Remember that old television in your basement, the one you
bought when "Cheers" was the top sitcom? It might soon be eligible
for federal aid to ensure that it works in the digital era. Within
a few weeks, the Department of Commerce is expected to release
rules for the TV subsidy program mandated by Congress in 2005.
Reversing an earlier proposal, the program reportedly will allow
households that subscribe to cable TV to receive federal support,
at a potential cost to taxpayers of hundreds of millions of
dollars. This would be a mistake. Subsidizing
broadcast reception for anyone makes little sense: There is no
right to television. It makes even less sense to subsidize
reception for cable households, whose access to programming is not
threatened by the switchover to digital broadcasting. For the sake
of taxpayers, the Bush Administration should decline to subsidize
The TV Transition
The controversy stems from the upcoming switchover of television
broadcasts from the analog technology in use since the days of
Milton Berle to new digital television technology. As a result of
the switchover, analog television sets will cease to pick up
broadcast transmissions on February 19, 2009.
TV sets hooked up to cable or satellite services will not be
affected, because they do not rely on over-the-air broadcast
signals. However, other old sets will be unable to receive the new
signals and will not have any TV reception unless they are
connected to a special converter box.
About 15 percent of U.S. households do not have cable or
satellite subscriptions and thus rely exclusively on over-the-air
signals. The National Association of Broadcasters estimates that
there are some 45 million analog TV sets in these households. In
addition, some 28 million more broadcast-only sets are in cable or
satellite households but are not hooked up to the service.
The Subsidies Debate
Concerned that some consumers would not be able to obtain
television signals after the February 2009 analog cutoff, Congress
in 2005 authorized $990 million to subsidize the cost of converter
boxes--with an automatic extension up to $1.5 billion if needed. The
National Telecommunications and Information Administration (NTIA),
part of the Commerce Department, was tasked with administering the
program. In July of last year, it released for public comment a
tentative plan.The plan sensibly proposed that eligibility
be limited to the 15 percent of households without cable or
satellite service. As specified by Congress, each eligible
household would be eligible for up to two $40 coupons to put toward
the purchase of converter boxes, which are expected to cost $50 to
Commerce's proposed rules, given the constraints set out by
Congress, were sensible. By limiting aid to non-cable households,
support would be focused on households that rely on broadcast
signals, rather than those that use broadcast signals only as a
The limit was also critical to keep the program under the
maximum $1.5 billion authorized. If all 17 million or so non-cable
households claimed two coupons apiece, the total cost would be
$1.36 billion, bringing the total (with administrative expenses)
near the $1.5 billion maximum cost. Subsidizing extra television
sets in cable households could increase this cost substantially.
With an estimated 28 million over-the-air sets in cable-TV
households, the additional cost could run over $1 billion.
Not surprisingly, NTIA's plan garnered significant criticism
from broadcasters, equipment manufacturers, and others arguing for
larger subsidies. Most significantly, in November of last
year, Representative John Dingell (D-MI), then the incoming
chairman of the House Commerce Committee, and 19 other Members of
Congress sent a letter to the NTIA administrator criticizing the
proposed plan, saying it "disadvantages the poor, the elderly,
minority groups, and those with multiple analog television sets in
their home." Specifically referring to exclusion of
cable households, the letter stated that the limitation would
"unfairly disenfranchise consumers with perfectly good
televisions," who deserve a "government-backed plan to hold them
No Right to Analog TV
This argument is wrong. First, there is no federal right to
analog television, nor should there be. Viewers have no more right
to existing TV technology than they did to vinyl records or Beta
video recorders. Viewers have been on notice of the
transition to digital television for over a decade, and those who
prepared for it should not have to subsidize those who did not.
It makes even less sense to subsidize converter boxes for
households that subscribe to cable television. These households
will not lose access to television programming when analog signals
end. They will receive the same news and entertainment as before,
without a change. The only difference is that their extra
televisions--those in the basement or kitchen and not connected to
cable--will need a converter. But this hardly constitutes
"disenfranchisement." And it hardly justifies a $40 taxpayer-funded
subsidy--an amount which may exceed the value of the television
The Administration got the answer right in its draft proposal.
It should tune out the static it has received since and decline to
subsidize basement televisions.
James L. Gattuso
is Senior Research Fellow in Regulatory Policy in the Thomas A. Roe
Institute for Economic Policy Studies at The Heritage
"Kneuer: NTIA Will Meet 'Tight' Deadline For Awarding
Interoperability Grants," Telecommunications Reports,
January 16, 2007.
background on the debate leading up to Congress's decision, see
James L. Gattuso, "Another Bridge to Nowhere? The Senate's $3
Billion Subsidy for Aged Television Sets," Heritage Foundation
WebMemo No. 891, October 24, 2005, at www.heritage.org/Research/Regulation/wm891.cfm.
National Telecommunications and Information Administration,
"Request for Comment and Notice of Proposed Rules to Implement and
Administer a Coupon Program for Digital-to-Analog Converter Boxes,"
Federal Register, Vol. 71, No. 142 (July 25, 2006), p.
course, fewer coupons will likely be claimed because not all
households have two TVs and many households will opt not to claim
the coupons. Many more will have digital television sets by the
deadline. Disconcertingly, no one knows what the final figure would
be. Such programs often end up costing well above--not
Electronics retailers also argued that they should be directly
compensated for accepting converter box coupons at their stores.
The "investments, expenses, and risks," they maintained, should not
be placed "solely on the backs of retail vendors who consent to
participate in this program." In other words, retail stores want to
be paid for the inconvenience of a program that will cause
millions of consumers to buy goods from them. See James Gattuso,
"DTV Subsidies: Not So Invisible Hands Reach for More,"
Techliberation.org, September 28, 2006, at www.techliberation.com/archives/040761.php.
Letter from Representative John D. Dingell, et. al., to John M.R.
Kneuer, Administrator of the National Telecommunications and
Information Administration, November 15, 2006.
The digital transitions in these fields were not triggered by a
federal cut-off date. The cut-off date was imposed pursuant to an
agreement by broadcasters to return their old analog frequencies in
exchange for new frequencies on which to broadcast in digital
formats. This does not impair any rights held by viewers.