Hearing of the Telecommunications and the Internet Subcommittee of the House Energy and Commerce Committee - Status of the DTV transition
Interview
Hearing of the Telecommunications and the Internet Subcommittee of the House Energy and Commerce Committee - Status of the DTV Transition
REP. MARKEY: (Sounds gavel.) Ladies and gentlemen, thank you so much. I apologize for the extended break. There were several unanticipated roll calls. We continue to have a highly contentious atmosphere out on the House floor.
Here, however, we are working together in harmony to find a solution to the problems which are raised by the transition from analog to digital television by February 17th of 2009. And we have for our second panel a very, very distinguished group of people who reflect just about every perspective that needs to be heard from in the resolution of the remaining issues.
We're going to begin, and I'm going to ask each of you to keep your opening statement to five minutes, no more than five minutes. We're already deep into the afternoon, but I promise you that there will be much interest on the part of the members of the subcommittee to probe more deeply into your testimony.
So, with that, I'm going to recognize Ron Bruno, who is the president of Community Broadcasters Association.
Mike Doyle, who is the congressman from western Pennsylvania on this subcommittee, cannot be here at this moment; I think there is an ice storm which has affected travel from Pittsburgh to come down here. But he wanted me to extend his best to you, sir. And whenever you are ready, you are recognized to address the Subcommittee on Telecommunications for five minutes.
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REP. MARKEY: (Sounds gavel.) Thank you, Mr. Bruno, very much.
Our second witness, Kyle McSlarrow, is the president and CEO of the National Cable and Telecommunications Association.
Welcome, sir. Whenever you're ready, please begin.
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REP. MARKEY: Thank you, Mr. McSlarrow.
Our next witness, David Rehr, is the president and chief executive officer of the National Association of Broadcasters.
Welcome back, Mr. Rehr. Whenever you're ready, please begin.
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REP: MARKEY: Thank you, Mr. Rehr, very much.
Our next witness, Chris Murray, is senior counsel for the Consumers Union.
We welcome you today, sir. Whenever you're ready, please begin.
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REP. MARKEY: Thank you, Mr. Murray, very much.
Our next witness, Tom Romeo, is the director for federal services, global business service for IBM Corporation, a very important person in this whole project, and we welcome him.
And please begin.
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REP. MARKEY: Thank you, Mr. Romeo, very much.
Our next witness, Laurance Harris, is the vice president for merchandising for Radio Shack.
Welcome, sir.
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REP. MARKEY: Thank you, Mr. Harris.
And our final witness is Mark Jackson, who is the president of Echostar Technologies Corporation.
We welcome you, sir.
MR. JACKSON: Thank you, Chairman Markey, Mr. Stearns.
As you mentioned, I am the president of Echostar Technology Corporation, a company that designs and markets what we believe are the best set-top boxes and video equipment in the world. On behalf of Echostar and our sister company DISH Network, thanks for inviting me to discuss the digital television transition, in particular our low- cost digital-to-analog converter box.
Echostar and DISH Network are committed to doing our part to make next year's digital transition a big success. DISH Network, as many others here, has an ongoing education campaign aimed at current subscribers to explain what the digital transition will mean to them. Among our many initiatives, we have aired public service announcements to DISH Network's roughly 14 million subscribers, as part of that awareness campaign, so they can try to get the word out to their friends and neighbors and family who may not have digital equipment.
On the equipment side of the business, Echostar Technologies has developed the lowest price coupon-eligible converter box, the TR-40. We think that making the TR-40 available to the public will have a very positive impact on the digital transition. Earlier this year, to get the word out, we made an announcement at the consumer electronics show that we would make our basic converter box available to consumers for about $39.99. That's one penny less than the $40 Congress authorized for each converter box coupon. In other words, not counting sales tax, a consumer who obtains a government --
REP. MARKEY: Did you say your box is ($)39.99?
MR. JACKSON: Thirty-nine, ninety-nine retail price.
REP. MARKEY: And you get a $40 coupon?
MR. JACKSON: So it's a penny less.
REP. MARKEY: I would go to Echostar Technologies Corporation if I could, to be honest.
MR. JACKSON: We hope that a lot of people decide to do this.
REP. MARKEY: I just, I'm sorry, but that sounds like that's the right price.
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REP. MARKEY: The chair will recognize himself for a round of questions.
So you're saying, Mr. Jackson, that you might even have one below ($)39.99.
MR. JACKSON: We're working very hard on getting one below ($)39.99.
REP. MARKEY: That would be so great. And I can see you actually on TV like it was a Veg-a-matic or something -- (laughter) -- you know, selling it to people. That is no -- if someone could come up with like the Veg-a-matic version of why you need to switch over, why you need a converter box, I think we wouldn't have a problem at all. I haven't seen those types of ads yet. But I imagine if you can make a buck doing it, that that ad will be made. That will be the breakthrough moment.
Now, let me go to you, Mr. Murray. You seem a little bit pessimistic about where we are right now, to be honest with you. You have a fairly high percentage of people who have misconceptions and confusion about what the digital revolution means for them and their television sets and whether or not they --
MR. MURRAY: Mr. Chairman, it's my job to be a pessimist, so -- (laughs) --
REP. MARKEY: And you're very good at it. (Laughter.) And I want to say that of all the witnesses, you capture our attention because obviously our names are on the ballot, and so pessimism is something we have to identify early so it's not manifested in another kind of a box, a secret ballot box that no one knows how anyone voted.
So, my question to you is, Chairman Martin said he had a $20 million fund for public education. If you were going to spend it, Mr. Murray, where would you spend that $20 million in order to ensure that the most vulnerable population was given the information they need to avoid a catastrophic February 17th, 2009?
MR. MURRAY: Well, sir, we've got pretty good demographic information from Nielsen about who's affected here. It does seem to be disproportionately elderly, disproportionately Latino. And so that's a good place to start, is find those communities, find a way to reach nursing homes with some scale, find a way to help people with a sort of Geek Squad kind of outfit that can actually -- I think part of the problem here is people may be aware of it, they may even know where to go get their boxes, but they get home, they get that box in their hands, they start messing around with their television set, and they're a little bit clueless about how to put the thing together. So I think part of it would go into materials to actually effectively educate people about, okay, you've got a box in your hands, how do you actually hook it up.
But I think really localized action plans tailored to the demographic information that we have from the excellent people at Nielsen is a good place to start. And as to whether or not I am overly pessimistic, I would be happy to take wagers from anyone who wants to bet on how this is going to go February 17th.
REP. MARKEY: And you would be betting on?
MR. MURRAY: I'm going to bet on that there's going to be enough displaced consumers to light up the switchboard on both the House and Senate side.
REP. MARKEY: Thank you. Thank you for saying that. (Laughter.) That's important testimony to hear.
Let me ask you, Mr. Romeo, there is a letter that Mr. Dingell and I and other members of the subcommittee sent to the NTIA, asking that consumers could reapply after 90 days for a coupon, and my question to you is, is there a technical reason why that wouldn't be possible, and for IBM to ensure that people who do reapply, in fact, can receive the coupon and, as a result, the converter box they would need in order for their TV set to work?
MR. ROMEO: No, there's no technical reason that we couldn't implement the policy change if that were decided.
REP. MARKEY: Okay, that's great, because the NTIA agrees that there's no technical problem. So I think we should begin to work towards dealing with that issue.
I just heard from Mr. Murray, so why I don't give all the rest of you your opportunity?
We'll begin with you, Mr. Jackson, over here. What do you lie awake at night worrying about that could go wrong on February 17th, 2009? What's the nightmare scenario from your perspective?
MR. JACKSON: Well, I found it with great interest on session one a lot of the members' concerns that they have. I think they're well founded. I think we share Mr. Murray's concern that there are a lot of issues that we have to work through.
The biggest thing I would recommend for the government to implement is that perhaps a test nationwide is warranted four months before the program comes out. Like, I would ask the broadcasters to go digital for one day or a few hours. I think that would generate a lot of awareness of what's going to happen. And that would be my biggest recommendation for you.
I think some of the members' concerns about antennas not working are well founded, so much so I think you'll see us at Echostar set up a service that consumers could pay for and we'll go out and set them up, because we will have a lot of issues there.
I think those are our two biggest concerns. But I think the test and get the awareness out will make consumers go to retail stores, I think it will make the broadcasters be prepared, I think it would force a lot of people to wake up.
REP. MARKEY: Thank you, Mr. Jackson.
Mr. Harris?
MR. HARRIS: Yes.
REP. MARKEY: Can you move that in a little bit more closely? Thank you.
MR. HARRIS: Pardon?
Okay, good.
Yeah. Our concern is when you're really dedicated to customer service is what level the customer understands what they need, and that's the role that Radio Shack fills. But we don't know, when you ask a customer a question, are you watching low power, they won't know. So we would ask the community broadcasters to inform their viewing public that they are watching low power, because that's one of our concerns.
The other concern that I think we have covered is spikes in demand. No one expected 4 million coupons, so we moved up a lot of orders. Also, when the program ends, as far as merchants and retailers, we're concerned about inventory residue, because we want to have the inventory covered as it's needed, but after the program ceases how much more demand is there? We at Radio Shack always carry legacy products so we'll have the product quite a bit after the coupon's end, but we're just worried about residue inventory as well, because that's substantial.
REP. MARKEY: Mr. Romeo, what's your greatest fear?
MR. ROMEO: So as someone who cares about the program's success, obviously not leaving people outside of the sphere of educating them so that they know that they need to act is a major concern. From a technical and parochial view, having 20 million orders on February 16th of 2009 would be a concern, that it all comes late.
REP. MARKEY: Mr. Murray, do you think you've already expressed your deepest pessimistic fears for that day, or do you have additions that you would like to make to that list? (Laughter.)
MR. MURRAY: I do think I have fully expressed myself, Mr. Chairman.
REP. MARKEY: Thank you, I appreciate it.
Mr. Rehr, how about you? At the broadcasters, what's your nightmare scenario?
MR. REHR: I scribbled down five.
Number one, if our program works the way we envision it we could run out of coupons and we'll need to come back to Congress and the FCC and the NTIA for additional funds.
Number two: that senior citizens who are difficult to reach, that we somehow won't be able to touch them and we'll miss some of them.
Number three, we'll have some isolated antenna issues, although we will be announcing soon a partnership with the Consumer Electronics Association to ensure that people understand the antennas that they will need to make the digital transition successful, and we want to applaud CEA for all their great work on that end.
Number four: technical issues, snow, heavy rain, sleet, fog, maybe a lack of engineers to do the final conversions the day before --
And then number five --
REP. MARKEY: Does that go over to Mr. Jackson's recommendation that we have like a one-day trial four months in advance just so everyone can experience in some form what might happen four months later permanently?
MR. REHR: Well, we actually have a thousand-plus stations that are running analog and digital systems today. These are stations that are going to just make the switchover. And I'm not sure how many they are; that has to do with channel selection and in getting to a different channel. But if we can minimize those through the FCC allocation of channels, that would be good.
And then, finally, number five, since my cell phone is on all my business cards, I'm personally worried that I will be held responsible by you and every other member of the committee. I'm just kidding.
REP. MARKEY: No, you can actually bet on that. That's the -- (laughter) -- that's a given. (Laughter.) Bipartisanship at its best!
MR. REHR: That's right.
We at the NAB take this extremely seriously and I take this extremely personally.
REP. MARKEY: Barack Obama would be proud of the cooperation we have up here -- the new America.
Mr. McSlarrow.
MR. MCSLARROW: I've now decided to put David's cell phone on my card so I've taken care of my biggest problem.
REP. MARKEY: (Laughs.)
MR. MCSLARROW: No, I think it's the same thing we've been talking about before. I worry that despite great efforts across the board that the most sophisticated, wide-ranging consumer education campaign in the world is still going to miss people. And it just is. And obviously we need to narrow that pool as -- to the smallest possible pool we can, but there's going to be some disruption.
And second point has been made earlier -- even if -- and I think, you know, we're well on our way to get the coupon program to get the boxes out there -- even if all that work seamlessly -- we're basically talking about a universe of people who either don't or chose not to have boxes in their home. And this is a new thing. And hooking them up -- and someone mentioned the Geek Squad, but somehow there's that last little step to actually making the box work that I'm not sure we're completely on top of and will have to think through.
REP. MARKEY: Would you recommend for February 17th that -- like on Election Day we all have these get-out-the-vote operations that everyone does the entities that is here on quadruple alert and everyone is ready to go? Because, as you're saying, Mr. McSlarrow, perhaps there are inevitable problems that are going to be there when -- and that we should have, almost like, a D-Day-like operation ready to go to deal with what is left over.
Do you think that is advisable?
MR. MCSLARROW: I do. I mean, it's a lot like a political campaign, with the advantage you don't actually have someone on the other side pushing back. I mean, we're all rowing the same direction. We should be able to do it. I think we ought to treat it with the seriousness which it deserves. And I think we can do it, and we're off to a good start.
But -- particularly when you think through the elections coming up here, there's going to be a three-, four-month period of time where no one has focused on the DTV transition. It's all about the elections. And after that period to February is sort of the forced march.
REP. MARKEY: Got it.
And, Mr. Bruno, your nightmare scenario?
MR. BRUNO: Yes, sir, Mr. Chairman. Our nightmare is not going to start on February 17th of '09. Our nightmare will start five days from now when those coupons are passed out.
I want to try to explain something as easily as I can. There are three types of boxes. There's the bad box that's digital-only. When you buy that box, when you bring it home and you plug it in you'll lose 80 percent of your transmission. And you'll say, "Well, gee, I don't get this channel anymore, I don't get that channel." So you go back to the retailer, you turn it in -- big mess. It's confusing -- it's very, very confusing for the consumer.
The other box that we've heard about -- both of these boxes, by the way, are not compliant with the All Channel Receiver Act -- the other box we call a user-hostile box, and that's because --
REP. MARKEY: The user --
MR. BRUNO: User-hostile --
REP. MARKEY: Hostile.
MR. BRUNO: -- is what we call it. And here's why: You take this box home with what we've been hearing all day today -- with a pass-through. You put -- you plug the box in and hopefully you can get it right, because there's a lot of wires.
REP. MARKEY: Which is worse, bad or user-hostile? The first one is that --
MR. BRUNO: The bad box blocks out all analog. The user-hostile box passes through analog. Both are not compliant with the All Channel Receiver Act.
REP. MARKEY: All right.
MR. BRUNO: Now, when you use the user-hostile box and you plug it in, you get -- you have to -- you flick through your channels and you get analog. But you go to channel 3, typically, in these boxes, and then you get another remote that came with the box. And now you have to flick around and try to see all your digital channels on channel 3. And if you want to plug in a VCR or a DVD recorder or something else, I don't think you can. I mean, I haven't tried it yet, and I'm fairly technical, but I don't think you can do this.
Now, the boxes that aren't approved -- the good boxes, the user- friendly boxes pass analog and digital. And that's why we need these boxes available to the consumer. They're not that expensive. For, you know, around $100 you can buy a user-friendly box with analog and digital that has a DVD recorder in it. So, I mean, we're not talking about -- I mean, the manufacturers --
REP. MARKEY: Do you think Radio Shack is going to be selling bad boxes and user-hostile boxes?
MR. BRUNO: Sir, they are bad to us because we lose our viewers.
We only have -- we don't have cable carriage rights for the most part. We have -- and we've heard today that Nielsen says there is 11 percent of the population that watches over-the-air signals.
Every time one of these noncompliant boxes are being sold -- and remember, 37 of them have been approved, and only four have the user- hostile analog pass-through. Every time one of these boxes are plugged in, we lose a viewer. We are out of business over this program -- 7,212 television stations. Mr. Chairman, we need help.
REP. MARKEY: Help is on the way.
So my time has expired. And I will recognize the ranking member for as much time as he may consume.
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REP. MARKEY: I thank the gentleman.
And I'll recognize myself for some additional questions. And I first wanted to let you each know that we're going to have each one of you back here on February 17th, 2009. There is a hearing that I'm announcing is scheduled for that date and we're going to ask you all to come back and sit here as we are on the transition day. And so I just want you to, you know, to clear -- a lot of times you don't get enough notice, you know. So I just want you all to know that on that day we'll see quite clearly what the holes are in the system.
So we thank you. It was I think a highly illuminating hearing. I remember back years ago, my old buddy Mark Fowler, when he was the chairman of the Federal Communications Commission back in the 1980s, he used to say that really a television is nothing more than a toaster with pictures. And as the public tries to figure out how to attach with splitters this converter box to their TV, it will very much be like trying to attach a toaster to a TV set, turning it into a toaster with pictures. And I don't know who will be toast that day. (Laughter.) That still remains to be seen. But I do know that the most vulnerable part of the American population are the minorities, are the senior citizens, and are poor people. And there is a very heavy responsibility which all of us share to ensure that there is the minimal amount humanly possible of disruption to their lives that occurs on that day and if there are holes that there is a program in place on that day that will ensure that everything is rectified in a very brief period of time after February 17th. But our goal is -- as it is at Radio Shack -- zero defects.
So we want to put in place the best plan that we can and execute it. Life is 20 percent concept, 80 percent execution. So the execution of this plan will ultimately determine how effective retrospectively all of the planning is viewed.
And I just want to finish by again thanking you, Mr. Harris and Radio Shack, for removing the remaining analog inventory from your store shelves.
MR. HARRIS: You're very welcome.
REP. MARKEY: And I would urge all of the other retail stores across the country to do the same. I think it would be in the public interest if they did so, and we're going to be continuing to monitor that situation.
So with the thanks of the committee, this hearing is adjourned. Thank you.
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