Digital Television Transition
Implementation of the Converter Box Subsidy Program Is Under Way, but Preparedness to Manage an Increase in Subsidy Demand Is Unclear Gao ID: GAO-08-1040 September 16, 2008The Digital Television Transition and Public Safety Act of 2005 requires all full-power television stations in the United States to cease analog broadcasting after February 17, 2009, known as the digital television (DTV) transition. The National Telecommunications and Information Administration (NTIA) is responsible for implementing a subsidy program to provide households with up to two $40 coupons toward the purchase of converter boxes. In this requested report, GAO examines (1) what consumer education efforts have been undertaken by private and federal stakeholders and (2) how effective NTIA has been in implementing the converter box subsidy program, and to what extent consumers are participating in the program. To address these issues, GAO analyzed data from NTIA and reviewed legal, agency, and industry documents. Also, GAO interviewed a variety of stakeholders involved with the DTV transition.
Private sector and federal stakeholders have undertaken various consumer education efforts to raise awareness about the DTV transition. For example, the National Association of Broadcasters and the National Cable and Telecommunications Association have committed over $1.4 billion to educate consumers about the transition. This funding has supported the development of public service announcements, education programs for broadcast, Web sites, and other activities. The Federal Communications Commission (FCC) and NTIA have consumer education plans that target those populations most likely to be affected by the DTV transition. Specifically, they identified 45 areas of the country as high risk that included areas with at least 1 of the following population groups: (1) more than 150,000 over-the-air households, (2) more than 20 percent of all households relying on over-the-air broadcasts, or (3) a top 10 city of residence for the largest target demographic groups. The target demographic groups include seniors, low-income, minority and non-English speaking, rural households, and persons with disabilities. In addition to targeting these 45 areas of the country, FCC and NTIA developed partnerships with organizations that serve these hard-to-reach populations. NTIA is effectively implementing the converter box subsidy program, but its plans to address the likely increase in coupon demand as the transition nears remain unclear. Almost 19 million coupons have been issued by NTIA, but as of June 2008, only 9 percent of U.S. households had requested coupons. As found in GAO's recent consumer survey, up to 35 percent of U.S. households could be affected by the transition because they have at least one television not connected to a subscription service, such as cable or satellite. With a spike in demand likely as the transition date nears, NTIA has no specific plans to address an increase in demand; therefore, consumers might incur significant wait time before they receive coupons as the transition nears and might lose television service during the time they are waiting for the coupons. In terms of participation in the converter box subsidy program, GAO analyzed coupon data in areas of the country comprising predominantly minority and senior populations and found that households in both predominantly black and Hispanic or Latino areas were much less likely to redeem their coupons compared with households outside these areas. Additionally, GAO analyzed participation in the subsidy program in the 45 areas of the country on which NTIA and FCC focused their consumer education efforts and found coupon requests to be about the same for zip codes within the 45 targeted areas compared with areas that were not targeted. Retailers play an integral role in the subsidy program by selling the converter boxes and helping to inform their customers about the DTV transition and the program. GAO visited 132 randomly selected retail stores in 12 cities. Store representatives at a majority of the retail locations GAO visited were able to correctly state that the DTV transition would occur in February 2009 and explain how to apply for a converter box coupon.
RecommendationsOur recommendations from this work are listed below with a Contact for more information. Status will change from "In process" to "Open," "Closed - implemented," or "Closed - not implemented" based on our follow up work.
Director: Team: Phone:GAO-08-1040, Digital Television Transition: Implementation of the Converter Box Subsidy Program Is Under Way, but Preparedness to Manage an Increase in Subsidy Demand Is Unclear
This is the accessible text file for GAO report number GAO-08-1040
entitled 'Digital Television Transition: Implementation of the
Converter Box Subsidy Program Is Under Way, but Preparedness to Manage
an Increase in Subsidy Demand Is Unclear' which was released on
September 17, 2008.
This text file was formatted by the U.S. Government Accountability
Office (GAO) to be accessible to users with visual impairments, as part
of a longer term project to improve GAO products' accessibility. Every
attempt has been made to maintain the structural and data integrity of
the original printed product. Accessibility features, such as text
descriptions of tables, consecutively numbered footnotes placed at the
end of the file, and the text of agency comment letters, are provided
but may not exactly duplicate the presentation or format of the printed
version. The portable document format (PDF) file is an exact electronic
replica of the printed version. We welcome your feedback. Please E-mail
your comments regarding the contents or accessibility features of this
document to Webmaster@gao.gov.
This is a work of the U.S. government and is not subject to copyright
protection in the United States. It may be reproduced and distributed
in its entirety without further permission from GAO. Because this work
may contain copyrighted images or other material, permission from the
copyright holder may be necessary if you wish to reproduce this
material separately.
Report to Congressional Requesters:
United States Government Accountability Office:
GAO:
September 2008:
Digital Television Transition:
Implementation of the Converter Box Subsidy Program Is Under Way, but
Preparedness to Manage an Increase in Subsidy Demand Is Unclear:
GAO-08-1040:
GAO Highlights:
Highlights of GAO-08-1040, a report to congressional requesters.
Why GAO Did This Study:
The Digital Television Transition and Public Safety Act of 2005
requires all full-power television stations in the United States to
cease analog broadcasting after February 17, 2009, known as the digital
television (DTV) transition. The National Telecommunications and
Information Administration (NTIA) is responsible for implementing a
subsidy program to provide households with up to two $40 coupons toward
the purchase of converter boxes. In this requested report, GAO examines
(1) what consumer education efforts have been undertaken by private and
federal stakeholders and (2) how effective NTIA has been in
implementing the converter box subsidy program, and to what extent
consumers are participating in the program. To address these issues,
GAO analyzed data from NTIA and reviewed legal, agency, and industry
documents. Also, GAO interviewed a variety of stakeholders involved
with the DTV transition.
What GAO Found:
Private sector and federal stakeholders have undertaken various
consumer education efforts to raise awareness about the DTV transition.
For example, the National Association of Broadcasters and the National
Cable and Telecommunications Association have committed over $1.4
billion to educate consumers about the transition. This funding has
supported the development of public service announcements, education
programs for broadcast, Web sites, and other activities. The Federal
Communications Commission (FCC) and NTIA have consumer education plans
that target those populations most likely to be affected by the DTV
transition. Specifically, they identified 45 areas of the country as
high risk that included areas with at least 1 of the following
population groups: (1) more than 150,000 over-the-air households, (2)
more than 20 percent of all households relying on over-the-air
broadcasts, or (3) a top 10 city of residence for the largest target
demographic groups. The target demographic groups include seniors, low-
income, minority and non-English speaking, rural households, and
persons with disabilities. In addition to targeting these 45 areas of
the country, FCC and NTIA developed partnerships with organizations
that serve these hard-to-reach populations.
NTIA is effectively implementing the converter box subsidy program, but
its plans to address the likely increase in coupon demand as the
transition nears remain unclear. Almost 19 million coupons have been
issued by NTIA, but as of June 2008, only 9 percent of U.S. households
had requested coupons. As found in GAO‘s recent consumer survey, up to
35 percent of U.S. households could be affected by the transition
because they have at least one television not connected to a
subscription service, such as cable or satellite. With a spike in
demand likely as the transition date nears, NTIA has no specific plans
to address an increase in demand; therefore, consumers might incur
significant wait time before they receive coupons as the transition
nears and might lose television service during the time they are
waiting for the coupons. In terms of participation in the converter box
subsidy program, GAO analyzed coupon data in areas of the country
comprising predominantly minority and senior populations and found that
households in both predominantly black and Hispanic or Latino areas
were much less likely to redeem their coupons compared with households
outside these areas. Additionally, GAO analyzed participation in the
subsidy program in the 45 areas of the country on which NTIA and FCC
focused their consumer education efforts and found coupon requests to
be about the same for zip codes within the 45 targeted areas compared
with areas that were not targeted. Retailers play an integral role in
the subsidy program by selling the converter boxes and helping to
inform their customers about the DTV transition and the program. GAO
visited 132 randomly selected retail stores in 12 cities. Store
representatives at a majority of the retail locations GAO visited were
able to correctly state that the DTV transition would occur in February
2009 and explain how to apply for a converter box coupon.
What GAO Recommends:
GAO recommends that the Secretary of Commerce direct NTIA to develop a
plan to manage coupon requests in the lead up to the transition. GAO
provided the Department of Commerce and FCC with a draft of this
report. While Commerce did not state whether it agreed or disagreed
with GAO‘s recommendation, it stated its concern about an increase in
coupon demand as the transition nears. FCC noted consumer outreach
efforts that it has taken related to the DTV transition.
To view the full product, including the scope and methodology, click on
GAO-08-1040. For more information, contact Mark Goldstein at (202) 512-
2834 or goldsteinm@gao.gov.
[End of section]
Contents:
Letter:
Results in Brief:
Background:
Private and Federal Stakeholders Have Undertaken a Myriad of Activities
Aimed at Increasing the Public's Awareness of the DTV Transition:
NTIA Is Effectively Implementing the Converter Box Subsidy Program, but
Concerns Exist about NTIA's Ability to Manage a Potential Spike in
Coupon Demand:
Conclusions:
Recommendation for Executive Action:
Agency Comments:
Appendix I: Objectives, Scope, and Methodology:
Appendix II: Comparison of Federal Consumer Education Plans to Key
Practices for Consumer Education Planning:
Appendix III: Federal Communications Commission DTV Consumer Education
Order:
Appendix IV: Comments from the Department of Commerce:
Appendix V: Comments from the Federal Communications Commission:
Appendix VI: GAO Contact and Staff Acknowledgments:
Related GAO Products:
Tables:
Table 1: Examples of FCC and NTIA Consumer Outreach Efforts to Targeted
Populations:
Table 2: Request, Redemption, and Expiration Rates of Converter Box
Coupons through June 2008:
Table 3: Retailer Representatives Able to Explain Certain Aspects of
NTIA's Converter Box Subsidy Program:
Table 4: Key Practices Comparison to FCC and NTIA Consumer Education
Plans:
Table 5: FCC DTV Consumer Education Order Requirements, by Industry
Sector:
Figures:
Figure 1: Cumulative Converter Box Coupon Requests, Issuances,
Redemptions, and Expirations through June 2008:
Figure 2: Average Coupon Processing Time from Request Date, through
June 2008:
Figure 3: Converter Box Coupons Requested, in Process, and Issued
through June 2008:
Abbreviations:
CEA: Consumer Electronics Association:
DTV: digital television:
FCC: Federal Communications Commission:
IBM: International Business Machines Corporation:
NAB: National Association of Broadcasters:
NTIA: National Telecommunications and Information Administration:
PSA: public service announcement:
[End of section]
United States Government Accountability Office:
Washington, DC 20548:
September 16, 2008:
Congressional Requesters:
Federal law requires all full-power television stations in the United
States to cease analog broadcasting and to broadcast digital-only
transmissions after February 17, 2009. This process is often referred
to as the digital television (DTV) transition. Currently, most
television broadcasters transmit over-the-air signals in both an analog
and a digital format to U.S. households. After the transition,
consumers who rely exclusively on over-the-air television signals
viewed on analog sets will not be able to view broadcast programming,
which could include important news information or emergency alerts,
unless they take action. Specifically, these consumers could (1)
purchase a television capable of processing digital signals; (2)
purchase a digital-to-analog converter box that converts the digital
signals to analog signals and enables their display on an analog set;
or (3) subscribe to cable, satellite, or other service.
The federal government and the private sector have taken several steps
to prepare for the DTV transition. The National Telecommunications and
Information Administration (NTIA), which is a bureau within the
Department of Commerce, created and implemented a digital-to-analog
converter box subsidy program to provide households with up to two $40
coupons toward the purchase of converter boxes that allow consumers to
continue viewing over-the-air signals on analog television
sets.[Footnote 1] Additionally, the government, the television
broadcast industry, cable and satellite providers, and other carriers
of the broadcast signal have established several educational efforts
informing consumers about the DTV transition and the subsidy program.
However, the success of the DTV transition and the subsidy program
requires consumers' understanding about the transition and the steps
needed to continue receiving a television signal. In addition,
consumers will rely on retailers to provide information, as well as to
supply eligible converter boxes.
You asked us to provide information on the progress of the DTV
transition. As part of our ongoing review of issues related to the
transition, we determined (1) what consumer education efforts have been
undertaken by private and federal stakeholders and (2) how effective
NTIA has been in implementing the converter box subsidy program, and to
what extent consumers are participating in the program.
To meet these objectives, we interviewed agency officials from the
Federal Communications Commission (FCC) and NTIA and reviewed their
consumer education documents, orders, rules, and proposed rules. We
also interviewed private sector stakeholders representing the
broadcasting, retailer, manufacturing, and cable industries and
reviewed publicly available information on their consumer education
planning. Furthermore, we discussed the effectiveness of consumer
education efforts with various advocacy groups identified as NTIA
partners that represent hard-to-reach populations. We also analyzed
date-specific data from NTIA on coupon applications, requests,
issuance, redemptions, and expirations and examined NTIA timeliness in
issuing coupons from the beginning of the converter box subsidy program
in January 2008 through June 2008. We conducted data reliability
testing and determined that the data used in this report were
sufficiently reliable for our purposes. We also conducted a "mystery
shopper" study--that is, we discussed the transition with randomly
selected retailers without identifying ourselves as government
employees--to determine retailer preparedness for the converter box
subsidy program, including the level of retailer knowledge about the
program and the availability of converter boxes. In conducting the
mystery shopper study, we visited 132 store locations in 12 cities from
April to early May 2008. Appendix I contains a detailed discussion of
our objectives, scope, and methodology.
We performed our review from February 2008 to September 2008 in
accordance with generally accepted government auditing standards. Those
standards require that we plan and perform the audit to obtain
sufficient, appropriate evidence to provide a reasonable basis for our
findings and conclusions based on our review objectives. We believe
that the evidence obtained provides a reasonable basis for our findings
and conclusions based on our audit objectives.
Results in Brief:
Private sector and federal stakeholders have undertaken various
consumer education efforts to raise awareness about the DTV transition.
For example, the National Association of Broadcasters (NAB) and the
National Cable and Telecommunications Association have committed over
$1.4 billion to educate consumers about the transition. This funding
has supported the development of public service announcements,
education programs for broadcast, Web sites, and other activities. NAB
has developed 15-second and 30-second public service announcements in
both English and Spanish and closed-captioned versions. In addition,
the Consumer Electronics Association and most national retailers
participating in the converter box subsidy program have developed
consumer education campaigns to raise awareness of the DTV transition
and the subsidy program. For example, some national retailers have
developed informational videos for their in-store displays, and some
are developing partnerships with broadcasters and other groups. Federal
stakeholders (FCC and NTIA) have developed consumer education plans
that generally follow key practices for consumer education planning and
target those populations most likely to be affected by the DTV
transition. Specifically, these agencies identified 45 areas of the
country as high risk, that is, those areas with at least 1 of the
following population groups: (1) more than 150,000 over-the-air
households, (2) more than 20 percent of all households relying on over-
the-air broadcasts, or (3) a top 10 city of residence for the largest
target demographic groups. The target demographic groups include
seniors, low-income, minority and non-English speaking, rural
households, and persons with disabilities. FCC and NTIA have developed
partnerships with organizations that serve these hard-to-reach
populations. For example, FCC has participated in events with the
National Social Worker Association, and NTIA has worked with a
coalition of aging organizations.
NTIA is effectively implementing the converter box subsidy program, but
its plans to address the likely increase in coupon demand as the
transition nears remain unclear. As of June 2008, NTIA has issued
approximately 17 million coupons, but as of that date only 9 percent of
U.S. households had requested coupons. As found in our recent consumer
survey, up to 35 percent of U.S. households could be affected by the
transition because they have at least one television not connected to a
subscription service, such as cable or satellite.[Footnote 2] In U.S.
households relying solely on over-the-air broadcasts (approximately 15
percent), of those who intend to purchase a converter box, 100 percent
of survey respondents said they were likely to request a coupon.
Therefore, a spike in demand for converter box coupons is likely as the
transition date nears. According to NTIA, a similar increase in
requests around the transition date may cause a delay in issuing
coupons. However, we found that NTIA has no specific plans to address
an increase in demand, and that it has encountered challenges in
issuing coupons within its requirement of 10 to 15 days from the date
the coupon applications were approved. Given the challenges to meeting
this requirement and NTIA's lack of a clear plan to address a potential
spike in demand, consumers might incur significant wait time before
they receive their coupons and might lose television service during the
time they are waiting for the coupons. Regarding participation in the
converter box subsidy program, we analyzed coupon data in areas of the
country comprising predominantly minority and senior populations and
found that participation varies. For example, we found that zip codes
with a high concentration of Latino or Hispanic households had
noticeably higher request rates (20 percent) compared with areas to
predominantly non-Latino or non-Hispanic households (8 percent).
However, households in both predominantly black and Hispanic or Latino
areas were much less likely, compared with households outside these
areas, to redeem their coupons once they received them. Additionally,
we analyzed participation in the converter box subsidy program in the
45 areas of the country on which NTIA and FCC focused their consumer
education efforts to determine participation of the target populations.
We found coupon requests were about the same (9 percent) for zip codes
in the 45 targeted areas compared with areas of the country that were
not targeted. Retailers play an integral role in the subsidy program by
selling the converter boxes and helping to inform their customers about
the DTV transition and the subsidy program. Store representatives at
most (118 of the 132) retailers we visited were able to correctly state
that the DTV transition would occur in February 2009. Additionally,
nearly all retailers (126) identified a coupon-eligible converter box
as an option available to consumers so that they may continue watching
television after the transition.
To help NTIA prepare for a potential increase in demand for converter
box coupons and so that consumers are not left waiting a lengthy amount
of time for requested coupons, we recommend that the Secretary of
Commerce direct the Administrator of the NTIA to develop a plan to
manage volatility in coupon requests to ensure that coupons are
processed and mailed within 10 to 15 days from the day the coupon
applications are approved, per NTIA's stated requirement.
We provided a draft of this report to the Department of Commerce (which
contains NTIA) and FCC for their review and comment. In response,
Commerce did not state whether it agreed or disagreed with our
recommendation, but the department did say that it shares our concern
about an increase in coupon demand as the transition nears.
Furthermore, Commerce's letter stated it is committed to doing all that
it can within its statutory authority and existing resources to ensure
that all Americans are ready for the DTV transition. In its letter, FCC
noted consumer outreach efforts it has taken related to the DTV
transition. See appendixes IV and V for written comments from Commerce
and FCC, respectively.
Background:
The DTV transition will require citizens to understand the transition
and the actions that some might have to take to maintain television
service. For those households with subscription video service on all
televisions or with all televisions capable of processing a digital
signal, no action is required. However, households with analog
televisions that rely solely on over-the-air television signals
received through rooftop or indoor antennas must take action to be able
to view digital broadcast signals after analog broadcasting ceases. The
Digital Television Transition and Public Safety Act of 2005 addresses
the responsibilities of two federal agencies--FCC and NTIA--related to
the DTV transition. The act directs FCC to require full-power
television stations to cease analog broadcasting by February 17, 2009.
The act also directed NTIA to establish a $1.5 billion subsidy program
through which households can obtain coupons toward the purchase of
digital-to-analog converter boxes. In August 2007, NTIA selected the
International Business Machines Corporation (IBM) as the contractor to
provide certain services for the program. On January 1, 2008, NTIA, in
conjunction with IBM and in accordance with the act, began accepting
applications for up to two $40 coupons per household[Footnote 3] that
can be applied toward the purchase of eligible[Footnote 4] digital-to-
analog converter boxes and, in mid-February 2008, began mailing the
coupons. Initially, during the first phase of the program, any
household is eligible to request and receive the coupons, but once $890
million worth of coupons has been redeemed, and issued but not expired,
NTIA must certify to Congress that the program's initial allocation of
funds is insufficient to fulfill coupon requests. NTIA will then
receive $510 million in additional program funds, but households
requesting coupons during this second phase must certify that they do
not receive cable, satellite, or any other pay television
service.[Footnote 5] As of June 24, 2008, in response to NTIA's
statement certifying that the initial allocation of funds would be
insufficient, all appropriated coupon funds were made available to the
program. Consumers can request coupons up to March 31, 2009, and
coupons can be redeemed through July 9, 2009. As required by law, all
coupons expire 90 days after issuance. As unredeemed coupons expire,
the funds obligated for those coupons will be returned to the subsidy
program.
Retailer participation in the converter box subsidy program is
voluntary; however, participating retailers are required to follow
specific program rules to ensure the proper use and processing of
converter box coupons. Retailers are obligated to, among other things,
establish systems capable of electronically processing coupons for
redemption and payment and tracking transactions. Retailers must also
train their employees on the purpose and operation of the subsidy
program. According to NTIA officials, NTIA initially explored the idea
of setting requirements for training content, but decided to allow
retailers the flexibility of developing their own training programs and
provided retailers with sample training materials. Certification
requires retailers to have completed an application form by March 31,
2008, and to attest that they have been engaged in the consumer
electronics retail business for at least 1 year. Retailers must also
register in the government's Central Contractor Registration
database,[Footnote 6] have systems or procedures that can be easily
audited and that can provide adequate data to minimize fraud and abuse,
agree to be audited at any time, and provide data tracking each coupon
with a corresponding converter box purchase. NTIA may revoke retailers'
certification if they fail to comply with these regulations or if any
of their actions are deemed inconsistent with the subsidy program.
Converter boxes can also be purchased by telephone or online and be
shipped directly to a customer's home from participating retailers. At
the time of our review, 29 online retailers were participating in the
converter box subsidy program. As of July 23, 2008, there were three
instances of retailers previously listed as participating in the
program that were no longer identified as participating online
retailers. Additionally, 13 telephone retailers were listed as
participating in the program, 2 of which are associated with national
retailers.
Private and Federal Stakeholders Have Undertaken a Myriad of Activities
Aimed at Increasing the Public's Awareness of the DTV Transition:
Private sector stakeholders from the broadcast, cable, retail, and
consumer electronics industries have committed over $1 billion to
voluntary and required consumer education efforts to inform the public
of the DTV transition. Also, FCC and NTIA have ongoing consumer
education efforts targeting households that rely on over-the-air
broadcasts and targeting hard-to-reach populations, such as minority
and non-English speakers, seniors, and rural households. The government
consumer education plans generally follow key practices for consumer
education planning.
Private Stakeholders Have Established Education Efforts to Inform the
Public about the DTV Transition:
Private sector stakeholders, such as broadcasters, cable providers, and
the Consumer Electronics Association, have undertaken various education
efforts to increase public awareness about the DTV transition.[Footnote
7] NAB and the National Cable and Telecommunications Association
initiated DTV transition consumer education campaigns in late 2007 at
an estimated value of $1.4 billion combined. NAB has produced six
versions of a public service announcement, including 15-second and 30-
second versions in both English and Spanish and close-captioned
versions. Private sector stakeholders have also produced DTV transition
educational programs for broadcast and distribution, developed Web
sites that provide information on the transition, and engaged in
various other forms of outreach to raise awareness. Examples of
outreach by some private stakeholders include attending and
distributing information at industry events and conferences, such as
speakers' bureaus and road shows, and initiating an educational contest
to find the oldest working television that receives over-the-air
broadcasts. Additionally, most of the national retailers participating
in the NTIA converter box subsidy program are providing materials to
help inform their customers of the DTV transition and the subsidy
program. Examples of these materials include informational brochures in
English and Spanish, educational videos and in-store displays in
English and Spanish, informational content on retailer Web sites, and
information provided in retailer advertising in Sunday circulars. Some
of the national retailers with whom we spoke are also engaging in
partnerships with other organizations. For example, one national
retailer is partnering with local broadcasters to run DTV television
spots and with print media outlets and magazines to help inform the
public about the transition. The private sector has also conducted
surveys to gauge consumer awareness. For example, NAB, the Consumer
Electronics Association, Consumers Union, and Best Buy Company, Inc.,
have all surveyed consumers nationwide regarding their level of
understanding and awareness of the DTV transition.
Federal Government Education Efforts Target Hard-to-Reach Populations,
and Plans Generally Follow Key Practices for Consumer Outreach:
FCC and NTIA also have ongoing DTV consumer education efforts, which
target populations most likely to be affected by the DTV transition.
Specifically, they focused their efforts on 45 areas of the country
that have at least 1 of the following population groups: (1) more than
150,000 over-the-air households, (2) more than 20 percent of all
households relying on over-the-air broadcasts, or (3) a top 10 city of
residence for the largest target demographic groups. The target
demographic groups include seniors, low-income, minority and non-
English speaking, rural households, and persons with disabilities.
According to NTIA, its consumer education efforts will specifically
target these 45 areas by leveraging partnerships and earned media spots
(such as news stories or opinion editorials) to better reach the
targeted populations. FCC indicated that while its outreach efforts
focus on the targeted hard-to-reach populations, the only effort
specifically targeting the 45 locations has been to place billboards in
these communities. According to FCC, contracts exist for billboards in
26 of the 45 markets, and it is working to place billboards in the
other 19 markets. Furthermore, FCC and NTIA have developed partnerships
with some federal, state, and local organizations that serve the
targeted hard-to-reach populations. FCC and NTIA believe the partners
can serve as trusted voices to inform the targeted populations about
the DTV transition. As shown in table 1, there have been outreach
efforts to all targeted populations. A few of the partners we contacted
indicated that while they agreed to help inform the populations they
serve, they had very little funding to support widespread dissemination
of this information, and that they would like monetary support from the
government to do so. We also found one instance of an organization
listed as a partner by NTIA that had not agreed to disseminate DTV
information because it could only focus on its primary mission.
Table 1: Examples of FCC and NTIA Consumer Outreach Efforts to Targeted
Populations:
Targeted population: Seniors;
Consumer outreach effort: NTIA conducted a train-the-trainer "Webinar,"
reaching approximately 200 individuals who are now conducting outreach
to seniors.
Targeted population: Low-income;
Consumer outreach effort: FCC placed exhibits at four state/territory
chapter meetings of the National Social Worker Association.
Targeted population: Minority and non-English speaking;
Consumer outreach effort: NTIA participated in an Asian Pacific
American Heritage Month event in San Francisco, along with
approximately 100 community leaders.
Targeted population: Rural households;
Consumer outreach effort: FCC and NTIA, in conjunction with the U.S.
Department of Agriculture, participated in a National 4H Youth
Conference and conducted a train-the-trainer session for approximately
100 youth members.
Targeted population: Persons with disabilities;
Consumer outreach effort: FCC attended several conferences, including
the National Black Deaf Advocates Conference, to distribute DTV
materials.
Sources: FCC and NTIA.
[End of table]
We previously reported on nine key practices for consumer education
planning: defining goals and objectives, analyzing the situation,
identifying stakeholders, identifying resources, researching target
audiences, developing consistent and clear messages, identifying
credible messenger(s), designing the media mix, and establishing
metrics to measure success.[Footnote 8] We analyzed FCC's and NTIA's
consumer education plans and found that they reflect almost all of the
key practices that we previously identified for overcoming potential
challenges in such planning. For example, NTIA has defined four primary
objectives, including (1) increasing awareness of the converter box
subsidy program, (2) generating requests for coupons, (3) engaging
partners to disseminate information about the subsidy program, and (4)
providing media information and tools needed to report on the program.
FCC has made consumer outreach one of its primary goals for the DTV
transition and has set goals for distributing publications;
participating in events and conferences; and coordinating with federal,
state, and local entities. Furthermore, NTIA and FCC conducted audience
research on targeted populations and identified geographic areas most
likely to be affected. The NTIA contractor for the subsidy program
completed a study of both general consumers and those who fall into the
target audiences to help develop the message and materials for the
program. This process included developing, testing, and refining the
message, with the goal of exploring the target audiences' reactions to
the message. For additional information on the key practices and the
FCC and NTIA consumer education plans, see appendix II.
NTIA Is Effectively Implementing the Converter Box Subsidy Program, but
Concerns Exist about NTIA's Ability to Manage a Potential Spike in
Coupon Demand:
NTIA has processed and issued coupons to millions of consumers, but a
sharp increase in demand might affect NTIA's ability to respond to
coupon requests in a timely manner. With relatively low participation
rates to date, a spike in demand leading up to the transition is likely
and, given the processing time required in issuing coupons, NTIA's
preparedness to handle volatility in coupon demand is uncertain. Coupon
requests and redemptions by the targeted hard-to-reach populations have
varied compared with participation in the rest of the country, with
some populations having higher request rates but redeeming the coupons
at a lower rate. Retailers play a crucial role in the converter box
subsidy program, and the national retailers we contacted have taken
steps to inform their consumers and train their employees about the
subsidy program.
NTIA Has Implemented Systems to Process Requests and Issue Coupons, but
NTIA's Ability to Respond to Volatile Coupon Demand Is Uncertain:
NTIA and its contractors have implemented comprehensive systems to
administer the converter box subsidy program. The contractors working
with NTIA--IBM and its subcontractors--have implemented systems (1) to
process coupon applications, (2) to produce and distribute coupons to
consumers, and (3) for retailers to process coupons and receive
reimbursement for the coupons from the government. Millions of
consumers have requested converter box coupons, and most of the
requested coupons have been issued. Through June 2008, households had
requested almost 19 million coupons. NTIA had issued over 92 percent of
all coupon requests, for more than 17 million coupons. Of those coupons
issued, about 4.9 million (28 percent) had been redeemed and 13 percent
had expired.[Footnote 9] At the time of our review, consumers were not
eligible to reapply for coupons that expired before they were used.
Rather, funds obligated for expired coupons were to be returned to the
subsidy program. According to NTIA, it had anticipated and budgeted for
the distribution of additional coupons as funds from expired coupons
are returned to the program, and it is working closely with its
contractor to ensure that as many coupons as possible can be
distributed.
After an initial spike at the beginning of the program, coupon requests
have remained steady and have averaged over 103,000 requests per day.
Coupon redemptions, since coupons were first issued in February 2008,
have averaged over 36,000 per day. Figure 1 illustrates the cumulative
requests, issuances, redemptions, and expirations of coupons, from the
inception of the subsidy program (January 2008) through June 2008.
Figure 1: Cumulative Converter Box Coupon Requests, Issuances,
Redemptions, and Expirations through June 2008:
This figure is a combination line graph showing cumulative converter
box coupon requests, issuances, redemptions, and expirations through
June 2008. The lines represent coupons requested, coupons issued,
coupons redeemed, and coupons expired. The horizontal axis represent
the day, and the vertical axis represent the number of coupons (in
millions).
Date: January 1;
Coupons issued: 0;
Coupons redeemed: 0;
Coupons expired: 0;
Coupons requested: 475,650.
Date: January 15;
Coupons issued: 0;
Coupons redeemed: 0;
Coupons expired: 0;
Coupons requested: 3,237,393.
Date: February 1;
Coupons issued: 195;
Coupons redeemed: 21;
Coupons expired: 0;
Coupons requested: 4,245,526.
Date: February 15;
Coupons issued: 195;
Coupons redeemed: 86;
Coupons expired: 0;
Coupons requested: 5,072,728.
Date: March 1;
Coupons issued: 840,161;
Coupons redeemed: 3,422;
Coupons expired: 0;
Coupons requested: 6,727,877.
Date: March 15;
Coupons issued: 1,800,150;
Coupons redeemed: 79,082.
Coupons expired: 0;
Coupons requested: 7,829,585.
Date: April 1;
Coupons issued: 4,159,990;
Coupons redeemed: 228,652;
Coupons expired: 0;
Coupons requested: 9,389,862.
Date: April 15;
Coupons issued: 6,334,451;
Coupons redeemed: 526,261;
Coupons expired: 0;
Coupons requested: 10,941,155.
Date: May 1;
Coupons issued: 9,697,960;
Coupons redeemed: 990,775;
Coupons expired: 81;
Coupons requested: 12,657,192.
Date: May 15;
Coupons issued: 13,088,003
Coupons redeemed: 1,634,960
Coupons expired: 81;
Coupons requested: 14,092,028.
Date: June 1;
Coupons issued: 14,511,303;
Coupons redeemed: 267,699
Coupons expired: 489,598
Coupons requested: 15,812,977.
Date: June 15;
Coupons issued: 16,011,203;
Coupons redeemed: 3,713,920;
Coupons expired: 1,084,520;
Coupons requested: 17,215,806.
Date: June 30;
Coupons issued: 17,473,806;
Coupons redeemed: 4,890,000;
Coupons expired: 2,243,760;
Coupons requested: 18,876,626.
[See PDF for image]
Source: GAO analysis of NTIA data.
[End of figure]
In our recent consumer survey, we found that 35 percent of U.S.
households are at risk of losing some television service because they
have at least one television not connected to a subscription service,
such as cable or satellite. However, through June 2008, only 9 percent
of U.S. households had requested converter box coupons, and less than 3
percent had redeemed these coupons. As the transition date nears, there
is the potential that many affected households that have not taken
action might begin requesting coupons. Our consumer survey found that
of those at risk of losing some television service and intending to
purchase a converter box, most will likely request a coupon. In fact,
in households relying solely on over-the-air broadcasts (approximately
15 percent), of those who intend to purchase a converter box, 100
percent of survey respondents said they were likely to request a
coupon.
Consumers have incurred significant wait times in the processing of
their coupon requests, but NTIA's processing time from receiving
requests to issuing coupons is improving, as shown in figure 2. NTIA
requires that 98 percent of all coupon requests be issued within 10
days, and the remainder be issued within 15 days from the date the
coupon applications are approved. From February 17 through June 30,
2008, our analysis shows that the average duration between coupon
request and issuance is over 19 days.[Footnote 10] In aggregate, 36
percent of all coupon requests have been issued within 10 days, and 54
percent of all coupon requests have been issued more than 15 days after
being requested. From May 1 through June 30, 2008, the average
processing time from coupon request to issuance was 9 days.
Figure 2: Average Coupon Processing Time from Request Date, through
June 2008:
[See PDF for image]
NTIA requires that 98 percent of all coupon requests be issued within
10 days of application approval.
Day: January 1;
Processing time (number of days): 5.71.
Day: January 15;
Processing time (number of days): 28.35.
Day: February 1;
Processing time (number of days): 33.
Day: February 15;
Processing time (number of days): 37.
Day: February 18; [Coupon requests submitted on February 18 had an
average processing time of 38 days]
Processing time (number of days): 38.2.
Day: March 1;
Processing time (number of days): 34.
Day: March 15;
Processing time (number of days): 28.
Day: April 1;
Processing time (number of days): 22.
Day: April 15;
Processing time (number of days): 15.
Day: May 1;
Processing time (number of days): 6.89.
Day: May 15;
Processing time (number of days): 9.95.
Day: June 1;
Processing time (number of days): 9.
Day: June 15;
Processing time (number of days): 9.
Source: GAO analysis of NTIA data.
[End of figure]
Throughout the course of the subsidy program, NTIA has increased its
capacity to issue coupons, at times issuing as many as 500,000 coupons
per day. However, the number of coupons issued per day varies greatly
and, as shown in figure 3, has declined since peaking in early May
2008.
Figure 3: Converter Box Coupons Requested, in Process, and Issued
through June 2008:
[See PDF for image]
Weekday (Mondays): February 25;
Coupons requested: 765,252;
Coupons in process: 5,919,303;
Coupons issued: 359,974.
Weekday (Mondays): March 03;
Coupons requested: 502,606
Coupons in process: 5,968,625
Coupons issued: 479,992.
Weekday (Mondays): March 10;
Coupons requested: 563,801;
Coupons in process: 6,008,313;
Coupons issued: 480,005.
Weekday (Mondays): March 17;
Coupons requested: 534,385;
Coupons in process: 6,095,202;
Coupons issued: 479,981.
Weekday (Mondays): March 24;
Coupons requested: 555,286;
Coupons in process: 5,734,133;
Coupons issued: 1,074,967.
Weekday (Mondays): March 31;
Coupons requested: 744,053;
Coupons in process: 5,312,324;
Coupons issued: 1,074,890.
Weekday (Mondays): April 07;
Coupons requested: 754,856;
Coupons in process: 5,007,522;
Coupons issued: 1,059,711.
Weekday (Mondays): April 14;
Coupons requested: 789,293;
Coupons in process: 4682,790;
Coupons issued: 1,124,804.
Weekday (Mondays): April 21;
Coupons requested: 736,457;
Coupons in process: 4,256,045;
Coupons issued: 1,224,633;
Weekday (Mondays): April 28;
Coupons requested: 746,840;
Coupons in process: 3,757,601;
Coupons issued: 1,224,495.
Weekday (Mondays): May 05;
Coupons requested: 736,510;
Coupons in process: 2,722,302;
Coupons issued: 2,143,772.
Weekday (Mondays): May 12;
Coupons requested: 697,259;
Coupons in process: 1,285,018;
Coupons issued: 1,964,265.
Weekday (Mondays): May 19;
Coupons requested: 746,205;
Coupons in process: 1,026,103;
Coupons issued: 620,160.
Weekday (Mondays): May 26;
Coupons requested: 687,879;
Coupons in process: 1,203,920;
Coupons issued: 449,789.
Weekday (Mondays): June 02;
Coupons requested: 768,651;
Coupons in process: 1,340,461;
Coupons issued: 749,692.
Weekday (Mondays): June 09;
Coupons requested: 694,436;
Coupons in process: 1,302,968;
Coupons issued: 749,949.
Weekday (Mondays): June 16;
Coupons requested: 712,272;
Coupons in process: 1,255,028;
Coupons issued: 749,973.
Weekday (Mondays): June 23;
Coupons requested: 762,678;
Coupons in process: 1,250,858;
Coupons issued: 732,575.
Weekday (Mondays): June 30;
Coupons requested: 773,818;
Coupons in process: 1,292,372;
Coupons issued: 729,931.
Source: GAO analysis of NTIA data.
[End of figure]
Given the processing time required in issuing coupons, NTIA's
preparedness to handle volatility in coupon demand is unclear.
Fluctuation in coupon requests, including the potential for a spike in
requests as the transition date approaches, could adversely affect
consumers. When NTIA faced a deluge of coupon requests in the early
days of the converter box subsidy program, it took weeks to bring down
the deficit of coupons requested to coupons issued. According to NTIA,
it expects a similar increase in requests around the transition date,
and such an increase may cause a delay in issuing coupons. As a result,
consumers might incur significant wait time before they receive their
coupons and might lose television service during the time they are
waiting for the coupons. NTIA told us it has discussed options to
address the increase in requests, such as downloadable coupons. NTIA
interprets the statute, however, as requiring it deliver all coupons
using the U.S. Postal Service. While NTIA and its contractors have
demonstrated the capacity to process and issue large numbers of coupon
requests over short periods, they have yet to establish specific plans
to manage a potential spike or a sustained increase in demand leading
up to the transition.
Participation in the Converter Box Subsidy Program by Hard-to-Reach
Populations Varies:
We analyzed data to compare areas of the country that comprise
predominantly minority and elderly populations with the rest of the
U.S. population and found some differences in the coupon request,
redemption, and expiration rates for Hispanic, black, and senior
households compared with the rest of the U.S. population.[Footnote 11]
For example, zip codes with a high concentration of Latino or Hispanic
households had noticeably higher request rates (20 percent) compared
with non-Latino or non-Hispanic zip codes (8 percent). However,
households in predominantly black and Latino or Hispanic zip codes were
less likely, compared with households outside these areas, to redeem
their coupons once they received them. As shown in table 2, the overall
rate of redemption for the converter box subsidy program is 28 percent,
but only 19 percent of coupons have been redeemed in predominantly
Latino or Hispanic areas. In predominantly black areas, 22 percent of
coupons have been redeemed.
Furthermore, we found that in areas of the country with a high
concentration of seniors, fewer coupons were requested (7 percent)
compared with areas of the country that did not have a high
concentration of seniors (9 percent). Redemption rates for the senior
population were similar to the redemption rates in the rest of the
country. Regarding coupon expirations, we found a wide variance between
minority and senior populations compared with the population as a
whole. For example, the areas comprising Latino or Hispanic households
only allowed 4 percent of their coupons to expire, while areas with
predominantly senior populations allowed 21 percent of their coupons to
expire.
Table 2: Request, Redemption, and Expiration Rates of Converter Box
Coupons through June 2008:
U.S. population;
Request rate: 9.1%;
Redemption rate: 28.0%;
Expiration rate: 12.8%.
Latino or Hispanic;
Request rate: 19.8;
Redemption rate: 19.4;
Expiration rate: 4.3.
Black;
Request rate: 9.2;
Redemption rate: 21.5;
Expiration rate: 11.2.
Seniors;
Request rate: 6.9;
Redemption rate: 27.5;
Expiration rate: 21.0.
Source: GAO analysis of NTIA data.
[End of table]
The higher coupon request rates for Latino or Hispanic households
compared with the non-Latino or non-Hispanic areas might be due to the
consumer education efforts of the Spanish speaking broadcasters. An
advocacy group representing Hispanics told us that the outreach efforts
of Spanish speaking broadcasters, such as Univision, Telemundo, and
Azteca America, have been effective in educating their viewers on the
DTV transition. While the advocacy group had high praise for these
broadcasters, it and another advocacy group representing minority
populations that we contacted expressed concerns about certain aspects
of the consumer education and outreach efforts by federal and private
sector stakeholders. Specifically, these groups expressed concerns
about the lack of funding for outreach to targeted vulnerable
populations, the possibility of misinformation being provided by
retailers to consumers, a lack of technical assistance to the targeted
populations (such as assisting the elderly with connecting the
converter boxes to their televisions), and the absence of rapid
response planning to assist the targeted populations if funds for the
converter box subsidy run out. Furthermore, these advocacy groups
stated they believe the current transition messaging is very general
and not targeted toward at-risk populations. As such, one group
believes current messaging does not lead the at-risk populations to
being fully aware of what they may need to do to prepare for the
transition. Another group stated that targeted outreach efforts to its
member organizations and populations are very general, and that
outreach efforts on the transition and converter box subsidy program
have not resonated with their communities.
To determine participation in the converter box subsidy program in the
45 areas of the country receiving targeted outreach by NTIA and FCC, we
analyzed NTIA coupon data (including requests, redemptions, and
expirations) in the 45 areas compared with the rest of the country not
targeted by NTIA and FCC. We found participation levels were about the
same in the targeted areas compared with the rest of the country. As we
have previously mentioned, the 45 areas were targeted for the level of
at-risk households, including households relying on over-the-air
television. Therefore, the portion of the population in those 45 areas
requiring action to continue viewing television broadcasts should be
higher than in other areas of the country. However, we found that in
the 45 targeted areas, 8.8 percent of households have requested coupons
compared with 9.4 percent for the rest of the country not targeted by
NTIA and FCC. We also found similarities between the 45 targeted areas
and the rest of the country when looking at the coupon redemption and
expiration rates. According to NTIA, similarities in request,
redemption, and expiration rates between the 45 targeted areas and the
rest of the country is viewed as a success.
Retailers Are Participating in the Converter Box Subsidy Program, but
Lacked Guidance from NTIA at the Time of Our Review:
As the sellers of the converter boxes, retailers play a crucial role in
the converter box subsidy program and are counted on to inform
consumers about it. To do so, many national retailers are using in-
store video programming, signage, and brochures to inform consumers. At
the time of our review, seven national retailers were participating in
the subsidy program.[Footnote 12] Three national retailers
participating in the program told us they display programming about the
transition on televisions at their store locations. One of these stores
said it developed two consumer education videos, which run along with
other programming on in-store displays. These videos provide
information in both English and Spanish on the DTV transition,
consumers' options for maintaining television service after the
transition, and information about how to set up digital-to-analog
converter boxes on analog televisions. Additionally, all of the
retailers we spoke with indicated that signs and informational
pamphlets about the DTV transition would be part of their in-store
education campaigns. Retailers wanting to participate in the converter
box subsidy program must become certified and are obligated to, among
other things, train employees on the purpose and operation of the
subsidy program. All of the retailers with whom we spoke told us they
were training employees on the DTV transition and the subsidy program,
although the retailers varied in which staff must complete training.
For example, one retailer told us that all employees working in sales,
customer service, call centers, and facilities handling warranties and
service must complete DTV transition-related training. Another retailer
told us that although it provides some training to its sales staff,
most of the training is focused on employees working at cash registers.
As part of our work, we conducted a "mystery shopper" study by visiting
132 randomly selected retail locations in 12 cities across the United
States that were listed as participating in the converter box subsidy
program. We did not alert retailers that we were visiting their stores
or identify ourselves as government employees. During our visits, we
engaged the retailers in conversation about the DTV transition and the
subsidy program to determine whether the information they were
providing to customers was accurate, and whether individual stores had
coupon-eligible converter boxes available. While not required to do so,
some stores we visited had informational material available and others
had signs describing the DTV transition and the subsidy program. The
informational materials included retailer-produced brochures and
fliers, NTIA-produced fliers, and converter box subsidy applications.
We also determined whether the information that retailers were
providing to customers was accurate, and whether individual stores had
coupon-eligible converter boxes available. At most retailers (118) we
visited, a representative was able to correctly identify that the DTV
transition would occur in February 2009. Additionally, nearly all (126)
retailers identified a coupon-eligible converter box as an option
available to consumers to continue watching television after the
transition. Besides coupon-eligible converter boxes, representatives
identified other options to continue viewing television after the
transition, including purchasing a digital television (67) or
subscribing to cable or satellite service (77). However, in rare
instances, we heard erroneous information from the retailers, including
one representative who told us that an option for continuing to watch
television after the transition was to obtain a "cable converter box"
from a cable company and another representative who recommended that we
buy an "HD tuner." Since participating retailers are obligated to train
their employees on the purpose and operation of the subsidy program, we
observed whether the representative was able to explain various aspects
about the program. As table 3 shows, a vast majority of the
representatives were able to explain how to receive or apply for a
coupon and the value of the coupon, while a similar number were able to
explain the converter boxes eligible for the subsidy program and who
needs a converter box.
Table 3: Retailer Representatives Able to Explain Certain Aspects of
NTIA's Converter Box Subsidy Program:
Was representative able to explain the following aspects of the
converter box subsidy program?: How to receive or apply for the coupon;
Yes: 117;
No: 10.
Was representative able to explain the following aspects of the
converter box subsidy program?: Value of the coupon;
Yes: 119;
No: 8.
Was representative able to explain the following aspects of the
converter box subsidy program?: Which converter boxes were eligible for
the subsidy program;
Yes: 110;
No: 14.
Was representative able to explain the following aspects of the
converter box subsidy program?: Who needs a converter box;
Yes: 108;
No: 14.
Source: GAO.
Note: Questions were not asked uniformly to all salespeople; therefore,
the number of responses to each question is not identical.
[End of table]
Although we could obtain information from the majority of the stores
that we visited and that were listed as participating in the subsidy
program, in a few instances, we were not able to ask questions and
observe whether the information provided was accurate. In two
instances, there was no retailer at the store location listed as a
participating retailer on NTIA's Web site ([hyperlink,
https://www.dtv2009.gov/VendorSearch.aspx]). In another instance, the
location listed was under construction and had not yet opened. In two
additional instances, the locations listed were private residences--one
was an in-home electronics store, and the other was a satellite
television installer working from a house. We asked NTIA how it ensured
the accuracy of the list of participating retailers on its Web site,
and according to NTIA, ensuring the accuracy of the list is the
responsibility of the retailers. NTIA said it provides a list of
locations to each retailer prior to placing the list on the Web site,
and retailers can update addresses or add new listings as warranted.
At the time of our review, retailers told us that it would be useful to
have guidance from NTIA on how to handle the refunds of converter boxes
purchased with a government coupon. Some retailers said that they were
tracking returns in their own systems and awaiting guidance from NTIA
on how to return funds to the government from returned boxes. As part
of NTIA's final rule on the converter box subsidy program, consumers
may not return a coupon-eligible converter box to a retailer for a cash
refund for the coupon amount. Therefore, if a customer returns a
converter box purchased with a coupon, the retailer can only refund to
the customer the amount paid for the converter box above the value of
the coupon, and the retailer must refund the value of the coupon to
NTIA. One of the retailers told us that it had developed an in-house
accounts payable system to track converter boxes that are returned
because it had no guidance from NTIA on how to return funds to the
government. In July 2008, NTIA provided guidance to the retailers on
how to handle the returns of coupon-eligible converter boxes. According
to the guidance, retailers must have agreed to the terms by August 15,
2008, or face deactivation from the subsidy program.
Conclusions:
NTIA estimates that it will see a large increase in the number of
coupon requests in the first quarter of 2009. In addition, our analysis
confirms that a spike in coupon requests is likely as the transition
nears. However, NTIA has not developed a plan for managing that
potential spike or sustained increase in coupon demand. The time
required for processing coupons has improved from when consumers
incurred significant wait times to receive their coupons at the
beginning of the program, but, until recently, NTIA fell short of its
requirement for processing coupons within 10 to 15 days from the date
the coupon applications were approved. Given the relatively low
participation rates to date and the amount of time it took to process
the spike in coupon requests in the early days of the program, NTIA's
ability to handle volatility in coupon demand without a plan is
unclear. Consequently, consumers face potential risks that they might
not receive their coupons before the transition and might lose their
television service after February 17, 2009.
Recommendation for Executive Action:
To help NTIA prepare for a potential increase in demand for converter
box coupons and so that consumers are not left waiting a lengthy amount
of time for requested coupons, we recommend that the Secretary of
Commerce direct the Administrator of NTIA to develop a plan to manage
volatility in coupon requests so that coupons can be processed and
mailed within 10 to 15 days from the day the coupon applications are
approved, per NTIA's stated requirement.
Agency Comments:
We provided a draft of this report to the Department of Commerce (which
contains NTIA) and FCC for their review and comment. In response,
Commerce did not state whether it agreed or disagreed with our
recommendation, but the department did say that it shares our concern
about an increase in coupon demand as the transition nears. Commerce
believes that NTIA has monitored coupon demand throughout the program,
has effectively responded to those demands, and will adjust the
program's operation as necessary to address consumer demand as the
transition date approaches. Furthermore, Commerce's letter stated it is
committed to doing all that it can within its statutory authority and
existing resources to ensure that all Americans are ready for the DTV
transition. In its letter, FCC noted consumer outreach efforts it has
taken related to the DTV transition, some of which were announced after
we concluded our audit work at the commission. For example, FCC stated
that in 81 markets, the Chairman, a commissioner, or FCC senior staff
would hold a public event, such as a town-hall meeting, workshop, or
roundtable discussion, to highlight the steps consumers need to take to
be prepared for the DTV transition. See appendixes IV and V for written
comments from Commerce and FCC, respectively.
We are sending copies of this report to interested congressional
committees, the Secretary of Commerce, and the Chairman of FCC. We will
make copies available to others upon request. In addition, the report
will be available at no charge on the GAO Web site at [hyperlink,
http://www.gao.gov].
If you or your staffs have any questions concerning this report, please
contact me on (202) 512-2834 or goldsteinm@gao.gov. Contact points for
our Offices of Congressional Relations and Public Affairs may be found
on the last page of this report. Key contributors to this report are
listed in appendix VI.
Signed by:
Mark L. Goldstein:
Director, Physical Infrastructure Issues:
List of Requesters:
The Honorable Edward J. Markey:
Chairman:
The Honorable Cliff Stearns:
Ranking Member:
Subcommittee on Telecommunications and the Internet:
Committee on Energy and Commerce:
House of Representatives:
The Honorable Herb Kohl:
Chairman:
Special Committee on Aging:
United States Senate:
The Honorable Daniel K. Inouye:
Chairman:
Committee on Commerce, Science, and Transportation:
United States Senate:
The Honorable Joe Barton:
Ranking Member:
Committee on Energy and Commerce:
House of Representatives:
The Honorable Bill Nelson:
United States Senate:
The Honorable Fred Upton:
House of Representatives:
[End of section]
Appendix I: Objectives, Scope, and Methodology:
The objectives of this report are to provide information on issues
surrounding the digital television (DTV) transition, specifically, (1)
what consumer education efforts have been undertaken by private and
federal stakeholders and (2) how effective the National
Telecommunications and Information Administration (NTIA) has been in
implementing the converter box subsidy program, and to what extent
consumers are participating in the program.
To obtain information on consumer education efforts, we reviewed
federal agency consumer education planning documents, agency orders,
rules, proposed rules, and testimony statements from the Federal
Communications Commission (FCC) and NTIA. We analyzed and compared
federal consumer education plans with key practices for consumer
education planning that were developed by an expert panel in our
previous work on the DTV transition.[Footnote 13] This analysis was
used to determine the extent that federal consumer education plans
incorporated the key practices for effective consumer education
planning. We also reviewed publicly available information on private
sector consumer education planning and consumer awareness surveys
conducted by industry groups, such as the Consumer Electronics
Association (CEA), the National Association of Broadcasters (NAB), and
Consumers Union. In addition, we spoke with government and private
sector stakeholders involved in the transition, including FCC and NTIA
officials. We also spoke with representatives from the broadcasting,
retailer, manufacturing, and cable industries, including NAB, the
Community Broadcasters Association, the Consumer Electronics Retailers
Coalition, the North American Retailer Dealers Association, CEA, and
the National Cable and Telecommunications Association. Lastly, we
contacted all national retailers participating in the NTIA converter
box subsidy program and spoke with six of the seven national retailers,
including Best Buy Company, Inc; Circuit City Stores, Inc; Kmart (a
subsidiary of Sears Holdings Corporation); Radio Shack Corporation;
Sears Holdings Corporation; and Target Corporation about their consumer
education efforts. Only one national retailer, Wal-Mart Stores, Inc.,
declined the opportunity to speak with us about its DTV consumer
education efforts.
To determine how effective NTIA and its partners have been in
implementing the converter box subsidy program, we analyzed coupon data
on request, redemption, and expiration rates. To examine NTIA's
timeliness in issuing coupons, we analyzed data for each day of the
subsidy program, beginning on January 1, 2008, through June 30, 2008.
Operating under the assumption that all coupons were issued in the
order the requests were received, we calculated the average daily
processing time for applications received. Furthermore, we analyzed
date-specific data from NTIA on coupon applications, requests,
issuance, redemptions, and expirations. To determine participation by
the targeted hard-to-reach populations, NTIA provided us with a list of
zip codes for the 45 areas of the country identified in FCC and NTIA
consumer education plans. We analyzed the NTIA data by zip codes to
draw comparisons across demographic differences. To do so, we merged
the NTIA zip code data with data from the 2000 Census SF-3 summary file
Zip Code Tabulation Areas. From the census data, we grouped zip codes
into urban and rural categories and looked at coupon requests,
redemptions, and expirations for zip codes that were over 50 percent
black or Hispanic/Latino. Furthermore, we discussed the effectiveness
of the consumer education with advocacy groups representing hard-to-
reach populations, including AARP, the National Hispanic Media
Coalition, Leadership Conference on Civil Rights, the American
Association of People with Disabilities, and National 4-H Headquarters.
To assess the reliability of these data, we reviewed related
documentation and conducted manual testing of certain source databases.
We also interviewed knowledgeable agency officials about the quality of
these data. As a result, we determined that these data were
sufficiently reliable for the purposes of this report. We also
conducted a "mystery shopper" study to determine the extent of retailer
preparedness for the converter box subsidy program, including (1)
retailer knowledge about the subsidy program, (2) the availability of
converter boxes, and (3) whether retailers were attempting to up-sell
to consumers who were interested in the program. We conducted the
mystery shopper study from April 14, 2008, to May 2, 2008. The sample
of retail stores that we visited was generated and randomly selected on
April 11, 2008, from the list of participating retail stores identified
on the NTIA Web site ([hyperlink,
https://www.dtv2009.gov/VendorSearch.aspx]). Our sample was limited to
store locations within a 15-mile radius of each GAO field office's and
GAO headquarters' 5-digit zip code. For the study, we visited 132 store
locations in 12 cities--Atlanta; Boston; Chicago; Dallas; Dayton;
Denver; Huntsville; Los Angeles; Norfolk; San Francisco; Seattle; and
Washington, D.C. The results of this study are not representative of
retailer preparedness across the nation and are only applicable to the
locations that we visited. However, our sample was sufficient to make
basic statistical generalities and collect anecdotal evidence on the
general level of retailer preparedness at that point in time.
Additionally, the time frame in which the study was conducted limited
our sample to retailers that were participating in the converter box
subsidy program at that time (which included national retailers Best
Buy Company, Inc; Circuit City Stores, Inc; Radio Shack Corporation;
and Wal-Mart Stores, Inc.)
We conducted this review from February 2008 to September 2008 in
accordance with generally accepted government auditing standards. Those
standards require that we plan and perform the audit to obtain
sufficient and appropriate evidence to provide a reasonable basis for
our findings and conclusions based on our review objectives. We believe
that the evidence obtained provides a reasonable basis for our findings
and conclusions based on our audit objectives.
[End of section]
Appendix II: Comparison of Federal Consumer Education Plans to Key
Practices for Consumer Education Planning:
In our previous work on the DTV transition, we convened an expert panel
to discuss consumer education issues applicable to the
transition.[Footnote 14] These issues included potential challenges
that may obstruct efforts and the key planning components of a consumer
education campaign that will help overcome some of those
challenges.[Footnote 15] As shown in table 4, we analyzed FCC and NTIA
consumer education plans and compared them with the key practices for
consumer education planning. We found that the federal plans address
nearly all of the key practices. (See detailed discussions of these
practices following the table.)
Table 4: Key Practices Comparison to FCC and NTIA Consumer Education
Plans:
Key practice: Define goals and objectives;
Did FCC plan address key practice?: Yes;
Did NTIA plan address key practice?: Yes.
Key practice: Analyze the situation;
Did FCC plan address key practice?: Yes;
Did NTIA plan address key practice?: Yes.
Key practice: Identify stakeholders;
Did FCC plan address key practice?: Yes;
Did NTIA plan address key practice?: Yes.
Key practice: Identify resources[A];
Did FCC plan address key practice?: No;
Did NTIA plan address key practice?: No.
Key practice: Research target audiences;
Did FCC plan address key practice?: Yes;
Did NTIA plan address key practice?: Yes.
Key practice: Develop consistent, clear messages;
Did FCC plan address key practice?: Yes;
Did NTIA plan address key practice?: Yes.
Key practice: Identify credible messenger(s);
Did FCC plan address key practice?: Yes;
Did NTIA plan address key practice?: Yes.
Key practice: Design media mix;
Did FCC plan address key practice?: Yes;
Did NTIA plan address key practice?: Yes.
Key practice: Establish metrics to measure success: Process metrics;
Did FCC plan address key practice?: Yes;
Did NTIA plan address key practice?: Yes.
Key practice: Establish metrics to measure success: Outcome metrics;
Did FCC plan address key practice?: No;
Did NTIA plan address key practice?: Yes[B].
Source: GAO analysis of FCC and NTIA data.
[A] Budget and other resource information was not provided within the
consumer education plans available for our review.
[B] The outcome metrics that NTIA uses measures only over-the-air
household participation and not participation by other hard-to-reach
populations.
[End of table]
Key Practice 1: Define goals and objectives. Both FCC and NTIA defined
the goals and objectives of their consumer education plans. The FCC
plan's stated goal is to identify channels and outreach activities not
yet utilized to ensure that the American public is made aware of the
DTV transition so they can benefit from it and, if necessary, take
action to be prepared for the transition.[Footnote 16] The NTIA plan's
stated goal is to educate U.S. residents who receive over-the-air
broadcasts on analog television about the DTV transition and the
converter box subsidy program. The objectives of the NTIA plan are to
(1) increase awareness of the subsidy program as one option available
to consumers; (2) generate requests for coupons through various request
methods, such as toll-free numbers, Web site visits, or written or
faxed correspondence; (3) engage program partners to disseminate
information about the subsidy program; and (4) provide media
information and the tools needed to report on the program.
Key Practice 2: Analyze the situation. Both FCC and NTIA analyzed the
situation related to market conditions, including competing voices or
messages, and constraints on timing. For example, FCC's plan provides
an analysis that determined the segments of the population most
vulnerable to the transition (i.e., over-the-air viewers). Included in
this analysis is the general resistance and skepticism to change beyond
the public's control; the challenge to ensure accurate, consistent, and
coordinated information between public and private sector stakeholders;
and the potential for the news media to pursue new angles and issues
related to the DTV transition. The NTIA plan addressed situation
analysis in two primary ways, including (1) media environment and (2)
partner environment. The media environment analysis assessed keeping
the media interested and engaged at critical times, recognizing that
the consumer education campaign would be in operation in a "crowded
media environment" competing with the 2008 presidential elections and
the holiday season for public attention. Additionally, NTIA assessed
that different organizations would be engaged in its transition
outreach activities, and that NTIA would be challenged with engaging
partners that are in a position to carry messages most effectively and
efficiently to target audiences, and ensuring they deliver accurate
information about the subsidy program.
Key Practice 3: Identify stakeholders. Both FCC and NTIA identified and
engaged stakeholders that would be involved with communication efforts,
including the roles and responsibilities of each stakeholder. For
example, the FCC plan emphasizes and recommends the use of various
stakeholders to be involved in consumer outreach, such as broadcast
outlets; media services, such as radio, print, and online news
services; and other direct-to-consumer methods of outreach, including
outdoor and transit public service advertising and outreach through
grocery store chains.[Footnote 17] The NTIA plan also identifies
various organizations as partners, such as the major broadcast networks
and other federal agencies. In addition to identification, NTIA has
developed a tiered approach to partnerships with other organizations.
The tiered partner system identifies the level of impact and
communication capability a partner may have on outreach based on the
organization's ability to reach the program's target
populations.[Footnote 18] The NTIA plan also outlines the minimum level
of commitment from the tiered partner and the amount of support the
partner would receive from NTIA.
Key Practice 4: Identify resources. Short-term and long-term budgetary
resources and other resources were not identified or available in the
planning documents used for our comparison of FCC and NTIA consumer
education plans to the key practices for consumer education planning.
However, FCC had $14.5 million in allocated and reprogrammed funds for
consumer education in fiscal year 2008, and also requested an
additional $20 million for fiscal year 2009.[Footnote 19] NTIA was
allocated $5 million for consumer education.
Key Practice 5: Research target audiences. Both FCC and NTIA conducted
audience research to determine needs, preferences, and characteristics
as well as possible audience-specific obstacles, such as access to
information. FCC and NTIA identified the target audiences who would be
hard to reach, most unaware of the transition, and most reliant on over-
the-air broadcasts (i.e., minorities, rural residents, persons with
disabilities, seniors, and low-income individuals). NTIA prioritized
its outreach efforts to 45 market areas that have high concentrations
of households most likely to be reliant on over-the-air broadcasts. FCC
also used NTIA's geographic prioritization data to focus its outreach
efforts.
Key Practice 6: Develop consistent, clear messages. FCC and NTIA
developed clear and consistent messages based on audience research and
goals. For example, FCC's consumer education plan messaging is divided
into three timeline phases that determine the type of information
outreach efforts emphasized and is focused on providing clear and
simple information to consumers that is accessible to all target
populations through a variety of formats and languages. The phases
described in the FCC plan are (1) transition basics (February to April
2008)--consumers need to know the transition is happening and may need
to take action; (2) transition detail (May to October 2008)--consumers
receive more specific information, such as how to choose a DTV, the
need for an antenna, how to get a coupon and converter box, and how to
hook up a converter box; and (3) transition urgency (September 2008 to
February 2009)--consumers need to act now and take action to avoid
losing their television viewing signal if they are affected. NTIA has
also developed and tested campaign messaging that resonates with target
audiences and changes over time to suit the needs of the converter box
subsidy program.[Footnote 20] The NTIA plan divides messaging into two
phases: (1) awareness/educate and (2) action/participate. During the
first phase, campaign messaging focused on the digital transition, what
the converter box subsidy program is, why it exists, the benefits of
the transition and the converter box, options for consumers to navigate
the transition, and how to participate in the program. Phase two
provides the same information, but the emphasis shifts to taking action
to avoid the loss of television signals and taking advantage of the
subsidy program.
Key Practice 7: Identify credible messenger(s). FCC and NTIA identified
in their consumer education plans partners who would be delivering the
messages and ensuring they are credible with audiences. Specifically,
the FCC plan identifies (1) the national media, such as the broadcast
networks, national radio, cable networks, online outlets, magazines,
and industry trade publications; (2) over-the-air markets, including
local television and radio stations and major daily newspapers; and (3)
target population media services and sources, which are based on the
media habits and preferences of the vulnerable populations, as credible
messengers. NTIA identified two broad groups of credible messengers,
including earned media and partners. Earned media messengers fall into
three categories, which consist of (1) the national media, including
the major broadcast networks, cable networks, online outlets,
magazines, and industry trade publications; (2) geographically targeted
media consisting of local television and radio stations and major daily
newspapers; and (3) demographically targeted media based on the media
habits and preferences of the target populations.
Key Practice 8: Design media mix. Both FCC and NTIA identified in their
consumer education plans methods and frequency of messaging to reach
target audiences. The FCC and NTIA plans present various types of media
services, such as satellite and radio media tours, background
briefings, editorial meetings, online chats, over-the-air market
outreach, and radio advertisements that will be used to generate media
coverage and as methods of outreach to inform target groups. In
addition, the FCC plan recommends direct-to-consumer initiatives, such
as outdoor and transit public service announcements and outreach
through grocery store chains. FCC also includes a timeline that denotes
by month when it will engage in outreach by messaging phases.
Key Practice 9: Establish metrics to measure success. FCC and NTIA have
established process metrics to measure the success of their consumer
outreach, but only NTIA has created outcome metrics. Process metrics
track the quantity, quality, and timeliness of work and have been
established by both FCC and NTIA. For example, FCC and NTIA have
measures tracking the distribution of materials, which enables them to
report on the quantity of materials mailed and the audience receiving
the materials. In addition, both FCC and NTIA will track media
coverage, including earned media and media coverage, of other DTV
transition stakeholders. NTIA has also implemented outcome metrics--
which evaluate how well a consumer education campaign influenced
attitudes or behaviors to determine if the target populations were
adequately receiving the message. For example, according to NTIA, it
tracks coupon requests and redemptions of over-the-air households for
the purpose of measuring the impact of its consumer education. NTIA
said it reviews coupon request data every 2 weeks and compares the
coupon requests by over-the-air households with the estimated number of
over-the-air households in major geographic areas of the country.
According to NTIA, if an area exists where less than 20 percent of the
over-the-air households in a market have ordered coupons, NTIA will
increase its outreach efforts in that area. NTIA also indicated that it
uses coupon request data to monitor the 45 targeted areas and uses
these data to determine if it is reaching the hard-to-reach
populations. Furthermore, NTIA indicated that it would use publicly
reported consumer awareness survey information from industry
participants and others to track progress in consumer awareness for
other populations. NTIA states in its plan that these measures will
indicate the success of its education efforts and highlight areas that
need additional focus. The use of monthly coupon application and
redemption data in comparison to over-the-air households measures the
effect of consumer education efforts on the population as a whole, but
does not determine whether the targeted hard-to-reach populations have
been influenced and have applied for and redeemed converter box
coupons.
[End of section]
Appendix III: Federal Communications Commission DTV Consumer Education
Order:
FCC adopted a final DTV consumer education order in February 2008,
which requires broadcasters, cable and satellite providers, certain
telephone service providers, and certain consumer electronics
manufacturers to provide a minimum level of DTV transition consumer
education.[Footnote 21] For example, commercial broadcasters are
required to choose one of two education options, and noncommercial
broadcasters must select one of three education options. These options
determine the number of public service announcements, crawls, or other
on-air consumer education programming they must air and report to FCC
per quarter. FCC officials told us that FCC has collected the required
report filings for broadcasters for the first two quarters since the
FCC order took effect. Cable and satellite providers are required under
the order to provide information on the DTV transition in billing
notices to their customers. Consumer electronics manufacturers are
required to include information with certain television-related devices
that explain what effect, if any, the DTV transition will have on the
devices' use. FCC also requires telephone companies that participate in
the Low Income Federal Universal Service program to provide information
on the transition to their Life-line and Link-up customers, either as
part of the billing notice or in a stand-alone mailer, such as a
postcard. According to FCC, it has sent compliance surveys to the nine
largest cable and satellite providers and the nine largest telephone
companies, and it intends to send compliance letters to the nine
largest electronics manufacturers to assess their consumer education
efforts. Furthermore, FCC stated that its Enforcement Bureau is working
with NTIA to spot-inspect retailers that are participating in the
converter box subsidy program. The purpose of the spot inspections is
to detail and assess retailer employee training and consumer education
plans and efforts. FCC Enforcement Bureau personnel, as of July 31,
2008, have visited 1,335 stores and conducted 1,291 interviews in 49
states and in Puerto Rico. According to FCC testimony, it has found
that the majority of store managers are well-informed about the DTV
transition and the converter box subsidy program.
Table 5: FCC DTV Consumer Education Order Requirements, by Industry
Sector:
Industry sector: Broadcasters;
Consumer education requirements: Commercial broadcasters must select
either option one or option two, while noncommercial broadcasters may
select any of the three options. The requirements of each option apply
separately to the station's analog channel and primary digital stream;
Option one: The station must air 1 public service announcement (PSA)
and run 1 transition crawl in every quarter of every day. The
requirement increases to 2 PSAs and crawls per quarter per day on April
1, 2008, and will increase to 3 of each on October 1, 2008. PSAs are in
addition to, not in lieu of other PSAs; Option two: The station must
air 16 PSAs per week and an average of 16 transition-related crawls,
snipes, or tickers per week over each quarter through the transition
period between 5:00 am and 1:00 am. Over the course of each calendar
quarter, ¼ of all mandatory PSAs, crawls, snipes, or tickers must air
between 6:00 pm and 11:35 pm (EST & PST) and between 5:00 pm and 10:35
pm (CST & MST); Option three: This option is open only to noncommercial
stations, and the station must air 60 seconds per day of on-air
consumer education, in variable time slots, including at least 7.5
minutes per month between 6:00 pm and 12:00 am. The requirement doubles
beginning May 1, 2008, and increases to 180 seconds per day and 22.5
minutes per month between 6:00 pm and 12:00 am beginning November 1,
2008. All transition PSAs must be closed-captioned.
Industry sector: Cable and satellite providers;
Consumer education requirements: All cable and satellite providers are
required to provide notice of the DTV transition to their subscribers
in monthly bills or billing notices, either as part of the bill or as a
"bill stuffer."[A].
Industry sector: Consumer electronics manufacturers;
Consumer education requirements: Manufacturers of some television-
related devices, such as television broadcast receivers, television
interface devices, devices that record or display signals received from
television broadcast receivers, and set-top boxes from cable/satellite
providers, are required to include information with those devices
explaining what effect the transition will have on their use.[A].
Industry sector: Telephone companies;
Consumer education requirements: Telephone companies participating in
the Federal Universal Service Low-Income Program are required to
provide notice of the transition to their customers as a bill stuffer,
part of the bill itself, or use of a monthly stand-alone mailer (i.e.,
postcards).[A].
Source: FCC.
[A] The bill notice, bill stuffer, separate mailing, or included
information must be noticeable, state the transition date, and note
that analog-only televisions may not work unless the viewer takes
action. These documents must also note that analog-only televisions
will continue to work for low-power, Class A, translator television
stations; with a cable or satellite service; and for use with game
consoles, VCRs, and DVDs. Furthermore, the notice must indicate that
viewers can get additional information about the DTV transition by
going to [hyperlink, http://www.DTV.gov] or by calling their cable
provider, satellite provider, or telephone company. Additional
information about the converter box subsidy program is available at
[hyperlink, http://www.dtv2009.gov] or by calling NTIA (1-888-DTV-
2009).
[End of table]
[End of section]
Appendix IV: Comments from the Department of Commerce:
The Secretary Of Commerce:
Washington, D.C. 20230:
August 29, 2008:
Mr. Mark L. Goldstein:
Director, Physical Infrastructure Issues:
Government Accountability Office:
441 G Street, NW:
Washington, DC 20548:
Dear Mr. Goldstein:
Thank you for the opportunity to comment on the Government
Accountability Office's (GAO) Report provisionally entitled, "Digital
Television Transition: Implementation of the Converter Box Subsidy
Program Is Underway, But Preparedness to Manage an Increase in Subsidy
Demand Is Unclear," GAO-08-1040. The Department of Commerce appreciates
GAO's acknowledgment that the National Telecommunications and
Information Administration (NTIA) is effectively implementing the TV
Converter Box Coupon Program (Coupon Program). This recognition is
underscored by the fact that to date, NTIA has distributed coupons to
one of every nine households in the United States and its
territories”in total, over 23 million coupons.
In the report, GAO recommends that NTIA develop a plan to manage
volatility in coupon requests in the period of time leading up to the
transition. The Department shares GAO's concern about an increase in
coupon demand as the transition nears. Throughout this program, NTIA
has monitored coupon demand and has effectively responded to those
demands. The Coupon Program is currently processing household requests
for about three million coupons monthly. As part of NTIA's plan for a
potential spike in coupon requests, it has focused its consumer
education message to urge consumers to act now to experience the
immediate benefits of digital television. NTIA has been working with
its partners to encourage over-the-air consumers to apply for coupons
as soon as possible to avoid any delays in the processing of requests
that could result from a last-minute rush. NTIA will adjust the
Program's operation as necessary to address consumer demand as the
February 17, 2009, deadline approaches.
The Department is committed to doing all that it can within its
statutory authority and existing resources to ensure that all Americans
are ready for the digital transition. Thank you again for the
opportunity to share the Department's comments on this report. With
less than six months remaining before the digital transition concludes,
we are on track to achieve a smooth transition for the American public.
Sincerely,
Signed by:
Carlos M. Gutierrez:
[End of section]
Appendix V: Comments from the Federal Communications Commission:
Federal Communications Commission:
Washington, D.C. 20554:
August 28, 2008:
Mr. Mark L. Goldstein, Director:
Physical Infrastructure Issues:
U.S. Government Accountability Office:
Washington, DC 20548:
Dear Mr. Goldstein:
Thank you for the opportunity to review and provide comments on the
Government Accountability Office's (GAO) Draft Report Digital
Television Transition – Implementation of the Converter Box Subsidy
Program is Underway, but Preparedness to Manage an Increase in Subsidy
Demand is Unclear. In the Draft Report, GAO reviews (1) what consumer
education efforts have been undertaken by private and federal
stakeholders and (2) how effective NTIA has been in implementing the
converter box subsidy program and to what extent consumers are
participating in the program. This letter contains the Federal
Communications Commission's (FCC) comments to the Draft Report.
The Commission's outreach effort places an emphasis on consumers who
receive their television signals "over-the-air," those who are
disproportionately impacted by the transition, and those who are hard
to reach and may be unaware of the upcoming transition. As the Draft
Report notes, the Commission has engaged in targeted measures to reach
these groups, which include senior citizens; non-English speaking and
minority communities; people with disabilities; low-income individuals;
and people living in rural and tribal areas. Ketchum, an outside
contractor hired by both the NTIA and the FCC, identified and
recommended that we focus our efforts on 45 areas of the country with
at least one of the following population groups: (1) more than 150,000
over-the-air households, (2) more than 20 percent of all households
relying on over-the-air broadcasts, or (3) a top 10 city of residence
of the largest target demographic groups.
The FCC has gone beyond specifically targeting only the 45 markets
recommended by Ketchum. We have chosen to place additional resources
into targeting at least 81 markets that are potentially more vulnerable
than the rest of the country with respect to the transition – including
all those markets with at least one of the following population groups:
(1) more than 100,000 over-the-air households, (2) more than 15 percent
of all households relying on over-the air broadcasts, or (3) otherwise
recommended specifically by Ketchum for specialized outreach. In those
81 markets, the Chairman, a Commissioner or FCC senior staff will hold
a public event, such as a town hall meeting, workshop, or roundtable,
to highlight steps consumers need to take to be prepared for the
digital transition.
Also concurrent with these visits, FCC staff will work to saturate each
media market with earned media related to these visits, and will
simultaneously encourage local radio and television broadcasters to run
PSAs related to the transition. Additionally, in the days prior to each
visit by the Commissioner, FCC staffers will be on the ground providing
technical and outreach assistance to local broadcasters, community
leaders, and other stakeholders, to further publicize the transition to
digital and help educate members of the community.
The FCC will also be coordinating with NAB to explore whether these
markets may participate in a temporary turn off of their analog signals
(so-called "soft tests"), as a means for stations and viewers to
determine consumer readiness for the DTV transition. This is an
unprecedented nationwide tour by the entire Commission, designed to
educate consumers in these markets and especially those groups that are
most vulnerable in the transition.
In addition to these specialized efforts, as you note, the FCC has
placed or is placing billboards in those 45 markets recommended by
Ketchum for specialized outreach. The decision to initially place
billboards in those 45 markets was due to our prioritizing the limited
resources the Commission has available for consumer outreach. We are
exploring the possibility of placing billboards in all 81 of the
markets where the Chairman, other Commissioners, and senior staff will
be holding town hall meetings.
The Commission is not focused on the target areas at the exclusion of
other areas of the country. The Commission is committed to doing
everything within its statutory and budgetary capacity to make sure
that no American is left behind. As the Draft Report recognizes, the
FCC is engaged in outreach activities throughout the entire nation. We
have hosted and participated in events and conferences; coordinated
with federal, state, local, and tribal entities and private industry
groups; conducted outreach through national and local media outlets;
developed and distributed DTV publications; and conducted outreach and
training sessions to targeted communities throughout the country.
Here are just a few statistics on the status of our education campaign.
* The Commission has conducted over 1584 DTV Awareness sessions,
attended more than 351 conferences and events, held over 425
partnership meetings, and made over 7024 visits to various
organizations around the country to disseminate DTV information.
* The Commission recently launched a Speakers Bureau for groups
throughout the country to request speakers to discuss the upcoming
transition to Digital Television (DTV) at their meetings in order to
give all communities the opportunity to request a speaker at their
events.
* Over 5.6 million pages of our DTV publications have been distributed
to individual consumers and to consumer agencies and organizations
nationwide.
* We have distributed over 8,600 posters nationwide. We are displaying
DTV education posters in all 34,000 post offices across the nation.
* We have secured commitments from 36 states to display DTV materials
in 1100 Department of Motor Vehicle locations.
* We have distributed radio PSAs to radio stations throughout the
country, and have just completed production of television PSAs, which
will be distributed to commercial broadcasters nationwide.
The FCC's consumer outreach effort recognizes that some consumers will
be disproportionately impacted by the transition, or are harder to
reach than the general population.
For instance, we have placed special emphasis on reaching seniors.
Through the work of our field agents, we have made visits to over 5098
senior centers in 50 states, plus the District of Columbia and two U.S.
territories, where we have delivered DTV material. In addition, we have
made 1496 presentations and answered questions from seniors about the
DTV transition. We are working closely with the AARP and other senior
organizations, presenting at their conferences and participating in
interviews with their media.
We are also taking extra steps to reach non-English speakers and
minorities, who disproportionately rely on over-the-air television
reception.
* All of our DTV publications are available in Spanish. Also our most
widely distributed DTV one-pager is now available in 20 languages:
English, Spanish, Chinese, French, Korean, Russian, Tagalog,
Vietnamese, Hmong, Japanese, Arabic, Cambodian, Navajo, Somali,
Amharic, Yupik, Portuguese and Laotian, Creole, and Kurdish, as well as
Braille and audio formats.
* We have conducted 16 DTV Awareness sessions, attended more than 23
conferences or events, had 9 partnership meetings, and made about 72
visits to various organizations all specifically targeting the Hispanic
population.
* We have partnered with Univision to educate its Spanish-speaking
audience, including outreach activities specifically targeted at
seniors in the Hispanic community. Similarly we have partnered with the
U.S. Hispanic Chamber of Commerce which will be conducting DTV
awareness sessions with local chambers around the country. Recently,
the FCC has participated in the League of United Latin American
Citizens national conference and the National Council of La Raza's
national conference.
* We have exhibited and presented DTV information at conventions and
conferences targeting minority communities and umbrella organizations
such as the Houston Black Expo, the Indiana Black Expo, and the
National Black Expo 2008, the NAACP Convention, and the National Urban
League Conference. In addition, the Commission is partnering with the
leadership of the National Black Church Initiative to target outreach
activities in predominantly African-American communities. The
Commission is also partnering with the Harlem Consumer Education
Council (HCEC) to educate both African-American and Spanish Harlem
consumers at DTV outreach events. Earlier this year, the Commission
conducted outreach at the Rainbow PUSH Wall Street Project Conference,
in New York City.
Low-income households also generally rely more on over-the-air
television signals due to the high costs of paid subscription services.
One way we are reaching these consumers is through our partnership with
the Department of Health and Human Services. Several HHS agencies
disseminate DTV material to consumers eligible for their services.
One step we have taken to target rural viewers has been to place DTV
transition materials at state and county fairs throughout the country.
We will be disseminating transition materials to 193 state and county
fairs in 26 states.
Regarding people with disabilities, Commission staff regularly attends
targeted conferences and events to distribute DTV educational materials
that will reach this vulnerable population. For example, the FCC has
attended and provided DTV materials at the National Black Deaf
Advocates Conference, the Vocational and Educational Services for
Individuals with Disabilities Conference, and the Emergency Planning
and Response for Special Needs and Disabilities Conference. We have
recently attended the American Council of the Blind Annual Conference,
the National Association of the Deaf Biennial Conference, and the
Summer Quarterly Meeting of the National Council on Disabilities and
discussed the DTV transition. Our website, [hyperlink,
http://www.DTV.gov], features a DTV educational video in American Sign
Language. Our most commonly utilized publications are available in
Braille and audio format and all of our fact sheets and advisories are
available in large print. In addition, we have publications addressing
DTV and closed captioning and video description. In addition, we
recently created a chart of select features available on 32 coupon
eligible digital-to-analog converter boxes. The chart, developed in
response to recommendations from the Commission's Consumer Advisory
Committee, as well as requests from groups representing people with
disabilities, describes features of particular interest to the
disabilities community. The chart, which is available on our website,
has been distributed to various interested groups, will be updated as
additional NTIA-approved converter boxes become available at retail
stores and online.
The Draft Report indicates that the short-term and long-term budgetary
resources and other resources were not identified or available in the
planning documents used for your comparison of FCC and NTIA consumer
education plans to the key practices for consumer education planning.
The FCC has requested appropriated funds to support its DTV outreach
efforts since 2006 when it first requested $500,000 in the proposed
fiscal year 2007 budget. In response to the FCC's request for $1.5
million in the proposed budget for fiscal year 2008, on December 26,
2007, the Commission received authorization to spend $2.5 million in
appropriated funds on DTV outreach. On January 28, 2008 the Commission
initiated the process for awarding a contract for DTV Consumer
Education Support Services to strengthen the FCC's outreach efforts
nationwide. This contract for national consumer education support was
awarded on February 13, 2008 to Ketchum, Incorporated.
On June 5, 2008 the Commission requested authorization to use $12
million of prior year unobligated funds to expand efforts to educate
consumers about the transition to DTV. The Commission received approval
from the House on June 19, 2008, the Senate on July 8, 2008 and the
final required action from the Office of Management and Budget on
August 4, 2008 enabling the Commission to move forward with obligating
and spending the $12 million. Just two weeks later, on August 18, 2008,
Chairman Martin announced the 81-city outreach tour to target educating
consumers in the high over-the-air markets about the transition.
In addition, in the proposed budget for fiscal year 2009, the FCC
requested $20 million in appropriated funds for DTV outreach. The House
and Senate appropriations committees both approved this request in the
mark ups of the 2009 budget.
One technical point to note regarding Appendix III, as of July 31,
2008, Enforcement Bureau field agents have visited 1335 stores and
conducted 1291 interviews in 49 states and the Commonwealth of Puerto
Rico.
We appreciate the opportunity to review and comment on the Draft
Report. If we can assist in any further way in the completion of this
report, please let me know.
Sincerely,
Signed by:
Monica Desai:
Chief, Media Bureau:
[End of section]
Appendix VI: GAO Contact and Staff Acknowledgments:
GAO Contact:
Mark L. Goldstein, (202) 512-2834, or goldsteinm@gao.gov:
Staff Acknowledgments:
In addition to the individual named above, other key contributors to
this report were Sally Moino, Assistant Director; Colin Fallon; Simon
Galed; Eric Hudson; Bert Japikse; Aaron Kaminsky; Michael Pose; and
Andrew Stavisky.
[End of section]
Related GAO Products:
Digital Television Transition: Broadcasters' Transition Status, Low-
Power Station Issues, and Information on Consumer Awareness of the DTV
Transition. [hyperlink, http://www.gao.gov/cgi-bin/getrpt?GAO-08-881T].
Washington, D.C.: June 10, 2008.
Digital Television Transition: Majority of Broadcasters Are Prepared
for the DTV Transition, but Some Technical and Coordination Issues
Remain. [hyperlink, http://www.gao.gov/cgi-bin/getrpt?GAO-08-510].
Washington, D.C.: April 30, 2008.
Digital Television Transition: Increased Federal Planning and Risk
Management Could Further Facilitate the DTV Transition. [hyperlink,
http://www.gao.gov/cgi-bin/getrpt?GAO-08-43]. Washington, D.C.:
November 19, 2007.
Digital Television Transition: Preliminary Information on Progress of
the DTV Transition. [hyperlink, http://www.gao.gov/cgi-bin/getrpt?GAO-
08-191T]. Washington, D.C.: October 17, 2007.
Digital Television Transition: Preliminary Information on Initial
Consumer Education Efforts. [hyperlink, http://www.gao.gov/cgi-
bin/getrpt?GAO-07-1248T]. Washington, D.C.: September 19, 2007.
Digital Television Transition: Issues Related to an Information
Campaign Regarding the Transition. [hyperlink, http://www.gao.gov/cgi-
bin/getrpt?GAO-05-940R]. Washington, D.C.: September 6, 2005.
Digital Television Transition: Questions on Administrative Costs of an
Equipment Subsidy Program. [hyperlink, http://www.gao.gov/cgi-
bin/getrpt?GAO-05-837R]. Washington, D.C.: June 20, 2005.
Digital Broadcast Television Transition: Several Challenges Could Arise
in Administering a Subsidy Program for DTV Equipment. [hyperlink,
http://www.gao.gov/cgi-bin/getrpt?GAO-05-623T]. Washington, D.C.: May
26, 2005.
Digital Broadcast Television Transition: Estimated Cost of Supporting
Set-Top Boxes to Help Advance the DTV Transition. [hyperlink,
http://www.gao.gov/cgi-bin/getrpt?GAO-05-258T]. Washington, D.C.:
February 17, 2005.
Telecommunications: German DTV Transition Differs from U.S. Transition
in Many Respects, but Certain Key Challenges Are Similar. [hyperlink,
http://www.gao.gov/cgi-bin/getrpt?GAO-04-926T]. Washington, D.C.: July
21, 2004.
Telecommunications: Additional Federal Efforts Could Help Advance
Digital Television Transition. [hyperlink, http://www.gao.gov/cgi-
bin/getrpt?GAO-03-7]. Washington, D.C.: November 8, 2002.
Telecommunications: Many Broadcasters Will Not Meet May 2002 Digital
Television Deadline. [hyperlink, http://www.gao.gov/cgi-bin/getrpt?GAO-
02-466]. Washington, D.C.: April 23, 2002.
[End of section]
Footnotes:
[1] The prices of eligible converter boxes range from $40 to over $90.
[2] GAO, Digital Television Transition: Broadcasters' Transition
Status, Low-Power Station Issues, and Information on Consumer Awareness
of the DTV Transition, [hyperlink, http://www.gao.gov/cgi-
bin/getrpt?GAO-08-881T] (Washington, D.C.: June 10, 2008).
[3] Households requesting coupons must submit the name of the person
requesting the coupon and a valid United States Postal Service address.
A post office box will not be considered a valid address, except in the
cases of residents of American Indian reservations, Alaskan native
villages, and other rural areas without home postal delivery. In April
2008, NTIA issued a notice of proposed rulemaking to change the
household eligibility and application process for individuals residing
in nursing homes and households that use post office boxes. The comment
period, for the proposed rulemaking, closed June 9, 2008, and NTIA has
indicated its intent to complete the rulemaking as soon as possible.
[4] NTIA established technical and performance specifications that
converter boxes must meet to be eligible for the subsidy program.
[5] With the additional $510 million, total program funding is $1.5
billion, which includes up to $1.34 billion in coupon funds and up to
$160 million in administrative funds.
[6] The Central Contractor Registration database is the primary
registrant system for collecting, validating, storing, and
disseminating data in support of agency acquisition missions.
Furthermore, the Central Contractor Registration facilitates electronic
financial transfers through electronic fund transfers. According to
NTIA officials, registration in the Central Contractor Registration
database does not mean that the registrant is a government contractor.
[7] FCC requires broadcasters, cable and satellite providers, and
consumer electronics manufacturers to provide a minimum level of DTV
transition consumer education. See appendix III for additional
information on these FCC requirements.
[8] GAO, Digital Television Transition: Increased Federal Planning and
Risk Management Could Further Facilitate the DTV Transition,
[hyperlink, http://www.gao.gov/cgi-bin/getrpt?GAO-08-43] (Washington,
D.C.: Nov. 19, 2007).
[9] Our redemption rate was calculated by dividing the number of
redeemed coupons by the total number of issued coupons as of June 30,
2008. The total number of issued coupons includes coupons that had been
redeemed, had expired, and had not yet expired as of that date.
[10] For the purposes of our analysis, we assumed that all coupons were
issued in the order they were received. According to NTIA, coupon
issuance was to begin 1 year from the transition. Therefore, the
processing time between coupon requests and issuance was calculated
beginning on February 17, 2008.
[11] Zip codes where 50 percent or more of the population, according to
the 2000 U.S. Census data, were part of one of the identified
demographic groups--minority or elderly--were used in this analysis.
[12] The seven national retailers include Best Buy Company, Inc;
Circuit City Stores, Inc; Kmart (a subsidiary of Sears Holdings
Corporation); Radio Shack Corporation; Sears Holdings Corporation;
Target Corporation; and Wal-Mart Stores, Inc. We spoke with
representatives from each of these retailers, with the exception of Wal-
Mart Stores, Inc., which declined to speak with us.
[13] GAO, Digital Television Transition: Increased Federal Planning and
Risk Management Could Further Facilitate the DTV Transition,
[hyperlink, http://www.gao.gov/cgi-bin/getrpt?GAO-08-43] (Washington,
D.C.: Nov. 19, 2007), 26.
[14] [hyperlink, http://www.gao.gov/cgi-bin/getrpt?GAO-08-43].
[15] The challenges highlighted by the expert panel included
prioritizing limited resources, educating consumers who do not
necessarily need to take action, reaching underserved populations, and
aligning stakeholders.
[16] This FCC plan is noted as being in addition to and augmenting
current FCC plans by providing recommendations to complement current
FCC outreach efforts.
[17] The Kroger Company and Safeway, Inc., are two grocery store chains
mentioned in the FCC consumer education plan.
[18] Tier 1 partners are national organizations that have the ability
to reach the coupon program's targeted populations in most areas of the
country and have a deep stake in the DTV transition. Tier 2 partners
are regional or local organizations that have the ability to reach one
or more targeted vulnerable populations and the ability to conduct on-
the-ground activities. Tier 3 partners are any organizations that have
expressed an interest in disseminating information and notifying
constituencies, but have little or no relation to the targeted
populations or the DTV transition.
[19] According to the Joint Explanatory Statement accompanying the 2008
Consolidated Appropriations Act (Pub. L. No. 110-161), FCC was provided
with $2.5 million for DTV consumer education and requested and received
approval to reprogram $12 million in unspent funds in early July 2008.
[20] IBM Global Business Services, U.S. Department of Commerce,
National Telecommunications and Information Administration, Consumer
Testing Results Report (Gaithersburg, MD: November 2007).
[21] Federal Communications Commission, DTV Consumer Education
Initiative, MB Docket No. 07-148, Report and Order, 23 FCC Rcd. 4134
(2008).
GAO's Mission:
The Government Accountability Office, the audit, evaluation and
investigative arm of Congress, exists to support Congress in meeting
its constitutional responsibilities and to help improve the performance
and accountability of the federal government for the American people.
GAO examines the use of public funds; evaluates federal programs and
policies; and provides analyses, recommendations, and other assistance
to help Congress make informed oversight, policy, and funding
decisions. GAO's commitment to good government is reflected in its core
values of accountability, integrity, and reliability.
Obtaining Copies of GAO Reports and Testimony:
The fastest and easiest way to obtain copies of GAO documents at no
cost is through GAO's Web site [hyperlink, http://www.gao.gov]. Each
weekday, GAO posts newly released reports, testimony, and
correspondence on its Web site. To have GAO e-mail you a list of newly
posted products every afternoon, go to [hyperlink, http://www.gao.gov]
and select "E-mail Updates."
Order by Mail or Phone:
The first copy of each printed report is free. Additional copies are $2
each. A check or money order should be made out to the Superintendent
of Documents. GAO also accepts VISA and Mastercard. Orders for 100 or
more copies mailed to a single address are discounted 25 percent.
Orders should be sent to:
U.S. Government Accountability Office:
441 G Street NW, Room LM:
Washington, D.C. 20548:
To order by Phone:
Voice: (202) 512-6000:
TDD: (202) 512-2537:
Fax: (202) 512-6061:
To Report Fraud, Waste, and Abuse in Federal Programs:
Contact:
Web site: [hyperlink, http://www.gao.gov/fraudnet/fraudnet.htm]:
E-mail: fraudnet@gao.gov:
Automated answering system: (800) 424-5454 or (202) 512-7470:
Congressional Relations:
Ralph Dawn, Managing Director, dawnr@gao.gov:
(202) 512-4400:
U.S. Government Accountability Office:
441 G Street NW, Room 7125:
Washington, D.C. 20548:
Public Affairs:
Chuck Young, Managing Director, youngc1@gao.gov:
(202) 512-4800:
U.S. Government Accountability Office:
441 G Street NW, Room 7149:
Washington, D.C. 20548:
