Digital transition a mess, but in entirely unexpected way

Introduction

Imagine paying $556 million for a house and then the seller — after cashing your check — says you have to wait an extra four months before you can move in. That’s sort of like what is happening to Qualcomm Inc. The San Diego-based company paid more than a half-billion dollars in a government airwaves auction last year for the right to use radio frequencies currently occupied by television broadcasters.

Qualcomm was one of several dozen bidders who paid a total of $19 billion in the auction. The broadcasters are supposed to get off those channels no later than February 17. And once they do, old fashioned televisions that get their signal with an antenna won’t work any longer.

But before the bidders can take possession, the broadcasters have to move off. The government wants to delay the move until June 12; the Senate voted to do so Monday.

Why? The coupon program that is supposed to keep over-the-air television viewers from losing their signal has run out of ready cash. The coupons ($40 each, maximum two per household) are being used to offset the cost of converter boxes, which cost around fifty bucks. The boxes translate digital signals to analog signals for people with non-digital sets that use antennas for reception.

The $1.34 billion available for coupons has been committed but not all of it has been spent. Only about half the coupons that have been distributed have been redeemed. It takes three months for unused coupons to expire and as they expire, more funds become available for new coupons.

The National Telecommunications and Information Administration, which runs the program, started a waiting list on January 4. As of this writing, there is a backlog of 2.5 million coupon requests.

Since those people probably aren’t going to get their coupons in time, it could add up to a lot of angry phone calls on February 17. President Obama and Congress have noticed. Obama made a delay all but inevitable when his transition team penned a letter on January 8 to the Democratically controlled Congress asking for one. (Because the transition date is law, Congress has to pass a law to change it.)

While the legislation now moves along in the House, getting the coupon program running again is another story. That will take money, and at the moment, the Obama administration’s economic stimulus plan is the favored vehicle. The plan calls for $650 million for the coupon program. But the uncertainty over when the stimulus plan will pass is also driving the delay.

Meanwhile, people and companies are counting on getting those frequencies NOW. Qualcomm, for example, wants to continue rolling out “MediaFLO,” its mobile television service and is ready to throw the switch on transmitters in several markets come February 18.

Additionally, for the past year, the government, the broadcast television industry, the cable television industry and others have been telling viewers ad nauseum that February 17 is THE DAY. Even now, stations are running infomercials and screen crawlers using that date. But if the government wasn’t serious when it said February 17, why should we believe it is serious about June 12?

And making this public relations nightmare even worse is the fact that some of those airwaves that will be vacated are designated for emergency responders. It’s one thing to delay the airing of an episode of “Knight Rider” on a cell phone — it’s something else to get a couple hundred thousand firefighters mad at you.