going to see

to it that if the purchaser can’t get it at the time he is in the store

that he is either going to come back, go to another store or to take

some other step to procure it and it won’t be shipped to him at the

seller’s cost in the case of Best Buy; is that a fair statement?

Mr. VITELLI. What happens typically today, if a product is out of

stock, the consumer will make an option to come back to the store

or have it shipped to them. Generally, they are paying for that

shipping if they decide not to come back, but we make those decisions in our stores every day.

Mr. DINGELL. One quick last question, Mr. Chairman. I note that

Best Buy is not going to accept coupons for converter boxes as a

part of online transactions, but you do accept gift cards for purchases made over the Internet. That is a curious difference in practice. Can you explain why?

Mr. VITELLI. I will, even though I am not technical, but I will do

the best I can.

The Best Buy gift card that we accept is, in a sense, tendered

to ourselves, so the ability to process that to ourselves is doable in

addition to a credit card that a customer uses. To have two different tenders that go to different, alternative companies—one

would go in this case to the Treasury and one going to a credit card

company—we are not able do it technically in a reasonable period

of time or financially. And that may not be true for everybody.

That is a Best Buy systems issue. I don’t think it is per se an issue

with the program.

Mr. DINGELL. Thank you, Mr. Chairman. You have been very

gracious.

Mr. MARKEY. The gentleman’s time has expired.

The Chair recognizes the ranking member of the full committee,

Mr. Barton.

Mr. BARTON. I am going to pass so I can get spun up on the hearing. So I will ask some questions later on.

Mr. MARKEY. The Chair recognizes former Speaker Mr. Hastert

from the State of Illinois.

Mr. HASTERT. I thank the chairman, and I want to congratulate

him on the stellar performance of his Red Sox.

Mr. MARKEY. I thank you very much. Mr. Swanson already congratulated me, and he didn’t tell us, but I think he is a Cubs fan.

Mr. HASTERT. Well, you know that I am a Cubs fan, too.

Mr. MARKEY. That’s what I was thinking.

Mr. HASTERT. Maybe the 100th year.

Mr. MARKEY. It feels great, by the way, when you finally win. It

is just an incredible——

Mr. HASTERT. Thank you. I wouldn’t know.

I would like to lay this out. The middle of February in the year

2009, people’s analog TVs go black. Everybody agrees that is going
616

to happen. So from that point I think it is a simple thing that we

start to work backward. The NTIA will start issuing certificates in

January, 2008, so these certificates are going to be available.

The next issue is how you communicate to people who may or

may not have but would need, I guess, people who have analog

TVs. That has to come on the part of the publicity from the broadcasters. Mr. Barrett, you talked about that. Do you think that is

sufficient?

Mr. BARRETT. I think the kind of comprehensive program we are

talking about will do the trick. There will need to be different kinds

of messages delivered to different demographic groups and different

constituencies, and in a well-thought-out marketing program I

think we will be able to accomplish that.

Mr. HASTERT. You note that somebody who or a broadcaster who

doesn’t adequately do this would probably lose the ability for people

to get his ads and lose prescribers, right, constituents.

Mr. BARRETT. I think to some extent that broadcaster will be

marginalized in our business.

Mr. HASTERT. Mr. Swanson, do you agree?

Mr. SWANSON. Yes, I do. And I think that the way that broadcasters reach people goes well beyond PSAs and crawls. You know,

we will use newscast, news stories. We will use our public affairs

programing.

On your morning shows it might even make sense for us to do

some sort of a giveaway of a digital television set to encourage participation. To reach particularly the young people under 30, so

much of their information comes from the Internet and Web sites,

we will have to be aggressive on our Web pages in that regard.

And then I think a thing that would be of primary concern is

that a lot of the people who receive their signals over the air are

in the minority communities. It would be high in the Hispanic community. It would be high in the African American community and

also the elderly. And our diversity development group will be working actively with community groups to make sure that that word

is disseminated to them most effectively.

Mr. HASTERT. In my follow-up question I was going to ask that

of Mr. Uva, the disproportionate share will be elderly and minority

groups, Hispanic groups, African American groups. Primarily, they

keep things longer. They use it longer. Old people like me, we probably have two or three of those analog TV sets sitting around. My

wife watches them. I don’t.

But, anyway, do you think with the publicity campaign that you

can educate people to go out and apply for a certificate? I mean,

the certificates aren’t just going to come to people in the mail or

come across your computer. A lot of people don’t have computers,

so e-mail—these issues, to start something, is not something, especially senior citizens’ use, is there an adequate campaign to get the

reality out there?

Mr. UVA. We are very committed to not only using our airwaves,

but, as Mr. Swanson suggested, to really work closely with grassroots organizations that we touch every day throughout the country

in high-density Hispanic markets, and that means being able to be

there, talk to them. We have even considered helping them, edu-
617

cate what is an analog television set; and we go look at them in

their homes or residences and really give a one-to-one instruction.

Mr. HASTERT. Now, Mr. Taylor says that he has a product, Mr.

Vitelli says that they have a way to sell that product, so that is

how all these pieces come together. I guess we are going to have

to watch over the next several months how the beginning starts,

how we will be able to transcend through this, but it seems to me

that free market system will work on this, and I congratulate all

of you.

Thank you. I yield back my time.

Mr. MARKEY. The gentleman’s time has expired.

The Chair recognizes the gentleman from Pennsylvania, Mr.

Doyle.

Mr. DOYLE. Thank you, Mr. Chairman.

Mr. Bruno, I am concerned about the really low numbers of

women and minorities who own our local media, and I know that

many members on this subcommittee are concerned about that, too.

Among low-powering class A stations, what percentage are owned

by women and minorities compared to full-power stations?

Mr. BRUNO. There are 12 percent of low-power television and

class A television stations that are owned by minorities and

women. In fact, Bruno-Goodworth Network is 37 percent owned by

Debra Goodworth.

Mr. DOYLE. Mr. Bruno, if you were available on cable, what

would your Nielsen rating be? When you were available on cable

fully, what was your Nielsen rating?

Mr. BRUNO. We had a 10 percent cumulative rating across the

board; and if you take the 300 channels that are on cable in our

area, that is in the top 40 stations that were there. So we were

heavily viewed.

Mr. DOYLE. And if a station like yours were granted carriage,

how many jobs might be created by that?

Mr. BRUNO. Well, in our area, we will probably start out—we are

at a very limited staff right now, under 10, because of the situation

that has happened to us. With cable carriage, we would immediately go to 50. Over the course of about 36 months, we would get

up to about 100 employees; and that would happen all across the

country. I am not an exception. There are 910 class A stations

around the country. We are all in the same situation. We would all

have that capability to hire those people.

Mr. DOYLE. This question is for Mr. Willner and Mr. Knorr. I am

curious of what you think about Mr. Bruno’s proposal that they

give up their analog carriage and become digital only and in return

for that they gain digital carriage on the cable stations where they

are currently available over the air. Many systems are already

moving from analog stations to digital, and you can fit at least four

or five digital channels in the one analog channel that they would

be giving up, so what is wrong with granting a local broadcaster

digital-only carriage? Mr. Willner.

Mr. WILLNER. There is nothing wrong with granting it if we can

determine that the programming that is being produced by the lowpowered TV station is of interest to our customers. The problem is

that there is a misconception that a 750 MHz cable system is this

vast wasteland of bandwidth that has availability for just an un-
618

limited use. The fact of the matter is, all of our cable systems are

either 750 MHz or 860 MHz; and we are struggling today to try

to maneuver the services that we are already offering in order to

provide competitive services in video, in digital video, in high-speed

data, Internet service and telephone service so we are competitive

in the whole telecommunications arena. And to open up a mustcarry requirement for another thousand TV stations across this

country will just put tremendous amounts of pressure on the limited bandwidth we have available.

Mr. DOYLE. We are not talking about dual carriage. We are talking about digital only; and it will free up an analog station for you,

which you’re going to be able to squeeze four or five or six digital

stations.

Mr. WILLNER. Well, I don’t understand how it frees an analog to

add a digital if we’re not going to——

Mr. DOYLE. Well, they’re going to give up analog. They’re going

to be——

Mr. WILLNER. But that doesn’t mean they’re necessarily—there

is no must-carry requirement now. So they may or not be carried

on analog.

We carry a lot of low-powered TV stations, and we do so voluntarily. We do so through negotiations, based on the programing

content that the LP TV station is delivering. And if we determine

that our customers are going to be interested in it, we want to

carry it. But to mandate just blanket carriage results in things like

weather scans that commercial broadcasters sometimes use to fill

up some of the multi-streams that they have right now which are

of very little interest to consumers.

Mr. DOYLE. So you don’t find Mr. Bruno’s proposal attractive.

Mr. WILLNER. I think right now it is impossible for us to allocate

the bandwidth at the levels that they are requesting without

breaking something else that is in the system.

Mr. DOYLE. Mr. Knorr?

Mr. KNORR. I do think capacity is an issue, and I also agree that

in many cases we are not reclaiming an analog channel under that

outline. But I think if the programing is compelling, it is absolutely

something we want to carry. If it turns out to be just a forced carriage of another shopping network when we have limited capacity,

I don’t think that does serve the public interest.

But I do think there is legitimate concern which actually mirrors

the concern of small cable where there is a big asymmetry between

large companies and small companies. Sometimes, even if there is

compelling content or a compelling case, the free market can work

against interest. And we feel that as small cable companies working with large broadcasters on retrans consent, and this is the inverse of that issue as a small broadcaster who is trying to work

with a large cable operator without Government mandates to back

it up. So there would be some legitimate challenges there that need

to be reviewed, but definitely keeping in mind, as Mr. Willner said,

there is not unlimited capacity on cable systems.

Mr. DOYLE. Mr. Bruno, isn’t there law requirements that you

have to air a certain amount of local content?

Mr. BRUNO. Yes, 3 hours of local content.
619

Let me point out that the 910 television stations are small television stations. Seventy percent of the country and cable operators

will not be affected under this. Only 30 percent will be affected. We

are not that big, even with 910 of us. We are not DMA wide. We

are small stations.

Mr. DOYLE. Mr. Barrett, I want to get on the record to understand NAB’s problem with unlicensed devices. This is strictly a

concern about interference. If it could be proven in real-world conditions that unlicensed devices wouldn’t interfere with broadcast

TV signals, then there would be no objection to having these devices being sold in Mr. Vitelli’s store or elsewhere? It is strictly an

interference issue?

Mr. BARRETT. Sir, I think it is more than just an interference

issue, although that is of significance importance to us. The notion

of license and the notion of fixed are important as well. I think if

these are unlicensed devices that are purported not to interfere and

they are mobile to the extent that something goes wrong, we have

lost the ability to find a remedy for the problem. We can’t track a

device down or we can’t correct it or shut it down if we are in an

unlicensed world with these devices. So it is very important but not

the only component.

Mr. DOYLE. So is there any circumstances under which you could

not object to these unlicensed devices?

Mr. BARRETT. I think if they are licensed and fixed and demonstrably——

Mr. DOYLE. But not mobile.

Mr. BARRETT. I think that is the more appropriate solution.

Mr. DOYLE. With my 30 seconds remaining, I just want to comment on the coupon program. Last night, Mr. Chairman, I was

watching Charlie Brown and the Great Pumpkin. And you know

when it gets to the part where Lucy and Charlie are playing football it made me think of something. Now what made the moment

special is that Lucy and Charlie Brown signed a contract that she

wouldn’t yank the ball away when he went to kick it. If you’ve seen

the show, Charlie Brown rears back, and he comes running all he

can and spins through the air and lands on his head. And then

when he looks at Lucy she says to him, well, the contract wasn’t

notarized.

Well, Mr. Chairman, this reminds me of NTIA. I am worried that

if a consumer coupon expires because the grandkids aren’t going to

hook up their sets until Thanksgiving or somebody is deployed

overseas and can’t get home to help grandma or grandpa before the

coupon expires, that they are sort of like Charlie Brown. They are

just going to be out of luck.

So, as I said many times before, there should be an extension of

these coupons if there are circumstances beyond the consumer’s

control, they are out of box at the store, the kids can’t hook their

sets up, and I don’t want our grandmoms and grandpops to be

Charlie Brown.

And with that, Mr. Chairman, I will yield back.

Mr. MARKEY. That would make N-T-I-A L-U-C-Y.

Let me turn and recognize the gentleman from Texas, Mr. Barton.

Mr. BARTON. Thank you, Mr. Chairman.
620

If we keep doing these hearings, we won’t have to have an education program. Everybody in the country will have testified before

your subcommittee. You are a one-man education program in and

of yourself, which is a good thing, not necessarily a bad thing.

I want to ask you, Mr. Vitelli and Mr. Taylor, I think you represent the retailers and the manufacturers, we have allocated

enough money to produce up to 33 million of these set-top boxes,

but my staff informs me that the industry doesn’t expect to manufacture and sell more than 8 million. Is that true, the lower number? And, if so, why so?

Mr. TAYLOR. Mr. Chairman, the Consumer Electronics Association estimates between 22 and 28 million converter boxes will be

required in the marketplace.

Mr. BARTON. So the 8 million number is a wrong number, a bad

number?

Mr. TAYLOR. I think that was extrapolated as the possible number that would be requiring coupons. I know that CEA has done

a lot of research. I need to study it some more. I would be happy

to investigate it more and get back to you.

Mr. BARTON. Mr. Vitelli?

Mr. VITELLI. The estimate of the number of people that would potentially need a box sounds completely accurate to me. It will be

interesting to see what consumers decide to do. Because they do

have multiple options. A converter box is one, and a large number

of people will do that. I think you are calling to point the difficulty

that I think many of us are in the industry are having, which is

projecting the demand.

Mr. BARTON. But nobody on the panel expects there to be a demand for more than 33 million.

I see a lot of stares, so I am going to assume that that means

you don’t expect there will be more than a need for 33 million.

I am going to ask Mr. Swanson, who is with Fox Television, I believe in markets. I believe that people that have an incentive, a

vested interest to help themselves will help others and for trying

to help themselves. Do you believe that the broadcast industry has

an incentive to educate their customers, consumers, viewers about

the transition or do you think that Congress needs to in some way

force, encourage, incentivize you to do more?

Mr. SWANSON. I think for people in the broadcast industry, as

Mr. Barrett has already suggested, it is self-preservation for us. We

want every household to be able to receive a digital signal on February 17, 2009.

Most of us need the ratings and need the revenue that comes

from that to continue to perform, and so we don’t need to be goaded

or prodded on this. And that is why Fox has been aggressive, not

just now but clear back to 2004, in helping educate the American

public to the advantages of HDTV and to digital television.

In this last 15 months, obviously, the efforts will intensify, but

a broadcaster who failed to participate would only be hurting themselves, ultimately, I think. So, yes, it is in our best interest to do

this. And I think hearings like this are beneficial, but I believe that

our business is reaching people with news and information. That

is what we do for a living; and I think if we are left to ourselves

to do it, I think we can do a good and adequate job.
621

Mr. BARTON. I would assume that in January, in early February

2009, as the transition approaches, that there would be quite a

number of ads on television letting people know that. Can you give

me any kind of an estimate of how many times a day I might see

a 15-second or 30-second spot telling me to get off my bottom and

go down and get my converter box or buy my new digital TV set

that last month? I would assume it would be a lot, but maybe I am

wrong. Maybe you will just run it once a day at 12:00 p.m., at midnight, or something when nobody is watching, but I think you will

do a lot.

Mr. SWANSON. Well, I think if you are home in Texas you will

see our two stations in Dallas running them in various day parts,

including prime time now; and if you watch here in Washington

you will see our two television stations here doing the same thing.

That effort is under way, it has been under way and will continue.

It will be interesting to see as we monitor this process over the

next 15 months, obviously, a lot of Americans—that is why the

stores stay open an Christmas Eve because there is always somebody shopping at the last minute. So I assume that in January,

February 2009 there will be stragglers, and we will have to have

an all-out effort to reach them, but that would be the intent, yes.

Mr. BARTON. I will be one of the stragglers, I assure you. But I

will be watching your ads informing me of the transition in between watching the ads of the Dallas Cowboys getting ready to

beat the New England Patriots in the Super Bowl that year.

Mr. MARKEY. What year is that?

Mr. BARTON. 2009.

Mr. SWANSON. I think they already settled that this year.

Mr. BARTON. We will have another crack at them.

I yield back, Mr. Chairman.

Mr. MARKEY. The gentleman’s time has expired.

The Chair recognizes the gentleman from Texas, Mr. Gonzalez.

Mr. GONZALEZ. Thank you very much, Mr. Chairman.

I want to associate what I feel about the Super Bowl with my

colleague from Texas; and that first game is just a warm-up, a

scrimmage. It meant nothing in the big picture.

First of all, I know that there is a time and a place for further

discussion on white space, dual carriage all of that, and it is important. Where I want to go immediately is going to be—and even

pass over the education part of what we will be doing in less than

a year, but I want to comment Mr. Barrett, Mr. Uva and Mr.

Swanson, for what you all are doing on the education part. Because

I think it has been pointed out by Mr. Abbott that the Federal Government is not going to help you that much for whatever reason,

so thank you for whatever you are doing on your own initiative.

My question focuses on the testimony by Mr. Vitelli and Mr. Taylor, the manufacturer and the retailer. We had an interesting conversation I guess a couple of weeks ago when we had the last hearing, and I believe Mr. Walden is here, and he may follow up on it.

My question goes to this converter box, Mr. Taylor. First of all, you

indicated this will sell for about $60 retail; is that correct?

Mr. TAYLOR. That is correct.

Mr. GONZALEZ. We have been hearing between $50 and $70 and

were a little concerned. How many of these converter boxes, the
622

one that you have before you, do you anticipate manufacturing? Because you are going to have competition, and there’s been different

numbers—22 million, 30 million, 8 million—so you have got to

have some idea how many you plan on manufacturing.

Mr. TAYLOR. We do. For competitive reasons, I can’t give you a

specific number, but we anticipate building millions of these boxes.

And, in fact, production begins next week.

Mr. GONZALEZ. But after, let’s say, the first few months or the

year of the program and such that we have it in place, those boxes

are pretty well useless as far as merchandise being carried and

available by the retailers?

Mr. TAYLOR. I’m sorry, at the end of the transition?

Mr. GONZALEZ. Sure. The shelf life of this thing is really at the

outset. Best Buy will not be carrying these in a few months, so you

have to factor that in. So my next question would be how much additional cost would it be for you to manufacture to add a feature

like the ability for that converter to play a DVD? And please excuse

me if I am getting all the technology confused or whatever, but I

am just assuming that you can add a feature on there.

Mr. TAYLOR. We make those products today, sir, and they are not

eligible for the coupon because of the way the statute was written.

That is only for the basic boxes, but we have products on the market today that are DVD recorders——

Mr. GONZALEZ. No, no, no, I am very familiar. Do you have any

plans at present to maybe manufacture something that will be

priced much lower than what you have with the DVD players and

recorders that you have out there, which are really wonderful machines, but I am talking about something that may coincide right

at the same time and be priced pretty close to the $60 that will

have some added feature like—not recording, because I know that

is expensive, but the playing of DVD.

Mr. TAYLOR. If you included a DVD player, it would be excluded

from the coupon program.

Mr. GONZALEZ. Oh, no, no, no, forget about the coupon. We’re

going to be talking about upselling, and that was—I am just wondering where all this is going to end up.

Mr. TAYLOR. For now, we anticipate just for this product and introducing the basic converter box, but I would add for the analog

consumer this is a big benefit because they move from that

scratchy analog picture into the digital world and they get new features.

Mr. GONZALEZ. No, no, no, I have no complaints about what you

have been able to pack into it as far as the quality. We had a demonstration yesterday, and I appreciate your effort.

Mr. Vitelli, I don’t believe that Best Buy or any retailer is going

to be the converter box policeman on the beat, you know what I

mean? But your testimony reads as follows: If a customer has no

over-the-air antenna and does not expect to use one, the customer

likely has no need of CECB; and it would ill serve the customer,

as well as the NTIA program and Congress and the FCC, for us

to try to sell one to the customer.

That is totally out of your hands, though. You can’t police that.

When someone comes in with their little credit card voucher and

they want one, you are not going to quiz them as to whether they
623

really need it or not. You are going to have to sell it to them, is

that correct?

Mr. VITELLI. Well, certainly we would sell it to them if we had

no contact with them.

My point of that comment is, if someone had a coupon that inevitably they don’t need and they buy that box, because we have had

no discussion with them about whether they need one or not, they

go home and they find out they actually don’t need it and several

weeks or months later they will want to come back and return it

and then that coupon disappears from the world and the box has

already been used and now with we have a used box that we need

to deal with—so it is in our best interest and the interest of the

program that a person who is getting the coupon and a person redeeming a coupon actually has a need for the box.

Mr. GONZALEZ. Mr. Vitelli, I understand that, and I appreciate

that, and I think it is necessary, but then it leads to what we have

here as far as the testimony of Marc Pearl, Consumer Electronic

Retailer’s Coalition: If a customer is interested in obtaining a

CECB to service an existing TV, VCR, et cetera, this will be the

focus on the sales discussion and transaction. If the customer is interested in upgrading to the new digital TV or an HDTV display

to better experience or enjoy watching DVDs or high-definition

DVD or in receiving digital broadcast in a new TV or recording

product, this will be the focus of the transaction.

So I assume once you get the threshold question about why are

you here that you will probably lead into other choices. I am not

saying that is evil or bad, and I think Mr. Walden and I had a discussion after the last hearing, and he may follow up on it. All I am

saying is that I am not sure that this program was ever intentioned to be somewhat of a windfall for retailers to be able to

upsell. If that happens, I have no idea if that is a bad or good

thing. Because, on the good side, why shouldn’t the consumer be

advised that there are better choices closely associated with the expenditure that they are going to make in buying something that is

of a basic design? I understand that the voucher does not apply,

but creative merchandising would have something in the way of a

rebate or something to make up for that $40 that they would be

investing in the base machine.

So, one, I don’t think you will be the police officer over there and

you are going to basically restrict people to buying the base product. But how do you find this balance? And your sales personnel,

I don’t know how you stop a salesperson. I don’t know if you pay

them by commission or not. That will simply be moving in that direction.

That is going to be an issue, and Mr. Walden may take that up.

I am just saying I would like to anticipate that situation and see

how we can address it.

Mr. Uva, I have got about 47 seconds, but TV stations, broadcasters along the southern border of the United States, what is the

special situation that you find yourselves in?

Mr. UVA. Congressman, we need to really focus on the stations

in those communities, more so than any other part of the Hispanic

world, simply because if they are left behind and Mexico not converting to digital, they will be receiving analog broadcast from
624

Mexican border stations and will be deprived of important emergency service information as well as global news.

Mr. GONZALEZ. As the situation exists now, Mexico will be broadcast in analog.

Mr. UVA. Will remain in analog past our transition in February

2009.

Mr. GONZALEZ. Thank you very much, Mr. Chairman.

Mr. MARKEY. The gentleman’s time has expired.

The Chair recognizes the gentleman from Oregon, Mr. Walden.

Mr. WALDEN. Thank you very much, Mr. Chairman.

Mr. Barrett, I want to, first of all, thank the NAB and others for

yesterday’s demonstration for Members of the House and their staff

on the DTV conversion. I understand about 170 staff turned out

and about two or three Members. Do you think that Congress

should by rule require all Members and staff to show up for events

like this so that Members of Congress are actually fully informed

so they can help their constituents?

Mr. BARRETT. I would like to see all the Members of Congress be

fully informed, but I will stop short of a mandate.

Mr. WALDEN. That is good. I just thought I’d ask.

I do have a serious question—well, I have a lot of them, actually;

and I will try to move rapidly.

Translators—I represent a district, 70,000 square miles. A lot of

our viewers over the air rely on translators to be able to see their

television, whether they are analog or digital. Can you give me

some sort of idea of what you see happening with translators making this shift from analog to digital in terms of timelines?

Mr. BARRETT. I think it will be very challenging. We have challenges, the company, with the amount of translators we have in the

State of New Mexico, and there will be some small pockets of that

State where it is economically not feasible for us to expend the

money to build out into a full digital facility there, and we are

working with the satellite providers to see if we can provide a solution for those small number of homes.

Mr. WALDEN. Are there any remaining issues at the FCC as far

as frequency allocation goes for those translators to be able make

the conversion and come up on air on a digital channel?

Mr. BARRETT. I believe until the FCC finalizes its table that remains an open issue.

Mr. WALDEN. Will that table be finalized, do you believe, before

February 17, 2009?

Mr. BARRETT. I believe it is imperative that it is finalized.

Mr. WALDEN. I would draw the chairman’s attention to this, because I think it will be a real issue in rural areas where you are

not served by the main signal of the broadcast station. And, in fact,

a lot of communities are served by translators, that they may not

have the opportunity of a digital box to be able to watch over-theair TV; is that not accurate?

Mr. BARRETT. That is the theoretical potential, yes, sir.

Mr. WALDEN. Mr. Vitelli, I want to commend you and what your

store is doing and that of other retailers.

I will follow up on Mr. Gonzalez’s point about how we market

products in America, and I don’t think you want this committee

micromanaging every sales transaction with penalty or there would
625

be no reason for you to bother to offer these boxes to begin with.

On the other hand, I don’t think we want bait-and-switch tactics;

and on that point I think all of us would agree.

What happens today when a consumer comes into a Best Buy

and wants to buy a new washer or dryer that has an Energy Star

rating and perhaps a rebate associated with it versus one that

doesn’t have that sort of rebate and they walk in the store and

want a washer and dryer? Do your sales clerks also say, gee, there

is also this model has a rebate with it, it is more energy efficient,

and you evaluate what the consumer wants or needs?

Mr. VITELLI. Sir, I would like to add to that. I’d like to add to

Mr. Gonzalez’s question. Best Buy is a noncommission environment, and our key training that we talk to all of our salespeople

about is to understand and then meet that customer’s unique

needs. That’s what we do.

Mr. WALDEN. Right.

Mr. VITELLI. Asking those questions, contacting the customer,

asking the lifestyle questions of what they are interested in and

what is important to them and then recommending the right product for that situation and encouraging the sale of that little acronym of CARE is how we train our sales people everyday.

So, in your example there, the conversation would be aligned—

would be, around in the appliance department, OK, you came in for

this. Are you aware of Energy Star? Are you aware of the benefits

that it brings to you and indeed to all of us by using less water,

using less electricity?

Mr. WALDEN. My example is an analogy here. If I come in saying

I need this consumer or the set-top box to do the conversion, I

would want somebody to say, gee, here are alternatives. Now, you

don’t get the coupon here or the $40 rebate, but these are also options if you are thinking about upgrading your television.

Mr. VITELLI. That is the explanation we are running on our video

wall that goes six times an hour. It is already running. You have

three options: You are going to get a converter box, you are going

to subscribe to another way, my colleagues are here that have another way to do that, or you are going to buy a new digital television.

And it is also important to understand there is a lot of talk about

the expensive digital televisions. That is because of what has been

going on with high-definition television and flat-panel TVs.There

are standard-definition digital televisions that are low cost that are

in our stores right now.

So those three options will be presented saying here is where you

came in and here are your three options. Wherever you want to go,

we can help you.

Mr. WALDEN. Mr. Barrett, I want to go back to follow up on a

question the chairman raised about sponsored public service announcements. Are those not a standard in the industry anyway for

drunk driving PSAs and Halloween safety public service announcements? Isn’t that a frequent situation where there are industry

groups or businesses who want to sponsor a message because it is

both in the public good and in their own good?

Mr. BARRETT. Yes, sir. That is a widely practiced matter in most

respects. And I think of in Baltimore, at our station there, WBAL,
626

if it is involved in the Susan Coleman Cancer Run, Hopkins may

want to be a sponsor of that. I believe it enhances the message.

Mr. WALDEN. And, actually, it may add more messages on the air

than you are planning to do for free through the public service announcement strategy. So it is actually an industry-wide effort to

add to the message, not detract.

Now, I understand the chairman’s comment about potato peelers

or Pocket Fishermen or something maybe being Ginsu knives, I

don’t know, being not necessarily what you would put in place with

that. I think the reference was it would be irrelevant to have some

of those people sponsor it. Do you think it would be irrelevant if

a Member of Congress’s campaign sponsored one of those messages? Would we be considered irrelevant to that process?

Mr. BARRETT. I would like to take that under advisement.

Mr. WALDEN. You may want to consult.

The final point I want to make—and it is really not necessarily

to this panel, because we don’t have anybody here from the satellite companies, but we may later—there are still pockets in America where over-the-air broadcasters are having difficulty getting

local-into-local signals set up on the satellite systems. I have that

in my district, and Ben Dorigan with KTVZ is having a real problem with that. It is a growing frustration for them and for viewers

I think in these local markets.

That was part of the deal, was to have local into local; and some

of us are running out of our patience in terms of the excuses on

why that can’t take place in an analog environment, let alone in

the digital environment. And that is an issue I continue to pursue.

Mr. Abbott.

Mr. ABBOTT. If I can second what you are saying.

Mr. WALDEN. I also have this problem in public broadcasting in

southern Oregon, too.

Mr. ABBOTT. Absolutely. And we have in that our model of

supplementing the Federal investment in public television in a

public-private partnership with significant support from the community to support programs. As I was mentioning in my testimony,

we are greatly concerned in rural areas that local into local move

forward, high definition move forward and the range of new digital

services that are available to every station to localize in their communities are established through satellite carriage, because that

creates the service that then communities respond to and make an

investment in public television.

Mr. WALDEN. I am going to steal back my last 5 seconds to make

a point to the chairman that in a future hearing if we could address this translator issue vis-a-vis the FCC’s rulemaking and the

allocation of those signals I think it would be real important to this

conversion success.

Thank you, Mr. Chairman.

Mr. MARKEY. Done. Thank you.

There are three roll calls that will be held on the House floor beginning in about 10 minutes. So I think that gives us time to recognize the gentlelady from California, Ms. Solis, for her 5 minutes of

questions. Then we will recess, and then we will return to let other

members be recognized.

The gentlelady from California is recognized.
627

Ms. SOLIS. Thank you, Mr. Chairman.

I just wanted to get a response from Mr. Vitelli and Mr. Taylor.

I have information before me where U.S. PIRG did I guess kind of

a random study here in Washington, DC. And they visited several

of our local stores, five electronic retailers. And in interviewing

clerks and supervisors many of them were not aware, were giving

inaccurate, misleading information, didn’t know about the converter box program. Some didn’t even know about the coupon.

Can you please respond to that, Mr. Vitelli?

Mr. VITELLI. Yes. As I said earlier in my testimony, there was

very little information other than—and what our training includes

today—that there will be a converter box and there will be a coupon. That is what is in our training today.

I think we are at a point now we can begin to take that training

to the next level of this is the various converter boxes that will be

available, this is the date that they will be available, and this is

when the coupon application process will all begin to start. And

that will happen after the holiday when we get into 2008.

The training that we do today in our stores is generally focused

on the questions that people are coming in and asking about today.

And the majority of people that walk into our stores right now are

talking about high-definition TV, flat-panel TVs; and that is the

preponderance of our training right now. That is going to change

and ratchet up as we get closer to the transition.

So I would say as we get into the application process, which will

happen the early part of next year, and certainly as we get into

January and February of next year with the transition, that both

the training, the messaging in our store, the messaging in our advertising will ratchet to meet the response that the customer is

going to have.

Mr. TAYLOR. We agree. At LG Electronics we have been increasing our sales training activities surrounding the digital transition

generally. We think it is a little too soon to be start talking about

the boxes, because they aren’t yet available. But we are preparing

and in fact just this week met with 800 of our dealers, and a huge

module of that was the discussion about the transition and the converter box coupon program.

Ms. SOLIS. But we just heard that there are commercials and

PSAs that are already going out. So there could be some confusion

amongst our consumers that is maybe unintended, but it is there.

So I am just cautioning that maybe we need to have some quality

control here and maybe know exactly what it is we are telling our

staffs to tell people. In fact, I understand that some people weren’t

even told that they had to purchase a converter box. They were actually trying to sell them higher-end equipment. So that is something that Mr. Gonzalez brought up earlier. So I would be concerned about that, just misleading; and it may not be intentional,

but it happens.

One of my questions, too, is I worry about those senior citizens

that live in convalescent homes, whose children bring them their

old television set or they bought them when it is already old and

the fact that many of the convalescent homes don’t allow them to

have digital or their own cable set-up. What are we doing to reach

those kinds of particular areas? Because that is a very different
628

population, and not all of them are going to go sit in front of the

big plasma TV during lunchtime. Some are immobile. How do we

handle that?

Mr. ABBOTT. If I might comment on that, that is an area of great

interest and focus, of course, for public television, where many of

the elderly residents in all of our communities care greatly for the

range of programming that we provide. It is a relationship that has

been fostered over time. It is why in my testimony I offered the expressed interest in supplementing the messaging that we can do on

our television stations with on-the-ground education and outreach.

And in our communities and communities across the country, senior centers, convalescent homes, in addition to libraries, facilities

tied to Ready to Learn and Head Start programs, those are the

ways on the ground we know we can experience some success in

having people really understand the transition.

One of our concerns is that a 15-second or a 30-second message

is the beginnings of awareness. It presents the beginning of awareness but not necessarily a way of talking through the most productive and prevalent solution.

Ms. SOLIS. Mr. Chairman, I don’t have a lot of time, so I want

to submit questions also for the record.

But I do want to say that one of the greatest concerns I have is that, again, the coupon is worth $40. If the converter cost $60, how

many chances will a family member get to use the coupon? Is it

just one per set or how does that work?

Mr. VITELLI. It is one coupon per one converter box.

Ms. SOLIS. So it will affect just one?

Mr. TAYLOR. And each household can apply for two coupons.

Ms. SOLIS. That might be another question to revisit.

Mr. MARKEY. The gentlelady’s time has expired.

The gentlelady from California, Mrs. Capps, says that she does

not mind if she has less than 5 minutes, so we will recognize her

for that purpose.

Mrs. CAPPS. And I am going to presume that I can run really fast

to the floor and not miss the vote. But I thank the chairman for

allowing me. I am not able to come back after the series of votes,

but I wanted to—and I just am going to ask very brief questions

of two people if I could, Mr. Knorr and Mr. Willner. Some of the

other concerns I have have been addressed, and I am going to assume they are going to be followed through.

Mr. Knorr, parts of my district are serviced by very small cable

providers. I am concerned about how FTC’s dual-carriage order will

affect cable and broadband service for my constituents. Can you

tell me—can you give us an idea of how many small cable operators

are likely to be affected by this? Because it will have a direct impact on my constituents, I am sure.

Mr. KNORR. Absolutely. It is very similar to the translator issue.

We estimate as many as 1,000 communities served by analog-only

cable operators serving just a few hundred customers. And we

think that a mandate to deploy digital where there is no financial

justification similar to translators to be able to afford that upgrade

to digital, very likely, almost with economic certainty, will drive

many of these operators out of business, in which case there is no

one to provide that service possibly to a retirement home.
629

Mrs. CAPPS. I hear you. And that is a big concern of mine, and

we will go further into it another time, I hope.

Finally, Mr. Willner, I am concerned that as the DTV transition

nears some consumers may feel they have to switch to more expensive digital cable in order to continue viewing certain programs because the channel on which the program airs has been moved to

the digital tier. Does cable have any plans to move certain channels

or networks to its digital-only tier? I want to be assured for my

constituents again.

Mr. WILLNER. The agreement that we have reached that did not

make it into the bill but we did a voluntary agreement was for carriage of the analog and the digital signals of all broadcasters, the

must-carry broadcasters.

Mrs. CAPPS [presiding]. Now I am supposed to gavel you down

and run to vote.

Until after the series of votes, we will be in recess. Thank you.

[Recess.]

Mr. MARKEY [presiding]. The hearing is reconvened; and, as you

can see, there are many members who continue to have an interest

in this subject. There is just no end to the number of hearings that

we can have on this issue.

And the gentleman from Texas, Mr. Green, is recognized.

Mr. GREEN. Thank you, Mr. Chairman.

I would like to thank our panel again for being here.

Mr. Taylor, I know in your testimony you said that converters would be available some time in early 2008 for about $60; and I

was going to follow it up with Mr. Vitelli from Best Buy. Is that

pretty well what you expect, that the converters will be in Best

Buy, for example, or even your competitors? I know you are at 25

percent of the market. But if you have them, I am sure your competitors want to have them also. Is there a broad range of dates?

How early in next year? Because if those coupons are sent out in

January, people will sit there, and they will show up at the retail

operations.

And I know you said because of the deadline on those coupons

they would be able to use that coupon and get one when it is delivered, so they wouldn’t worry about the date on that. Do you know

if your other retailers or other competitors are using that same scenario or has the FCC said anything about that is what they would

like to see done?

Mr. VITELLI. The complexity of the dilemma that you just described is why we made the recommendation that, as the applications start to come in starting in January to the NTIA, that the

NTIA should say to consumers, don’t expect your coupon before

April 1. What that is going to allow to happen is the multiple—

hopefully, multiple approved box manufacturers to be able to state

what their production capacity is by week and by month. And then

we will know, OK, here is the production capacity. NTIA should

then release coupons against weekly and monthly production capacity.

They have also—we have been working with IBM—will be able

to tell us and other retailers here are the coupons that are being

issued by Zip Code. So as we try to figure out of the 10,000 retail

locations in the country here is where to put them. So that supply
630

chain process that you described is very complex. It happens every

day, but it happens in a more predictable model of how consumer

demand for goods are.

This is very different, and the actual coupon issuance needs to

match up with the product availability, which is going to need—the

industry as a whole is going to need to understand production capacity by month and then issue coupons against that so retailers

can order those quantities and all three of them match.

Mr. GREEN. So they could control the distribution of the coupons

once they receive the applications to somehow fit with the distribution chain for the retail operations.

Mr. VITELLI. And that will be the best thing to do to avoid customer disappoints.

Mr. GREEN. Do you think we are going to be that well organized

to do that?

Mr. VITELLI. I think—with several key manufacturers and several key retailers and IBM at the center with NTIA I think it can

be done.

Mr. GREEN. One of the other concerns I have—and I know it was

mentioned by some of my colleagues—is the availability of those

coupons and how broadly they are going to be distributed. Are they

going to be available to the public, for example, at Best Buy or Circuit City or someone else? Or are they just going to be Internet

based?

And again in an area that—I have a very urban area in Houston

that has less cable penetration, but they also have less computer

access and Internet penetration. So what are the suggestions on

how those applications would be distributed?

Mr. VITELLI. We have committed that we will have applications

in all of our stores. So if someone comes in and says I need an application in January, we will have it. I think it would be great if

all of the consumer electronic retailers that are participants in the

coupon program have the applications available.

Mr. GREEN. Mr. Chairman, one of the concerns I have, and I

think my colleague, Congresswoman Solis, talked about the impact

on Hispanic cable viewers, because I have the same situation, to

make sure that we have those. I was thinking, because in every

newsletter we send out we put a little blurb in about the DTV transition, and I don’t know what we would need to take, but I know

some of us over every few years will send out a voter registration

application bipartisanly. If that would be possible for—maybe it

comes from our committee—to say that Members of Congress could

actually put that in their newsletters and their application or however we could make it available, just like for retail operations. But

we could do that.

Mr. MARKEY. I think that is an excellent idea. I think we should

pursue that and maybe recommend it to the other Members, maybe

with your leadership.

Mr. GREEN. I will talk with what we call the mayor of Capitol

Hill, our House Administration Chair, and see if that is something

we could work with.

Mr. MARKEY. Excellent.

Mr. GREEN. Thank you. And thank our witnesses.

Mr. MARKEY. The gentleman’s time has expired.
631

The chair recognizes the gentleman from Virginia, Mr. Boucher.

Mr. BOUCHER. Well, thank you very much, Mr. Chairman; and

I also want to join with you in welcoming our panel of witnesses

and thank each of you for your enlightening testimony here today.

For Mr. Willner, Mr. Barrett and Mr. Vitelli, as I understand the

statute that authorizes the distribution of vouchers for these converter boxes, the vouchers will expire 90 days from the date upon

which they are issued; and I am wondering if there is any justification for retaining that provision. I have heard Mr. Vitelli say that

we should make sure that we issue vouchers in accordance with

the availability of converter boxes and that they be issued in that

kind of parity. But I am wondering if an outright repeal of this provision might be preferable. Is there an argument for retaining this

90-day limit?

Mr. BARRETT. Mr. Boucher, I would agree with you. I think that

this is not the right solution, and it is going to pose more problems

going forward. I don’t think there is logic to it at this point to stick

to a 90-day date.

Mr. BOUCHER. The concern, obviously, is that someone will get

a voucher in January or February of next year and potentially

delay going to the store in order to get a box until the voucher expires. And then that voucher recycles back, and I suppose somebody else could have it issued to them at some later point in time.

But that individual who has been disenfranchised, I am not even

sure that person is eligible to go back and reapply. I don’t know

the answer to that. So that person potentially could be

disenfranchised.

The more common situation might be where the individual receives the voucher, goes to a store and the kind of parity of voucher

issuance and device availability Mr. Vitelli talks about somehow

fails, and the store simply doesn’t have the box. He goes back 2

weeks later, the store doesn’t have the box, and he gives up, and

his voucher expires. He is rendered, I guess, ineligible from getting

another one.

And in the face of that uncertainty it just seems to me that repealing this 90-day provision might be the better course to take;

and, Mr. Chairman, I would suggest that we consider that and possibly put forward legislation in order to do it.

The reason I am raising the question is just to see if anybody has

a justification for retaining this 90-day expiration, and I am not

hearing any.

Mr. Vitelli.

Mr. VITELLI. I actually have two thoughts of why it is a good

idea.

Mr. BOUCHER. Why what is a good idea?

Mr. VITELLI. The 90-day expiration is a good idea. And I will try

them. Because I understand the dilemma that it is creating. One

is that there is another scenario that all the coupons are issued

and everybody waits until February 18 to get the box and there is

22 million people lined up outside of all the stores and there actually isn’t any linear production and issuance of these boxes and getting them into homes. That is almost untenable for retailers and

manufacturers.
632

So the perfect scenario would be that 2 million a month of these

converter boxes, the coupons were issued, they were manufactured,

they were sold, and people came in in an orderly fashion over the

course of the 15 months. So that is one reason I actually think it

is good. As the coupon comes in, you have a motivation to go to the

retail outlet and get a box. You may not install it that day, but now

you physically have it.

Mr. BOUCHER. Well, I understand the ideal situation, and I agree

with you. If the world works as nicely and cleanly as you suggest

that it may, that will solve the problem. But I don’t have that level

of confidence that it will work with quite that level of efficiency,

and then I think people are going to get caught in a crunch.

But let me move on to another area where I have a question. Mr.

Willner, I realize it is difficult for you to speak for every cable system in the country. But you speak with authority on cable issues,

and you are here this morning representing the industry, so let me

pose this question to you.

I am looking for a level of comfort in terms of what the cable subscriber is going to receive in the home when the digital transition

has been accomplished, and so I am going to ask three questions

about what that cable subscriber will receive.

Question No. 1, will he get an analog signal delivered on the

cable system so that he can keep his analog sets in operation without having to buy a converter box? Yes or no?

Mr. WILLNER. Yes.

Mr. BOUCHER. Question No. 2, will he get a full digital signal on

the cable system so that his new digital set operates efficiently

with digital feeds coming off the cable system?

Mr. WILLNER. Yes.

Mr. BOUCHER. Question No. 3, when the local affiliate of a network, television network is broadcasting in high definition, will the

cable system be carrying that full HD signal into the home?

Mr. WILLNER. Well, are you talking about must-carry?

Mr. BOUCHER. For the must-carry stations, that is correct.

Mr. WILLNER. Yes.

Mr. BOUCHER. So the answer is yes.

Mr. WILLNER. Yes.

Mr. BOUCHER. So the answer is yes to all three of those.

Mr. BOUCHER. Yes.

Yes, sir. I see your hand being raised, and I can’t read your sign.

I’m sorry.

Mr. KNORR. Patrick Knorr. I’m chairman of the ACA. We represent the smaller cable company.

Mr. BOUCHER. And what is your answer to those questions?

Mr. KNORR. And my answer to those questions, the first one is

yes. But the next two are a little bit more complicated for smaller

operators.

If they are required to carry HD signals for the smallest of operators, it is very akin to the translator problem that broadcasters

have of if you are a mom-and-pop cable company with two people

running a cable system serving 100 customers in a small rural

community, 100 customers does not support the investment in HD.

There is probably not as much demand there, and there is alternatives for those people in that community that do get HDTV sets.
633

But the business model doesn’t support it. And if there is a Government mandate to provide an HD signal, chances are that cable

company is going to cease to exist and their customers are not

going to get the HD signal or the analog signal. And that is a really

major concern that we think may affect up to 1,000 communities

in this country if that is not very well thought out. And the current

policy that the FCC has released, combined with the must-carry

mandates that are already in place, really leave grave concerns for

what will happen with small cable companies.

Mr. BOUCHER. Thank you very much. My time has expired. And

thank you, Mr. Chairman, for your indulgence.

Mr. MARKEY. Thank you. I appreciate it.

The gentleman from Michigan, Mr. Stupak, is recognized.

Mr. STUPAK. Thank you, Mr. Chairman.

Mr. Knorr, the third answer to Mr. Boucher’s question, would

you care to clarify on that one?

Mr. KNORR. Clarify which?

Mr. STUPAK. Your answer to his third question there.

Mr. KNORR. I’m sorry, the HD signals.

Mr. STUPAK. Yes, with regard to high-definition signals.

Mr. KNORR. Correct. Any member, just like the education issue,

we all have a huge stake, a market incentive, to be as competitive

as possible. We want to serve our customers. We want to provide

our customers with HD signals. It is really a matter of economic

ability for the very small operators, which is really where we are

asking for allowances to be made for systems that are very small

or very limited capacity.

We used to have 30,000 customers in Lawrence, KS. We are

going to be providing an HD signal, we are going to be providing

a digital standard definition signal, we are going to be providing

an analog signal for every single broadcaster in our market. We

want to do that for competitive reasons.

But, again, if you are a 100 subscriber system, even 1,000 subscriber system, that is a mathematical impossibility to finance the

equipment required to do that.

Mr. STUPAK. In the last hearing, I asked Mr. Martin about it,

when the FCC was here, about the dual carriage; and he said there

was not that obligation, that you can go one way or the other, you

don’t have to have the dual-carriage license.

Mr. KNORR. Well, there is a definite lack of clarity. For one is

that written order has not been made available, and it doesn’t

exist. Martin may know that, but he hasn’t published to the rest

of us. We haven’t read it. We don’t know that to be a fact.

And there are other rules that are also in place besides the FCC

mandate that require must-carry to carry the native signal, and

those go back to 2001.

Mr. STUPAK. In your September order, they also allowed you to—

or not ‘‘you’’ but I mean small cable operators have an option of

asking for an exception to that order they put out in September.

But you make a point in your testimony that, well, look, if we can’t

afford equipment, what makes you think we are going to be able

to afford an FCC lawyer? No disrespect to lawyers, but what kind

of costs are we looking at here?
634

Mr. KNORR. Well, the costs are really uncertain. The process for

the set-top box waivers for the security ban prove to be very burdensome where the FCC did not even follow their own rules of response where they said they would respond within 90 days. In

many cases, it was 6 months, sometimes as long as a year before

that response came out.

So, again, with all due respect to lawyers, something that takes

a year process can be very costly versus something that has a very

finite response and that is lived to. We have not seen that from the

FCC, so there is grave concerns that that would take time to navigate.

And, again, when we are talking about a mom-and-pop system,

if someone tries to navigate that process on their own, if two people

are running a small cable system, the phones don’t get answered,

service calls don’t get run, they can’t operate their business.

Mr. STUPAK. Well, I asked them about one with 133 customers

on there. Anyway, I am following up with Mr. Martin with further

questions on his testimony last week or so when that was, so I am

glad to share that with you when I get some response.

Mr. Vitelli, if I may—and to all the witnesses, thank you for

being here. I was listening in my office in between appointments,

and Mr. Dingell was asking you about the coupon program. And

the way I understood your answer was like, well, you can come in

and purchase it from Best Buy, and Best Buy accepts their own

coupon or gift card, but yet they won’t accept by mail or e-mail a

coupon from the Federal Government for these converter boxes,

right?

Mr. VITELLI. We were talking specifically about BestBuy.com, the

Web site. Up until very recently, we weren’t able to even accept our

own gift cards. The only option you had was a credit card. It was

a single tender option. We have been able to, as I said just recently, just a few months ago been able to add a Best Buy gift card

online; and it is because of the transactions, if you will, of the Best

Buy gift cards stay within the Best Buy system. To add a second

outside tender is economically and technically not feasible within

the timeframe of the program. So our intention is to have them in

all of our stores and to be able to take orders over the phone.

Mr. STUPAK. So they have to call Best Buy then.

Mr. VITELLI. In the store or call Best Buy.

Mr. STUPAK. But then how are you going to accept a coupon

then? They are going to have to bring the coupon in and an extra

$20. If it is $60, you get a $40 coupon, you are going to have to

send in 20 bucks plus the coupon and then you are going to ship

it to them?

Mr. VITELLI. That’s correct.

Mr. STUPAK. Plus they are going to pay for the cost of shipping?

Mr. VITELLI. Depending how we work that out, yes.

Mr. STUPAK. See, my concern is, in my district, there are no Best

Buys. Even Radio Shack is probably 100 miles away from most of

my cities. We are just going to be running back and forth. So all

this improper testimony, make sure you get the right box and all

this, it would sure be a lot easier if we could go online, redeem online, do that last 20 bucks on the credit card and get it shipped to

us and ask the questions online.
635

I find it hard that you just won’t accept the Federal coupon. You

got to have some kind of markings or readings on these coupons

to allow you to do that.

Mr. VITELLI. We would love to do it. It is not that we are not trying to do it. I have been told by my IS/IT people that it is not technically doable in our system. I said I don’t believe that that is necessarily a broad problem, and hopefully out of all the other retailers that are part of the Consumer Electronics Retailer Coalition

there is going to be more than one that will be able to do it online.

Mr. STUPAK. We have done your retail coalition in my district.

Very few are in my district. So how are we going to access it, besides driving a couple hundred miles or, I guess, over the telephone?

Mr. VITELLI. Telephone is one. But I would predict—and I don’t

know this. I would predict there are going to be other retailers that

will be able to do it. I was talking specifically about Best Buy and

our inability to do it. I don’t think that is going to be broadly the

case.

Mr. STUPAK. Thank you.

Mr. MARKEY. The gentleman’s time has expired.

What we can do, if the members would like this, we could go to

a 3-minute round if members have additional questions that they

would like to follow up on; and the Chair will recognize himself.

I want to go back to Mr. Barrett, Mr. Swanson and you, Mr. Uva;

and that is that earlier question that I was asking about, the FCC’s

PSA minimum and whether it is a minimum or not that undermines what the broadcasters are seeking to do voluntarily. Could

you address that question, each of you?

Mr. Barrett.

Mr. BARRETT. Perhaps I should have better characterized that.

Rather than we are in opposition to that, we think there is a better

solution. And my concern as a broadcaster and a business executive

is that we not create a standard that applies to the lowest common

denominator here and in effect gives stations a disincentive to do

the kind of multi-marketing things that will drive the success of

this program.

I think that is just an imperative to understand that this can’t

just be about PSAs. And if we have an environment that the Government wants 4, 8 or 12 PSAs a day, if stations believe that that

is all that needs to be done, we will not be as successful as we need

to be in this endeavor.

Mr. MARKEY. Mr. Swanson.

Mr. SWANSON. Well, I would echo what David Barrett just testified. I think the most effective way is to enhance on what is discussed with PSAs and crawls; and that is to use our news programs, our public affairs programs, our morning shows, our Web

sites. And I think that—and on Fox we want to use our diversity

development group to go after the community organizations in the

African American communities, the Hispanic communities, the senior citizens. It is going to take a lot more than just PSAs to do that,

and we are prepared to do that. We are doing that. And I think

if we let broadcasters do what we do, we broadcast, we know how

to reach people, I think we can do it effectively.
636

Mr. MARKEY. Mr. Uva, I want to follow up on something the

GAO highlighted for us in its testimony 2 weeks ago and that is

the technical operational difficulty of actually getting the switch

done. Can you and Mr. Swanson and Mr. Barrett say with certainty that at midnight on February 17, 2009, that 100 percent of

analog signals will be turned off and digitally fully on?

There are a limited number of construction crews in the northern

States. In February, there is icy weather. The FCC has not acted

on all of its construction permits. And aside from consumer education programs, how concerned are you about these technical challenges?

Mr. UVA. We are very concerned about some of the technical

challenges, but we are constantly vigilant of trying to be ahead of

those dates so that we are able to comply and to fully switch over

on February 17, 2009.

Mr. MARKEY. Mr. Swanson.

Mr. SWANSON. Well, with a transition of this size and magnitude,

there are going to be outstanding technical issues; and we would

be hopeful that the FCC would move and move quickly on some

proceedings that we need in the technical area so that we can refine what we need to do in terms of equipment, purchase and installation.

Mr. MARKEY. Mr. Barrett.

Mr. BARRETT. I would echo what Mr. Swanson said.

I think there are two proceedings that I believe the Commission

is close to concluding, the reconsideration on the final DTV table

and their third periodic review of the DTV rules. Absent the wrapup of those proceedings, there will be some stations that will be

challenged to order and have fabricated antennas and the like to

accomplish this to the precision of 100 percent delivery on the date

in February, 2009.

Mr. MARKEY. Thank you. My time has expired.

The Chair recognizes the gentleman from Michigan, Mr. Upton.

Mr. UPTON. Thanks.

I just have one additional question I am going to ask Mr. Taylor,

Mr. Knorr and Mr. Willner. Isn’t it true that converter boxes will

enable the old analog TVs to receive digital multi-task programming over the air for free? Since that is so, there will be some 8

to 24 million TV sets using these converter boxes, not to mention

the more millions of digital TV receivers. Doesn’t that indicate that

there is more than an adequate business model for quality multicast programming?

Mr. WILLNER. I would think that is an ample amount, and that

also helps to create the content that gives cable operators incentive

to carry additional streams as well.

Mr. KNORR. I would echo that. And just as Mr. Willner said, if

it is quality content that is being generated in addition to those

boxes, cable operators want to carry multi-cast signals that have

valuable programming. So we will increase that business spot.

Mr. TAYLOR. We agree. In fact, we think it is going to be a key

selling point for converter boxes to talk about that capability.

Mr. UPTON. And the other thing, of course, as many of the staff

saw yesterday, you actually get a better signal. And for many folks

when they first—that was the real reason why they went to cable
637

in the first place 20 some years ago, because you got a better signal. You didn’t have the number of programs or number of channels that were there, you actually had a better picture. And so that

will be yet another selling point.

So with that type of answer then, obviously, it would seem that

we don’t need more regulations to mandate multi-cast must-carry.

Would you come to that conclusion?

Mr. KNORR. Yes.

Mr. WILLNER. I vote in favor of the motion.

Mr. UPTON. And that is for all cable companies, is that right, Mr.

Willner?

Mr. WILLNER. For everybody.

Mr. UPTON. I yield back. Thanks.

Mr. MARKEY. The gentleman’s time has expired.

The Chair recognizes the gentleman from Virginia, Mr. Boucher.

Mr. BOUCHER. Thank you very much, Mr. Chairman.

I just want to focus for a moment on the public education campaign to advise TV set owners that the digital transition is coming.

I think it is very interesting. In the United Kingdom, there are 60

million residents. We have about 300 million residents. The United

Kingdom is planning to spend on its public education campaign 200

million pounds. That is about $400 million. We are planning to

spend $5 million here. And for a country that is one-fifth the size

of ours, almost 100 times as much will be expended. So who is getting it right? Is the United Kingdom right or are we right about

this?

And a second aspect of this question is whether the very commendable commitment that has been made by broadcasters and

cable together, totaling about $800 million for their own public education efforts, offsets the positive public funding or whether we

really need more public funding? And if we do, what level would

the members of the panel suggest?

So who would like to respond?

Mr. ABBOTT. I appreciate the opportunity to speak to that.

I think, actually, if you look at the character of the questions

today and sorting through what that experience in the 12 months

prior to the cut-off is going to be like, where the device is, how do

I get them, how do I install them, what are my choices, clearly,

there is a sequence of communications that needs to be executed

effectively at the retail side, on the manufacturer’s side.

But I think in the questions we have had today it is more than

abundantly clear that a 30-second announcement of the fact that

the transition looms is just the tip of the iceberg, and I think what

you see in the Great Britain program is a recognition that people

who don’t live their lives thinking about how to connect devices to

televisions need more guidance than that.

We just opened a brand new facility, a new home for WGBH, just

2 weeks ago; and I had 4,000 contributing families come through

over the course of a Saturday. And I stood in front of our master

control operation, and it was fascinating to me, all of the questions.

Many of the questions were about these new digital services and

how do I get them and what is this thing I am beginning to hear

about. Will my old television set work? And the thought that I

would have had to figure out how to say in 30 seconds all they
638

needed to know to have them effectively bring the television services into their homes was beyond imagining. So I learned a lot that

day about what is really required to give people a sense on the

ground in their homes what is going to be required to adequately

connect to these marvelous digital services.

Mr. BOUCHER. So you would agree we should be spending more?

Mr. ABBOTT. I think Great Britain has it right. To really connect

with folks who have questions who are not in the industry, a more

significant investment is required. That is why we spoke to the bill

that Congressman Engel has put forward.

Mr. BOUCHER. Does anyone disagree?

Mr. BARRETT. The reality, sir, is that we are dealing with a limited amount of funding that has caused the broadcasters and the

cable industry to step up in a very aggressive way. And I would

submit that the kind of comprehensive program that only the

broadcasters, only the broadcasting piece of this, if it delivers 98

billion advertising impressions, if it reaches 94 percent of the U.S.

television viewing viewership and the average frequency of those

messages is over 400, that we have got a saturation program in

place.

Mr. BOUCHER. Well, I agree that it is impressive; and I think you

are to be commended for doing it. I am still not sure it is enough.

Thank you, Mr. Chairman.

Mr. MARKEY. I thank the gentleman.

If the people visiting Mr. Abbott’s studio don’t get it, it is about

as sophisticated a group of people that we have in the country that

will be walking through on the first day of the opening of the

WGBH studio.

The Chair recognizes the gentleman from Michigan, Mr. Stupak.

Mr. STUPAK. Thank you.

I want to go back to the coupons again, Mr. Vitelli. Is Best Buy

or anyone in your Consumer Electronics Retailers Coalition working with NTIA to make sure there will be a way we can redeem

these online? You just said you can’t do it, and you just recently

did it. But is anyone asking NTIA or IBM, I guess, really, in this

case, how can we make this happen so it is convenient for people,

especially those of us in sparsely populated, rural areas?

Mr. VITELLI. I don’t know that, but I will find out and get back

to you the answer of what is going on between other retailers.

Mr. STUPAK. Thanks.

Mr. VITELLI. Mr. Abbott, if I may, Chairman Markey started off

with this question, and I want to explore this a little bit more.

With the satellite industry being EchoStar and DirecTV has not

reached an agreement, the carriage agreement there with public

television after DTV transition, how large an audience would be affected if there is no agreement here?

Mr. ABBOTT. We are very concerned in that regard. DBS services

to the American people represents approximately 23 percent, as

many as 30 or 31 million homes. Many of them are in rural areas:

Oregon, Nebraska, Illinois, Virginia, Michigan. And we are very

concerned because, while we have reached a very effective set of

carriage agreements on the cable side, we have not yet reached an

agreement with either DirecTV or EchoStar. There have been conversations with DirecTV. There is not an agreement, and there has
639

been even less conversation about the potential of digital on the

EchoStar side.

The challenge to us is, as we are watching on the commercial

side, there are as many as 1,500 local stations whose high-definition services already on the commercial side are getting carried

and yet not a single public station is being carried in high definition. Combine that with the fact, earlier remarks by one of your

colleagues, about the fact that public television has made the more

substantial commitment to multi-cast programming, a larger library of choice and convenience for the American people at a time

in which public television will serve better, will have greater impact across our library. We are grateful for the enhanced carriage,

the full carriage assured us by the cable operators, but we have not

secured that from satellite.

Mr. STUPAK. Well, public broadcasting is partnered with Homeland Security in that digital emergency alert system, so if you don’t

have the digital this won’t work then, right?

Mr. ABBOTT. That’s correct. We aspire to universal service to the

American people; and if the satellite piece of that puzzle isn’t there

that full range of services, including our commitment to Homeland

Security, is at risk.

Mr. STUPAK. Thank you.

I have nothing further, Mr. Chairman.

Mr. MARKEY. The gentleman’s time has expired, as has all time

for questions by the panel on this largest panel ever assembled in

the history of Congress.

And what we would like to do is to get the final word, 1 minute

from each one of you, what you want us to know about what you

are going to do between now and the next hearing we are going to

have with the largest panel in the history of Congress so that—because we are going to start getting questions asked of each of us

who are members of this Subcommittee on Telecommunications beginning in January or February. So they are going to think that

we know all the answers out on the floor. So as they are being besieged we will in turn get besieged for the answers.

So could you tell us, each of you, what your plans are, what you

want us to remember as we conclude this hearing, looking forward

to the next one? Mr. Taylor.

Mr. TAYLOR. Mr. Chairman, when I see you next, we will have

sold millions of boxes, hopefully. We are in production beginning

next week. Our commitment to work with the DTV Transition Coalition and all of the stakeholders is stronger than ever, and we are

committed to making this a smooth transition for both our retail

partners and, ultimately, the consumers that need these boxes.

Mr. MARKEY. Thank you, Mr. Taylor.

Mr. Abbott.

Mr. ABBOTT. Mr. Chairman, we will be committing to a clear, understandable communication program with everyone in our communities across the country, mindful of what they will find at retail

and the boxes available, committing as best we can with the resources available to the communications we can offer on our air

and in our communities. With greater resources, we can amplify

the reach of those messages and ensure a successful transition.
640

Additionally, on the 19th of November, we are convening here in

Washington a digital television closed captioning summit with a

cross-industry representation of manufacturers, programmers, including those from the cable industry, Verizon, as well as, as I have

said, manufacturers, device manufacturers and retailers talking

about making closed captioning a reality in the digital environment

and accelerating the way in which we can adequately serve all

Americans.

Mr. MARKEY. Thank you, Mr. Abbott.

Mr. Vitelli.

Mr. VITELLI. Best Buy, along with all the other retailers, are

going to work very closely with the NTIA and with our manufacturing partners to ensure that we have converter boxes available and

systems to process the coupons with NTIA.

Additionally, we are going to work with everybody that is involved with the DTV Transition Coalition to make sure that the

messages to our consumers are clear, understandable and correct.

Mr. MARKEY. Thank you.

Mr. Swanson.

Mr. SWANSON. A significant consumer awareness and education

effort is necessary to facilitate the digital TV transition. We believe

in the voluntary efforts that are already under way. We are running PSAs in prime time on the Fox network through various day

parts on our television stations. But we think that it is much more

than that that is necessary, and we are committed to do that.

On the technical side, we are hopeful that the FCC will get

through these next couple of proceedings so that we can get on

with doing the things technically and on the engineering side that

we need to do to be ready for February 17, 2009.

Mr. MARKEY. Thank you, Mr. Swanson.

Mr. Uva.

Mr. UVA. In addition to continuing our accelerated pace with the

public service announcements across all of our television and radio

platforms, we will be ramping up our community outreach programs; and we will also have completed and hopefully aired a program dedicated—a public affairs program dedicated to explaining

the transition to digital to Hispanic consumers.

Mr. MARKEY. Thank you.

Mr. Willner.

Mr. WILLNER. Just you hear a lot about the laws of unintended

consequences here. Having the largest hearing ever in the history

on digital television also means you feel like you are sitting in the

middle seat on the Delta shuttle and delayed for 3 hours. Do you

remember that?

The cable industry told you 2 years ago we would be ready, willing and able to provide seamless transition to digital, 2 years ago.

We continue to be ready, willing and able as well. I have stood up

voluntarily adding to commitments that we are going to carry multiple streams of broadcast signals so that the transition is seamless

to our customers. They don’t have to do anything.

And we are going to step up and have already stepped up with

an advertising campaign, along with the broadcasters and with the

retailers, to make sure our customers are fully informed as to what

they need to and not need to do.
641

Mr. MARKEY. Thank you, Mr. Willner.

Mr. Barrett.

Mr. BARRETT. The voluntary program I have spoken to is under

way. I think it will grow exponentially as stations activate all of

their efforts across all of our platforms. We are prepared to report

on our performance. We are prepared to track and share with you

the growth and awareness that we create. And I have not properly

referenced the effectiveness I think of the Transition Coalition that

is in place which touches today 171 grassroots organizations that

I think will serve the interest and be responsive to many of the

points, questions about special constituencies that we need to be in

touch with. So I think that program is well under way and effective, and we look forward to moving ahead with the voluntary program.

Mr. MARKEY. Thank you. Mr. Barrett.

Mr. Knorr.

Mr. KNORR. Small cable operators also will be focused on educating both their customers and other small operators on what the

digital transition will mean.

More importantly, as Mr. Willner pointed out, we want to make

sure this is a seamless transition. Right now, we still have grave

concerns of whether that will be the case for our very small cable

operators unless the FCC really gets it right and absent of that

may require congressional intervention.

Mr. MARKEY. Mr. Knorr, thank you.

And you, Mr. Bruno.

Mr. BRUNO. Thank you, Chairman.

It is important to note that the 910 class A stations in America,

the 1,600 low-power stations and the 4,000 translator stations are

not part of this transition. They will remain analog. That means

that 80 percent of the broadcast stations in America will, after the

transition, still be broadcasting analog.

Under our proposal in 1999, Congress made class A stations—everybody had the chance, all low powers had the chance to be class

A. We took class A, and we made great stations, and those operators took the opportunity to make local programming and become

good broadcasters in their community. We are set to go in the next

60 and 90 days to forego our second channel and clog up spectrum

and free it up and become digital broadcasters to move this transition forward.

I would like to leave you with one quick story, if I may. A week

ago Monday, the fires were in California; and, in fact, in Congresswoman Bono’s district there is a station there. It is about 100 miles

east and south of Los Angeles. You had all the helicopters and all

the news stations covering all the fires in Malibu and Los Angeles,

but no one was covering Murrieta and Temecula and Escondido.

What happened is, in the morning, the children went to school

in Escondido. Somehow, the wind shifted and blew a line through

houses and started burning houses in a strip through. Here is

where all the parents live. Here is where all the children are. The

line goes through. They close down the freeway. Parents are frantic. People are running around trying to get their children. The

only TV station paying attention to that little local community was
642

the class A low power, KZSW. They were on the air 24 hours telling what was going on.

Now, the problem with that is that it is 71 percent cable. So 71

percent of the people didn’t know that this was going on. So all of

a sudden it became a big problem with first responders, because

you had parents trying to beat these policemen up on the highway

trying to get their kid. If they could have listened to the local television station, if we could have told them, they would have known

that their children were safe.

Mr. MARKEY. Good job, Mr. Bruno. Good story. And we thank

you for your testimony.

When I was a kid, my father delivered milk for the Hood Milk

Company. I didn’t know what I wanted to be. And the Perry Mason

show would come on, and Erle Stanley Gardner actually was from

Waltham, MA. So I had a special interest in it because he was from

my hometown. And every time you thought the show was done and

the case was closed and Perry couldn’t win, Della Street would

show up to say the show is not over yet, Perry; I have some new

information that can help us before we hit the hour and we move

on to the next show. And that always made it kind of very interesting because you thought the whole thing was done.

And we thought this whole hearing was done, but Mr. Engel has

now showed up. And Mr. Engel has all new information that, by

being recognized here for 5 minutes, will make it possible to put

a spotlight and illuminate a key area.

So the Chair recognizes the gentleman from New York, Mr.

Engel.

Mr. ENGEL. Thank you, Mr. Chairman.

With an introduction like that, I better quit when I am ahead

and say that I will submit my questions. And I want to thank all

the gentleman for their testimony. Unfortunately, I have been in

and out because I have a lot of conflicts. But, obviously, this is an

issue that is very, very important to us and to America; and I

thank you all for your testimony.

And I will submit the questions, Mr. Chairman. You intimidated

me.

Mr. MARKEY. No, no. I don’t mean to do that. In fact, if I think

about it, I don’t think we ever heard Della Street speak. She used

to whisper to Perry. So we will submit the questions.

Mr. ENGEL. As long as you don’t make fun of my New York accent, we are fine.

Mr. MARKEY. Yes, we hate people with funny accents from where

I come from.

Mr. ENGEL. The Yankees next year.

Mr. MARKEY. It is Red Sox domination now. It is a whole new

word we have.

So we very much appreciate all of your help in moving this forward. We are anticipating a tsunami of congressional interest in

this subject as we hit the beginning of next year. As Members are

asking questions about it, we become digital transition ombudsmen

out on the House floor. And the fewer questions we get is the

happier we are going to be. So to the extent to which all of you

working together can help to ease this transition, it would be greatly appreciated.
643

This has been an excellent hearing. It is now adjourned. Thank

you.

[Whereupon, at 1:00 p.m., the subcommittee was adjourned.]

[Material submitted for inclusion in the record follows:]
644
645
646
647
648
649
650
651
652
653
654
655