[Federal Register: July 25, 2006 (Volume 71, Number 142)]
[Proposed Rules]
[Page 42067-42074]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr25jy06-16]
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DEPARTMENT OF COMMERCE
National Telecommunications and Information Administration
47 CFR Chapter III
[Docket Number: 060512129-6129-01]
RIN 0660-AA16
Implementation and Administration of a Coupon Program for
Digital-to-Analog Converter Boxes
AGENCY: National Telecommunications and Information Administration,
Commerce.
ACTION: Notice of proposed rulemaking and request for comment.
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SUMMARY: The National Telecommunications and Information Administration
(NTIA) proposes to implement and administer a program to provide $40
coupons to consumers for use towards the purchase of digital-to-analog
converter boxes. Congress mandated the coupon program in Title III of
the Deficit Reduction Act of 2005. The converter boxes are necessary
for consumers who wish to continue receiving broadcast programming over
the air using analog-only televisions after February 18, 2009--the date
that full-power televisions stations are required to cease analog
broadcasting. Without converter boxes, consumers with analog-only
television sets will be unable to view full-power television broadcasts
unless they purchase digital television sets or subscribe to cable or
satellite service.
DATES: Comments must be submitted by 5 p.m. EDT, no later than
September 25, 2006.
ADDRESSES: Comments via mail should be submitted to: Milton Brown,
Office of the Chief Counsel, National Telecommunications and
Information Administration, 1401 Constitution Avenue, Room 4713,
Washington, DC 20230. Comments may also be sent by facsimile to (202)
501-8013. Electronic comments may be submitted to coupon@ntia.doc.gov
or to Regulations.gov at http://www.regulations.gov.
FOR FURTHER INFORMATION CONTACT: Milton Brown at (202) 482-1816.
SUPPLEMENTARY INFORMATION:
I. Background
A. Overview
In this Notice of Proposed Rulemaking (NPRM), NTIA seeks comment on
ways to implement the digital-to-analog converter box coupon program
pursuant to the Digital Television Transition and Public Safety Act of
2005 (the Act).\1\
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\1\ See Title III of the Deficit Reduction Act of 2005, Pub. L.
109-171, 120 Stat. 4, 21 (Feb. 8, 2006).
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The Act, among other things, requires the Federal Communications
Commission (FCC) to require full-power television stations to cease
analog broadcasting by February 18, 2009. Recognizing that consumers
may wish to continue receiving broadcast programming over the air using
analog-only televisions not connected to cable or satellite service,
the Act authorizes NTIA to create a digital-to-analog converter box
assistance program. Specifically, Section 3005 of the Act authorizes
the Assistant Secretary for Communications and Information to
``implement and administer a program through which households in the
United States may obtain coupons that can be applied toward the
purchase of digital-to-analog converter boxes.'' NTIA is proposing
these regulations to implement the requirements of the Act.
B. Summary of Relevant Provisions of the Act
Section 3002 of the Act amends the Communications Act of 1934 to
direct the FCC to terminate analog television licenses for full power
stations and to require all full-power Class A television stations in
the digital television service to broadcast in the radio spectrum
between 54 and 698 MHz, by February
[[Page 42068]]
18, 2009. Section 3003 of the Act directs the FCC to begin an auction
of returned analog television spectrum no later than January 28, 2008
and to deposit auction proceeds into a fund established by the Act no
later than June 30, 2008. The returned analog television spectrum to be
auctioned is the band between 698 and 806 MHz, except for the 24
megahertz that has been reserved for public safety uses and certain
other frequencies that have already been made available through
auction. Section 3004 of the Act establishes a new Treasury fund to be
known as the Digital Television Transition and Public Safety Fund
(Fund). It directs the receipts from the FCC's analog spectrum return
auction to be deposited into the Fund.
Specific to this NPRM, section 3005 of the Act directs NTIA to
implement and administer a program through which eligible U.S.
households may obtain a maximum of two coupons of $40 each to be
applied towards the purchase of a digital-to-analog converter box. The
Act defines the term ``converter box'' to mean a stand-alone device
used solely for digital-to-analog conversion.\2\ The Act does not
define ``eligible household.'' To implement the coupon program, the Act
authorizes NTIA to use up to $990 million from the Fund for the
program, including $100 million for program administration. NTIA is
also authorized to expend up to $1.5 billion for the program, including
$160 million for administration, upon a 60-day notice and certification
to the Committee on Energy and Commerce of the House of Representatives
and the Committee on Commerce, Science, and Transportation of the
Senate that the $990 million is insufficient to fulfill coupon requests
for eligible U.S. households.\3\ This section also authorizes NTIA,
beginning on October 1, 2006, to borrow not more than $1.5 billion from
the Treasury to implement the program. NTIA, however, must reimburse
the Treasury for this amount, without interest, as recovered analog
television spectrum auction proceeds are deposited into the Fund.
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\2\ Section 3005(d) provides that the term ``digital-to-analog
converter box'' means ``a stand-alone device that does not contain
features or functions except those necessary to enable a consumer to
convert any channel broadcast in the digital television service into
a format that the consumer can display on television receivers
designed to receive and display signals only in the analog
television service, but may also include a remote control device.''
120 Stat. at 24.
\3\ See supra note 1 at Section 3005(c)(3).
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II. Proposed Rules and Request for Comment
NTIA recognizes that there will be a number of solutions, including
market based solutions, to address potential disruption of television
service resulting from the analog to digital transition. Many consumers
will neither need nor want a coupon to purchase a converter box. For
example, many households that are now receiving over-the-air analog
television signals will have purchased digital receivers by the time
that analog broadcasting ends. We also assume that many households that
currently receive over-the-air television transmissions will begin
receiving digital service through one of the multichannel video
programming distributors, such as cable or satellite service.
Therefore, we consider this coupon program to represent one of a number
of solutions to accommodate consumers once analog broadcasting ends.
A. Eligible U.S. Households
NTIA proposes that a ``television household'' is a ``household''
with at least one television. A ``household'' consists of all persons
who currently occupy a house, apartment, mobile home, group of rooms,
or single room that is occupied as separate living quarters and has a
separate U.S. postal address.\4\ An eligible household address shall
not be a post office box.
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\4\ This definition is based on the definitions of ``household''
and ``housing unit'' used by the U.S. Census Bureau. See U.S. Census
Bureau, http//http://www.census.gov (Current Population Survey--Definitions
and Explanations); see also ``Digital Broadcast Television
Transition: Several Challenges Could Arise in Administering a
Subsidy Program for DTV Equipment,'' GAO-05-623T (May 26, 2005) (GAO
Challenges Report) at 10 (discussion on eligibility criteria for
low-income households).
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The Act and its legislative history indicate that the coupon
program is not intended to cover every television in every household in
the United States. The legislative history provides that the coupon
program is intended to help consumers who wish to continue receiving
broadcast programming over-the-air using analog only televisions not
connected to cable or satellite.\5\ The legislative history also notes
that as of June 2004, only 14.86 percent of U.S. television households
relied exclusively on over-the-air transmission.\6\ Furthermore, the
Act limits the number of coupons per U.S. household to only two.\7\ As
a result, NTIA proposes to define those U.S. television households that
will be eligible to participate in the coupon program as those
households that only receive over-the-air television signals using
analog-only television receivers. In other words, households that
receive cable or satellite television service would not be eligible
even if they have one or more analog-only television receivers not
connected to such service.
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\5\ H.R. REP. NO. 109-362, at 201 (2005) (Conf. Rep.).
\6\ Id.
\7\ See Section 3005(c)(1)(A) of the Act, 120 Stat. at 23
(titled ``Two-per-household maximum'' provides that ``[t]he
Assistant Secretary shall ensure that each requesting household
receives, via the United States Postal Service, no more than two
coupons'').
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We invite comment on any other eligibility factors that NTIA should
consider. For example, should NTIA consider economic need in the
eligibility requirements for coupons? If so, how should ``economic
need'' be determined? Should we propose a rule to make coupons
available only to households with an income based on a poverty
threshold? For example, should we distribute coupons only to those
households with an annual income of $19,806 or below--the U.S. Census
Bureau's poverty threshold for a family of four? \8\ Should we consider
some other income level as a basis for eligibility for this program? We
note that neither the Committee of Conference's Joint Explanatory
Statement (the Manager's report) includes such a requirement regarding
economic need or other factors that might be related to a household's
eligibility to receive coupons.
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\8\ See U.S. Census Bureau's Poverty Thresholds for 2005, http://www.census.gov/hhes/www/poverty/threshld/thresh05.html
.
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Depending on the demand for the coupons, it is possible that the
number of requests for coupons may exceed the total dollar amount
provided by the Act. If the number of requests exceeds $990,000,000 as
specified in the Act, NTIA is authorized to request additional funds
from the appropriate Congressional committees, as required by the
Act.\9\ Recognizing that the additional funding, which cannot exceed
$1,500,000,000, may still be insufficient to administer the program,
NTIA proposes to fulfill valid coupon requests on a first-come, first-
served basis until funds devoted to this program have been spent. Are
there other factors NTIA should consider in distributing coupons if the
number of requests exceeds the number of coupons available? On the
other hand, if the demand for coupons is low, should NTIA consider
expanding its eligibility requirements?
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\9\ See supra note 3.
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B. Coupon Value and Use Restrictions
The Act states that the value of each coupon shall be $40.\10\ We
recognize that the cost of a converter box may be greater than $40.
NTIA proposes to issue $40 coupons that can be redeemed only
[[Page 42069]]
at a certified retailer when purchasing an eligible converter box. To
keep track of the number of coupons issued, used and redeemed, as well
as to minimize fraud and counterfeiting, NTIA intends to place
identifying serial numbers on the coupons. NTIA invites comment on this
proposal and other fraud prevention methods that are available or are
currently being used. For example, instead of a paper coupon, should
NTIA consider using an electronic coupon card?
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\10\ Sec. 3005(c)(4), 120 Stat. at 24.
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The Act also states that the ``[t]wo coupons may not be used in
combination, toward the purchase of a single digital-to-analog
converter box.'' \11\ As a result, NTIA proposes that each individual
coupon be restricted for the purchase of one digital-to-analog
converter box and that a coupon holder cannot use two coupons in
combination toward the purchase of a single digital-to-analog converter
box. To prevent fraud, NTIA proposes to prohibit a coupon holder from
returning a converter box to a retailer for a cash refund or for credit
towards the purchase of another item. NTIA proposes to permit the even
exchange for another certified converter box in the event of defective
or malfunctioning equipment. NTIA also proposes similar restrictions on
participating retailers elsewhere in the rules. NTIA invites comment on
these proposed rules.
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\11\ See Sec. 3005(c)(1)(B) of the Act, 120 Stat. at 23
(emphasis added).
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C. Application Process
The Act states that a household may obtain coupons by making a
request between January 1, 2008 and March 31, 2009.\12\ NTIA proposes
to require consumers to request coupons by submitting an application in
accordance with the eligibility criteria and procedures provided in
this proposed rule. As part of the application process, NTIA proposes
to require applicants to submit the following: (1) Name; (2) address;
(3) the number of coupons that they require; (4) a certification that
they only receive over-the-air television signals using an analog-only
(NTSC) television receiver; and (5) a certification that no other
member of the household has or will apply for a coupon. NTIA proposes
to commence the application period on January 1, 2008 and conclude on
March 31, 2009.
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\12\ See id. at Sec. 3005(c)(1)(A).
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The Act limits coupon distribution to two coupons per household and
requires the Assistant Secretary of Communications and Information to
ensure that the requesting households receive the coupons via the
United States Postal Service.\13\ As stated above, NTIA proposes a rule
through which an eligible U.S. television household that requests
coupons must certify that it only receives over-the-air television
signals using an analog-only (NTSC) television receiver, and that they
receive only over-the-air transmissions in analog format, and that they
do not receive service from a multichannel video program distributor
such as a cable or satellite service. As part of the certification
process, the applicant household must request the specific number of
coupons that it requires, not to exceed two. An applicant household
requesting more than one coupon must certify that it has more than one
analog-only (NTSC) television receiver. If an applicant fails to
specify the number of coupons that they require, that applicant will
only receive one coupon. Once certified, the requested coupon(s) will
be sent via the United States mail. Regardless of the manner or the
type information being collected as part of the application process,
NTIA intends to protect all such information consistent with applicable
law including, but not limited to, the Privacy Act of 1974.\14\
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\13\ See supra, note 5.
\14\ 5 U.S.C. 552a.
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NTIA intends to make application forms widely available. NTIA
intends to allow potential applicants to request forms through the
mail, via telephone, and over the Internet. NTIA places the highest
priority on designing an application system that prevents waste, fraud,
and abuse. As such, NTIA intends to utilize a computer based
application system which prevents duplicate requests for coupons and
other potential abuses of the program by households. NTIA seeks comment
on ways to prevent waste, fraud, and abuse in the application process.
The legislative history of the Act expresses an expectation that
NTIA will use electronic media and networks to make aspects of the
program more efficient.\15\ To that end, NTIA proposes to permit
consumers to request, submit and track applications over the Internet.
We invite comment on our proposal to permit consumers to submit
electronic applications.
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\15\ H.R. Rep. 109-362 at 202 (2005 (Conf. Rep.)).
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D. Coupon Expiration
The Act states that all coupons will expire three months after
issuance. NTIA proposes to print an expiration date on each coupon.
NTIA also proposes that the expiration date will be three months after
the coupon's issuance date, which would be the date upon which the
coupon is placed in the U.S. mail. Consumers will not be able to redeem
a coupon to purchase a converter box after the expiration date printed
on a coupon and retailers will not be able to accept coupons for
converter box purchases after their expiration date. NTIA believes that
an expiration date will encourage consumers to obtain the necessary
converter boxes in a timely manner. Moreover, a specified expiration
date will reduce opportunities for waste, fraud, and abuse and provide
greater efficiency and certainty in administering the program. We seek
comment on this proposed rule and also on whether other options for
addressing the expiration requirement are available. For example,
should NTIA define the issuance date to be the date upon which a
consumer receives a coupon? If so, how would NTIA calculate the
expiration date of a coupon? Or should NTIA assume that the average
delivery of a first class letter is two to three days and thus define
the issuance date to be three days after the coupon is placed in the
U.S. mail?
E. Digital-to-Analog Converter Box
The Act defines the term ``digital-to-analog converter box''
(converter box) as ``a stand-alone device that does not contain
features or functions except those necessary to enable a consumer to
convert any channel broadcast in the digital television service into a
format that the consumer can display on television receivers designed
to receive and display signals only in the analog television service,
but may also include a remote control device.'' It is our understanding
that a converter box as defined by the Act is currently not
commercially available, at least on a widespread basis. Ideally, a
converter box should be able to receive digital broadcast signals in
the same receiving configuration (e.g., same household antenna, same
location) as used for the existing analog reception. We note, however,
recent GAO congressional testimony indicating that antenna reception of
digital signals may vary based on a household's geography and other
factors.\16\
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\16\ See GAO Challenges Report supra, note 7.
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For purposes of the coupon program, NTIA proposes certain standards
for a minimum-capabilities converter box that simply converts an
Advanced Television Systems Committee (ATSC) terrestrial digital
broadcasting signal to the analog National Television Standards
Committee (NTSC) format. The digital converter box should be able to
receive, render and display usable pictures and sound from high
definition
[[Page 42070]]
as well as standard definition broadcast; however, the converter box
would not be required to render pictures and sound at more than
standard definition quality. Specifically, the converter box should be
capable of receiving, decoding and presenting video and audio from
digital television transmissions as specified in FCC Part 73 and ATSC
Standards A/52A, A/53C, and A/65B.\17\ NTIA proposes to take into
consideration the cost (i.e., inexpensive but meets the ATSC
Recommended Practice: Receiver Performance Guidelines standard (A/74)
of the converter box as well as the ease of installation and operation.
Specifically, NTIA proposes the following characteristics in certifying
a converter box:
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\17\ See 47 CFR 73.682(d); ATSC Standards A/52A, Digital Audio
Compression (AC-3), A/53C, Digital Television Standard, and A/65A,
Program and System Information Protocol for Terrestrial Broadcast
and Cable.
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(a) Appropriately processes all ATSC radio frequency (RF) signals
provided to the antenna-only input and then provides output signals in
standard definition video for display on an NTSC television receiver/
monitor;
(b) Delivers NTSC composite video and stereo audio to drive NTSC
monitors;
(c) Delivers Channel 3 or 4 switchable (NTSC) RF output for
television receivers;
(d) Complies with FCC requirements for Closed Captioned, Emergency
Alert System (EAS) and the required parental controls;
(e) Operable by and includes a remote control; and
(f) Tunes to all television channels 2-69.
NTIA proposes to accept certification for converter boxes that are
capable of only receiving over-the-air broadcast signals for display
over analog-only (NTSC) receivers/monitors to firmly control the nature
of the input and output signals and connectors on the box. The only
input of the converter box shall be for an external antenna. The
outputs shall be channel 3 or 4 (NTSC modulated signals), composite
video (NTSC baseband), and audio (stereo). The single input (Type F
connector) ensures that only an antenna can be connected to eligible
boxes thus ensuring use of such boxes as for over-the-air television
reception only. The channel 3 or 4 analog output (Type F connector)
ensures that older style NTSC analog television receivers can be
connected to eligible boxes. The composite video and stereo audio (all
three RCA connectors) ensures that other NTSC analog television
monitors can also connect to the boxes. We seek comment on these
characteristics that we propose to use to certify converter boxes and
on other characteristics we should consider as well.
NTIA proposes to require manufacturers to self-certify that the
converter boxes meet the standards outlined in the rules. NTIA reserves
the right to test the converter boxes that have been self-certified by
the manufacturer to ensure that they meet those standards. We also
invite comment on whether there are existing industry or government
organizations engaged in activities that can help speed the development
of testing/certification processes within the allowed time frame of
this program?
For purposes of this program, we interpret the Act's definition to
mean that a digital-to-analog converter box is not a digital cable
television box. Therefore, we do not propose to accept self-
certifications for a digital cable television box. We also do not
intend to accept certifications for converter boxes that have features
beyond those necessary to convert an ATSC digital signal to an analog
NTSC format. We invite comment on the appropriate minimum technical
capabilities for converter boxes. We also seek comment on the extent we
should consider certain standards, such as energy standards, in
determining the type of converter box that would be eligible for this
program.\18\ How would these standards affect this program?
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\18\ See e.g., Cal. Code Regs, tit. 20, section 1605 (2004).
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Finally, NTIA is seeking comments on how the converter boxes
eligible for participation in the coupon program should be identified
for the consumer. Should NTIA print a list of approved converter boxes
on the coupons or on information sent with the coupons? Should NTIA
maintain an Internet Web site listing approved converter boxes? Should
it be left to the retailer to inform consumers which converter boxes
are eligible for the coupon through the retailers advertising or at
placards at point of sale?
F. Retailer Certification
Participation by retailers in this program is voluntary. Retailers
that choose to participate will not be compensated by NTIA. We propose
to permit consumers to redeem coupons at retailers that have
established production and distribution channels and who have
demonstrated that they can redeem coupons expeditiously and
efficiently. We note that retailers are also typically familiar with
coupon programs and have systems in place to process coupons. We are
also interested in retailers that can handle converter box purchases
with the coupons via mail, phone or the Internet-based sales.
We propose to institute a process for retailers through which they
must certify, under penalty of law, that they: (1) Provide information
to customers about the necessity for and the installation of a
converter box; (2) have in place systems that can be easily audited as
well as systems that have the ability to prevent fraud and abuse in the
coupon program; (3) are willing to be audited at any time during the
course of the coupon program; (4) have the ability to electronically
provide NTIA with sales information related to coupons used in the
purchase of converter boxes, specifically tracking each serialized
coupon by number with a corresponding certified converter box purchase;
and (5) will only submit coupons for redemption as a result of
purchases made for converter boxes certified by NTIA.
NTIA also proposes to require retailers to adhere to and enforce
coupon restrictions contained in the Act such as prohibiting coupon
holders from using two coupons in combination towards the purchase of a
single digital-to-analog converter box. We will require retailers to
prohibit consumers from using coupons to purchase any device other than
a converter box certified pursuant to this rulemaking. Moreover, we
expect retailers to have in place a system that prevents consumers from
returning a converter box to the retailer for a cash refund or for
credit towards the purchase of another item. In other words, a coupon
holder is limited to an even exchange of one certified converter box
for another. NTIA proposes to require retailers to submit coupons or
coupon information to NTIA for redemption within 30 days after the
coupon has been used to purchase a converter box. NTIA also proposes to
require retailers to retain hard copies of sales information related to
converter boxes purchased with coupons for one year. We seek comment on
ways to prevent waste, fraud and abuse in the process by which
retailers accept and process coupons.
As part of the certification process, NTIA intends to inform
retailers of the coupon program's details and their rights and
obligations, including their obligations to honor all valid coupons
that are tendered in the authorized manner. NTIA proposes to reimburse
retailers within 60 days after receiving sales information related to
converter boxes purchased with coupons. NTIA also proposes to review
and resolve any
[[Page 42071]]
allegation by the retailer that it was improperly denied reimbursement
for a valid coupon properly tendered and accepted pursuant to the
rules. We request comment on our proposed rule with respect to the
self-certification process and other rights and responsibilities
identified for retailers. NTIA places the highest priority on creating
a coupon redemption process that prevents waste, fraud and abuse, while
minimizing the burden on participating retailers and consumers.
Therefore, we also seek comment on the various ways to prevent waste,
fraud and abuse in the coupon redemption process.
G. Consumer Education
In addition to the proposed rules above, we also solicit comment on
other issues related to the coupon program that are not a part of the
rulemaking process. For example, we solicit views on the most effective
means to provide consumer education about this program. The Act
provides that NTIA may spend ``not more than $5,000,000 for consumer
education concerning the digital transition and the availability of the
digital-to-analog converter box program.'' Considering the costs of
media production and paid advertising time, the $5,000,000 limit
necessitates that NTIA carefully leverage the program's consumer
education spending by collaborating with and complementing the consumer
education efforts of broadcasters, equipment manufacturers, retailers,
consumer groups and others with a stake in a successful and timely
transition to digital television broadcasting. According to the FCC Web
site, a wide range of broadcasters, equipment manufacturers, retailers,
consumer groups and others have begun to produce and provide
information concerning the digital transition.\19\
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\19\ The Federal Communications Commission maintains a consumer
education website on the digital television transition at http://www.dtv.gov
.
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In order to maximize consumer education efforts, NTIA may seek
proposals to produce commonly used on-air announcements, print and
online promotional materials as well as other media or services that
can be used to convey clear, consistent, frequent and widely
disseminated information concerning the existence of the digital-to-
analog converter box program and the actions that households must take
to obtain coupons and converters. Examples include advertising
campaigns, public service announcements, print articles, web sites, and
posters for public display. Any public information campaign undertaken
by NTIA will only be successful if other stakeholders in the digital-
to-analog converter box program contribute significant effort to the
production and distribution of this information.
We seek comment on ways to provide consumer information to those
households most likely to rely solely on over-the-air broadcasts in
analog format. We note that there are differences in the estimated
number of households that rely exclusively on over-the-air broadcasts.
For example, as noted above, the legislative history indicates that
14.86 percent of U.S. households rely exclusively on over-the-air
transmissions, whereas the Government Accountability Office (GAO)
provided an estimate of 19 percent or 21 million American
households.\20\ We note also that in recent congressional testimony GAO
stated that the identification of households that rely exclusively on
over-the-air television is difficult because no list of such households
exists.\21\ GAO also noted that information on the inverse--those
households that subscribe to cable or satellite service--is dispersed
across hundreds of providers, and these providers may face limitations
on the release of their lists to others. Thus, any information as to
ways to target consumer outreach to those households eligible for
coupons under this program would be helpful. The Managers' Report
provides that NTIA may use the efficiencies of electronic media and
networks for outreach efforts. We solicit comment on the best ways to
utilize the Internet and other forms of electronic media to disseminate
consumer information on the various aspects of the program. Again, we
seek information regarding ways primarily to target those specific
households that only receive over-the-air television broadcast signals.
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\20\ See ``Digital Broadcast Television Transition: Estimated
Cost of Supporting Set-Top Boxes to Help Advance the DTV
Transition,'' GAO-05-258T (February 17, 2005).
\21\ See GAO Challenges Report, supra note 7.
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III. Submission of Comments
NTIA requests written comments from interested parties on the
proposed rule as stated above as well any other aspects of the Act
related to the digital-to-analog converter box program. NTIA is
especially interested in receiving written comments from persons with
particular knowledge of the legal, economic and technical elements
related to such a program. Any information submitted to NTIA, however,
should not contain confidential, proprietary or business sensitive
data.
Executive Order 12866
This proposed rule has been determined to be economically
significant for purposes of Executive Order 12866; and therefore, has
been reviewed by the Office of Management and Budget (OMB). In
accordance with Executive Order 12866, an Economic Analysis was
completed, outlining the costs and benefits of implementing this
program. The complete analysis is available from NTIA upon request.
Executive Order 12988
This rule has been reviewed under Executive Order 12988, Civil
Justice Reform. NTIA has determined that the rule meets the applicable
standards provided in section 3 of the Executive Order, to minimize
litigation, eliminate ambiguity, and reduce burden.
Congressional Review Act
This rule has been determined to be major under the Congressional
Review Act, 5 U.S.C. 801 et seq.
Regulatory Flexibility Act
As required by the Regulatory Flexibility Act, 5 U.S.C. 603, NTIA
has prepared an Initial Regulatory Flexibility Analysis (IRFA) of the
possible significant economic impact on small entities of the policies
and rules addressed in this Notice. The IRFA is set forth in Appendix
A. Written public comments are requested on the IRFA. These comments
must be filed in accordance with the same filing deadlines a comments
filed in response to this Notice and must have a separate and distinct
heading designating them as responses to the IRFA.
Information Collection and Recordkeeping Requirement
This document contains proposed information collection
requirements. In accordance with the Paperwork Reduction Act of 1995
(44 U.S.C. chapter 35), NTIA invites comments on this information
collection for which NTIA intends to request approval from the Office
of Management and Budget (OMB). To successfully administer this
program, NTIA requests approval on three collection requirements and
recordkeeping and reporting requirements for: (1) The application that
households must submit to receive coupons; (2) the certification form
for retailers that will sell the converter boxes and submit coupons for
redemption; and (3) the certification form and recordkeeping and
reporting requirements for manufacturers
[[Page 42072]]
regarding converter boxes eligible for the coupon program.
Comments on the information collection and recordkeeping
requirements in this proposed rule must be received by September 25,
2006.
Comments are invited on (a) Whether the collection of information
is necessary for the proper performance of the functions of the agency,
including whether the information will have practical utility; (b) the
accuracy of the agency's estimate of burden including the validity of
the methodology and assumptions used; (c) ways to enhance the quality,
utility and clarity of the information collected; and (d) ways to
minimize the burden of the collection of information on those who are
to respond, including through the use of appropriate automated,
electronic, mechanical, or other technological collection techniques or
other forms of information technology.
Comments on the information collection and recordkeeping
requirements in this proposed rule may be sent to Milton Brown, Office
of the Chief Counsel, National Telecommunications and Information
Administration, 1401 Constitution Avenue, Room 4713, Washington, DC
20230.
(1) Title: Application for the Digital-to-Analog Converter Box
Coupon.
Type of Request: New Collection.
Estimate of Burden: Public reporting burden for this collection of
information is estimated to average .25 hours (15 minutes) per
respondent.
Respondents: U.S. television households that receive only over-the-
air television in analog format.
Estimated Number of Respondents: 21 million U.S. television
households.
Estimated Number of Responses per Respondent: 1.
Estimated Total Annual Burden on Respondents: .5 hours.
(2) Title: Certification for Retailer to Accept and Redeem Coupons
for the purchase of a Digital-to-Analog Converter Box Coupon.
Type of Request: New Collection.
Estimate of Burden: Public reporting burden for this collection of
information is estimated to average 1.0 hour per respondent.
Respondents: Retailers that accept coupons for digital-to-analog
converter boxes and submit them to NTIA for redemption.
Estimated Number of Respondents: 100.
Estimated Number of Responses per Respondent: 1.
Estimated Total Annual Burden on Respondents: 1 hour.
(3) Title: Certification of Digital to Analog Converter Box.
Type of Request: New Collection.
Estimate of Burden: Public reporting burden for this collection is
estimated at 1 hour per respondent.
Respondents: Companies that manufacture digital-to-analog converter
boxes who request NTIA certification.
Estimated Number of Respondents: 20.
Estimated Number of Responses per Respondent: 1.
Estimated Total Annual Burden on Respondents: 1 hour.
All responses to this information collection and recordkeeping
notice will be summarized and included in the request for OMB approval.
All comments will also become a matter of public record.
Executive Order 12372
No intergovernmental consultation with State and local officials is
required because this rule is not subject to the provisions of
Executive Order 12372, Intergovernmental Consultation.
Unfunded Mandates
This rule contains no federal mandates (under the regulatory
provision of Title II of the Unfunded Mandates Reform Act of 1995) for
State, local, and tribal governments or the private sector. Thus, this
rule is not subject to the requirements of sections 202 and 205 of the
Unfunded Mandates Reform Act of 1995.
National Environmental Policy Act
It has been determined that this rule does not constitute a major
federal action significantly affecting the quality of the human
environment, and in accordance with the National Environmental Policy
Act of 1969 [42 U.S.C. 4321 et seq.] (NEPA), an Environmental Impact
Statement is not required.
Government Paperwork Elimination Act
NTIA is committed to compliance with the Government Paperwork
Elimination Act, which requires Government agencies to provide the
public the option of submitting information or transacting business
electronically to the maximum extent possible.
Executive Order 12630
This rule does not contain policies that have takings implications.
Executive Order 13132
This rule does not contain policies having federalism implications
requiring preparation of a Federalism Summary Impact Statement.
Authority: Title III of the Deficit Reduction Act of 2005, Pub.
L. 109-171, 120 Stat 4, 21 (Feb. 8, 2006).
Dated: July 18, 2006.
John M. R. Kneuer,
Acting Assistant Secretary for Communications and Information.
Appendix A--Initial Regulatory Flexibility Analysis
As required by the Regulatory Flexibility Act (RFA) of 1989, as
amended, NTIA has prepared an Initial Regulatory Flexibility
Analysis (IRFA) addressing the economic impact on small entities
that might result from this Notice of Proposed Rulemaking
(``Notice'' or ``proposed rule'').\1\ NTIA requests written public
comments on this IRFA. Comments must be identified as responses to
the IRFA and must be filed by the deadlines for comments on the
Notice provided above. We will consider all timely comments in
drafting our final Regulatory Flexibility Analysis and in making our
decision on a final rule. NTIA will send a copy of the Notice,
including this IRFA, to the Chief Counsel for Advocacy of the Small
Business Administration.
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\1\ See 5 U.S.C. 603(a).
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This analysis addresses six issues: (1) A description of the
reasons why action by NTIA is being considered; (2) the proposed
rule's objectives and legal basis; (3) a description of and, where
feasible, an estimate of the number and types of small entities
affected by the proposed rule; (4) a description of the projected
reporting, recordkeeping and other compliance requirements of the
proposed rule, including an estimate of the classes of small
entities which will be subject to the requirement; and (5) the
relevant rules that could duplicate, overlap, or conflict with the
proposed rule. The following sections provide details on each of
these issues.
A. Need for, Objectives of, the Proposed Rule
NTIA is promulgating this proposed rule because of a statutory
mandate to create a subsidy program that will affect the public
under section 3005 of Public Law 109-171.\2\ This legislation, known
as The Digital Television Transition and Public Safety Act of 2005
(the Act), requires the Federal Communications Commission (FCC) to
require full-power television stations to cease analog broadcasting
by February 18, 2009. After that date, households using analog-only
televisions not connected to cable or satellite service will no
longer be able to receive television broadcast unless the television
is connected to a converter box that converts the digital signal to
analog format. As a result, the Act authorizes NTIA to create a
program whereby certain households can apply for $40 coupons to be
used towards the purchase of digital-to-analog converter boxes.
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\2\ See Title III of the Deficit Reduction Act of 2005, Pub. L.
109-171, 120 Stat. 4, 21 (Feb. 8, 2006).
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The proposed rule sets forth a framework to implement the coupon
program as authorized by the Act. Moreover, the proposed rule
provides public notice as well as an opportunity for the public to
comment.
[[Page 42073]]
The proposed rule provides clear guidelines to consumers,
manufacturers and retailers regarding eligibility, responsibilities
and certifications.
B. Legal Basis
The legal basis for any action taken pursuant to this proposed
rule is contained in the Act. Specifically, section 3005 of the Act
directs NTIA to implement and administer a program through which
eligible U.S. households may obtain a maximum of two coupons, $40
each, to be applied towards the purchase of a digital-to-analog
converter box. The Act defines the term ``converter box'' to mean a
stand-alone device used solely for digital-to-analog conversion.\3\
The Act does not define ``eligible household.'' To implement the
coupon program, the Act authorizes NTIA to use up to $990 million
from the Fund for the program, including $100 million for program
administration. NTIA is also authorized to expend up to $1.5 billion
for the program, including $160 million for administration, upon a
60-day notice and certification to the Committee on Energy and
Commerce of the House of Representatives and the Committee on
Commerce, Science, and Transportation of the Senate that the $990
million is insufficient to fulfill coupon requests for eligible U.S.
households.\4\ This section also authorizes NTIA, beginning on
October 1, 2006, to borrow not more than $1.5 billion from the
Treasury to implement the program. NTIA, however, must reimburse the
Treasury for this amount, without interest, as recovered analog
television spectrum auction proceeds are deposited into a new
Treasury fund to be known as the Digital Television Transition and
Public Safety Fund.
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\3\ Section 3005(d) provides that the term ``digital-to-analog
converter box'' means ``a stand-alone device that does not contain
features or functions except those necessary to enable a consumer to
convert any channel broadcast in the digital television service into
a format that the consumer can display on television receivers
designed to receive and display signals only in the analog
television service, but may also include a remote control device.''
120 Stat. at 24.
\4\ See supra note 2 at Section 3005(c)(3).
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C. Description and Estimate of the Number of Small Entities to
Which the Proposed Rules May Apply
The RFA directs agencies to provide a description of and, where
feasible, an estimate of the number of small entities that may be
affected by the proposed rules.\5\ The RFA generally defines the
term ``small entity'' to include ``small business,'' ``small
organization,'' or ``small governmental jurisdiction.'' \6\ The
Small Business Administration defines small entities in the ``radio,
television, and other electronic stores'' sector as those
organizations with less than $8 million in annual revenue.\7\ With
respect to equipment manufacturers, the SBA defines those small
entities as those with less than 750 employees.
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\5\ 5 U.S.C. 603(b)(3), 604(a)(3).
\6\ 5 U.S.C. 601(6).
\7\ See U.S. Small Business Administration Table of Small
Business Size Standards Matched to North American Industry
Classification System Codes, http://www.sba.gov/size.
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NTIA does not have precise information on the number of
qualifying small businesses that are in the manufacturing or
electronic retailing sectors that would be affected by the proposed
rule. According to data from the U.S. Census Bureau, there were 1041
U.S. companies in 2002 that manufactured radio and television
communications equipment, and approximately 1010 of these firms were
classified as small entities having fewer than 750 employees.\8\
Specific figures for the number of firms that manufacture television
equipment are unavailable; however, NTIA believes that some of these
companies are capable of manufacturing a digital-to-analog converter
box and qualify as small entities. To the extent that there exists
small entities capable of manufacturing a converter box pursuant to
the standards provided in the proposed rule, the extent to which
they participate in the coupon program will be a business decision
and not based on any mandatory action resulting from the proposed
rule. Thus we are unable to predict with any certainty as to the
number of small firms that will view the coupon program as a
business opportunity and thus be affected by the proposed rule. We
anticipate that comments to the proposed rule and to this IRFA will
be informative on this subject.
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\8\ See U.S. Census Bureau, 2002 Economic Census, Industry
Statistics by Employment Size, Radio and Television Broadcasting and
Wireless Communications Equipment Manufacturing (NAICS Code 334220),
Table 4, available at http://www.census.gov/econ/census02.
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Likewise, it is difficult to ascertain the number of consumer
electronics retailers that qualify as small entities. Certain data
from trade associations, however, provide a glimpse of the type of
small businesses that may participate in the coupon program. For
example, the Professional Audio-Video Retailers Association (PARA)
division of the Consumer Electronics Association (CEA) has more than
250 professional audio, video, home theater, and custom electronics
specialty dealers.\9\ CEA has also formed a partnership with the
North America Retail Dealers Association (NARDA), a group of
independent retailers that include consumer electronics retailers
that represent approximately 3,500 storefronts and accounts for over
$11 billion in annual sales.\10\ However, not all NARDA members may
be interested in participating in the digital-to-analog converter
box coupon program. In addition to consumer electronics, NARDA's
members also sell and service kitchen and laundry appliances,
consumer mobile electronics, computers and other home and small
office products, furniture, sewing machines, vacuum cleaners, room
air conditioners, and other consumer home products. NARDA's members,
however, are not limited to retailers, but also include
manufacturers, suppliers and vendors. Moreover, both PARA and NARDA
members may be specialty electronic dealers not interested in
selling converter boxes.
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\9\ See http://www.ce.org/Membership/Divisions/98.asp \10\ See http://www.narda.com.
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D. Description of Projected Reporting, Recordkeeping and Other
Compliance Requirements
The proposed rules place certain compliance requirements on
manufacturers and retailers that choose to participate in the
program. For example, the proposed rule requires retailers to
certify under law that they: (1) Will educate their customers on the
necessity for and the installation of a converter box; (2) have
systems in place that can be easily audited as well as systems that
have the ability to prevent fraud and abuse in the coupon program;
(3) are willing to be audited at any time during the course of the
coupon program; (4) have the ability to electronically provide NTIA
with sales information related to coupons used in the purchase of
converter boxes, specifically tracking each serialized coupon by
number with a corresponding certified converter box purchase; and
(5) will only submit coupons for redemption as a result of purchases
made for converter boxes certified by NTIA. The Notice also requires
retailers to submit coupons for redemption within 30 days after they
have been used for a purchase, and to retain hard copies of sales
information for one year after the purchase.
With respect to manufacturers, the proposed rule provides
standards that will be required for converter boxes for the coupon
program. These standards are necessary to comply with the Act and to
ensure that converter boxes function properly. Manufacturers will be
required to submit a self certification that affirms that these
standards have been met.
E. Steps Taken To Minimize Significant Economic Impact on Small
Entities, and Significant Alternatives Considered
The proposed rule has minimal economic impact on small entities.
Participation in the coupon program on all levels--consumers,
manufacturers, and retailers--is voluntary. Thus any significant
economic impact would not be caused by the proposed rule that
creates and implements the coupon program, as small entities are not
required by the rules to participate in the program. However, if a
small entity does participate in the program, there is no indication
that they will incur significant economic impacts. Moreover, there
does not appear to be any economic impact on small businesses by a
decision not to participate in the program.
Associated Costs
Although there may be costs associated with accepting the
coupons and distributing the converter boxes, the coupon program
does not restrict the retailer in pricing the converter box.
Manufacturers and retailers may consider these associated costs and
establish the wholesale and retail price of the converter boxes to
recoup any associated costs. In fact, the coupon program anticipates
that there will be a co-pay element to the purchase price. Thus, to
the extent that a small retailer or manufacturer incurs costs as a
result of this program, those costs can be recouped though the
retail or wholesale price which the retailer and manufacturer are at
liberty to choose.
Section D of this IRFA provides the compliance requirements of
the proposed
[[Page 42074]]
rule that retailers must assume if they decide to participate in the
coupon program. Besides the time that it takes to submit a
certification form to NTIA, there will be actual costs associated
with meeting these compliance requirements. These costs, however,
are difficult to quantify because of many varying factors. However,
we anticipate that the costs would be minimal because retailers and
manufacturers may already have the ability to meet the requirements
associated with participation in this program. For example,
retailers would have to ensure that employees are capable of
educating customers about the necessity for and installation of
converter boxes. The costs for this compliance would be calculated
by the number of hours it would take to train employees. The
estimate would depend on a number of factors such as the existing
sales force's expertise, number of employees, salary levels, type of
converter box that is certified, and the consumer knowledge.
The proposed rule also requires retailers to have systems in
place that can be easily audited as well as systems that have the
ability to prevent fraud and abuse in the coupon program. We assume
that most businesses would have systems in place that can be easily
audited, and therefore, we do not anticipate that small businesses
will have to assume a cost to purchase a new system for the coupon
program. Retailers must also have systems in place that have the
ability to prevent fraud and abuse in the coupon program. We assume
that most retailers are familiar with and accept coupons for
merchandise, and that they have in place systems to prevent fraud.
The nature of this coupon program, however, may require
participating retailers to assume additional costs associated with
preventing fraud. These costs cannot be estimated at this point in
the rulemaking process. There may be costs associated in complying
with an audit. These costs would most likely be calculated in terms
of employee hourly rates. The associated costs depends on the nature
and extent of an audit.
There are also costs associated with handling coupons, that is,
accepting the coupons, submitting the coupons for redemption, and
retaining hard copies of the coupons pursuant to the regulations.
Again, these associated costs depend on a number of factors such as
the particular systems that retailers currently have in place, as
well as the extent to which these costs can be absorbed within
existing procedures that the retailer has in place.
Likewise there are costs associated with small manufacturers
complying with the proposed rule. Manufacturers must ensure that the
converter box meet the standards outlined in the final rule.
Manufacturers would also have to assume up front costs of
manufacturing and distributing the boxes to certified retail
outlets. These costs are dependent upon a number of factors such as
the cost to the manufacturer to build the converter box pursuant to
regulations, the manufacturer's established distribution lines, the
number of retailers participating, and any relationship that may or
may not exist between the manufacturer and the retailer.
Exemptions and Waivers
The proposed rule does not provide a small business exemption
for any compliance requirements. To the extent possible, the
proposed rule limits reporting and recordkeeping requirements to
only those necessary to provide the coupons in accordance with the
Act. Any exemption or waiver of the requirements imposed on
manufacturers or retailers would potentially subject the program to
waste, fraud and abuse.
It is not essential that small businesses obtain a waiver of the
certification requirement outlined in the section above. It is
important for small retail businesses participating in the program
to be knowledgeable on the particular converter boxes certified by
the program, and for their sales staff to be able to provide
direction and guidance for consumers. Moreover, these retailers
would have to utilize systems that accommodate the government issued
coupons. In the long run, the certification program may provide some
protection from consumer liability for small businesses that provide
converter boxes consistent with the government-established
certification requirement. As such, a small business could assure
customers that the converter box meets government standards, which
may offset returns and other issues that could cause additional
costs for the business.
The requirement for retailers to submit coupons for redemption
within 30 days after they have been used for purchase, and the
requirement to retain hard copies of sales information for one year
after the purchase also should not be waived for small businesses.
These redemption and record-keeping requirements are necessary to
keep track of the number of coupons used and to ensure that the
program can be properly audited at any time. The ability of the
agency to monitor the program and to audit the program outweighs any
burden on small businesses to comply with these requirements. Again,
any costs imposed on small businesses to comply with these
requirements can be recouped through the retail price of the
converter box.
Likewise, compliance requirements cannot be waived for small
businesses that manufacturer converter boxes. The standards outlined
in the proposed rule are necessary to comply with the Act and to
ensure that the converter boxes certified by the program function
properly.
Regarding alternatives considered, the proposed rule requests
comment on whether a paper coupon or an electronic coupon card
should be used. If an electronic coupon card is used, small
businesses may not be able to participate in the coupon program if
they do not have a system in place that accepts coupons
electronically. On the other hand, paper coupons may present an
additional burden on small businesses in processing the sale and
submitting the hard copy for redemption. Either of these
alternatives will only affect small businesses to the extent that
they choose to participate in the coupon program.
Alternatives To Minimize Burdens
NTIA has taken steps to minimize burdens on small retailers and
manufacturers in its proposed rule. For example, NTIA has proposed a
self-certification process for both retailers and manufacturers for
the compliance requirements discussed above. Alternatively NITA
could require a third-party certification process, or institute a
procedure whereby NTIA certifies the compliance requirements. Either
option includes additional steps in the certification process and
therefore would increase time and cost.
We have also sought to minimize burdens on small retailers by
proposing clear rules with respect to the redemption process.
Retailers have certainty that if they submit their coupons within
the time established in the rules, they will be reimbursed in a
timely manner. This proposal removes any uncertainty on the part of
the retailer as to when they can receive full payment.
F. Federal Rules That May Duplicate, Overlap, or Conflict With the
Proposed Rules
NTIA is not aware of any Federal rules that may duplicate,
overlap or conflict with the proposed rules.
The preceding analysis indicates that the expected burden on
small entities to implement the proposed rule would be minimal.
[FR Doc. E6-11754 Filed 7-24-06; 8:45 am]
BILLING CODE 3510-60-P