Paul Gluckman

The FCC seeks comments by April 27 and replies May 27 on a petition that alleges Americans are overpaying for DTV sets because of exorbitant royalties levied by patent holders that license the technology on unreasonable and discriminatory terms, it said in a public notice Wednesday. The Coalition United to Terminate Financial Abuses of the Television Transition (CUT FATT), whose only members are TV makers Vizio and Westinghouse Digital, filed the petition two months ago asking the commission to start a rulemaking to regulate the patent fees, and to impose fines on licensors judged to be non-compliant (CD Jan 5 p2). That the FCC has decided to seek comments on the petition is a sign CUT FATT’s allegations may have resonated with some at the commission. Compared with the DTV patent licensing process elsewhere in the world, licensors in the U.S. “operate in an unregulated ‘Wild West’ without supervision or accountability,” the petition said. In a written statement Wednesday, CUT FATT hailed the commission notice as a first step “to protect consumers against uncontrolled price-gouging by DTV patent holders.” Meanwhile, Funai wants the FCC to combine Vizio’s Friday request for temporary relief with the CUT FATT petition “under a single proceeding,” it told the commission in a motion filed Tuesday. In its request, Vizio said it will suffer “irreparable harm” without an FCC temporary order requiring Funai to license it for a DTV patent. But the Vizio request was merely a petition for rulemaking in disguise and should be treated that way, Funai said. Vizio styled it as a request for temporary relief in “a blatant attempt to trigger the substantially shortened pleading cycle” under FCC rules, Funai said. If the commission decides not to group the Vizio request with the CUT FATT petition, Funai wants the deadline extended to March 13 to respond to it, it said. Without the extension, its response would be due Monday.

Some of the largest markets where at least three network affiliates have dropped analog also have significant numbers of households on the converter box coupon wait list, according to newly released NTIA data. Almost 21,000 households in the San Diego TV market were on the list for DTV coupons Monday, the agency said. San Diego is the largest designated market area, and has the most network- affiliated stations, to have made the switch to digital this week. But just 0.46 percent of the San Diego households on the waiting list were over-the-air only, the NTIA said. Wilkes-Barre/Scranton, Pa., the third largest DMA affected, had almost 8,000 households on the waiting list, 0.15 percent over-the-air only. Los Angeles had the most households on the waiting list, just over 154,000, 3.47 percent of them over-the-air only, followed by New York, with more than 148,000 households, 2.86 percent over-the-air only. But Los Angeles and New York have few, if any, stations switching off their analog signals early.

The DTV Delay Act just signed into law “doesn’t change the operation of the TV Converter Box Coupon Program at this time,” NTIA’s vendor says in a new notice posted at the program’s retailer site. “Retailers should continue with the same processes for coupon acceptance and redemption that have been used since the program’s inception,” it said. But “other program changes in the DTV Delay Act that address the supply of converter box coupons require additional funding from Congress,” it said.

The CEA was “generally correct” last week at the FCC when it estimated there’s about 3 to 6 million coupon- eligible DTV converter boxes in the retail pipeline (CD Feb 6 p1), LG spokesman John Taylor told us Monday. But he declined comment on whether LG was among the manufacturers that the CEA said ceased producing converter boxes about a month ago. “We're working with our retailers” to forecast converter-box demand in light of the DTV delay to June 12, said Taylor, whose company markets its own Zenith-brand boxes and supplies Insignia-brand boxes to Best Buy. “That process has been under way for some time.” Predicting demand for a “one-time product” like converter boxes has long been a crapshoot, because no one knows for sure how many antenna-only analog sets are out there, Taylor said. The DTV Delay Act has made forecasting demand “that much more difficult” because it allows consumers whose coupons expired to reapply for replacements, he said. Still, LG, breaking with the CEA, supported the DTV Delay Act, Taylor said. “With sufficient funding, this extension makes sense,” because it gives new opportunity to consumers “who might opt now for a converter box,” he said. It also gives the CE industry more time to promote HDTV sets, which “especially during difficult economic times, represents a tremendous consumer value,” Taylor said.

With the analog cutoff now delayed to June 12, the CEA has “even less certainty whether demand and supply for boxes will match,” CEA President Gary Shapiro said. He was explaining why his group called on Congress and the Obama administration Wednesday to take the “necessary steps” to assure a steady supply of converter boxes (CD Feb 5 p1). The CEA recently urged Congress to allow consumers to use their coupons other ways -- including toward purchases of DTV sets -- if the government determined there was a shortage of boxes. Shapiro said Republicans noted on the House floor Wednesday “that the lack of any hearing on the change in dates means that many unintended consequences could not be discussed. This is one we thought of - - I am sure there will be others.”

Contrary to critics who say the DTV coupon program has been “grossly mismanaged” under the NTIA, the agency’s former acting administrator, Meredith Baker, said in an interview Tuesday that she thinks the program has been “a great success.” The NTIA’s “primary target” has always been protecting over-the-air households that would lose service on Feb. 17, Baker said. “And I think we've done a good job of trying to get the coupons to those folks.”

Momentum to delay full-power broadcasters’ move to DTV picked up steam with support from President-elect Barack Obama. A Thursday letter from the co-head of his transition team to top lawmakers asked Congress to push back the Feb. 17 DTV switch, noting the NTIA’s digital converter box coupon program has run out of money. But the NTIA’s chief told us that Congress is coming up with legislation to let the agency send out more coupons. And FCC Chairman Kevin Martin, some legislators and industry groups said delay could cause consumer confusion.

NTIA by next week thinks it will “fully obligate” the $1.34 billion Congress appropriated for DTV coupons, Acting NTIA Administrator Meredith Baker told House Telecom Subcommittee Chairman Ed Markey, D-Mass., Friday. She responded to his call for a status report on the coupon program. Reaching the $1.34 billion “ceiling” won’t mean the program has run out of money, but the NTIA will need to halt processing new coupon orders until money from expired coupons has been recycled back into the pool, Baker said.

Raising its forecast by a million coupons from a projection in November, NTIA now expects to have accepted orders for 51.5 million DTV coupons when it stops taking applications March 31, but thinks the number easily could go higher, we've learned. Marking two months until the analog cutoff Feb. 17, the agency will announce this week that it has ordered a million more coupons from IBM.

There’s a strong possibility that tru2way can become a prominent DTV buzzword as more cable companies “upgrade their headends” for the OCAP feature, Sony Electronics President Stan Glasgow told reporters Thursday in New York. “The ability to have a system where you can move from one part of the country to another without having to buy a new cable box or a new television in the future is a positive thing,” he said. “And Sony wants to be part of that. We are working on that very hard.” But he wouldn’t comment when we asked whether Sony will introduce tru2way TVs in its Bravia LCD TV line at CES.