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 after February  17, 2009. Private and Federal Stakeholders Have Undertaken a Myriad of Activities Aimed at Increasing the Public’s Awareness of the Transition

Private sector stakeholders, such as broadcasters and cable providers,  have undertaken various education efforts to increase public awareness  about the DTV transition. The 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. 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. 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. 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. Furthermore, FCC and NTIA have developed partnerships with  some federal, state, and local organizations that serve the targeted hard-to- reach populations. NTIA is Effectively Implementing the Converter Box Subsidy Program, But Concerns Exist about NTIA’s Ability to Manage a Potential Spike in 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. In our 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 August 2008, only 13 percent of U.S.  households had requested converter box coupons, and less than 5 percent  had redeemed these coupons. 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. 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. 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. 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. 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 to the rest of the country not  targeted by NTIA and FCC. 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. 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. At most retailers (118) we visited, a  representative was able to correctly identify that the DTV transition would  occur in February 2009.
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 testimony, which is principally based on a recently issued 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. As of August 31, 2008, NTIA had issued almost 24 million coupons and as of that date approximately 13 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. 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. 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 to receive their coupons and might lose television service if their wait time lasts beyond February 17, 2009. 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 less likely to redeem their coupons compared with households outside these areas. Additionally, GAO 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 and found coupon requests to be roughly the same for zip codes within the 45 targeted areas compared with areas that were not targeted. Retailers play an integral role in the converter box subsidy program by selling the converter boxes and helping to inform their customers about the DTV transition. GAO visited 132 randomly selected retail stores in 12 cities. Store representatives at a majority of the retailers GAO visited were able to correctly state that the DTV transition would occur in February 2009 and how to apply for a converter box coupon.