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Digital Discount Coupons Initially Available to All

Mar 12, 2007  •  Post A Comment

The Commerce Department chose a broad path for distributing a potentially scarce supply of $40 discount cards to buy the converter boxes needed to watch digital TV on analog sets.

The department’s National Telecommunications & Information Administration said it won’t limit the discounts until the first 22.5 million discount cards are gone. NTIA, which today unveiled rules for the discounts and standards for the converter boxes, said the cards will look like gift cards and will expire in three months if not used.

Only after the first batch runs out will NTIA limit the cards’ availability, with the remaining 11 million going to households without cable and satellite.

There had been suggestions the limited supply should be reserved for those without cable or satellite, an estimated 70 million TVs. Those households will lose all TV broadcasts with the digital transition. TVs with cable and satellite set-top boxes won’t be affected.

The government has set aside $1.5 billion for the discount program, which will fund enough coupons for about 33.5 million converter boxes. Democrats have questioned whether the funding is sufficient.

John M.R. Kneuer, assistant secretary for communication and information for the Commerce Department, said whether the supply is sufficient depends on the path consumers take to continue watching TV.

The government discount applies only to basic converter boxes, which are likely to go on sale early next year. Those basic boxes, for which the NTIA issued standards today, can include a video guide and an easy antenna connector but not much else. More advanced converter boxes, which may have DVD players, DVRs or videogames built in, won’t be eligible for the discount. Otherwise, consumers could simply buy new digital televisions.

Mr. Kneuer said the range of possibilities makes it hard to project the number of discount requests.

“We’ve got an uncertainty in demand,” he said. “Tens of millions of consumes are availing themselves of the transition as we speak, buying digital televisions. So there are a number of options. Given the growth in sales of digital [TVs], and given the performance of consumers in the marketplace who want to make other choices, the demand curve is uncertain.”

(Editor: Horowitz)