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Hearing of the House Committee on Energy and Commerce Subcommittee on Telecommunications and the Internet- Status of the DTV Transition Part II

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Location: Washington, DC


Hearing of the House Committee on Energy and Commerce Subcommittee on Telecommunications and the Internet- Status of the DTV Transition Part II

BREAK IN TRANSCRIPT

REP. GREG WALDEN (R-OR): Thank you very much, Mr. Chairman. Thanks for having this additional hearing on the DTV transition.

I want to welcome the secretary and commissioners and others to testify today. Unfortunately, I'm going to have to step out, but I'll take your testimony and read it later.

Four hundred and eighty-nine days from today it all happens -- millions of Americans will be affected and our phones will ring off the hook. As chairman of the Congressional Digital Television Caucus, along with my colleague Rick Boucher, I'm pleased that the subcommittee's having this hearing today. And we are doing everything we can as a caucus to educate our colleagues and others not in this committee about what lies ahead.

We got to get this right. And we have to work collaboratively to ensure a smooth transition.

I appreciate the fact that the cable industry and the broadcast industry together are spending more than $900 million to air English and Spanish-language advertising on cable and broadcast stations. I've already begun to see those ads. I think that's essential to educate consumers about what lies ahead. It certainly will complement the ($)5 million that NTIA has on hand to spend on consumer education. But clearly, the bulk of the heavy lift here will be done by cable casters, broadcasters and satellite casters.

The NAB says that their efforts will reach some 98 billion audience impressions over the course of the campaign. And I applaud the commitment of all who are involved.

I also think it's important to recognize the Digital Television Transition Coalition. It's a broad-based group that's comprised of business and industry groups, as well as grassroots organizations that share an interest in a smooth transition.

I'm pleased to hear that the coupon NTIA is putting out will actually look like a gift card. Indeed, it is. And consumers are familiar with gift cards. And it will make it a lot easier to use when they go to get the converter boxes.

It's important we not take our eye off this ball. We have to carefully consider the feedback of our witnesses today in order that we get a transition that's smooth as possible and that consumers are both educated about what's coming toward them and have the ability to connect appropriately so that they don't lose contact with the digital TV world.

Mr. Chairman, thank you again for this hearing and for the work that you and the subcommittee are doing. And we look forward to a smooth transition in '09.

BREAK IN TRANSCRIPT

REP. WALDEN: Thank you, Mr. Chairman. I appreciate the opportunity to ask just a couple of questions.

I just want to make sure for the record: Coupons are due out and available by January 1 of '08?

MR. KNEUER: January 1 of '08.

REP. WALDEN: And how would somebody get that coupon?

MR. KNEUER: Either by phone, by mail, by fax, over the Internet. They request, they submit -- they can either call on the phone and give their information. They can get on the Internet and there will be a form available; there will be forms in hard copy generally available from a variety of sources and so they can either mail that in, fax it in --

REP. WALDEN: And how many people are likely to apply?

MR. KNEUER: In January?

REP. WALDEN: Total number available to apply, you estimate.

MR. KNEUER: The eligibility is for all U.S. households, and a variety of different sources are coming up with different predictions on demand.

REP. WALDEN: Right.

MR. KNEUER: We're doing some pulling and things on that as well.

REP. WALDEN: And what do you think?

MR. KNEUER: Fewer than the 30-plus million that we have on ability --

REP. WALDEN: The reason I ask that is that I assume that it's going to be in the 15 to 20 million range; I don't know, I'm kind of pulling a number out of the air as we all probably are right now. I remember going through the signup for Medicare Prescription Part D. There was an overwhelming of the phone system; there was a problem with the Internet system, all of that as consumers tried to sign up for prescription drug coverage, and I just would -- you might want to talk to your friends at HHS about their lessons learned from that process as you go into -- especially the dial-up part, because the waits on phones were very long and very frustrating, obviously, for folks.

Okay. So July -- or January 1, the coupon should be available to apply for, and how long would it take for a consumer to get that coupon back after they apply? If they go online, what are your folks telling you?

MR. KNEUER: For the very early phases of the program, we are going to manage the distribution of the coupons that we get requests for based on the available of boxes and the availability of retailers. So if there is not widespread availability of boxes and widespread retailer participation in the early days of 2008, we probably wouldn't send those coupons out until we had that visibility. But once the full system's in place, it'll be a matter of days on the turn around. Getting to the mail from the time we receive the request.

REP. WALDEN: It strikes me that that's going to be a frustration point for consumers who apply and don't get it and maybe they were going go into 60 miles away outside of their zip code to get a box, and they can't do it.

MR. KNEUER: We have the ability to adjust the program in lots of different parameters throughout the entire part of the program. So the early forms will probably indicate, "Expect a number of weeks for delivery," or if you call on the phone they will say, "The coupon will be there in a couple of weeks." Later it will be adjusted to match up with the supply. We don't anticipate and in all of the research that we have done and the visibility we're getting from our vendors, we do not anticipate a large volume in the early days of 2008.

REP. WALDEN: Okay. What about the rollout of the boxes themselves? You brought a prototype there, or an actual --

MR. KNEUER: This is actually for market, it's not a prototype. This is a certified box that's ready --

REP. WALDEN: And are there any certified boxes available today in a retailer that you're aware of?

MR. KNEUER: Not of coupon-eligible boxes. There are some digital-to-analog conversion devices that are integrated into other devices, DVD players and such.

REP. WALDEN: Sure. And when do the manufacturers tell you they'll have these boxes ready to actually roll out and in the stores, in the retailer outlets?

MR. KNEUER: Throughout our management of the program, it's going to be collecting information from the participating retailers, from manufacturers to the extent we can. A lot of this is very business proprietary and sensitive information, so they don't want to put into a public record, "We're shipping X number of units to the following stores," because that can dictate competitive behavior by others. But we are working with the retailers who are certifying and getting a sense from them, because like I said, when we deliver a coupon, we are going to deliver a list to the consumers, "Here are the certified boxes; here's where you go to get them." We're going to gather that information for --

REP. WALDEN: And I'm thinking of my district, which is very rural and I live in one zip code and people not too many miles away live in another. There's no retailer in that zip code, so are you going to pull multiple zip codes?

MR. KNEUER: We're working on what's the best way to deal with that scenario. It may not be --

REP. WALDEN: Like within a 20-mile or 50-mile radius?

MR. KNEUER: -- may not be exclusively zip code specific. We have the zip code of the consumer, because that's where we're mailing the boxes, and then we may say, "It may be a geographic, within 10 miles, within 15 miles." We're working through what we have the capability to --

REP. WALDEN: I hope those of us, especially in rural areas, you'll look at how big a swath you need to reach out to. It may be 100 miles. I've got parts of my district that are at least 100 miles to the nearest stoplight, and I'm not exaggerating. And five miles to the nearest freeway. And so what works in an urban area, as you well know, won't work in a rural area.

REP. MARKEY: (Sounds gavel.)

REP. WALDEN: The one final question -- Mr. Chairman, can I beg your indulgence, since --

REP. MARKEY: Only that a roll call is about to break. I want to allow members -- I apologize to you, but --

REP. WALDEN: I remain deeply concerned about the rollout of the boxes, would be the one point I'd leave you with.

REP. MARKEY: I thank the gentleman.

Just to make sure as many members can ask questions. The gentlelady from California, Ms. Eshoo.

BREAK IN TRANSCRIPT

REP. GREG WALDEN (R-OR): Thank you, Mr. Chairman.

I just have to follow up on this. Are you really saying that if a clerk says to me when I go in here's what your coupon is good for, for this converter box, Mr. Walden -- we also have these other options available to you -- that somehow that retailer should be punished for upselling?

MS. FAZLULLAH: No.

REP. WALDEN: That's what I heard you say in response to Mr. Gonzales's question, is if they say, oh, and this one's got a DVD player and this one will do that and has, you know, big, new picture -- you said we've got to take care of that and have a script.

MS. FAZLULLAH: Well, I think that --

REP. WALDEN: Are you serious?

MS. FAZLULLAH: Well, I'm serious about the fact that we need to have adequate information for consumers in these stores. I think it's a really confusing process --

REP. WALDEN: That's not my question here. My question, though, was -- this went further than just somebody scamming a customer and a bait and switch and a fraud, which I'm with you all the way on. If they say yeah, come in and use your coupon and then they don't happen to have boxes for, oh, a year, you know, that's a different deal. But what I heard was we ought to regulate from the federal government what a salesperson says in terms of other options a consumer might want to take advantage of.

MS. FAZLULLAH: I don't think that -- I'm sorry if that's what appeared --

REP. WALDEN: Okay.

MS. FAZLULLAH: -- but I'd actually like --

REP. WALDEN: But you don't believe in regulating --

MS. FAZLULLAH: -- I'd like a process for fraud and upselling, which I think is very confusing. In conversations that I've had with the FCC and with the FTC, it's unclear what you do with consumer fraud situations, with upselling. Do you go to the NTIA when there's a problem with the coupon program, or do you go to the FCC when there's a problem with the -- (inaudible)?

REP. WALDEN: Reclaiming my time, because there's a difference between bait and switch and upselling I think as I understand it, which is just offering consumers other opportunities and choices.

MS. FAZLULLAH: I think that --

REP. WALDEN: Is that a problem? Do you call that a fraud?

MS. FAZLULLAH: I'd say maybe my definition of upselling is actually where you don't provide the adequate information about the converter box program or alternative situations --

REP. WALDEN: Alright.

MS. FAZLULLAH: -- as opposed to just jumping ahead into trying to sell an HDTV.

REP. WALDEN: See, I think you need to train, and I think you need to make sure that the customer representatives know the whole deal on the consumer box. I fully agree with that. But if we start trying to write scripts for every salesperson in every retail outlet in America, then have the speech police come in and decide -- I can't tell you that that TV has a converter box and a DVD player, and by the way, this one also has a stereo or whatever in it and these are your options, then I think we got a problem.

I'm going to go to Mr. Romeo. Tell me how the process is going to work if I'm a consumer and I apply for a card in January. I heard earlier today from the secretary that they're going to delay the rollout of those cards commensurate with the product rollout.

Now, what I want to get at is an issue that -- I apply. I live in a little town, but it's 60 miles from a major city in Oregon, Portland. Tell me about how this database is going to work where you're going to list the stores I can go to that will have these converter boxes. How do you know where I shop or where I want to shop, and am I going to be limited? I know I can use that coupon anywhere. But let's say on January 10th I'm ready to go celebrate my birthday by getting my coupon that I ordered and going into Portland to a Best Buy and buying one of these converter boxes 'cause I know they have them when perhaps the Radio Shack in Hood River doesn't. Who's going to decide for me when I get that coupon?

MR. ROMEO: If you order the coupon -- so we're working with NTIA on the rollouts.

REP. WALDEN: Can you bring that a little closer? I'm having trouble hearing --

MR. ROMEO: I'm sorry.

REP. WALDEN: That's much better. Thank you, sir.

MR. ROMEO: Okay. Yeah, we're working with NTIA on the rollout details, but in that scenario -- we haven't talked about -- we have the information -- (audio skip) -- when you order the coupon. We have your address.

REP. WALDEN: Right.

MR. ROMEO: We have a list of certified retailers throughout the country.

REP. WALDEN: Great.

MR. ROMEO: So we can send you these lists of certified retailers in your geography, and that could be zip code or much broader than that.

REP. WALDEN: Yeah.

MR. ROMEO: We're still working with NTIA on what those -- (inaudible).

REP. WALDEN: And I concur that that's a good idea to get the list, or at least allow me somewhere where I can go and get a list. I have a district that's 70,000 square miles. It would stretch from the Atlantic to Ohio. It's an enormous district, and so when you limit to a zip code or a 15-mile radius or something --

MR.: If the gentleman would yield just for one second -- but you're also going to be able to get them through a mail order house or on the Internet --

REP. WALDEN: Right.

MR.: -- where they can actually get them delivered.

MR. ROMEO: And those would also be listed on the mailing.

REP. WALDEN: Okay.

MR. ROMEO: Or you could order online, and if there are retailers who provide the box online, they would also be listed.

REP. WALDEN: Alright. I guess I'm just trying to get to where consumers have as many options --

MR. ROMEO: Right.

REP. WALDEN: -- at their disposal as possible to get a coupon whenever they want to get it, get it returned to them, and then they make the decision, 'cause the government doesn't always know -- I know I'm slightly over.

REP. GONZALEZ: (Off mike.)

REP. WALDEN: I'm kind of like the last one here other than Mr. Terry.

But anyway, I'll quit. Thank you.

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