Under an all-but-laughable banner of protecting consumers, Verizon Wireless recently presented FCC Chairman Kevin Martin with a plan to take away the current regulatory and legal authorities of states over early termination fees (ETFs), effectively stifling current and future consumer lawsuits at the state level on ETFs.

Several such cases are now moving through state courts. In fact, Verizon recently agreed to pay $21 million to settle an ETF case brought against it by consumers in a state court in California. If other cases are successful, wireless companies could face billions of dollars in damages.

In exchange for this sweeping preemption of state authority by the FCC over ETFs and the accompanying sweeping away of billions of dollars in potential damages in consumer lawsuits, the wireless companies are giving up literally next to nothing. The biggest concession by the wireless industry would be a watered-down form of pro-rating of ETFs and the adoption of a short trial period during which consumers could cancel their long-term contracts without incurring penalties.

None of the “concessions” offer much of anything new. Nearly all of the big wireless companies are already pro-rating their ETFs or plan to begin doing so soon, primarily due to pressure from consumers. Same goes for the trial period.

Ever since Verizon brought forward this grossly lopsided plan a few weeks ago, we have been stunned that the FCC – and agency charged with protecting consumers and guarding the public interest – has even taken it seriously.

More than 14,000 consumers have recently sent letters to the FCC asking the agency to reject the industry-authored, anti-consumer plan put forward by Verizon and its fellow wireless carriers. The letters urged the agency to give consumers a more powerful marketplace and limit exorbitant early termination fees – but not at the expense of their legal right to sue wireless companies for potentially illegal behavior.

Now the rumors are flying that FCC Chairman Martin wants the Verizon plan to be adopted as soon as possible and has quietly drafted the necessary rules to do so.

Because of the FCC’s often opaque rulemaking process, Martin can ask his four fellow commissioners to consider and approve rules implementing the Verizon plan under a process known as “on circulation.” Unfortunately for wireless consumers and the public at large, that means it’s possible that any formal rules implementing the Verizon plan could effectively become the law of the land without any further public notice or meaningful input from consumers.

We have written at length about the flimsy and nonsensical arguments wireless companies have trotted out in defense of ETFs.

In a nutshell, wireless providers argue that these fees, which range from $150 to 250 per phone line, are imposed on customers who break a one- or two-year contract in order to recoup the company’s losses from subsidized or free phones. However, research has shown that the average cost incurred by wireless companies in providing a free phone is $14.33.

The practice of early termination fees have in effect acted as barrier to a fair marketplace in which consumers can choose the best wireless provider at any time.

Given the facts, we find it amazing the FCC is even thinking about implementing the anti-consumer, anti-competitive plan put forward by Verizon on behalf of the wireless industry.

The FCC will be acting against the consumers it is charged with protecting if it continues with any further such back room, below the radar shenanigans. The commissioners need to quickly and forcefully reject this legal bailout written by the wireless industry, for the wireless industry.

Titled "Transition in Trouble: Action Needed to Ensure a Successful Digital Television Transition," the report lays out the problems and challenges of the upcoming transition and what can still be done to make it go smoother.

By law on February 17, 2009, most television stations must stop sending analog over-the-air signals. This will change the way Americans watch television – especially those most reliant on free over-the-air television, many of whom are low-income Americans, seniors, people with disabilities, communities of color, and people who speak languages other than English.

The report details specific challenges faced by these communities, such as difficulties for seniors and people with disabilities in accessing captioning and the loss of community (low-power) broadcast television stations that provide the news and information on which communities of color and non-English speaking populations rely.

"We need to reach deep into communities who rely on over the air broadcasting to find out if they are prepared for the transition, and we need to make sure all Americans get the message about the DTV transition from messengers they trust in a language they can understand," said LCCR vice president for strategic initiatives Mark Lloyd. "Then we need to follow up to make sure they get the assistance they need to continue to have access to important news and emergency broadcasts."

The first is a proposal recently drafted by the wireless telephone industry involving those maddening early termination fees consumers are forced to pay if they decide to change carriers before the end of their long-term service contracts.

A few weeks ago Verizon Wireless approached FCC Chairman Kevin Martin with a plan to make certain changes in the way the industry imposes the fees – such as some pro-rating of the fees over the life of the contract and moving back deadlines for new customers to cancel their service without penalty.

In exchange, the industry is asking the FCC to take away the regulatory and legal powers over early termination fees that currently reside with the states. That is a huge deal because several wireless carriers are now facing class action lawsuits over early termination fees in state courts that, if successful, could result in billions of dollars in damages. In theory, those lawsuits would go away if the FCC were to preempt the states on early termination fees, as called for in the Verizon plan.

There was a hastily-arranged FCC hearing on the Verizon proposal on June 12, where the agency heard testimony from wireless industry executives, attorneys involved in some of the pending ETF lawsuits, and other stakeholders – including Consumers Union, the publisher of this blog.

Since then, there have been rumors that FCC Chairman Martin is circulating proposed regulations based on the Verizon proposal and might try to get the full commission to take action on the issue as soon as its regularly scheduled public meeting later this month.

Consumers Union is opposed to the Verizon proposal and would be highly skeptical of any new FCC regulations based on it.

Although they are touted by wireless carriers as necessary so they can provide customers with cheaper or free phones, early termination fees are in fact penalties designed to stop consumers from switching companies for better service and better price.

These penalties don't save consumers money as the carriers claim, and they rob consumers of the benefits that an open and competitive market would otherwise bring, according to Consumers Union's telecom policy analyst Chris Murray, who testified at the recent FCC hearing on early termination fees. Click here to read Murray’s full testimony.

USA Today ran an excellent editorial on the issue on the day of the hearing, pointing out the gross lopsidedness of the proposal in favor of the wireless industry.

XM-Sirius Merger Decision Could Be Close

Rumors are also circulating that the FCC is close to reaching a decision on whether to approve the pending merger of the country’s only two satellite radio companies, XM and Sirius.

The Justice Department’s antitrust division rubber stamped the merger in March, somehow arguing with a straight face that the resulting satellite radio monopoly the deal would create won’t harm consumers.

We begged to differ at the time, to put it mildly. And we continue to hold out hope the FCC will not buy the tortured logic offered by the Justice Department in its approval of the deal.

The simple fact is that monopoly businesses – particularly unregulated monopolies – are by their very nature anti-consumer, no matter what the Justice Department and other supporters of the XM-Sirius merger might think. The whole idea of a monopoly is to destroy all competition in the marketplace, cut services and choices, and then slap consumers with high prices.

XM and Sirius have recently offered up some sweeteners aimed at easing some of the monopoly concerns shared by most anyone with even the most rudimentary understanding of basic economics – which unfortunately does not include the so-called “antitrust watchdogs” at the Justice Department, who approved the deal without any sort of conditions.

For example, Sirius CEO Mel Karmazin – without offering too many details – has said the merged company would not raise subscription prices and will allow subscribers to pick and choose the channels they receive under certain circumstances.

Karmazin may be a fine and honorable fellow, but we think it is an acutely bad idea to ever let the competitors in any industry combine to become a monopoly, particularly a government-blessed one.

Washington Post business columnist Stephen Pearlstein did a very good job of presenting the rational arguments against the XM-Sirius deal when it was approved by the Justice Department a few months ago.

By the way, did we mention that it was the FCC which cleared the way for XM and Sirius to get in the satellite radio business more than a decade ago, but with one very important caveat – the two companies could not merge? We’re not making this up.

We hope the FCC will read and heed Pearlstein’s insightful words about this anti-consumer deal – and remember what the agency itself thought about such a merger when it created the satellite radio industry more than a decade ago – as they consider the XM-Sirius deal in the coming days.

We are happy to announce that the wait is over and, in even happier news, it looks like some of the cheaper DTV converter boxes now on the market work just as well – or even better – than more expensive models.

Currently, there are only about 25 models of digital converter boxes available, all of which cost more than $50. Consumers can apply for two $40 government coupons towards the purchase of these devices.

The 14 models Consumer Reports tested are available for purchase either online or at stores including Wal-Mart, Best Buy, Circuit City, and Radio Shack and have been approved for the government’s converter box coupon program.

But there is a very big problem – those coupons expire 90 days after they are issued. Since the government began issuing the coupons in March, many have already expired, despite the fact that there is still only a limited number of models and units available to consumers. Many more coupons will expire soon.

CU policy analyst Joel Kelsey sums up the situation well.

“This is a consumer Catch-22,” says Kelsey. “Those who acted early in requesting coupons face limited or expensive choices in converter boxes, but can’t wait for more options because their coupons are expiring.”

Consumers who do not have a digital TV and currently rely on over-the-air-broadcasts for news and entertainment will have to purchase a digital converter box in order to receive digital signals from U.S. television stations.

CR's recommendations, ratings and shopping tips

CR found there were differences in performance among the 14 models tested, though not dramatic, with price not necessarily an indicator of quality. In fact, some of the less expensive models offered better picture quality than higher-priced models.

For those considering a DTV converter, CR advises first choosing models with better picture quality, and then narrowing choices down to those that have desired features. The Tivax STB-T9, $50, was among those with the best picture quality. The Microgem MG200, $65, also stood out in CR tests for its picture quality.

When judging picture quality at home, however, consumers should also consider other variables that can affect picture quality – the quality of the video transmitted by stations and the quality of the television set, either of which can often be the weak link in the picture quality chain.

Another characteristic to consider is tuner sensitivity, the ability to receive channels when signal strength is weak. CR found that the tuners in all boxes performed comparably in tests of their ability to pull in digital stations.

The tests were conducted at CR’s headquarters in Yonkers, NY using a standard residential rooftop antenna. Though the results are a rough indicator, it suggests that any of these boxes should be able to detect a similar number of channels. However, reception can vary for each user, depending on location, local terrain, signal strength, and the type of antenna being used, as well as the number of stations broadcast in the area and their signal strength.

CR recommends choosing a digital converter box that allows for individual channels to be easily added. This feature eliminates the need for consumers to perform the more time consuming “scan-for-all-channels.”

Additionally, if no signal is found on a particular channel, some boxes have on-screen signal meters that allow viewers to monitor signal strength while optimizing the antenna position. Signal strength meters are available on all boxes but are typically active only on channels that have already been found.

Also consider the electronic programming guide. These guides range from very basic to more comprehensive.

Analog-pass-through will allow the TV to continue receiving available analog, as well as digital, signals, including those from lower-power TV stations, which may continue to broadcast in analog after the February 2009 deadline.

One final note: Unlike the boxes themselves, CR’s ratings and recommendations on the DTV converters are available free-of-charge online.

Click here for more information on the digital television conversion and CR’s ratings and shopping tips on digital converter boxes.

We will be closely studying the proposed deal in the coming days to try and figure what it might mean for wireless consumers. As is so often the case in such mega-mergers, the devil will be in the details.

But at an absolute minimum, government regulators have an obligation to make completely sure the deal does not mean even fewer choices for wireless consumers. The government should require the combined company to divest itself of one of its existing operations in markets where Verizon and Alltel currently compete.

The U.S. wireless business is already highly concentrated oligarchy, with just five big companies in near complete control of the marketplace. This deal will combine the #2 and #5 wireless carriers, and it will no doubt increase pressure for #3 Sprint and #4 T-Mobile to also merge. Five big players could easily be reduced to just three even bigger players in fairly short order.

Verizon says it expects the deal to be completed by the end of the year, but government officials need to resist any attempts rush the regulatory approval process. Both the Department of Justice and the Federal Communications Commission need to comb through the details and take whatever steps necessary to make sure the deal doesn’t further reduce the already limited competition that exists in the U.S. wireless market.

We should note that Verizon and Alltel regularly pull top ratings in the annual surveys of wireless service companies by our colleagues at Consumer Reports.

But we have yet to see an industry where consolidation has improved customer service or driven down prices. That is especially true when talking you’re talking about an industry that’s already as highly concentrated as the U.S. wireless business.

Further, the track record on recent big mergers in the wireless business has been anything but encouraging. The troubled merger of Sprint and Nextel has driven millions of customers to other carriers, mostly AT&T and Verizon. The merger of AT&T and Cingular has also yielded myriad consumer problems.

The recent track record of federal regulators in protecting consumers in big communication company mergers is also nothing to write home about. For example, the antitrust watchdogs at Justice Department approved the proposed merger of the country’s only two satellite radio companies with no conditions.

We’ll be watching.

“Deputy Tom” has posted a story online about the trials and tribulations of getting his rural New Jersey home ready for the February 2009 switchover by full-power TV broadcasters from their traditional analog signals to all digital.

Allibone’s story should be required reading for the government officials at the Federal Communications Commission and the Commerce Department in charge of the switchover, which will affect millions of Americans who rely on free, over-the-air television. Ditto for electronics makers and retailers, as well as the TV broadcasting industry.

You can read the whole sordid story by clicking here.

Tom’s story begins with the arrival in the mail of his two $40 DTV converter box “coupons.” He cheerily headed off to his local Best Buy to check out his options – which turned out to be precisely one model – the Insignia NS-DXA1, which the store was selling for about $60.

The salesman knew virtually nothing about the converter box. If he had, he might have been able to tell Tom that the Insignia model he was being sold did not have a feature allowing analog signals to “pass through.” That’s important because hundreds of low-power television stations will continue to broadcast analog signals after the February 2009 switchover. Many of those stations are located in rural areas, like where Tom lives.

Without a converter box, Tom had always been able to pick up 11 channels from Philadelphia and New York. Some are little snowy, but watchable. He hooked up his new converter box and did an initial channel scan. To Tom’s surprise, the screen flashed “No Signals Found.”

We’ll let Tom take the story from here.

“Upon rechecking the connection, I found the issue and performed the auto-channel search again. This time the display found seven channels. As I moved the antenna, at one point the auto channel search found as many as 14 channels. And it was bizarre. I got a Korean channel, some local station from a small NJ town and other mixed-bag watching – all of which I didn't know existed – and would never watch.

”This is where things got very interesting. The digital converter box has a "signal strength" button that shows a color coded bar. When it is displayed on the screen, you can watch your signal bounce up and down like the wind was blowing thru your TV. It was probably one of the most useful features with the digital converter as I continued to reposition the TV and see what happened.

”Basically, my digital signal strength mostly fell into the 15% to 50% range. If I repositioned the antenna, I could receive one Philadelphia station and others would pixilate, freeze the screen, provide intermittent sound and in some cases revert to a black screen saying "no signal".

”It appeared that when a station worked well, meaning consistent picture and sound with no pixilating or sound degradation, the signal showed 75% or higher. At the 60% to 75% signal strength, the picture would experience degradation issues previously described.

”Like many rural country consumers with TV antennas in the attic, we chose to give up some of the signal power for a number of reasons. It has worked well in the analog world but the new digital signal does not appear to be as resilient. Based upon my experience, it appears that minimum signal strength of 75% is needed; otherwise, reception begins to degrade.

”At this point in the process of converting to over the air digital, it was clear that simply buying a digital converter was not the answer. I couldn't get the basic channels I watch without pixelating, etc. Using my current system configuration with the converter does not work as well as my analog system. So, where do you go from here?”

We highly recommend you read the rest of “FCC Deputy” Tom’s story for yourself, but we’re sure he won’t mind us telling you the anything-but-happy ending.

It looks like he is facing a total bill of $650 to buy a new, high-tech antenna and get it installed so he can continue to get the same channels he now watches just fine with his old analog TVs.

He concludes with these words: “The government claims that this should go smoothly… and has spent hundreds of millions of dollars for us to drink the Kool-Aid – only to find out that it's now undrinkable purple stuff for millions of customers.”

But this nightmarish scenario is all too real – and it is playing out right now. A number of small Internet service providers are already stealthily tracking their customers as they surf the web and sharing that information with online advertising firms.

Wait, it gets worse.

This last week it was disclosed that Charter Communications, one of the country’s largest cable broadband providers, is teaming up with a controversial online advertising company called NebuAd to track Charter customer’s web surfing activities in order to deliver “targeted” online advertising.

Charter plans to begin the tracking in four markets next month; Ft. Worth, Texas; San Luis Obispo, Calif.; Oxford, Mass.; and Newtown, Conn.

Charter recently sent a letter to its customers in those markets telling them they are about to receive “enhanced online experience.” Charter wrote that the NebuAd ads generated by the deal “will better reflect the interests you express through your Web-surfing activity. You will not see more ads – just ads that are more relevant to you.”

Charter says customers will be able to opt-out of the tracking, by providing their name and address and installing an “opt-out cookie” on their computer. PC World has done an excellent job explaining the technical details in an article you can read by clicking here.

Two powerful members of Congress reacted quickly to the news about the Charter/NubuAd deal last week, saying that the planned opt-out option is not adequate.

In a letter to Charter Communications CEO Neil Smit, House Telecommunications Subcommittee Chairman Edward Markey, D-Mass., and House Energy and Commerce Committee Ranking Minority Member Joe Barton, R-Tx., expressed deep concerns about the NebuAd deal. Click here to see the letter.

“Any service to which a subscriber does not affirmatively subscribe and that can result in the collection of information about the web-related habits and interests of a subscriber…raises substantial questions,” the two legislators wrote.

Markey was even blunter in a written statement he issued with the letter.

“Charter Communications' reported plans to sell information about their customers’ activities online raise several red flags. Simply providing a method for users to opt-out of the program is not the same has asking users to affirmatively agree to participate in the program. These privacy issues and how this venture is consistent with communications privacy laws must be addressed before the company moves forward with this plan.”

But it appears that Charter is just the latest and biggest ISP to jump into the web-surfing surveillance business with NebuAd and some online advertising firms.

Click on the links below to learn more.

“Every Click You Make” Washington Post
“Privacy Groups Ask for Online 'Do Not Track' List” Wired
Consumers Union Comments to Federal Trade Commission on Behavioral Advertising

We will be closely tracking the situation and blogging on any new developments. In the meantime, what do you think about the Charter/NebuAd plan?

Case in point: the peculiar decision by the federal bureaucrats in charge of educating the public on the looming transition to digital television to spend millions of taxpayer dollars to hire the ethically-challenged Ketchum Communications Inc. as their communications and "messaging" guru.

Ketchum, you may recall, was at the center of two of worst government public relations debacles in recent memory.

It was Ketchum that funneled $240,000 from the U.S. Department of Education to syndicated television and radio host Armstrong Williams in exchange for his touting of the Bush Administration’s “No Child Left Behind” program a few years ago. Williams did not disclose the contract to his viewers or readers.

Ketchum was also behind so-called “video news releases” about the No Child Left Behind program in which a public relations executive named Karen Ryan posed as a news reporter. Those VNRs, which were picked up and used by media outlets across the country without any editing or identification of origin, were funded by the Department of Education through a contract with Ketchum. Click here for more information on the incidents.

Ketchum was widely condemned for both episodes, even drawing fire from some of its fellow powerhouse public relations firms. The incidents also touched off a larger debate on whether the VNRs, the Williams contract and similar PR tactics were, in actuality, nothing more than taxpayer-funded government propoganda.

Given the national uproar, it’s hard to imagine the contracting officials at the two agencies in charge of the digital television transition -- the Federal Communications Commission and the Commerce Department’s National Telecommunications and Information Administration -- were unaware of Ketchum’s previous government-financed PR catastrophes.

But wait, it gets worse.

The FCC itself conducted an official investigation of the Williams episode, concluding the failure to disclose the government’s contract with the television and radio host was a violation of the law.

And it gets worse still.

During recent congressional hearings, FCC Chairman Kevin Martin highlighted the $1.7 million Ketchum contract as evidence the agency was doing a good job on getting the word out about the digital TV transition. Click here to read Martin’s full testimony.

Last month the FCC quietly posted Ketchum’s plan for the agency’s digital television transition education effort on the agency’s web site. Click here to read the plan.

Incredibly, one of Ketchum's primary recommendations was the preparation and distribution of a half dozen of what the PR calls “Drop-In Article/Matte Releases,” which are -- for all practical purposes -- merely a print press version of the widely condemned VNRs.

Ketchum describes them as “a formatted, consumer-related article provided to an approved vendor for distribution to key newspapers across the country. These media tools allow your message to be disseminated unfiltered by commentary.”

Like VNRs, the matte releases are predicated on the fact that newsrooms are understaffed and willing to publish such content -- unedited, uncredited and unchallenged.

“Newspaper editors normally use matte releases to supplement staff-written stories to fill soft news sections of the paper,” said Ketchum. ”These can be targeted to specific populations or provided in languages other than English to reach specific segments of the target audience.”

Ketchum recommended six matte releases: two targeting the general audience, two targeting the African American audience and two targeting the Hispanic audience.

To its credit, the FCC this week rejected Ketchum’s matte release recommendation, according to Communications Daily, an industry newsletter.

Still, knowing what they had to know about Ketchum’s past shenanigans on taxpayer-funded PR efforts, it's incomprehensible that the FCC awarded the company a contract for perhaps the most critical element of the digital TV transition public education program.

The National Telecommunications and Information Administration needs to be asked the same question.

Both agencies owe a speedy and lucid explanation of the Ketchum contract to the millions of consumers/taxpayers who will be dealing with the digital TV transition in the coming months.

Bi-Partisan Group of Senators Ask NTIA to Loosen DTV Converter Box Coupon Rules

In a bit of good news for consumers, a bi-partisan group of senators is asking NTIA to loosen up the rules on the agency's digital TV converter box coupon program.

Currently, the $40 government coupons, which are issued as part of $1.5 billion program run by NTIA, expire 90 days after they are issued, with no option of replacement or reissue. Coupons issued to consumers who applied when the program began earlier this year have started expiring, even though many converter box models have yet to reach store shelves.

In a letter sent yesterday to NTIA Acting Director Meredith Baker, the 11 senators said they are "concerned that situations may arise where consumers are unable to use their coupons because boxes are regionally unavailable." The senators urge NTIA to allow consumers with expired coupons to reapply so that coupons may be reissued, funds permitting.

In addition, the senators urge NTIA to "examine novel approaches to ensure consumers are able to purchase the approved converter boxes of their choice, even when there is a temporary shortage. To this end, NTIA should consider allowing consumers to apply their coupons to pre-orders of converter boxes that are out of stock or not yet available in stores."

These are all excellent suggestions, which we hope NTIA will move to adopt without delay.

Such folks do not currently qualify to receive the coupons, which are being handed out by the National Telecommunications and Information Administration, an arm of U.S. Department of Commerce.

All full-power TV stations in the U.S. are to go all digital broadcasting no later than February 17, 2009, at which time they will stop broadcasting their traditional, over-the-air analog signal. Consumers who get programming through an antenna and do not have a newer-model digital TV set will need to buy a box that converts the digital signal to analog to continue receiving free, over-the-air television after that date.

Today NTIA published a notice in the Federal Register seeking public comment on allowing both nursing home residents and consumers using post office boxes to qualify to receive the DTV converter box coupons.

In its notice, NTIA estimates as many as 420,000 nursing home residents and 340,000 post office box users will qualify for coupons. There is 45-day public comment period on the proposed rule changes. NTIA officials predict the rule changes could take effect by this fall, if not sooner.

This is clearly good news for nursing home residents, one of the most vulnerable populations when it comes to free, over-the-air television. These consumers should have qualified for the coupons from the get go, but it is heartening to see NTIA moving to fix the oversight.

Nursing home residents will be able to qualify for one $40 coupon each. That’s in contrast to the current rule for households in general, which qualify for two coupons each.

The government’s original reasoning for disqualifying post office box users was somewhat more understandable – mainly concerns about fraud. The new rules would require PO box users to supply proof of residency – a driver’s license or utility bill, for example – to qualify to receive two coupons.

NTIA Clings to 90-Day Expiration Date for Coupons

While the new rule proposal is a welcome development, there is a potentially bigger oversight NTIA is choosing not to address – a 90-day expiration date on the DTV converter box coupons.

Many consumers applied for the coupons as soon as the government began offering them back in January. The coupons issued to those conscientious consumers will begin expiring next month.

The problem is that relatively few DTV converter boxes are currently on store shelves or available through online retailers. Most of the units now available cost $60 or more.

Echostar earlier this year announced plans to produce a $39.95 DTV converter box, meaning it would effectively be free for consumers with the $40 coupons. Echostar had originally said it hoped to have ample supplies of its boxes available by late spring, but that date has gradually been slipping to later in the year.

Consumers Union, the publisher of this blog, and many members of Congress have been urging NTIA to remove the expiration date or allow consumers with expired coupons to reapply for new ones, but the agency appears to have dug in on the issue.

Instead of changing the expiration date rules or seeking congressional approval to make such changes, the Commerce Department instead issued a remarkably unhelpful press release reminding consumers the nationwide switch to DTV is less than 300 days away.

“The first coupons mailed are set to expire at the end of May and I encourage all Americans who have ordered a coupon to purchase your eligible converter box within the 90-day required timeframe,” said U.S. Commerce Secretary Carlos M. Gutierrez in a prepared statement issued yesterday.

That’s not exactly helpful, Mr. Secretary. It’s past time for you and your department to alter or eliminate the ridiculous 90-day expiration date on the DTV coupons. If not, Congress should move expeditiously to remove the expiration dates on the coupons.

Federal Communications Commission Chairman Kevin Martin and National Telecommunications and Information Administration Acting Director Meredith A. Baker demurred when requested to give a letter grade to their agencies efforts so far. Both artfully answered “incomplete.”

Led by Senate Commerce Committee Chairman Daniel Inouye (D-Hawaii), who called the hearing, several lawmakers told Martin and Baker they are extremely worried millions of consumers who depend on free, over-the-air television will be left in the dark when full power broadcasters are required to switch to all digital signals in February 2009.

“I've just got my fingers crossed,” Inouye said. “I hope everything turns out well.”

We have our fingers crossed too, but we would feel a lot better if the lawmakers and government bureaucrats in charge of this landmark transition – arguably the biggest change in broadcasting since the advent of color television – were doing a whole lot more than they have so far to make sure this massive conversion comes off as problem free as possible.

At the top of our list would be immediate action by NTIA and/or Congress to address the problem of a 90-day expiration date on government-issued coupons intended to help consumers purchase digital converter boxes so their old-style, analog televisions will continue to work after the digital transition.

Currently, the $40 government coupons, which are issued as part of $1.5 billion program run by NTIA, expire 90 days after they are issued, with no option of replacement or reissue.

NTIA has the authority to allow consumers to reapply if their coupons have expired but not been used, or Congress could extend the 90-day deadline. Both options would allow consumers to have greater access to a wider variety of converter boxes, which have been slow to come on the market.

While the conversion is less is than a year away, many retailers have only one or two models of the converter boxes in stock, forcing consumers to choose from pricier converter options to prevent the coupons from expiring.

A brief sample of online retailers Best Buy, Circuit City, Radio Shack, and Wal-mart by our sister organization, Consumer Reports Online, found that each had just one or two boxes. Of the boxes listed, all but two cost $60; only Wal-mart had lower-priced models, for $50 and $53. With these four retailers, the coupons cannot be used if making the purchase online, the government coupons must be redeemed in person at the retail store, or by phone from Radio Shack and Best Buy.

Echostar has said it will be releasing a converter this summer that will cost about $40, which would mean no out-of-pocket expense for consumers with a coupon, but the introduction of that model has already been delayed once due to manufacturing problems and it remains unclear when it will actually be available.

“There are a limited number of coupons and they expire,” said Joel Kelsey, a policy analyst for Consumers Union, the publisher of this blog. “Consumers that were proactive and requested coupons early will have fewer choices when they go to buy the boxes,” added Kelsey. “We are expecting more converter boxes on the market in a few months, which might be too late for consumers who requested their coupons early.”

Several senators also voiced concerns that not enough was being done to reach out to consumers, especially seniors and low income consumers, who are generally much more dependent on over-the-air broadcasting.

We share those worries, in no small part because of a Consumers Union survey put out a few weeks ago.

Among the more troubling findings was that 74 percent of the respondents who said they were aware of the upcoming transition to all digital broadcasting have serious misconceptions about its actual impact on them and what steps they need to take to keep their TVs working after the switchover.

Both Martin and Baker told the Senate panel their agencies were working hard to educate consumers. They said broadcasters, electronics manufacturers and other industry players are also working hard on getting the word out.

If you are a consumer who wants to know more about the digital transition and what to do – besides crossing your fingers – you can go to Consumer Reports Online’s DTV transition web page.

And it might not be a bad idea to rub your rabbit ear antenna for luck, just to be on the safe side.

Quick: Name a monopoly business that gives consumers great service, low prices, cutting edge technology, plenty of choices. Anyone? Anyone at all?

Okay, forget the “quick” part. Take all the time you need. We’ll go make ourselves a sandwich.

Okay, we’re back. Anyone?

The simple fact is that monopoly businesses – particularly unregulated monopolies – are by their very nature anti-consumer, no matter what the current Justice Department might think. The whole idea of a monopoly is to destroy all competition in the marketplace, cut services and choices, and then slap consumers with high prices. Everyone knows that’s how it works – with the apparent exception of the Justice Department’s antitrust division.

The antitrust division’s official announcement okaying the deal – while fairly brief – still manages to present a mind-boggling mound of twisted logic, along with a heaping helping of hard-to-believe claims. You can read the whole thing by clicking here.

For a marvelous, point-by-point deconstruction of the dubious arguments presented by DOJ, you should take a look at this article by Washington Post business columnist Steven Pearlstein.

Along with a first-rate dissection of DOJ’s nonsensical case for approving the deal, Pearlstein also raises some of the bigger implications for consumers beyond satellite radio.

“It took some doing -- and more than a year of “investigation” – for the Justice Department to come up with its undisclosed evidence and tortured logic to justify this strikingly anti-consumer decision,” says Pearlstein. “As precedent, it could be used to justify the merger of ABC with both CBS and NBC, Clear Channel with the Bonneville radio network or even Coke with Pepsi. The message it sends to business executives is clear: If you find yourself in a tough competitive environment, the best strategy is not to find a way to offer better products and services at a better price, but rather to call your investment banker and negotiate a truce with your biggest rival.”

We couldn’t have said it better ourselves.

We were also particularly struck by just one sentence in the DOJ announcement which, by itself, speaks volumes about DOJ’s “process” in scrutinizing the merger.

“During the course of its investigation, the Division reviewed millions of pages of documents, analyzed large amounts of data related to sales of satellite radios and subscriptions for satellite radio service, and interviewed scores of industry participants.”

So let’s get this straight: The chronically overwhelmed and overworked civil servants at DOJ’s antitrust division “reviewed millions of pages of documents” on this one deal over the past year? We aren’t sure exactly how the Justice Department pulled that off, but we did a few calculations on what it might take.

Say the total number of pages “reviewed” added up to just the absolute minimum allowed for “millions” – just two million. A “review” of two million pages would require at least 10 employees working on nothing else for a year, slogging through at least 800 pages a day each.

Put another way, the minimal number of those “reviewed” pages laid end-to-end would stretch more than 347 miles, roughly the distance between Baltimore and Boston.

At the same time, the antitrust division “analyzed large amounts of data related to sales of satellite radios and subscriptions for satellite radio services, and interviewed scores of industry participants.”

If this really is an accurate reflection of what the antitrust division did in scrutinizing the merger, it is truly one of the bureaucratic miracles of our time. If they pulled off this Herculean task as described, each and every person involved is to be praised and held in awe.

The paperwork aside, we also couldn't help but notice that while DOJ bragged that it “interviewed scores of industry participants," we couldn't find any mention of it interviewing actual satellite radio consumers.

That's more than little odd, don't you think? Wouldn’t you think you might want to interview some actual satellite radio consumers before concluding none of them will be harmed by this highly controversial deal that will turn the country’s satellite radio industry into a monopoly enterprise?

But we digress.

With the blessing of the DOJ in hand, the only major stumbling block remaining for the XM/Sirius merger is approval from the Federal Communications Commission.

It should be noted that it was the FCC which cleared the way for XM and Sirius to get in the satellite radio business more than a decade ago, but with one very important caveat – the two companies could not merge.

FCC Chairman Kevin Martin has said the two companies face a “high hurdle” in gaining his agency’s approval of their merger. We hope he is being sincere.

The FCC is clearly charged with protecting the public interest in its consideration of the proposed merger, but then so was the Justice Department. We hope the FCC takes that charge more seriously than the Justice Department did and rejects this merger as the anti-consumer travesty it is.

That question has been one of the most hotly debated topics in Washington over the past few weeks as the White House has pushed relentlessly for such telecom immunity to be included in any reauthorization of the controversial Protect American Act, which expired last month.

The Bush Administration and supporters in Congress say such immunity is vital to protect national security, arguing big telecom companies who cooperated with the government on warrantless wiretapping activities are now facing crippling lawsuits. The White House says the phone companies were acting patriotically in granting the warrantless wiretaps, helping the government more easily fight terrorists in the aftermath of the 9-11 attacks. The White House also contends the warrantless wiretaps were legal.

Opponents say such immunity for the telecom companies is unnecessary and unwarranted if, as the White House contends, the warrantless wiretaps were indeed legal. If they were not, critics argue, the telecom companies should face lawsuits for participating in illegal wiretaps on their customers.

The House earlier this year passed legislation reauthorizing the Protect America Act that did not contain the retroactive immunity for telecom companies sought by the White House. A couple of weeks ago the Senate passed it own version of the reauthorization, which included the retroactive immunity for the telecoms. The White House has vowed to veto any legislation that does not include the immunity for telecom companies.

The White House has stepped up its attacks substantially on congressional opponents of telecom immunity in recent days, accusing them of hurting the administration’s national security and anti-terrorism efforts.

Proponents of telecom immunity, led by the White House, say getting a warrant might allow would-be terrorists to slip away from investigators, but such arguments are dubious at best. Current law allows investigators to put wiretaps in place and then go get the proper warrants within the next 72 hours in the very limited number of such “hot-on-the-trail” cases.

This week House leaders floated a new plan aimed at breaking the deadlock, but it stops well short of granting the blanket, retroactive immunity sought by the White House. Instead, according to a report in the New York Times, the tentative proposal would give the federal courts special authorization to hear classified evidence and decide whether the phone companies should be held liable.

The proposal could come before the House for a vote as soon as today.

There is no way we can do full justice to this complicated and vitally important debate in the limited space we have here.

That said, Americans have every right to expect their telecom companies to jealously guard their privacy of their personal information – whether it’s who they are calling or texting, what web sites they are visiting, or what they are buying on Amazon.com.

Telecom companies have absolutely no business simply surrendering such private information to the government or anyone else without an appropriate warrant. Legal liability helps assure these companies will think long and hard before taking such potentially reckless actions in the future, no matter who is making the request.

The latest proposal from the House to give federal courts special authorization to hear classified information and decide whether the phone companies should be held liable seems more than reasonable. A simple rejection of any sort of immunity for telecom companies would be even better.
_________________________________________________________________________________________

NEW ON www.hearusnow.org

Click on the links below to view these items recently posted on www.hearusnow.org