UPDATE 1-Obama backs extending digital TV cutoff date

Thu Jan 8, 2009 5:15pm EST

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(Adds byline, Nielson details, impact on companies)

By Kim Dixon

WASHINGTON Jan 8 (Reuters) - President-elect Barack Obama backs a move to delay a mandatory switch to digital television signals on fears viewers are unprepared and as the government has run out of coupons to help pay for converter boxes.

"The Feb. 17 cutoff date for analog signals should be reconsidered and extended," John Podesta, co-chairman of the Obama-Biden transition team said in a letter to key lawmakers on Thursday.

Congress mandated the Feb. 17 switch to digital television, which will affect some 20 million consumers who do not already use the technology. Owners of older television sets receiving over-the-air signals must buy converter boxes, replace their TVs with digital models, or subscribe to satellite or digital cable service.

But the government said earlier this week it had run out of $40 discount coupons for consumers to help pay for converter boxes needed to keep their sets from going black, leading a major consumer group to call for a delay of the analog switch- off.

"With coupons unavailable, support and education insufficient and the most vulnerable Americans exposed, I urge you to consider a change to the legislatively mandated cut-off date," Podesta wrote.

The wading by Obama into the issue is likely to significantly boost the case for delay, according to one congressional source.

About 7.8 million homes, or 6.8 percent of total U.S. television homes, are "completely unprepared," according to a survey by Nielson Ratings of December data.

Cable and satellite TV companies that already deliver digital broadcast signals were hoping to grow their subscriber base after the switch-over on Feb. 17. Even with a converter box, some subscribers will not be able to receive digital signals over-the-air, forcing them to consider pay-TV options.

The two largest cable companies, Comcast Corp (CMCSA.O) and Time Warner Cable Inc (TWC.N) have both said they see an opportunity to add new subscribers who in the past might not have taken pay-TV services.

The switch is intended to free up more airwaves for public safety uses and also to provide better television reception.

The Government Accountability Office, Congress' watchdog, warned in September the government was not prepared for a last- minute surge in coupon demand.

That prophecy came to pass earlier this week, when the National Telecommunications and Information Administration, a unit of the Commerce Department, said it exhausted its $1.3 billion budget for the program and nearly 1 million people are on a waiting list for the coupons.

Lawmakers are so worried that it asked the Federal Communications Commission to delay all complex matters before the agency until the switch has occurred. (Additional reporting by Yinka Adegoke in New York; Editing by Gerald E. McCormick and Andre Grenon)

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