U.S. could face glitch in TV converter box program

WASHINGTON Tue Jun 10, 2008 6:52pm EDT

WASHINGTON (Reuters) - U.S. officials are facing a potential glitch in a program designed to help television viewers make the switch to digital TV next year.

A Commerce Department official told House lawmakers that more money might be needed to mail out all the $40 government coupons that will be available to subsidize converter boxes that some TV owners will need for the February 2009 switchover.

Bernadette McGuire-Rivera, associate director of the National Telecommunications and Information Administration, said at a hearing that it was possible the agency "would have to get more money, basically to buy more stamps to send out coupons."

"This sounds like it could be a big problem here," Rep. Edward Markey, chairman of the House Subcommittee on Telecommunications and the Internet, said at the hearing before the panel.

The NTIA is an arm of the Commerce Department that is overseeing the converter box program.

Congress ordered the February 17, 2009 switch to digital television to free public airwaves for other uses, such as for police and fire departments. The switch also is to lead to improved picture and sound for TV viewers.

The transition is being closely watched because owners of analog televisions will be unable to watch television unless they subscribe to satellite or digital cable, replace their TV with a digital television by that date, or get a converter box.

The federal government is subsidizing the cost of buying a digital-analog converter box by offering the $40 discount coupons to anyone who owns an analog television. The $1.5 billion program has enough funding to subsidize as many as 33.5 million converter boxes.

The converter box coupons expire if they are not redeemed within 90 days.

More than 100 retailers have been certified to participate in the converter box program, including Best Buy Co Inc (BBY.N), Circuit City Stores Inc CC.N, RadioShack Corp (RSH.N), Sears Holdings Corp (SHLD.O), Target Corp (TGT.N) and Wal-Mart Stores Inc (WMT.N).

The government began mailing coupons on February 21. As of June 3, it had received requests for more than 16 million coupons, McGuire-Rivera said in a prepared statement.

But extra coupon mailings could be needed because many people who applied for them did not use them before they expired.

Only 42 percent of the coupons sought by consumers were being redeemed before they expired, according to NTIA figures.

Funds for expired, unredeemed coupons are being returned to the subsidy program and will be available so more coupons can be mailed.

But McGuire-Rivera said, "The program currently has limited administrative funds to distribute additional numbers of coupons that might be issued from the returned funds."

The NTIA issued a statement after the hearing saying it "has no plans to ask Congress for any additional funds."

A more accurate forecast of the costs would be possible sometime after July 1, when NTIA gets further redemption information.

(Editing by Leslie Gevirtz)

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