Consumers don’t benefit from these arranged marriages between cell phone makers and wireless service providers. The deals thwart competition, discourage competition and invariably lead to higher overall prices. When teamed up with the ridiculous early termination penalties that are standard operating procedure in the U.S. wireless market, the exclusive deals make it next to impossible for consumers to switch between different phones and service providers without paying hundreds or thousands of dollars.
Want an iPhone? You have to sign a two-year service contract with telecom giant AT&T in order to get one. That’s because Apple, the maker of the ultra-popular iPhone, has a multi-year, exclusive deal with AT&T in the U.S. market. Want one of those nifty new Palm Pre smartphones everyone seems to be talking about these days? Sprint will have to be your wireless carrier.
In fact, eight of the ten most popular handsets in the U.S. market in 2008 were shackled to a single wireless service provider such as AT&T or Verizon through exclusive deals. Think about that. Consumers who want to get virtually any of the most popular cell phones must first agree to use a certain wireless service provider.
And there’s more. The companies literally “lock” the handsets so they will only operate on the designated carrier’s network.
Again, think about that. What if Safeway had such a deal with Pepsi. You could only buy Pepsi at Safeway and you would have to sign a long-term deal with Safeway agreeing to only shop for Pepsi there. You would have to pay a steep penalty to Safeway should you decide you want to buy your Pepsi somewhere else. But then again you wouldn’t be able to buy Pepsi anywhere else because of its exclusive deal with Safeway.
Unfortunately for American cell phone users, this unfair and anti-consumer system of exclusive deals completely dominates the U.S. wireless market. Only about five percent of the cell phones sold in the U.S. each year are unlocked and available from multiple carriers. In contrast, about 80 percent of the cell phones sold in Asia are unlocked and available independent of a wireless carrier. The number is 70 percent in Europe and more 50 percent worldwide.
Acting FCC Chairman announced last month instructed agency staff to determine whether handset exclusivity arrangements adversely restrict consumer choice or harm the development of innovative devices. New FCC Chairman Julius Genachowski, who was sworn in last week, has already said he wants to continue that effort.
Consumers Union, the publisher of this blog, believes it is long past time for these exclusivity deals to be outlawed. The only clear beneficiary are the big four U.S. wireless carriers – AT&T, Verizon, Sprint and T-Mobile – which already control more than 90 percent of the market.
There will undoubtedly be huge pressure exerted on the FCC by the powerful wireless industry and the army of lobbyists it employs. We hope basic fairness and the FCC’s obligation to protect consumers will convince the agency to do everything it can to eliminate these unfair and anti-competitive deals.
By most accounts the transition took place with the vast majority of consumers experiencing no problems. Still, an FCC help line got nearly a million calls in the days following the switch, although most of the problems were relatively minor and easily resolved.
There’s little doubt that decisions by the Obama Administration and Congress to delay the cutover date from last February to last week helped consumers better prepare for the transition. Stepped up education and assistance efforts by the Federal Communications Commission and additional funding for government coupons to help consumers purchase digital-to-analog converter boxes certainly helped smooth the transition as well. Consumers Union, the publisher of this blog, was a leading proponent in all those efforts.
Some consumers reported they could no longer receive local, over-the-air channels they had picked up for years without any problems. A number reported losing digital channels they had been receiving fine up until last Friday.
Here’s a note we received from reader Mark this week:
“Well the changeover has happened. I live on Long Island NY. I got the converter box early, and I have a rooftop antenna. I now get ONE CHANNEL. They tell us we are too far from the broadcast tower...they tell us we are on the fringe of coverage. But all I know is that I have no TV anymore, and no ability to pay for cable.”
The problems have not been isolated to people that live a distance from broadcast towers. Consumers in cities including Chicago, New York and Washington, DC – virtually in the shadow of their local broadcast towers – have reported losing many of the stations they received just fine before last Friday.
The Federal Communications Commission is recommending a two-pronged approach for consumers who lost some or all of their local stations following the switchover last Friday.
The first is called “double rescanning.” Scanning searches for and “remembers” the available digital broadcast channels, but in some cases where stations moved their digital frequencies on June 12 simple scanning may not be enough. Earlier scans may have saved channel information that is now incorrect “Double rescanning” can clear your digital-to-analog converter box’s memory of saved channels from earlier scans and replace them with the current, correct ones.
Here’s what to do, according to the FCC:
1. Disconnect the antenna from the converter box or digital TV
2. Re-scan the box or digital TV without the antenna connected. As with any scan,
follow the on-screen instructions or owner’s manual for your device
3. Unplug the box or digital TV from the electrical outlet for at least one minute
4. Reconnect the antenna to the box or digital TV and plug the unit into the electrical
outlet.
5. Rescan the box or digital TV one more time.
The FCC also says some antenna adjustments might help bring in stations lost after the transition last Friday.
First, you must have a “VHF/UHF” antenna. Traditional “rabbit ears,” rods, or other elements are needed to pick up channels 2-13 (VHF), and a circle, bow-tie, or other element is needed to pick up channels 14-51 (UHF).
Some antennas marketed as HDTV antennas don’t perform well on VHF channels; some antennas are VHF or UHF-only. For the best reception of channels 2-6, extend the rods all the way out. For the best reception of channels 7-13, reduce the length of the rods to12-18 inches.
The location of the antenna is also key. One of the most popular spots for indoor
antennas – on top of the TV – may not be the best. Consumers having trouble with digital TV reception should try moving their antennas to one of these locations:
* Near a window
* As high as possible
* Away from other electronic equipment, including computers, VCRs, DVD
players, converter boxes, and the television itself
* Change the direction the antenna is facing
* Rooftop antennas may be needed in some instances
Consumers may need to run the “scan” function again on their converter boxes after
moving the antenna.
For additional information on troubleshooting digital TV reception problems see Consumer Report’s DTV transition information page at www.consumerreports.org/dtv/.
We expect their will be plenty of problems once the broadcasters flip the switch. Calls to the Federal Communications Commission assistance line tripled the day after broadcasters conducted a dry run last month, turning off their analog signals for a few minutes.
There will undoubtedly be hundreds of thousands of calls to the FCC when the real switchover kicks in next Friday, June 12.
That said, the FCC and the Obama Administration deserve a lot of credit for the efforts they have put in over the last few months to make sure the transition goes as smoothly as possible. Perhaps most important, one of the first things the Obama Administration did upon taking office was to extend the transition date from February 28th until June 12th. Although there was some substantial grousing about the date change among broadcasters and consumer electronics manufacturers and retailers, pushing the transition date back helped avoid a near certain disaster.
The Obama Administration and Congress also moved quickly to fix the troubled government coupon program to help consumers buy analog-to-digital converter boxes. This was vital. The program was out of money and hopelessly behind in filling coupon requests when the new administration took over. A couple of months later that backlog was gone and it appears that anyone who needs a converter box will be able to get a government coupon to help pay for it.
The FCC has gone to great lengths to make sure technical support is available to people who might have trouble installing their converter boxes, awarding contracts to provide more than 200,000 free, in-home installations. Among the groups doing that work will be Americorps and several other non-profits, as well as some more traditional techies including Best Buy’s Geek Squad. At the same time the FCC has made arrangements for more than 500 walk-in help centers nationwide.
On the other hand, there have been some who have sought to take advantage of the situation. There have been numerous reports of cable companies trying to convince consumers they need to subscribe to pay TV services in order keep getting the over-the-air channels they now get free. Such behavior is unscrupulous and needs to be investigated and punished.
Again, there will undoubtedly be some major problems on June 12th and the following days as millions of consumers make the transition. We fully expect new, unanticipated problems to surface once the final transition takes place.
But, again, government officials deserve a good deal of credit for moving quickly to avert the almost certain train wreck that loomed back in February.
For comprehensive information from Consumers Union/Consumer Reports on navigating the DTV transition, including ratings on analog-to-digital converter boxes, go to www.consumerreports.org/dtv.
Like many others, we were skeptical – eye-rolling skeptical – of TWC’s argument it had to change from a traditional, all-you-can-upload-and-download broadband pricing structure to a metered one in order to survive and prosper.
“We need a viable model to be able to support the infrastructure of the broadband business,” Time Warner Cable CEO Glenn Britt told Business Week in an interview. “We made a mistake early on by not defining our business based on the consumption dimension.”
There’s just one problem, however. When TWC released its first quarter financial results (PDF) this week the hard numbers completely contradicted the company’s argument that it was being forced to go to a metered broadband model. In fact, the numbers showed that TWC was doing very, very well by every measure under its current, all-you-can-eat pricing structure.
Among the highlights:
• TWC’s revenues from broadband during the first three months of this year rose 11% percent over the first quarter of 2008, climbing from $994 million to $1.1 billion.
• At the same time, TWC’s costs to provide broadband service to its customers dropped 18%, from $40 million to $33 million. That dramatic drop in costs came even though its number of subscribers grew from 7.9 million to 8.6 million.
• Overall, TWC’s profits were down for the quarter, falling from $242 million to $164 million. But the company says the drop in profits was due mostly to restructuring costs rung up when it was spun off in March from its parent company, Time Warner.
Before shelving its plan a couple of weeks ago in the face of consumer outrage and the threat of possible congressional action, TWC argued that a flat rate broadband billing structure—say, $50 per month—is unfair to the low-volume users who make up 30 percent of its customer base.
The company said tiered pricing would be a more equitable approach. “When you go to lunch with a friend, do you split the bill in half if he gets the steak and you have a salad?” asked TWC Chief Operating Officer Lanel Hobbs at the time. He said under the proposed rate plan, high-volume users would pay $150 for “virtually unlimited usage.”
TWC has left the possibility of metered broadband on the table, even though the company has shelved its plans for additional trials for the time being.
It should be noted that TWC is the only major U.S. broadband provider to go this far toward a metered pricing structure. Hopefully the sharp and swift consumer fury that hit TWC will give the others pause before heading down a similar road.
But it should also be noted that in shelving its plans, TWC said the main problem was inadequate consumer education efforts and pledged to do better – on consumer education efforts.
If we may, we would like to offer TWC a little bit of advice: Stop trying to put one over on your broadband customers. There’s no amount of “consumer education” that can change the fact that TWC is making a whole lot of money selling broadband service -- without metered pricing.
From a purely consumer standpoint, we hope Apple dumps its pact with AT&T and unlocks the uber popular iPhone so it can work on any wireless carrier network.
The iPhone has been wedded to AT&T for service since the got-to-have gadget was introduced in the U.S. a couple of years ago. The one theme from consumers that has been a constant since then has been iPhone owners love the device, but many aren’t that crazy about AT&T’s service. That really didn’t matter, however. If you wanted an iPhone you were forced to sign up for AT&T service.
Ironically, unlocked iPhones that work on multiple carrier networks are already sold in other counties, including both France and Germany.
As consumer advocates, we have never liked the exclusive arrangement between Apple and AT&T. And the reasons go far deeper than the fact that AT&T has lousy service in many parts of country.
For one thing, people who live and/or work outside the range of AT&T’s network aren’t able to use an iPhone. A term has even been developed for iPhones that can’t access AT&T’s network – the IBrick.
Also, the exclusive deal gives AT&T monopoly powers over anyone who wants to buy and use an iPhone. This is the same AT&T that was such an aggressive monopoly that the government broke it up in 1987. Since then it has reassembled itself to a large degree and it appears to have retained a good bit of the monopolist DNA.
That’s part of what made Apple’s decision to go into an exclusive deal with AT&T so troubling in the first place. Apple has long been at the forefront of innovation – first with computers, then with portable music players and most recently with the iPhone. AT&T has been much less innovative, retaining much of the monopolistic, “we’re the only game in town” mindset.
Think about it for a minute. AT&T was still forcing customers to rent big, clunky, hard-to-use phones from it right up until the company was broken up by the government in 1987. Look at what happened after anyone was allowed to attach devices to AT&T’s lines. Along came FAX machines, answering machines, computer modems. And phones became so inexpensive they were given away with magazine subscriptions.
The current speculation is that AT&T is willing to do almost anything to keep its exclusive deal on the iPhone going for another couple of years, including huge payments and a substantial cut of its monthly service revenues.
But Apple clearly doesn’t need AT&T to be successful. An unlocked iPhone would almost certainly boost sales of the devices from millions of customers who prefer getting their wireless service from someone other than AT&T.
This would lead to another benefit to consumers as well. AT&T and all the other wireless carriers would have to compete aggressively with each other to attract and retain IPhone owners. Wireless prices would drop and service would improve.
If you’re a consumer, what’s not to like about that?
The plaintiff, Billie Parks, charges AT&T and Radio Shack “conspired to promote, market and sell netbook computers and the required AT&T 24-month DataConnect plan by utilizing false, misleading and inaccurate advertising.”
Specifically, the lawsuit says the companies utilized a customer service summary and wireless service agreement which were “deceptive, misleading and utterly incomprehensible to the average customer with regard to ‘additional charges’ and how those charges would be priced.”
Further, the lawsuit says the companies deliberately misled consumers as to the actual cost of the DataConnect plan with respect to usage of more than 5 gigabytes per month. Five gigabytes is roughly the equivalent of eight compact disks of music.
“Consumers were not told by the Defendents, nor could consumers have reasonably discenrned from the paperwork that usage of double or triple the 5GB covered by the $60 ‘rate plan charge’ would result in charges running into the thousands of dollars.”
The lawsuit seeks class action status for all consumers who bought the $99 netbooks from Radio Shack with the two-year, $60 per month service agreements from AT&T.
We’ve been hearing more and more stories like this where consumers are hit with whopping bills when they exceed certain caps on wireless data service.
A consumer who asked that we not identify him told us he recently got a $3530 bill on an AT&T $60-a-month wireless data plan for his computer. He says his family accidentally exceeded to 5GB monthly limit, using roughly double that amount. He says he received no notice he had exceeded the limit, although AT&T contends it sent him an email.
He protested the size of the bill to AT&T, noting it was a roughly 5,000% increase over the initial $60 per month charge. He says AT&T has recently agreed to revisit the matter, but it has not yet been resolved.
“I am willing to pay a slight surcharge for our oversight, but do not believe it is reasonable to be billed thousands of dollars for Internet usage,” he says.
We are hopeful more consumers will come forward with these kind of stories and the “you should have read the small print” arguments they get from the companies all too often. It shouldn’t take a magnifying glass and an advanced technical degree to figure out when and how a $60 a month service plan will suddenly morph into $5,000 bill.
Big, sophisticated communications companies such as AT&T should clearly inform consumers about the draconian charges they will impose when a limit is exceeded. And it shouldn’t be buried in the fine print of a 20-page service agreement in language most of us mortals have no chance of understanding.
DTV Coupon Backlog Finally Cleared
The federal agency in charge of the digital to analog converter box coupon program says it has cleared out a backlog of four million applications that had piled up after it ran out of money in January.
The National Telecommunications Information Administration says it is accepting new applications as well as requests for new coupons from households with expired ones.
The problems with the coupon program were one of the main reasons the final deadline for full-power broadcasters to switch off their traditional analog signals was moved from February 17th to June 12th.
To apply for coupons or reapply to replace expired ones go to www.dtv2009.gov.
First, the agency in charge of issuing $40 coupons to help consumers buy digital-to-analog converter boxes has begun clearing a backlog of more than four million applications that piled up after the program ran out of money in January.
The National Telecommunications and Information Administration, an arm of the Commerce Department, says it hopes to have the backlog cleared within two or three weeks. NTIA got an additional $650 million for the coupon program as part of the recently-approved economic stimulus package.
As part of the deal, NTIA plans to allow millions of people whose coupons have expired to reapply for new ones, although the details of the reapplication process are still being hashed out.
We have blogged at length about the ongoing travails of the coupon program over the past year. We are hopeful it is now fixed enough to allow consumers to get coupons and purchase their DTV converter boxes before the new DTV deadline on June 12th. One thing we are sure about is that millions of consumers who depend on free, over-the-air television would have been left in the lurch if the government had moved ahead with the original cutover date on February 17th.
On a related front, the Federal Communications Commission appears to be working much harder than in the past in its education and assistance efforts ahead of the June 12th cutover.
Published reports say the agency is also in the process of letting contracts to beef up its telephone help line and create additional walk-in help centers. In addition, the agency is reported to be negotiating with grassroots and community organizations to actually install converter boxes for the elderly and other at risk populations.
We hope the agency will move quickly to get these operations up and running, especially the “boots on the ground” approach of helping out those who need the help the most in navigating the digital transition.
Required Reading
The New York Times put out a terrific, three-part blog this week looking at the gap in the price and availability of broadband in the U.S. and the rest of the world.
You can read the blogs here, here and here.
In clear and understandable language, the series goes through the various reasons many other developed countries have faster and cheaper broadband service than we do.
Here’s a taste.
“In the paradises of broadband — Japan, South Korea and Sweden — nearly everyone can surf far faster and far cheaper than anyone in the United States. What is their secret sauce and how can we get some?
The short answer is that broadband deployment in those countries was spurred by a combination of heavy government involvement, subsidies and lower corporate profits that may be tough for the economic and political system in the United States to accept. Those countries have also tried to encourage demand for broadband by paying schools, hospitals and other institutions to use high-speed Internet services.”
We highly recommend the series to anyone who wants to understand not only the problems, but also some possible solutions.
First up is the tale of Wayne Burdick, an Illinois man who last November found himself on a cruise ship docked in Miami with no way to watch his hometown Chicago Bears play the lowly Detroit Lions.
But Burdick is a pretty savvy guy when it comes to technology. He’s got a Slingbox unit attached to his cable box at his home outside Chicago, which is in turn linked to the wireless modem in his laptop. Basically, his system lets him watch the same television he gets on cable at home on his laptop using an AT&T wireless modem.
It’s a pretty slick setup, but there was one problem Burdick didn’t know about. Instead of connecting to the local wireless network in Miami, the modem linked up with the wireless system on the cruise ship.
Suffice it to say that he surprised when he got his next wireless bill. Instead of the usual monthly charges of about $220 it was nearly $28,000. It seems that the two-and-a-half hours Burdick watched of the Bears game was billed at an ultra expensive international rate for data of two cents per kilobit. That might not sound like a lot, but it really adds up quickly when you are doing something like watching television on your computer. In Burdick’s case, it added up to a whopping $27,788.93.
Burdick appealed to AT&T, telling various representatives the ship was sitting at the dock the whole time he was watching the game, not out on the high seas. They gave a little, telling him they could knock the bill down to about $6,000.
Frustrated, Burdick got in touch with Stephanie Zimmerman, who writes a consumer column call “The Fixer.” The company told her the problem was that his wireless modem – his AT&T wireless modem – made a mistake by not connecting him up to the company’s wireless network in Miami.
If it had, Burdick would have been able to watch the game for free. Because of the mistake AT&T agreed to credit his account $27,776. In the end he owed AT&T about $290.
The lesson here is that you run a risk of big roaming charges anytime you are outside your home wireless market, particularly if you are traveling internationally. It’s always prudent to check with your wireless provider before you travel and make sure you don’t end up charged $28,000 to watch a lousy football game.
For the record, the Bears won the game 27-23. The Lions went on to become the only team to go 0-16 in modern NFL history. We suspect that the only people with worst memories of the forgettable Bears-Lions clash last November were Lions fans – and they aren’t going to get any sort of refund.
FCC tees up fines on phone firms for consumer privacy violations
This week the Federal Communications Commission proposed fines ranging up to $20,000 on hundreds of telecommunications companies for not complying with agency rules aimed at protecting consumer privacy.
The agency says more than 600 telecom companies failed to file an annual compliance certificate on the rules, which were adopted in 2007. In addition, a number of other telecom firms submitted of non-compliant certifications and also face fines, according to the FCC.
The rules cover what the agency calls Customer Privacy Network Information, or CPNI. They were adopted by the agency in April 2007 in response to increasing consumer complaints about data brokers selling private customer data obtained through a practice called “pretexting.” It typically involves a data broker or some other entity obtaining a customer’s personal information from a telecom company by pretending to be that person.
“I have long stressed the importance of protecting the sensitive information that telecommunications carriers collect about their customers,” said FCC Acting Chairman Michael Copps in announcing the proposed fines. “The broad nature of this enforcement action hopefully will ensure substantial compliance with our CPNI rules going forward as the Commission continues to make consumer privacy protection a top priority.”
The FCC says the companies will have an opportunity to demonstrate to the commission that the proposed fines are inapplicable or that there are reasons to reduce the penalty due to an inability to pay.
We hope the FCC will take a firm line on enforcing the fines and not let the companies off the hook, so to speak.
Consumers rightly expect their personal information will not be handed out by telecom companies to anyone who calls up claiming to be them.
The Federal Communications Commission says it has recently received notice from 491 full-power broadcasters that want to terminate their traditional, over-the-air signals on February 17th. The FCC says another 190 stations had already made the switch or had previously told the agency they planned to make the switch on February 17th.
The DTV delay legislation passed by Congress last week does allow stations to go ahead and switch to all digital on the original February 17th date as long as they can show convince the FCC that will be in the public interest.
It’s unclear how many of the 491 stations that have only recently notified the FCC they want to make the switch on February 17th will be allowed to do so.
This week the FCC said it will consider a number of factors in evaluating whether to allow the 491 stations to make the switch on February 17th. Among those factors:
• Whether all or most of the stations in a market has already switched to all digital or is planning to make the switch on February 17th.
• How many of the viewers in a market are unprepared for the transition.
The FCC says it may require some stations wanting to make the switch next week to submit additional information to explain and justify how their early termination of their analog signals advances the public interest. The agency says such additional information can include significant economic, technical, contractual and other business reasons that support termination of analog on February 17th, as well as efforts being made to protect consumers from service disruptions.
“The Commission will scrutinize such information closely in light of the important interests at stake to determine whether a compelling case can be made,” according to an FCC statement.
A complete list of stations that have notified the FCC they intend to make the switch on February 17th has been posted on the agency’s web site as both a PDF document and an Excel spreadsheet.
Any decisions by the FCC to block any of the 491 stations from making the switch on February 17th will have to be made extremely fast, with that date now just four days away.
There certainly appear to be a number of markets that appear to meet the FCC criteria for blocking stations from making the switch next week.
For example, analog viewers in the Augusta, GA, market would lose two PBS stations, NBC, ABC and CBS if none of those stations are blocked from switching on February 17th by the FCC. The only over-the-air analog station remaining in Augusta would be Fox.
Other markets where analog viewers would face significant programming losses on February 17th should the FCC not intervene include:
• Bakersfield, CA, would lose all four of its over-the-air analog stations.
• Columbus-Tupelo, MS, would lose all five of its OTA analog stations.
• Dayton, OH would lose all of six of its OTA analog stations.
• Madison, WI, would lose all of its OTA analog network-affiliated stations.
• Mobile, AL-Pensacola, FL would lose all of its OTA analog network-affiliated stations.
• Sioux City, IO, would lose all of its OTA analog network-affiliated stations.
• South Bend-Elkhart, IN, would lost all of its OTA analog network-affiliated stations.
• Fort Meyers-Naples, FL, would lose all of its OTA analog stations except for Fox and PBS.
The situation with the government coupon program to help consumers purchase digital-to-analog converter boxes remains unclear. The coupon program ran out of money a few weeks ago and has been putting consumers on a waiting list. About $650 million to help replenish the coupon program is in the stimulus package moving through Congress.
Last week the Senate passed a bill to delay the transition and that same legislation was on the House floor this past Tuesday evening where it was considered under a suspension of rules, which requires approval by a two thirds majority. Although a strong majority of the House voted in favor of the bill, it fell short of the two thirds total that was needed.
The legislation could be brought back again for consideration under regular House rules, which would only require approval by a simple majority. But with the transition date just 19 days away the clock is ticking louder and louder.
Consumers Union, the sponsor of this blog, strongly supports a delay in the DTV transition.
Without a delay millions of people who watch free, over-the-air broadcasting will see their screens go blank on February 17th. The biggest impact will be on some of the country’s most vulnerable people, including the elderly and low income populations.
A government-run coupon program meant to help people buy digital to analog converter boxes is a mess and it is getting worse by the day. The program ran out of money a couple of weeks ago and has since been putting people on a waiting list, which is growing longer with each passing hour. That waiting list is now at 3.2 million requests and is growing by approximately 150,000 a day.
Another big problem is that the coupons have a 90-day expiration date – something that many consumers only discover when they have taken their coupons to a retailer or go online to buy their converter boxes.
Many people who have purchased and installed their converter boxes are also having problems. Many aren’t able to pick up the stations they have received with no problem in the past. Many are finding they need to buy and install an expensive new antenna to pick up the same channels – and even that doesn’t solve the problem for some.
On January 22, 2009, A.C. Nielsen reported that 6.5 million households remain completely unready for the transition and 10.5 million households are only partially ready. At the two-coupon-per-household limit, these 17 million households represent a potential of more than 34 million coupon requests. The Nielsen study also reports that the “not ready” rate among African American and Hispanic households is 70 percent higher than among the general population.
Millions of consumers who acted early and responsibly continue to find themselves stranded on a waiting list for assistance to purchase the equipment they need in order to maintain access to critical news and information.
It is not fair to force millions of rural, elderly, low-income households to bear the financial burden of this federally mandated transition. Many have already profited of stand to profit handsomely from the transition – broadcasters, cable and satellite companies, wireless companies, even the federal government – virtually everyone except the millions of people throughout the nation who are being asked to literally pay for it.
With modest adjustments to the coupon program, more on-the-ground resources for consumers in need of assistance and more clarity for families wondering if they need to climb on their roof in the middle of February to install an antenna, the nation will be able to responsibly move forward. But the only way to achieve this is to extend the date until June 12th and get to work.
Consumers Union, the sponsor of this blog, wrote to key members of Congress and the outgoing and incoming presidents seeking such a delay last week.
The Obama transition team followed the next day with a letter of its own to members of Congress supporting a delay, touching off an outpouring of support from legislators. It has also touched off a smaller but still significant outpouring of support among lawmakers, broadcasters and telecom industry groups for leaving the transition date alone.
As a result of all that, top lawmakers in both the House and Senate are now working on legislation that would delay the transition for at least 90 days.
Regular readers of this blog know we have repeatedly singled out for well deserved criticism the two agencies in charge of the switchover – the National Telecommunications and Information Administration and the Federal Communications Commission. It would be extremely charitable to say that both agencies have continued to fiddle as the digital television transition moved closer and closer to disaster on February 17th.
The last straw for us was the abrupt announcement two weeks ago by NTIA that its $1.5 billion program to provide consumers with $40 coupons toward the purchase of converter boxes to make older, analog televisions capable of picking up over-the-air digital signals had run out of money.
That’s right, the coupon program that was supposed to be the centerpiece of helping consumers through the DTV conversion was officially broke and likely to stay that way through the last critical month leading up the February 17th switch.
For the sake of millions of consumers who have been badly served or failed completely by the government on the digital television transition, we are hopeful Congress will move quickly to delay the transition date.
And let us emphasize this was the last straw in an ongoing series of incompetent and indifferent move by the two agencies toward consumers in the ongoing run up to the transition.
For some inexplicable reason NTIA put a 90-day expiration date on the coupons. To make matters worse, the agency won’t allow consumers with expired coupons to reapply for new ones.
This was particularly cruel given that NTIA, the FCC and the broadcast industry strongly pushed consumers to order their coupons when the program began last March. Those who heeded that advice discovered there were few, if any, converter boxes available before their coupons expired. This was particularly true in the case of the lower-priced boxes most consumers wanted. Now all of those consumers who did what the government and the broadcast industry told them to do are out of luck.
For the sake of millions of consumers who have been badly served or failed completely by the government on the digital television transition so far, we are hopeful Congress will move quickly to delay the transition date.
Regular readers of this blog over the past year already know about some of the many mistakes and frequent misinformation that have honeycombed the government’s $1.5 billion program to provide $40 coupons toward the purchase of converter boxes to make older, analog televisions capable of picking up over-the-air digital signals. Under the program, households are eligible to receive two of the $40 coupons that can be applied toward the purchase of converter boxes, which generally range in price from $50 to $150.
In the latest in an ongoing series of eye-rolling developments, the government agency in charge of the digital television converter box coupon program – the Commerce Department’s National Telecommunications and Information Administration – said it will likely stop processing coupon requests as early as next week because it expects to run out of money.
Think about that for a minute. NTIA says it will stop processing coupons at the precise moment that consumers will be needing them most – the last few weeks leading up to the digital television switchover.
The sad fact is that the coupon program has already been an abject failure for many consumers.
For some inexplicable reason NTIA put a 90-day expiration date on the coupons. To make matters worse, the agency won’t allow consumers with expired coupons to reapply for new ones.
This was particularly cruel given that NTIA, the Federal Communications Commission and the broadcast industry strongly pushed consumers to order their coupons when the program began last March. Those who heeded that advice discovered there were few, if any, converter boxes available before their coupons expired. This was particularly true in the case of the lower-priced boxes most consumers wanted.
Here is the response one of our readers got from NTIA after he had tried to track down his two coupons which he ordered last March.
Your coupons were mailed on 4/25/08; however your coupons have since expired. By law, we are not able to issue coupon replacements under any circumstances including coupons that were lost during postal delivery. Perhaps a friend or family member who does not need their coupons could pass them along to you. While it is illegal to sell coupons, giving a coupon for free to a family member, friend, or neighbor is not prohibited under Program regulations.
Sincerely,
STEPHANIE GOLDMAN
Consumer Support
TV Converter Box Coupon Program
This is all-too-typical of the way the coupon program has been administered virtually from the beginning.
NTIA officials have repeatedly blamed the program’s problems on Congress, saying the agency has had its hands tied by the legislation that created the coupon program. At the same time NTIA officials have repeatedly told Congress and everyone else that the program was adequately funded and administered wisely.
We really don’t know what to say anymore. It is inexcusable that millions of consumers will likely be left with blank TV screens when the DTV switch occurs, a disproportionate number of who will be elderly or poor – or both.
It is now imperative that Congress step in quickly and provide additional funding and better oversight of the coupon program as soon as it returns to Washington next week. A major government effort will be required to make up for the incompetence and indifference that have defined the coupon program so far.
And it has to happen fast.
In an unexpected move, the nation’s major cable television operators have agreed to stop moving nearly all channels from analog to digital tiers during the first two months of 2009. In a letter to members of Congress, the National Cable & Telecommunications Association said the action is aimed at reducing potential consumers confusion about the federally-mandated shut-off of over-the-air analog TV signals on February 17th.
Consumers Union, the sponsor of this blog, has been critical of the recent trend among cable companies to shift programming from low-cost, basic tiers to higher-priced digital tiers. In many cases, consumers were paying more to get the same channels due to the programming shifts.
Making matters worse, the programming shifts were coming amid an already highly confusing backdrop created by the run up to the nationwide shift to digital broadcasting. Many consumers were confused, thinking that one was related to the other.
In addition, many cable operators say they will offer a low-cost basic tier as a one-year promotion so long as consumers sign up for a plan by June 30th.
The cable industry plan also for NCTA members to offer analog-only subscribers a free set-top box or adapter to view analog channels that have been moved to digital. The device is free for one year for analog-only consumers who request one by June 30th.
It’s good to see the cable industry step up with this plan, but there are still huge problems looming for consumers in dealing with the DTV transition.
One of the biggest problems is the $1.5 billion program run by NTIA to provide $40 coupons toward the purchase of converter boxes to make older, analog televisions capable of picking up over-the-air digital signals. Under the program, households are eligible to receive two of the $40 coupons that can be applied toward the purchase of converter boxes, which generally range in price from $50 to $150.
The coupons are indeed helpful for consumers, but they unfortunately come with a 90-day expiration date. Worse, households that got coupons that expired cannot reapply for new ones. That might not sound that unfair were it not for the fact that supplies of converter boxes have been uneven at best, particularly the lowest-cost models.
Making matters worse is the fact that the people who depend on free, over-the-air television are disproportionately senior citizens, low-income households and/or minorities. Many aren’t tech savvy and are going to probably need individual help in buying, installing and programming their converter boxes.
Even if the coupon program were working well, the switchover is going to be much more complicated and expensive for millions of consumers than government and industry officials are letting on.
Many consumers will discover they cannot receive the free over-the-air channels they now get, including their local network and public television stations. Many will need expensive new antennas and even then they might lose some channels, especially in hilly areas or even in big cities with lots of tall buildings.
The incoming Obama administration has said it will make the DTV transition a top priority, but it’s difficult to see how much it can do since it will take office with less than a month to go until the switchover.
The FCC had been scheduled to hold a public hearing today to tackle a number of complicated issues not involving the DTV transition, but decided to cancel that meeting after a couple of powerful members of Congress told the agency to clear the decks and step up its efforts on the switchover.
That is a heartening development, but simply canceling the meeting was the easy part.
For the record, we are now 75 days and some change away from the big switch. And with each passing day it appears more and more likely that government efforts to make the huge switchover easy and painless are going to be woefully inadequate, leaving millions of Americans with blank television screens.
We wish it were otherwise but it isn’t, and it is hard to imagine that the two government agencies in charge of the switchover – the FCC and the Commerce Department’s National Telecommunications and Information Administration – will suddenly fix all the problems. It’s particularly hard to imagine that happening as one administration is leaving office and another is coming in, and it will be on the administration’s watch when the switchover actually takes place.
One of the biggest problems is the $1.5 billion program run by NTIA to provide $40 coupons toward the purchase of converter boxes to make older, analog televisions capable of picking up over-the-air digital signals. Under the program, households are eligible to receive two of the $40 coupons that can be applied toward the purchase of converter boxes, which generally range in price from $50 to $150.
The coupons are indeed helpful for consumers, but they unfortunately come with a 90-day expiration date. Worse, households that got coupons that expired cannot reapply for new ones. That might not sound that unfair were it not for the fact that supplies of converter boxes have been uneven at best, particularly the lowest-cost models.
Making matters worse is the fact that the people who depend on free, over-the-air television are disproportionately senior citizens, low-income households and/or minorities. Many aren’t tech savvy and are going to probably need individual help in buying, installing and programming their converter boxes.
Even if the coupon program were working well, the switchover is going to be much more complicated and expensive for millions of consumers than simply buying a converter box and hooking it up to the old Philco.
Many consumers will discover they cannot receive the free over-the-air channels they now get, including their local network and public television stations. Many will need expensive new antennas and even then they might lose some channels, especially in hilly areas or even in big cities with lots of tall buildings.
Tom Regan, a columnist for the Christian Science Monitor, this week wrote about how he discovered the darker side of the DTV switchover.
Here’s what he found when he hooked up his converter box and flipped on his old analog TV.
“I could only pick up about five channels, eight at most. And they were never the same ones. Twist the antenna one way and get ABC and NBC. Turn it another way and get CBS and Fox. I couldn’t get any PBS stations at all, which were the real reason I wanted to get a better signal in the first place.”
He bought a digital antenna.
“The picture actually grew worse, so I took it back. The signal was super finicky. If I walked in a certain part of the room, the signal disappeared all together.”
Regan does a nice job of summing up how many consumers already feel about the DTV transition, and millions are likely to feel in the near future as they try to prepare for the changeover.
“What bothers me the most about this entire exercise? I feel led astray. The information that has been coming out from broadcasters and the FCC about the switch from analog to digital has been nothing but glowing. They haven’t told us (or at least haven’t spoken loudly enough) about the problems we might have getting digital signals. They haven’t told people about the extra expense that might be involved. And they haven’t told people that come Feb. 17, their television-viewing experience might be worse, not better.”
The time for excuse making by the current FCC and NTIA and the broadcasting industry is over. It is beyond irresponsible for these entities to continue tinkering around the edges of the DTV transition and hope for the best, as they’ve now done for months.
The clock is ticking.
Consumers Union is the sponsor of this blog.
Titled “Broadband in America: A Policy of Neglect is Not Benign,” the study calls on the incoming Obama administration and Congress to pursue policies to help prevent overcharging, blocking and discrimination against consumers and small businesses on the Internet.
Of particular concern are communities where competition among Internet providers has not emerged. In those communities, the groups suggest the federal government should step in to stop price gouging and promote low-cost broadband Internet access.
The Bush administration’s telecommunications policies have failed to achieve affordable access to a ubiquitous, advanced network, the report says. Among the results of those policy failures, the report says, the digital divide has not been closed and the U.S. has fallen behind at least a dozen other advanced industrial nations in the deployment and adoption of broadband communications.
“Inadequate competition makes it essential to reinstate policies that can squeeze prices down 25 percent and drive economic growth through a more open Internet,” says Gene Kimmelman, CU’s Vice President for Federal and International Affairs. “Advanced industrial nations in Europe and Asia recognized the need for aggressive policies to promote deployment of broadband and keep prices down and they shot ahead of the U.S. in the past decade.”
The report examines data on Internet adoption and broadband deployment in 2001 and 2007/2008 to measure both the extent of the digital divide with the U.S. and the status of broadband networks in a number of nations.
Among the key findings:
• In 2001, 54 percent of households did not have the Internet. In late 2007, 49 percent of households did not have broadband.
• About 25 percent of households with incomes below $25,000 per year had broadband in 2007; whereas over 80 percent of households with incomes above $75,000 did.
• Rural areas lag behind urban areas in broadband adoption by 10% to 20%.
• In the U.S. consumers pay substantially higher prices for slower service than in a dozen developed nations.
• In 2001 the OECD rankings on Internet penetration put the U.S. in third place; by 2007 it had fallen to 15th on broadband.
• Half a dozen studies that try to “excuse” the lag in U.S. performance by introducing explanatory variables, like income, education, population density, urbanism and inequality only reaffirm the finding that the U.S. is underperforming.
“The Bush administration allowed a cozy duopoly of telephone and cable companies to gain a stranglehold on the advanced telecommunications network,” notes Mark Cooper, Consumer Federation of America’s Director of Research. “It allowed the cable and telephone companies to consolidate control over wires and wireless networks through mergers, foreclose competition from new entrants by denying access to monopoly network elements, and undermine competition from Internet service providers by eliminating the obligation to operate the telecommunications networks in a nondiscriminatory manner.”