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Congress may help usher in TV’s digital age

Sat., Nov. 12, 2005

WASHINGTON – While considering slashes in Medicaid and student loan programs, Congress is about to set aside up to $3 billion to help millions of Americans with old non-digital television sets buy converter boxes.

Each converter box is expected to cost the government $40 to $60, but supporters of the legislation don’t want to take any chances of being accused of denying Americans their right to a TV picture when broadcasting goes all digital.

Depending on how much money is allocated, the funding would go to purchase as many as 60 million “set-top” electronic boxes to make it possible for old, broadcast-only television sets to continue receiving a picture when the broadcasting industry converts to all-digital transmission. Conservative groups have criticized the proposed expenditure as a giveaway, but it has received less attention because it is included in deficit-reduction legislation that has generated an uproar in the House for its spending reductions in programs affecting the poor, such as Medicaid and food stamps.

The GOP leadership yanked the budget bill from the floor on Thursday because it had failed to gather enough votes to pass and its outlook is now uncertain. Some of the House’s spending cuts could be killed to make the bill more palatable, but there is no indication that the television provision is in jeopardy. The Senate has already passed its budget measure.

James Gatusso, a technology expert at the Heritage Foundation, called it “a subsidy for old TV sets,” and not the wisest use of federal money at a time of large deficits.

Robert Bixby, executive director of the Concord Coalition, a budget-watchdog group, said that helping poor people buy converter boxes appears justified, but he added: “When the government subsidizes anything, it usually goes to people who don’t need it. I suspect that will be the case here.”

The money would be doled out without regard to income, though families that have broadcast-only sets tend to be poorer, industry officials said.

Both the House and Senate bills would require the industry to convert to all-digital broadcasting by a specific date – on Dec. 31, 2008, in the House bill and April 7, 2009, in the Senate measure. Old “analog” or non-digital sets could not receive a picture unless they are hooked to a cable or satellite system.

These provisions created some controversy, but nowhere near the uproar over proposed cuts in Medicaid, food stamps and student loan programs as well as tax cuts. One reason is that the government would take over the broadcasting spectrum and auction it off to private companies, raising $10 billion to $28 billion.

Rather than risk an uproar by millions of Americans, including an estimated 21 million households that have only non-digital sets, lawmakers decided to pre-empt the complaints with a purchase plan similar to one tried in Berlin when it recently switched to all-digital.

“The potential for consumer outrage over one day waking up and finding out that you are simply incapable of receiving local news, information about a hurricane or tornado alert, or entertainment programs, is enormous,” said Dennis Wharton, a spokesman for the National Association of Broadcasters.

Some conservative groups have criticized the proposed expenditure as excessive and unnecessary, complaining that it subsidizes old technology and amounts to little more than a government giveaway.

“I think it’s way too much,” said Gatusso, the Heritage Foundation analyst. He said neither bill requires people to reveal whether they have a cable or satellite hookup and that subsidies would go to people who have extra broadcast-only televisions in bedrooms or dens.

“It certainly has elements of paying a bribe, but oftentimes paying a bribe is the better part of deficit reduction,” countered Barry Bosworth, a Brookings Institution economist. “By making this payment, they (Congress) will free up a spectrum that can be sold for money.”

There is big money to be made in the transition from analog to digital television, Gatusso said, adding that many companies have their eye on buying some of the spectrum so they can offer new wireless and broadband services. That will be the biggest corporate payoff, he said.

The House plan authorizes spending $990 million so the government can issue $40 coupons (a $10 co-pay would be required) to buy converter boxes, while the Senate proposal authorizes $3 billion for a purchasing program with unspecified details as to how the money would be distributed.


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