JOINS REP. JOE BARTON IN WRITING COMMERCE SECRETARY AND ACTING FCC CHAIR FOR ANSWERS

Washington, Jun 11, 2009 - “In 2005, Congress set the deadline for the DTV transition for February 17, 2009, and broadcasters and the federal government worked to prepare for that deadline,” stated Rep. Cliff Stearns (R-FL), Ranking Republican on the House Communications, Technology and the Internet Subcommittee. “However, the deadline was moved to June 12, 2009, because some thought that the public was not prepared for the transition in February. Ensuring 100-percent preparedness is not possible, and this ill-considered delay wasted federal and broadcaster dollars.”

Stearns joined Rep. Joe Barton (R-TX), the Ranking Republican on the House Energy and Commerce Committee, in requesting answers to specific questions regarding the transition, the delay, and the additional funding for coupons to help consumers buy converter boxes. The letter was sent to Commerce Secretary Gary Locke and to Acting Federal Communications Commission (FCC) Chair Michael Copps.

The letter notes that enough funding was provided originally for the coupon program, and that legislation was offered to address any shortcoming in meeting the February deadline, yet another $650 million was requested and provided for the transition. In addition, the letter seeks information on how the FCC is exercising oversight on the funding for the coupon program.

Secretary Gary Locke
U.S. Department of Commerce
1401 Constitution Ave., NW
Washington, DC 20230

Acting Chairman Michael Copps
Federal Communications Commission
445 12th Street SW
Washington, DC 20554

Dear Secretary Locke and Acting Chairman Copps:

With the delayed DTV transition now upon us, we have a number of questions about the impact that moving the date and allocating an additional $650 million to the program had:

1. According to NTIA data, about 27.3 million of the original DTV coupons have been redeemed as of June 9. The original DTV funding provided enough money to cover 33.5 million redeemed coupons. That means there’s still about $250 million of the original money left to cover another 6.2 million redeemed coupons. If that’s so, why was it necessary to delay the transition and allocate another $650 million in the stimulus package for DTV? Remember, there were also still 11 million active coupons in consumers’ hands at the time of the delay. In addition, 175,000 homes were coming off the waiting list each week. And according to the NTIA, either the Barton-Markey or the Barton-Stearns bills would have cleared the remaining homes off waiting list in time to get coupons to consumers before the original Feb. 17 transition date.

2. The supposed justification for the delay was that we needed more time for completely unready households to take action, even though 95 percent of the country had at least one television prepared by the end of January. Although about 2.9 million completely unready households have gotten prepared since then, approximately 2 million of them did so using coupons redeemed with the original DTV funding, based on Nielsen data and information from the NTIA. All, or at least many, of those households would likely have redeemed coupons earlier had there been no delay. Only about 900,000 completely unprepared households have used any of the 3.6 million coupons redeemed with the stimulus money as of June 9. (The rest went to homes with cable or satellite.) Doing the math, $650 million in stimulus funds to reach 900,000 unprepared homes comes to more than $700 per unprepared household for a $50 device. Does that sound like a sensible expenditure of taxpayer dollars?

3. Average coupon requests plummeted from 230,000 per day with a 65 percent redemption rate at the end of January, to 75,000 per day with a 44 percent redemption rate by the end of May. Ironically, doesn’t this indicate that the delay slowed consumers’ preparation rather than helped it?

4. At least 17 broadcast stations won’t make the transition to digital because they are going bankrupt, according to the June 4 issue of Communications Daily. Is it possible that the hundreds of millions of dollars that the delay cost the broadcast industry is what pushed these stations over the edge?

5. The Commerce Department has transferred almost $70 million in stimulus funds to the FCC for DTV-related expenses.

a. How is the Commerce Department exercising oversight of the stimulus money Congress and the taxpayers entrusted to it? What information did the Department require the FCC to provide before it gave the $80 million away? Is there any kind of contract, memorandum of understanding, or written commitment regarding how the FCC will spend the money? Is the Department requiring the FCC to provide updates as it spends the money, or putting performance measures in place to monitor its use? What happens to any money that goes unused? Does it become part of the FCC’s budget, go back to the NTIA, or automatically return to the Federal Treasury?

b. How is the FCC exercising oversight over that money? What performance measures did the FCC put in place to evaluate grant requests? For example, multiple FCC grants of between $500,000 and $1 million have gone to “walk-in centers,” some of which do not appear to have opened before last month. How did the FCC determine that these centers would make enough of an impact in the 30 days left before the transition to justify that kind of money? And what performance measures has the FCC put in place to track how effectively the money is used once granted? For that matter, what anti-fraud measures has the FCC put in place? There are already rumors that some walk-in centers that received grant money don’t even exist. Is that true?

Please provide written answers to these questions at your earliest convenience.

Sincerely,