Retailers warn the DTV transition may not proceed as planned

Scott Fulton, BetaNews: From our Deja Vu All Over Again Dept., here's a topic that's a major CES issue this week and it's definitely a rerun from last year. It's the DTV transition, which is still on schedule for next year, except now some of the major retailers involved in getting new DTV broadcast converter boxes distributed, are worried that the US government won't be able to pull this off.

Sharon Fisher, who had more on this last year, has more on it this year.

Sharon Fisher, Senior CES Analyst, BetaNews: Scott, the television industry is starting to worry that there's going to be a lot of ticked-off people on February 18, 2009.

According to the Associated Press, executives from Best Buy and Circuit City were nervous during a CES panel about the transition yesterday, about both the logistics of getting converter boxes to more than 15 million households (think about how hard it was to get a Wii last Christmas) and the simple matter of educating the public of the need in the first place.

Phil Schoonover, the CEO of Circuit City Stores Inc., reportedly compared the transition to that of high-definition television, but there's one big difference: People with low-definition television sets can still get HD television programming. If the industry doesn't get everyone converted in time, people's broadcast-only TVs will be dancing with static.

To add even more fun to the mix, the Federal Communications Commission quietly announced on December 31 that broadcasters could convert to all-digital before February 17. Surprise! Your TV doesn't work! On some stations!

Coupons to help defray the cost of the converter boxes, forecast to be worth between $40 and $70, are scheduled to be made available when the boxes themselves are made available -- which is projected to be late February or early March. And people are getting the message: More than 1 million have applied for almost 1.9 million coupons, worth $40 each, during the first week they were available.

But that still leaves 14 million households that haven't yet. And people won't have a lot of time after February 17, 2009, to deal with the problem: The coupons won't be available after March 1, and may run out before then.

On top of that, the coupons can be used only on an approved list of boxes. And guess what: They expire 90 days after they're mailed.

Boxes are starting to be trickle in; EchoStar announced at CES that it would ship one in limited quantities for $39.99 (imagine that) in March and "unlimited" quantities in June. Sansonic Electronics announced on December 13 that its box had received certification but did not say when it would be available nor how much it would cost.

So there's a number of ways that this conversion could turn ugly:

1. How many people aren't going to know about the conversion? I filed for my coupons, but has my 78-year-old Great Aunt Betty? I don't even know how to tell her how to do it when she doesn't have Internet access.

2. How well is the coupon distribution program actually going to work? How many people will get turned down? What's the likelihood that the coupons run out? What about people with more than two TVs in their house?

3. How well will the coupon/converter box logistics work out? What if the boxes come out before the coupons do? What if the coupons expire before the boxes become available? What are the chances that people who wait for their coupon get skunked because people who can afford to pay full price snap them up to scalp them on eBay?

4. What about the people who don't happen to live in an area where they can find a converter box? How well is the distribution of the boxes going to work out? How far is Aunt Betty going to have to drive to find one? What incentive do retailers have to stock the boxes if they think they have a chance to sell someone a digital TV instead?

5. Okay, I got a box. How the hell do I set up the thing? How complex a process is that going to be? Am I going to have to disassemble my entire setup to plug it in? Can Aunt Betty move around her own TV to install the box? Stay tuned. If you can.

Scott Fulton: Sharon, some of our readers in the past have expressed the opinion that viewing television over the airwaves is not a right of the people, so the government shouldn't be in the business of subsidizing converter boxes in the first place. If Congress had stayed out of this, do you think the transition would be going along more smoothly?

Sharon Fisher: You know, I do know one thing: I expect the people most likely to be shut out from their TVs to be the elderly -- and the elderly vote.

Scott: Has it occurred to anybody that there are two dates in next year's history: * January 20, New President Inaugurated. * February 17, New TV System Inaugurated...that are suspiciously close to one another?

Sharon: Well, it's been suggested that part of the reason for scheduling the transition in February is to wait until after the inauguration. Personally, I suspect it has more to do with the scheduling of the Super Bowl. That is, of course, assuming that broadcasters actually wait 'til February 17 to transition.

Scott: When I saw the hearings (and yes, I watched them live), Sen. John McCain suggested a much earlier date. Then some others in his own party suggested a much later date. They settled on February 17, they said, to allow the networks to complete their showing of the NCAA basketball championships.

Sharon: Ah. Glad to know what their priorities are.

Scott: But I've also often wondered whether it was a convenient way to extend the public grievance period, if you will, to whatever the next administration is.

Sharon: It's possible, I suppose. I would think, though, that if that were the case, they'd have waited til 2010, to make sure all the conversion process didn't happen under their watch. On the other hand, it does guarantee that the new Administration has to deal with all the fallout without being able to do any preparation.

Scott: Wouldn't it be ironic if Pres. McCain were the one handling the fallout?

Sharon: Karma is a beautiful thing.

Scott: Uh-huh. Thanks, Sharon.