The United States is currently undergoing a transition from analog to digital broadcast television. With traditional analog technology, pictures and sounds are converted into “waveform” electrical signals for transmission through the radiofrequency spectrum, while digital technology converts these pictures and sounds into a stream of digits consisting of zeros and ones for transmission. Digital transmission of television signals provides several advantages compared to analog transmission, such as enabling better quality picture and sound reception as well as using the radiofrequency spectrum more efficiently than analog transmission. A primary goal of the DTV transition is for the federal government to reclaim spectrum that broadcasters currently use to provide analog television signals. The radiofrequency spectrum is a medium that enables many forms of wireless communications, such as mobile telephone, paging, broadcast television and radio, private radio systems, and satellite services. Because of the virtual explosion of wireless applications in recent years, there is considerable concern that future spectrum needs— both for commercial as well as for varied government purposes—will not be met. The spectrum that will be cleared at the end of the DTV transition is considered highly valuable spectrum—sometimes called “beachfront spectrum”—because of its particular technical properties. In all, the DTV transition will clear 108 MHz of spectrum—a fairly significant amount. In the Balanced Budget Act of 1997, the Congress directed FCC to reallocate 24 MHz of the reclaimed spectrum to public safety uses. Since the terrorist attacks of September 11, 2001, there has been a greater sense of urgency to free spectrum for public safety purposes. The remaining returned spectrum will be auctioned for use in advanced wireless services, such as wireless high-speed Internet access. To implement the DTV transition, television stations must provide a digital signal, which requires them to upgrade their transmission facilities, such as transmission lines, antennas, and digital transmitters and encoders. Depending on each individual station’s tower configuration, the digital conversion may require new towers or upgrades to existing towers. Most television stations throughout the country are now providing a digital broadcast signal in addition to their analog signal. After 2006, the transition will end in each market—that is, analog broadcast signals will no longer be provided—when at least 85 percent of households in a given market have the ability to receive digital broadcast signals. During the course of our review, we identified several administrative challenges to implementing a subsidy for DTV equipment. For example, prior to implementing a subsidy program, various determinations need to be made, including (1) which federal entity will administer a subsidy program, (2) whether a rulemaking process is necessary to fully determine and stipulate how the subsidy program will be structured, (3) who will be eligible to receive a subsidy, (4) what equipment will be covered, (5) how information about the subsidy will be communicated to consumers and industry, and (6) what measures, if any, will be taken to limit fraud. One challenge to the DTV subsidy that we identified is determining which entity should administer the subsidy program. An industry representative told us that the implementing agency should have some level of telecommunications expertise in order to be able to set appropriate standards for the equipment being subsidized and to effectively educate consumers about the DTV transition. In our opinion, policymakers might also consider if the entity has experience administering a household assistance program. Based on our discussions with government officials, it appears that no single entity has the combined technical knowledge and subsidy administration expertise that might be necessary to successfully implement a DTV subsidy. For example, while FCC and NTIA have telecommunications knowledge and are responsible for managing the use of the radiofrequency spectrum, neither has experience administering a federal subsidy program of this kind. We asked these agencies about their ability, based on their experience, to administer a DTV subsidy. NTIA had no official comment. FCC officials told us they believe the Commission could have some role, such as defining which equipment would be eligible for the subsidy, but did not believe FCC was best suited to administer the entire subsidy program. Further, an FCC official said it might be advantageous for the administering entity to leverage the expertise of state government agencies to assist with delivering the subsidy to low-income households. We also asked two agencies that have experience administering federal assistance programs, the Department of Health and Human Services and the Department of Agriculture’s Food and Nutrition Service, about their ability to implement a DTV subsidy. Although these agencies have experience with subsidy programs, they do not have expertise in telecommunications. Officials from the Department of Health and Human Services told us the agency would not be well suited to administer a DTV subsidy because their programs, such as Temporary Assistance for Needy Families, are narrowly defined—a household must have children to be eligible for Temporary Assistance for Needy Families—and would not offer broad enough coverage for a DTV subsidy. Similarly, officials from the Food and Nutrition Service said they did not believe their agency would be the best entity to administer the subsidy. However, after we asked whether the state agencies that administer food stamps could provide a DTV subsidy to their recipients, Food and Nutrition Service officials said that this might be possible under certain conditions, but that an agreement would most likely have to be reached with each state and, in their view, the states should be paid for the costs they incur in doing so. When we contacted four state heath and human services agencies that administer various assistance programs on behalf of the federal government, such as food stamps, all four indicated that it might be possible for the states to provide the DTV subsidy to the low-income individuals who already receive assistance from one or more programs they administer. However, they told us there would be costs associated with implementing a subsidy program, such as staff time, programming costs, postage, and envelopes. One state we contacted estimated that it would cost approximately $552,000 to mail vouchers to the approximately 1.5 million households that receive food stamps, Medicaid, and Temporary Assistance for Needy Families within the state. However, two states told us that if the program ran over a period of time it would be difficult to track which households already received the DTV subsidy as people go on and off of assistance over time, so some households could receive duplicate benefits. Further, three of the four states told us that such a program would be burdensome on their limited staff resources. A rulemaking process might be required to implement a DTV subsidy, and if so, this would likely have implications for how quickly a subsidy program could be established. While legislation could broadly define the parameters of the subsidy program and may even prescribe specific elements of the programs’ structure and administration, it is not uncommon for a federal agency to determine that a rulemaking process is necessary to more fully detail how a program will be implemented. Through a rulemaking, the agency would finalize the rules of the program that were not specifically addressed in the legislation. FCC told us that if the legislation is very specific a rulemaking process may not be necessary for a DTV subsidy. However, FCC did note that rulemakings have been used in the past after legislation enacted new programs. For example, rulemaking processes have been undertaken several times to make adjustments to the Lifeline Assistance Program since it was established in 1985. The rulemaking process generally takes time because it requires a wide range of procedural, consultative, and analytical actions on the part the agencies. Sometimes agencies take years to develop final rules. Among other things, the rulemaking process generally requires agencies to (1) publish a notice of proposed rulemaking in the Federal Register; (2) allow interested parties an opportunity to participate in the rulemaking process by providing written data, views, or arguments; (3) review the comments received and make any changes to the rule that it believes are necessary to respond to those comments; and (4) publish the final rule at least 30 days before it becomes effective. Further, the Office of Management and Budget reviews significant proposed and final rules initiated by executive branch agencies other than independent regulatory agencies before those rules are published in the Federal Register. A former official from the Department of Health and Human Services told us that industry participants, interest groups, or other stakeholders can challenge a proposed rulemaking, which can delay the process further. He said that in order to avoid such challenges, it is essential to have the key stakeholders involved early in the process. That is, if the key stakeholders have the opportunity to provide input prior to the development of the rulemaking and are satisfied that their concerns are addressed, they will be less likely to file a challenge to the proposed rulemaking. Determining who would be eligible to receive the subsidy could present an administrative challenge to developing a subsidy program. If the government decides not to provide a DTV subsidy to all households, it would need to establish criteria to determine who is eligible. For example, a means test could be imposed to restrict eligibility to low-income households determined to be in financial need of the subsidy. The subsidy could also be limited to only those households relying on over-the-air television signals, on the grounds that these households are likely to be the most adversely affected by the DTV transition. Eligibility for Low-Income Households: If it is determined that a DTV subsidy will only be made available to low-income households, a means test of some kind would need to be used to identify the appropriate target households. Officials from the Department of Health and Human Services told us that using the income-based eligibility criteria of existing social service programs to define eligibility for a DTV subsidy program would be the most efficient way to employ a means test. That is, by using the receipt of an existing program benefit that is means tested, a new program could be effectively implemented without developing a means test specifically for that program.