Implementation and Administration of a Coupon Program for Digital-to-Analog Converter Boxes

Federal Register / Vol. 71, No. 142 / Tuesday, July 25, 2006 / Proposed Rules
the FAA proposes to amend 14 CFR part
39 as follows:
PART 39—AIRWORTHINESS
DIRECTIVES
1. The authority citation for part 39
continues to read as follows:
Authority: 49 U.S.C. 106(g), 40113, 44701.
§ 39.13

[Amended]

2. The Federal Aviation
Administration (FAA) amends § 39.13
by adding the following new
airworthiness directive (AD):
BAE Systems (Operations) Limited
(Formerly British Aerospace Regional
Aircraft): Docket No. FAA–2006–25437;
Directorate Identifier 2006–NM–136–AD.
Comments Due Date
(a) The FAA must receive comments on
this AD action by August 24, 2006.
Affected ADs
(b) None.
Applicability
(c) This AD applies to all BAE Systems
(Operations) Limited Model BAe 146–100A,
–200A, and –300A series airplanes; and
Model Avro 146–RJ70A, 146–RJ85A, and
146–RJ100A airplanes; certificated in any
category.
Unsafe Condition
(d) This AD results from reports of loss of
the nose wheel assembly. We are issuing this
AD to prevent the nose wheel nut from
loosening, and consequently, the nose wheel
assembly detaching from the airplane; and to
prevent the nose wheel clamping loads from
applying to the machined radius at the root
of the stub axle, which could result in
damage to the nose landing gear.
Compliance
(e) You are responsible for having the
actions required by this AD performed within
the compliance times specified, unless the
actions have already been done.

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Modification
(f) Within 12 months after the effective
date of this AD, modify the nose landing gear
in accordance with the Accomplishment
Instructions of BAE Systems (Operations)
Limited Modification Service Bulletin 32–
174–70676A, dated February 21, 2006.
Note 1: BAE Systems (Operations) Limited
Modification Service Bulletin 32–174–
70676A refers to Messier-Dowty Service
Bulletin 146–32–161, dated March 2, 2005, as
an additional source of service information
for accomplishing the modification.
Note 2: BAE Systems (Operations) Limited
Modification Service Bulletin 32–174–
70676A refers to the abutment ring as a
spacer. Airplane Maintenance Manual
(AMM) 32–42–17 401 identifies this part as
an abutment ring (item 4). Item 3 of the AMM
is identified as a spacer but this is not the
part described in the modification service
bulletin.

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No Reporting
(g) Although the service bulletin referenced
in this AD specifies to submit certain
information to the manufacturer, this AD
does not include that requirement.
Alternative Methods of Compliance
(AMOCs)
(h)(1) The Manager, International Branch,
ANM–116, Transport Airplane Directorate,
FAA, has the authority to approve AMOCs
for this AD, if requested in accordance with
the procedures found in 14 CFR 39.19.
(2) Before using any AMOC approved in
accordance with § 39.19 on any airplane to
which the AMOC applies, notify the
appropriate principal inspector in the FAA
Flight Standards Certificate Holding District
Office.
Related Information
(i) European Aviation Safety Agency
(EASA) airworthiness directive 2006–0137,
dated May 23, 2006, also addresses the
subject of this AD.
Issued in Renton, Washington, on July 17,
2006.
Ali Bahrami,
Manager, Transport Airplane Directorate,
Aircraft Certification Service.
[FR Doc. E6–11806 Filed 7–24–06; 8:45 am]
BILLING CODE 4910–13–P

DEPARTMENT OF COMMERCE
National Telecommunications and
Information Administration
47 CFR Chapter III
[Docket Number: 060512129–6129–01]
RIN 0660–AA16

Implementation and Administration of
a Coupon Program for Digital-toAnalog Converter Boxes
National Telecommunications
and Information Administration,
Commerce.
ACTION: Notice of proposed rulemaking
and request for comment.
AGENCY:

SUMMARY: The National
Telecommunications and Information
Administration (NTIA) proposes to
implement and administer a program to
provide $40 coupons to consumers for
use towards the purchase of digital-toanalog converter boxes. Congress
mandated the coupon program in Title
III of the Deficit Reduction Act of 2005.
The converter boxes are necessary for
consumers who wish to continue
receiving broadcast programming over
the air using analog-only televisions
after February 18, 2009—the date that
full-power televisions stations are
required to cease analog broadcasting.
Without converter boxes, consumers

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with analog-only television sets will be
unable to view full-power television
broadcasts unless they purchase digital
television sets or subscribe to cable or
satellite service.
DATES: Comments must be submitted by
5 p.m. EDT, no later than September 25,
2006.
ADDRESSES: Comments via mail should
be submitted to: Milton Brown, Office of
the Chief Counsel, National
Telecommunications and Information
Administration, 1401 Constitution
Avenue, Room 4713, Washington, DC
20230. Comments may also be sent by
facsimile to (202) 501–8013. Electronic
comments may be submitted to
coupon@ntia.doc.gov or to
Regulations.gov at www.regulations.gov.
FOR FURTHER INFORMATION CONTACT:
Milton Brown at (202) 482–1816.
SUPPLEMENTARY INFORMATION:
I. Background
A. Overview
In this Notice of Proposed
Rulemaking (NPRM), NTIA seeks
comment on ways to implement the
digital-to-analog converter box coupon
program pursuant to the Digital
Television Transition and Public Safety
Act of 2005 (the Act).1
The Act, among other things, requires
the Federal Communications
Commission (FCC) to require full-power
television stations to cease analog
broadcasting by February 18, 2009.
Recognizing that consumers may wish
to continue receiving broadcast
programming over the air using analogonly televisions not connected to cable
or satellite service, the Act authorizes
NTIA to create a digital-to-analog
converter box assistance program.
Specifically, Section 3005 of the Act
authorizes the Assistant Secretary for
Communications and Information to
‘‘implement and administer a program
through which households in the
United States may obtain coupons that
can be applied toward the purchase of
digital-to-analog converter boxes.’’ NTIA
is proposing these regulations to
implement the requirements of the Act.
B. Summary of Relevant Provisions of
the Act
Section 3002 of the Act amends the
Communications Act of 1934 to direct
the FCC to terminate analog television
licenses for full power stations and to
require all full-power Class A television
stations in the digital television service
to broadcast in the radio spectrum
between 54 and 698 MHz, by February
1 See Title III of the Deficit Reduction Act of 2005,
Pub. L. 109–171, 120 Stat. 4, 21 (Feb. 8, 2006).

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Federal Register / Vol. 71, No. 142 / Tuesday, July 25, 2006 / Proposed Rules

18, 2009. Section 3003 of the Act directs
the FCC to begin an auction of returned
analog television spectrum no later than
January 28, 2008 and to deposit auction
proceeds into a fund established by the
Act no later than June 30, 2008. The
returned analog television spectrum to
be auctioned is the band between 698
and 806 MHz, except for the 24
megahertz that has been reserved for
public safety uses and certain other
frequencies that have already been made
available through auction. Section 3004
of the Act establishes a new Treasury
fund to be known as the Digital
Television Transition and Public Safety
Fund (Fund). It directs the receipts from
the FCC’s analog spectrum return
auction to be deposited into the Fund.
Specific to this NPRM, section 3005 of
the Act directs NTIA to implement and
administer a program through which
eligible U.S. households may obtain a
maximum of two coupons of $40 each
to be applied towards the purchase of a
digital-to-analog converter box. The Act
defines the term ‘‘converter box’’ to
mean a stand-alone device used solely
for digital-to-analog conversion.2 The
Act does not define ‘‘eligible
household.’’ To implement the coupon
program, the Act authorizes NTIA to use
up to $990 million from the Fund for
the program, including $100 million for
program administration. NTIA is also
authorized to expend up to $1.5 billion
for the program, including $160 million
for administration, upon a 60-day notice
and certification to the Committee on
Energy and Commerce of the House of
Representatives and the Committee on
Commerce, Science, and Transportation
of the Senate that the $990 million is
insufficient to fulfill coupon requests for
eligible U.S. households.3 This section
also authorizes NTIA, beginning on
October 1, 2006, to borrow not more
than $1.5 billion from the Treasury to
implement the program. NTIA,
however, must reimburse the Treasury
for this amount, without interest, as
recovered analog television spectrum
auction proceeds are deposited into the
Fund.
II. Proposed Rules and Request for
Comment
NTIA recognizes that there will be a
number of solutions, including market

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2 Section

3005(d) provides that the term ‘‘digitalto-analog converter box’’ means ‘‘a stand-alone
device that does not contain features or functions
except those necessary to enable a consumer to
convert any channel broadcast in the digital
television service into a format that the consumer
can display on television receivers designed to
receive and display signals only in the analog
television service, but may also include a remote
control device.’’ 120 Stat. at 24.
3 See supra note 1 at Section 3005(c)(3).

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based solutions, to address potential
disruption of television service resulting
from the analog to digital transition.
Many consumers will neither need nor
want a coupon to purchase a converter
box. For example, many households that
are now receiving over-the-air analog
television signals will have purchased
digital receivers by the time that analog
broadcasting ends. We also assume that
many households that currently receive
over-the-air television transmissions
will begin receiving digital service
through one of the multichannel video
programming distributors, such as cable
or satellite service. Therefore, we
consider this coupon program to
represent one of a number of solutions
to accommodate consumers once analog
broadcasting ends.
A. Eligible U.S. Households
NTIA proposes that a ‘‘television
household’’ is a ‘‘household’’ with at
least one television. A ‘‘household’’
consists of all persons who currently
occupy a house, apartment, mobile
home, group of rooms, or single room
that is occupied as separate living
quarters and has a separate U.S. postal
address.4 An eligible household address
shall not be a post office box.
The Act and its legislative history
indicate that the coupon program is not
intended to cover every television in
every household in the United States.
The legislative history provides that the
coupon program is intended to help
consumers who wish to continue
receiving broadcast programming overthe-air using analog only televisions not
connected to cable or satellite.5 The
legislative history also notes that as of
June 2004, only 14.86 percent of U.S.
television households relied exclusively
on over-the-air transmission.6
Furthermore, the Act limits the number
of coupons per U.S. household to only
two.7 As a result, NTIA proposes to
define those U.S. television households
that will be eligible to participate in the
coupon program as those households
4 This definition is based on the definitions of
‘‘household’’ and ‘‘housing unit’’ used by the U.S.
Census Bureau. See U.S. Census Bureau, http//
www.census.gov (Current Population Survey—
Definitions and Explanations); see also ‘‘Digital
Broadcast Television Transition: Several Challenges
Could Arise in Administering a Subsidy Program
for DTV Equipment,’’ GAO–05–623T (May 26,
2005) (GAO Challenges Report) at 10 (discussion on
eligibility criteria for low-income households).
5 H.R. REP. NO. 109–362, at 201 (2005) (Conf.
Rep.).
6 Id.
7 See Section 3005(c)(1)(A) of the Act, 120 Stat.
at 23 (titled ‘‘Two-per-household maximum’’
provides that ‘‘[t]he Assistant Secretary shall ensure
that each requesting household receives, via the
United States Postal Service, no more than two
coupons’’).

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that only receive over-the-air television
signals using analog-only television
receivers. In other words, households
that receive cable or satellite television
service would not be eligible even if
they have one or more analog-only
television receivers not connected to
such service.
We invite comment on any other
eligibility factors that NTIA should
consider. For example, should NTIA
consider economic need in the
eligibility requirements for coupons? If
so, how should ‘‘economic need’’ be
determined? Should we propose a rule
to make coupons available only to
households with an income based on a
poverty threshold? For example, should
we distribute coupons only to those
households with an annual income of
$19,806 or below—the U.S. Census
Bureau’s poverty threshold for a family
of four? 8 Should we consider some
other income level as a basis for
eligibility for this program? We note that
neither the Committee of Conference’s
Joint Explanatory Statement (the
Manager’s report) includes such a
requirement regarding economic need or
other factors that might be related to a
household’s eligibility to receive
coupons.
Depending on the demand for the
coupons, it is possible that the number
of requests for coupons may exceed the
total dollar amount provided by the Act.
If the number of requests exceeds
$990,000,000 as specified in the Act,
NTIA is authorized to request additional
funds from the appropriate
Congressional committees, as required
by the Act.9 Recognizing that the
additional funding, which cannot
exceed $1,500,000,000, may still be
insufficient to administer the program,
NTIA proposes to fulfill valid coupon
requests on a first-come, first-served
basis until funds devoted to this
program have been spent. Are there
other factors NTIA should consider in
distributing coupons if the number of
requests exceeds the number of coupons
available? On the other hand, if the
demand for coupons is low, should
NTIA consider expanding its eligibility
requirements?
B. Coupon Value and Use Restrictions
The Act states that the value of each
coupon shall be $40.10 We recognize
that the cost of a converter box may be
greater than $40. NTIA proposes to issue
$40 coupons that can be redeemed only
8 See U.S. Census Bureau’s Poverty Thresholds
for 2005, http://www.census.gov/hhes/www/
poverty/threshld/thresh05.html.
9 See supra note 3.
10 Sec. 3005(c)(4), 120 Stat. at 24.

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Federal Register / Vol. 71, No. 142 / Tuesday, July 25, 2006 / Proposed Rules

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at a certified retailer when purchasing
an eligible converter box. To keep track
of the number of coupons issued, used
and redeemed, as well as to minimize
fraud and counterfeiting, NTIA intends
to place identifying serial numbers on
the coupons. NTIA invites comment on
this proposal and other fraud prevention
methods that are available or are
currently being used. For example,
instead of a paper coupon, should NTIA
consider using an electronic coupon
card?
The Act also states that the ‘‘[t]wo
coupons may not be used in
combination, toward the purchase of a
single digital-to-analog converter
box.’’ 11 As a result, NTIA proposes that
each individual coupon be restricted for
the purchase of one digital-to-analog
converter box and that a coupon holder
cannot use two coupons in combination
toward the purchase of a single digitalto-analog converter box. To prevent
fraud, NTIA proposes to prohibit a
coupon holder from returning a
converter box to a retailer for a cash
refund or for credit towards the
purchase of another item. NTIA
proposes to permit the even exchange
for another certified converter box in the
event of defective or malfunctioning
equipment. NTIA also proposes similar
restrictions on participating retailers
elsewhere in the rules. NTIA invites
comment on these proposed rules.
C. Application Process
The Act states that a household may
obtain coupons by making a request
between January 1, 2008 and March 31,
2009.12 NTIA proposes to require
consumers to request coupons by
submitting an application in accordance
with the eligibility criteria and
procedures provided in this proposed
rule. As part of the application process,
NTIA proposes to require applicants to
submit the following: (1) Name; (2)
address; (3) the number of coupons that
they require; (4) a certification that they
only receive over-the-air television
signals using an analog-only (NTSC)
television receiver; and (5) a
certification that no other member of the
household has or will apply for a
coupon. NTIA proposes to commence
the application period on January 1,
2008 and conclude on March 31, 2009.
The Act limits coupon distribution to
two coupons per household and
requires the Assistant Secretary of
Communications and Information to
ensure that the requesting households
receive the coupons via the United

States Postal Service.13 As stated above,
NTIA proposes a rule through which an
eligible U.S. television household that
requests coupons must certify that it
only receives over-the-air television
signals using an analog-only (NTSC)
television receiver, and that they receive
only over-the-air transmissions in
analog format, and that they do not
receive service from a multichannel
video program distributor such as a
cable or satellite service. As part of the
certification process, the applicant
household must request the specific
number of coupons that it requires, not
to exceed two. An applicant household
requesting more than one coupon must
certify that it has more than one analogonly (NTSC) television receiver. If an
applicant fails to specify the number of
coupons that they require, that
applicant will only receive one coupon.
Once certified, the requested coupon(s)
will be sent via the United States mail.
Regardless of the manner or the type
information being collected as part of
the application process, NTIA intends to
protect all such information consistent
with applicable law including, but not
limited to, the Privacy Act of 1974.14
NTIA intends to make application
forms widely available. NTIA intends to
allow potential applicants to request
forms through the mail, via telephone,
and over the Internet. NTIA places the
highest priority on designing an
application system that prevents waste,
fraud, and abuse. As such, NTIA intends
to utilize a computer based application
system which prevents duplicate
requests for coupons and other potential
abuses of the program by households.
NTIA seeks comment on ways to
prevent waste, fraud, and abuse in the
application process.
The legislative history of the Act
expresses an expectation that NTIA will
use electronic media and networks to
make aspects of the program more
efficient.15 To that end, NTIA proposes
to permit consumers to request, submit
and track applications over the Internet.
We invite comment on our proposal to
permit consumers to submit electronic
applications.
D. Coupon Expiration
The Act states that all coupons will
expire three months after issuance.
NTIA proposes to print an expiration
date on each coupon. NTIA also
proposes that the expiration date will be
three months after the coupon’s
issuance date, which would be the date
upon which the coupon is placed in the

11 See Sec. 3005(c)(1)(B) of the Act, 120 Stat. at
23 (emphasis added).
12 See id. at Sec. 3005(c)(1)(A).

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13 See

supra, note 5.
U.S.C. 552a.
15 H.R. Rep. 109–362 at 202 (2005 (Conf. Rep.)).

42069

U.S. mail. Consumers will not be able to
redeem a coupon to purchase a
converter box after the expiration date
printed on a coupon and retailers will
not be able to accept coupons for
converter box purchases after their
expiration date. NTIA believes that an
expiration date will encourage
consumers to obtain the necessary
converter boxes in a timely manner.
Moreover, a specified expiration date
will reduce opportunities for waste,
fraud, and abuse and provide greater
efficiency and certainty in
administering the program. We seek
comment on this proposed rule and also
on whether other options for addressing
the expiration requirement are available.
For example, should NTIA define the
issuance date to be the date upon which
a consumer receives a coupon? If so,
how would NTIA calculate the
expiration date of a coupon? Or should
NTIA assume that the average delivery
of a first class letter is two to three days
and thus define the issuance date to be
three days after the coupon is placed in
the U.S. mail?
E. Digital-to-Analog Converter Box
The Act defines the term ‘‘digital-toanalog converter box’’ (converter box) as
‘‘a stand-alone device that does not
contain features or functions except
those necessary to enable a consumer to
convert any channel broadcast in the
digital television service into a format
that the consumer can display on
television receivers designed to receive
and display signals only in the analog
television service, but may also include
a remote control device.’’ It is our
understanding that a converter box as
defined by the Act is currently not
commercially available, at least on a
widespread basis. Ideally, a converter
box should be able to receive digital
broadcast signals in the same receiving
configuration (e.g., same household
antenna, same location) as used for the
existing analog reception. We note,
however, recent GAO congressional
testimony indicating that antenna
reception of digital signals may vary
based on a household’s geography and
other factors.16
For purposes of the coupon program,
NTIA proposes certain standards for a
minimum-capabilities converter box
that simply converts an Advanced
Television Systems Committee (ATSC)
terrestrial digital broadcasting signal to
the analog National Television
Standards Committee (NTSC) format.
The digital converter box should be able
to receive, render and display usable
pictures and sound from high definition

14 5

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16 See

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Federal Register / Vol. 71, No. 142 / Tuesday, July 25, 2006 / Proposed Rules

as well as standard definition broadcast;
however, the converter box would not
be required to render pictures and
sound at more than standard definition
quality. Specifically, the converter box
should be capable of receiving,
decoding and presenting video and
audio from digital television
transmissions as specified in FCC Part
73 and ATSC Standards A/52A, A/53C,
and A/65B.17 NTIA proposes to take
into consideration the cost (i.e.,
inexpensive but meets the ATSC
Recommended Practice: Receiver
Performance Guidelines standard (A/74)
of the converter box as well as the ease
of installation and operation.
Specifically, NTIA proposes the
following characteristics in certifying a
converter box:
(a) Appropriately processes all ATSC
radio frequency (RF) signals provided to
the antenna-only input and then
provides output signals in standard
definition video for display on an NTSC
television receiver/monitor;
(b) Delivers NTSC composite video
and stereo audio to drive NTSC
monitors;
(c) Delivers Channel 3 or 4 switchable
(NTSC) RF output for television
receivers;
(d) Complies with FCC requirements
for Closed Captioned, Emergency Alert
System (EAS) and the required parental
controls;
(e) Operable by and includes a remote
control; and
(f) Tunes to all television channels 2–
69.
NTIA proposes to accept certification
for converter boxes that are capable of
only receiving over-the-air broadcast
signals for display over analog-only
(NTSC) receivers/monitors to firmly
control the nature of the input and
output signals and connectors on the
box. The only input of the converter box
shall be for an external antenna. The
outputs shall be channel 3 or 4 (NTSC
modulated signals), composite video
(NTSC baseband), and audio (stereo).
The single input (Type F connector)
ensures that only an antenna can be
connected to eligible boxes thus
ensuring use of such boxes as for overthe-air television reception only. The
channel 3 or 4 analog output (Type F
connector) ensures that older style
NTSC analog television receivers can be
connected to eligible boxes. The
composite video and stereo audio (all
three RCA connectors) ensures that
other NTSC analog television monitors
17 See 47 CFR 73.682(d); ATSC Standards A/52A,
Digital Audio Compression (AC–3), A/53C, Digital
Television Standard, and A/65A, Program and
System Information Protocol for Terrestrial
Broadcast and Cable.

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can also connect to the boxes. We seek
comment on these characteristics that
we propose to use to certify converter
boxes and on other characteristics we
should consider as well.
NTIA proposes to require
manufacturers to self-certify that the
converter boxes meet the standards
outlined in the rules. NTIA reserves the
right to test the converter boxes that
have been self-certified by the
manufacturer to ensure that they meet
those standards. We also invite
comment on whether there are existing
industry or government organizations
engaged in activities that can help speed
the development of testing/certification
processes within the allowed time frame
of this program?
For purposes of this program, we
interpret the Act’s definition to mean
that a digital-to-analog converter box is
not a digital cable television box.
Therefore, we do not propose to accept
self-certifications for a digital cable
television box. We also do not intend to
accept certifications for converter boxes
that have features beyond those
necessary to convert an ATSC digital
signal to an analog NTSC format. We
invite comment on the appropriate
minimum technical capabilities for
converter boxes. We also seek comment
on the extent we should consider
certain standards, such as energy
standards, in determining the type of
converter box that would be eligible for
this program.18 How would these
standards affect this program?
Finally, NTIA is seeking comments on
how the converter boxes eligible for
participation in the coupon program
should be identified for the consumer.
Should NTIA print a list of approved
converter boxes on the coupons or on
information sent with the coupons?
Should NTIA maintain an Internet Web
site listing approved converter boxes?
Should it be left to the retailer to inform
consumers which converter boxes are
eligible for the coupon through the
retailers advertising or at placards at
point of sale?
F. Retailer Certification
Participation by retailers in this
program is voluntary. Retailers that
choose to participate will not be
compensated by NTIA. We propose to
permit consumers to redeem coupons at
retailers that have established
production and distribution channels
and who have demonstrated that they
can redeem coupons expeditiously and
efficiently. We note that retailers are
also typically familiar with coupon
18 See e.g., Cal. Code Regs, tit. 20, section 1605
(2004).

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programs and have systems in place to
process coupons. We are also interested
in retailers that can handle converter
box purchases with the coupons via
mail, phone or the Internet-based sales.
We propose to institute a process for
retailers through which they must
certify, under penalty of law, that they:
(1) Provide information to customers
about the necessity for and the
installation of a converter box; (2) have
in place systems that can be easily
audited as well as systems that have the
ability to prevent fraud and abuse in the
coupon program; (3) are willing to be
audited at any time during the course of
the coupon program; (4) have the ability
to electronically provide NTIA with
sales information related to coupons
used in the purchase of converter boxes,
specifically tracking each serialized
coupon by number with a
corresponding certified converter box
purchase; and (5) will only submit
coupons for redemption as a result of
purchases made for converter boxes
certified by NTIA.
NTIA also proposes to require
retailers to adhere to and enforce
coupon restrictions contained in the Act
such as prohibiting coupon holders
from using two coupons in combination
towards the purchase of a single digitalto-analog converter box. We will require
retailers to prohibit consumers from
using coupons to purchase any device
other than a converter box certified
pursuant to this rulemaking. Moreover,
we expect retailers to have in place a
system that prevents consumers from
returning a converter box to the retailer
for a cash refund or for credit towards
the purchase of another item. In other
words, a coupon holder is limited to an
even exchange of one certified converter
box for another. NTIA proposes to
require retailers to submit coupons or
coupon information to NTIA for
redemption within 30 days after the
coupon has been used to purchase a
converter box. NTIA also proposes to
require retailers to retain hard copies of
sales information related to converter
boxes purchased with coupons for one
year. We seek comment on ways to
prevent waste, fraud and abuse in the
process by which retailers accept and
process coupons.
As part of the certification process,
NTIA intends to inform retailers of the
coupon program’s details and their
rights and obligations, including their
obligations to honor all valid coupons
that are tendered in the authorized
manner. NTIA proposes to reimburse
retailers within 60 days after receiving
sales information related to converter
boxes purchased with coupons. NTIA
also proposes to review and resolve any

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allegation by the retailer that it was
improperly denied reimbursement for a
valid coupon properly tendered and
accepted pursuant to the rules. We
request comment on our proposed rule
with respect to the self-certification
process and other rights and
responsibilities identified for retailers.
NTIA places the highest priority on
creating a coupon redemption process
that prevents waste, fraud and abuse,
while minimizing the burden on
participating retailers and consumers.
Therefore, we also seek comment on the
various ways to prevent waste, fraud
and abuse in the coupon redemption
process.
G. Consumer Education
In addition to the proposed rules
above, we also solicit comment on other
issues related to the coupon program
that are not a part of the rulemaking
process. For example, we solicit views
on the most effective means to provide
consumer education about this program.
The Act provides that NTIA may spend
‘‘not more than $5,000,000 for consumer
education concerning the digital
transition and the availability of the
digital-to-analog converter box
program.’’ Considering the costs of
media production and paid advertising
time, the $5,000,000 limit necessitates
that NTIA carefully leverage the
program’s consumer education spending
by collaborating with and
complementing the consumer education
efforts of broadcasters, equipment
manufacturers, retailers, consumer
groups and others with a stake in a
successful and timely transition to
digital television broadcasting.
According to the FCC Web site, a wide
range of broadcasters, equipment
manufacturers, retailers, consumer
groups and others have begun to
produce and provide information
concerning the digital transition.19
In order to maximize consumer
education efforts, NTIA may seek
proposals to produce commonly used
on-air announcements, print and online
promotional materials as well as other
media or services that can be used to
convey clear, consistent, frequent and
widely disseminated information
concerning the existence of the digitalto-analog converter box program and the
actions that households must take to
obtain coupons and converters.
Examples include advertising
campaigns, public service
announcements, print articles, web
sites, and posters for public display.
19 The Federal Communications Commission
maintains a consumer education website on the
digital television transition at http://www.dtv.gov.

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Any public information campaign
undertaken by NTIA will only be
successful if other stakeholders in the
digital-to-analog converter box program
contribute significant effort to the
production and distribution of this
information.
We seek comment on ways to provide
consumer information to those
households most likely to rely solely on
over-the-air broadcasts in analog format.
We note that there are differences in the
estimated number of households that
rely exclusively on over-the-air
broadcasts. For example, as noted
above, the legislative history indicates
that 14.86 percent of U.S. households
rely exclusively on over-the-air
transmissions, whereas the Government
Accountability Office (GAO) provided
an estimate of 19 percent or 21 million
American households.20 We note also
that in recent congressional testimony
GAO stated that the identification of
households that rely exclusively on
over-the-air television is difficult
because no list of such households
exists.21 GAO also noted that
information on the inverse—those
households that subscribe to cable or
satellite service—is dispersed across
hundreds of providers, and these
providers may face limitations on the
release of their lists to others. Thus, any
information as to ways to target
consumer outreach to those households
eligible for coupons under this program
would be helpful. The Managers’ Report
provides that NTIA may use the
efficiencies of electronic media and
networks for outreach efforts. We solicit
comment on the best ways to utilize the
Internet and other forms of electronic
media to disseminate consumer
information on the various aspects of
the program. Again, we seek
information regarding ways primarily to
target those specific households that
only receive over-the-air television
broadcast signals.
III. Submission of Comments
NTIA requests written comments from
interested parties on the proposed rule
as stated above as well any other aspects
of the Act related to the digital-to-analog
converter box program. NTIA is
especially interested in receiving
written comments from persons with
particular knowledge of the legal,
economic and technical elements
related to such a program. Any
information submitted to NTIA,
however, should not contain
20 See ‘‘Digital Broadcast Television Transition:
Estimated Cost of Supporting Set-Top Boxes to Help
Advance the DTV Transition,’’ GAO–05–258T
(February 17, 2005).
21 See GAO Challenges Report, supra note 7.

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confidential, proprietary or business
sensitive data.
Executive Order 12866
This proposed rule has been
determined to be economically
significant for purposes of Executive
Order 12866; and therefore, has been
reviewed by the Office of Management
and Budget (OMB). In accordance with
Executive Order 12866, an Economic
Analysis was completed, outlining the
costs and benefits of implementing this
program. The complete analysis is
available from NTIA upon request.
Executive Order 12988
This rule has been reviewed under
Executive Order 12988, Civil Justice
Reform. NTIA has determined that the
rule meets the applicable standards
provided in section 3 of the Executive
Order, to minimize litigation, eliminate
ambiguity, and reduce burden.
Congressional Review Act
This rule has been determined to be
major under the Congressional Review
Act, 5 U.S.C. 801 et seq.
Regulatory Flexibility Act
As required by the Regulatory
Flexibility Act, 5 U.S.C. 603, NTIA has
prepared an Initial Regulatory
Flexibility Analysis (IRFA) of the
possible significant economic impact on
small entities of the policies and rules
addressed in this Notice. The IRFA is
set forth in Appendix A. Written public
comments are requested on the IRFA.
These comments must be filed in
accordance with the same filing
deadlines a comments filed in response
to this Notice and must have a separate
and distinct heading designating them
as responses to the IRFA.
Information Collection and
Recordkeeping Requirement
This document contains proposed
information collection requirements. In
accordance with the Paperwork
Reduction Act of 1995 (44 U.S.C.
chapter 35), NTIA invites comments on
this information collection for which
NTIA intends to request approval from
the Office of Management and Budget
(OMB). To successfully administer this
program, NTIA requests approval on
three collection requirements and
recordkeeping and reporting
requirements for: (1) The application
that households must submit to receive
coupons; (2) the certification form for
retailers that will sell the converter
boxes and submit coupons for
redemption; and (3) the certification
form and recordkeeping and reporting
requirements for manufacturers

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regarding converter boxes eligible for
the coupon program.
Comments on the information
collection and recordkeeping
requirements in this proposed rule must
be received by September 25, 2006.
Comments are invited on (a) Whether
the collection of information is
necessary for the proper performance of
the functions of the agency, including
whether the information will have
practical utility; (b) the accuracy of the
agency’s estimate of burden including
the validity of the methodology and
assumptions used; (c) ways to enhance
the quality, utility and clarity of the
information collected; and (d) ways to
minimize the burden of the collection of
information on those who are to
respond, including through the use of
appropriate automated, electronic,
mechanical, or other technological
collection techniques or other forms of
information technology.
Comments on the information
collection and recordkeeping
requirements in this proposed rule may
be sent to Milton Brown, Office of the
Chief Counsel, National
Telecommunications and Information
Administration, 1401 Constitution
Avenue, Room 4713, Washington, DC
20230.
(1) Title: Application for the Digitalto-Analog Converter Box Coupon.
Type of Request: New Collection.
Estimate of Burden: Public reporting
burden for this collection of information
is estimated to average .25 hours (15
minutes) per respondent.
Respondents: U.S. television
households that receive only over-theair television in analog format.
Estimated Number of Respondents: 21
million U.S. television households.
Estimated Number of Responses per
Respondent: 1.
Estimated Total Annual Burden on
Respondents: .5 hours.
(2) Title: Certification for Retailer to
Accept and Redeem Coupons for the
purchase of a Digital-to-Analog
Converter Box Coupon.
Type of Request: New Collection.
Estimate of Burden: Public reporting
burden for this collection of information
is estimated to average 1.0 hour per
respondent.
Respondents: Retailers that accept
coupons for digital-to-analog converter
boxes and submit them to NTIA for
redemption.
Estimated Number of Respondents:
100.
Estimated Number of Responses per
Respondent: 1.
Estimated Total Annual Burden on
Respondents: 1 hour.
(3) Title: Certification of Digital to
Analog Converter Box.

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Type of Request: New Collection.
Estimate of Burden: Public reporting
burden for this collection is estimated at
1 hour per respondent.
Respondents: Companies that
manufacture digital-to-analog converter
boxes who request NTIA certification.
Estimated Number of Respondents:
20.
Estimated Number of Responses per
Respondent: 1.
Estimated Total Annual Burden on
Respondents: 1 hour.
All responses to this information
collection and recordkeeping notice will
be summarized and included in the
request for OMB approval. All
comments will also become a matter of
public record.
Executive Order 12372
No intergovernmental consultation
with State and local officials is required
because this rule is not subject to the
provisions of Executive Order 12372,
Intergovernmental Consultation.
Unfunded Mandates
This rule contains no federal
mandates (under the regulatory
provision of Title II of the Unfunded
Mandates Reform Act of 1995) for State,
local, and tribal governments or the
private sector. Thus, this rule is not
subject to the requirements of sections
202 and 205 of the Unfunded Mandates
Reform Act of 1995.
National Environmental Policy Act
It has been determined that this rule
does not constitute a major federal
action significantly affecting the quality
of the human environment, and in
accordance with the National
Environmental Policy Act of 1969 [42
U.S.C. 4321 et seq.] (NEPA), an
Environmental Impact Statement is not
required.
Government Paperwork Elimination
Act
NTIA is committed to compliance
with the Government Paperwork
Elimination Act, which requires
Government agencies to provide the
public the option of submitting
information or transacting business
electronically to the maximum extent
possible.
Executive Order 12630
This rule does not contain policies
that have takings implications.
Executive Order 13132
This rule does not contain policies
having federalism implications
requiring preparation of a Federalism
Summary Impact Statement.

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Authority: Title III of the Deficit Reduction
Act of 2005, Pub. L. 109–171, 120 Stat 4, 21
(Feb. 8, 2006).
Dated: July 18, 2006.
John M. R. Kneuer,
Acting Assistant Secretary for
Communications and Information.

Appendix A—Initial Regulatory
Flexibility Analysis
As required by the Regulatory Flexibility
Act (RFA) of 1989, as amended, NTIA has
prepared an Initial Regulatory Flexibility
Analysis (IRFA) addressing the economic
impact on small entities that might result
from this Notice of Proposed Rulemaking
(‘‘Notice’’ or ‘‘proposed rule’’).1 NTIA
requests written public comments on this
IRFA. Comments must be identified as
responses to the IRFA and must be filed by
the deadlines for comments on the Notice
provided above. We will consider all timely
comments in drafting our final Regulatory
Flexibility Analysis and in making our
decision on a final rule. NTIA will send a
copy of the Notice, including this IRFA, to
the Chief Counsel for Advocacy of the Small
Business Administration.
This analysis addresses six issues: (1) A
description of the reasons why action by
NTIA is being considered; (2) the proposed
rule’s objectives and legal basis; (3) a
description of and, where feasible, an
estimate of the number and types of small
entities affected by the proposed rule; (4) a
description of the projected reporting,
recordkeeping and other compliance
requirements of the proposed rule, including
an estimate of the classes of small entities
which will be subject to the requirement; and
(5) the relevant rules that could duplicate,
overlap, or conflict with the proposed rule.
The following sections provide details on
each of these issues.
A. Need for, Objectives of, the Proposed Rule
NTIA is promulgating this proposed rule
because of a statutory mandate to create a
subsidy program that will affect the public
under section 3005 of Public Law 109–171.2
This legislation, known as The Digital
Television Transition and Public Safety Act
of 2005 (the Act), requires the Federal
Communications Commission (FCC) to
require full-power television stations to cease
analog broadcasting by February 18, 2009.
After that date, households using analog-only
televisions not connected to cable or satellite
service will no longer be able to receive
television broadcast unless the television is
connected to a converter box that converts
the digital signal to analog format. As a
result, the Act authorizes NTIA to create a
program whereby certain households can
apply for $40 coupons to be used towards the
purchase of digital-to-analog converter boxes.
The proposed rule sets forth a framework
to implement the coupon program as
authorized by the Act. Moreover, the
proposed rule provides public notice as well
as an opportunity for the public to comment.
1 See

5 U.S.C. 603(a).
Title III of the Deficit Reduction Act of 2005,
Pub. L. 109–171, 120 Stat. 4, 21 (Feb. 8, 2006).
2 See

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The proposed rule provides clear guidelines
to consumers, manufacturers and retailers
regarding eligibility, responsibilities and
certifications.
B. Legal Basis
The legal basis for any action taken
pursuant to this proposed rule is contained
in the Act. Specifically, section 3005 of the
Act directs NTIA to implement and
administer a program through which eligible
U.S. households may obtain a maximum of
two coupons, $40 each, to be applied towards
the purchase of a digital-to-analog converter
box. The Act defines the term ‘‘converter
box’’ to mean a stand-alone device used
solely for digital-to-analog conversion.3 The
Act does not define ‘‘eligible household.’’ To
implement the coupon program, the Act
authorizes NTIA to use up to $990 million
from the Fund for the program, including
$100 million for program administration.
NTIA is also authorized to expend up to $1.5
billion for the program, including $160
million for administration, upon a 60-day
notice and certification to the Committee on
Energy and Commerce of the House of
Representatives and the Committee on
Commerce, Science, and Transportation of
the Senate that the $990 million is
insufficient to fulfill coupon requests for
eligible U.S. households.4 This section also
authorizes NTIA, beginning on October 1,
2006, to borrow not more than $1.5 billion
from the Treasury to implement the program.
NTIA, however, must reimburse the Treasury
for this amount, without interest, as
recovered analog television spectrum auction
proceeds are deposited into a new Treasury
fund to be known as the Digital Television
Transition and Public Safety Fund.
C. Description and Estimate of the Number
of Small Entities to Which the Proposed
Rules May Apply

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The RFA directs agencies to provide a
description of and, where feasible, an
estimate of the number of small entities that
may be affected by the proposed rules.5 The
RFA generally defines the term ‘‘small
entity’’ to include ‘‘small business,’’ ‘‘small
organization,’’ or ‘‘small governmental
jurisdiction.’’ 6 The Small Business
Administration defines small entities in the
‘‘radio, television, and other electronic
stores’’ sector as those organizations with less
than $8 million in annual revenue.7 With
respect to equipment manufacturers, the SBA
3 Section 3005(d) provides that the term ‘‘digitalto-analog converter box’’ means ‘‘a stand-alone
device that does not contain features or functions
except those necessary to enable a consumer to
convert any channel broadcast in the digital
television service into a format that the consumer
can display on television receivers designed to
receive and display signals only in the analog
television service, but may also include a remote
control device.’’ 120 Stat. at 24.
4 See supra note 2 at Section 3005(c)(3).
5 5 U.S.C. 603(b)(3), 604(a)(3).
6 5 U.S.C. 601(6).
7 See U.S. Small Business Administration Table
of Small Business Size Standards Matched to North
American Industry Classification System Codes,
http://www.sba.gov/size.

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defines those small entities as those with less
than 750 employees.
NTIA does not have precise information on
the number of qualifying small businesses
that are in the manufacturing or electronic
retailing sectors that would be affected by the
proposed rule. According to data from the
U.S. Census Bureau, there were 1041 U.S.
companies in 2002 that manufactured radio
and television communications equipment,
and approximately 1010 of these firms were
classified as small entities having fewer than
750 employees.8 Specific figures for the
number of firms that manufacture television
equipment are unavailable; however, NTIA
believes that some of these companies are
capable of manufacturing a digital-to-analog
converter box and qualify as small entities.
To the extent that there exists small entities
capable of manufacturing a converter box
pursuant to the standards provided in the
proposed rule, the extent to which they
participate in the coupon program will be a
business decision and not based on any
mandatory action resulting from the
proposed rule. Thus we are unable to predict
with any certainty as to the number of small
firms that will view the coupon program as
a business opportunity and thus be affected
by the proposed rule. We anticipate that
comments to the proposed rule and to this
IRFA will be informative on this subject.
Likewise, it is difficult to ascertain the
number of consumer electronics retailers that
qualify as small entities. Certain data from
trade associations, however, provide a
glimpse of the type of small businesses that
may participate in the coupon program. For
example, the Professional Audio-Video
Retailers Association (PARA) division of the
Consumer Electronics Association (CEA) has
more than 250 professional audio, video,
home theater, and custom electronics
specialty dealers.9 CEA has also formed a
partnership with the North America Retail
Dealers Association (NARDA), a group of
independent retailers that include consumer
electronics retailers that represent
approximately 3,500 storefronts and accounts
for over $11 billion in annual sales.10
However, not all NARDA members may be
interested in participating in the digital-toanalog converter box coupon program. In
addition to consumer electronics, NARDA’s
members also sell and service kitchen and
laundry appliances, consumer mobile
electronics, computers and other home and
small office products, furniture, sewing
machines, vacuum cleaners, room air
conditioners, and other consumer home
products. NARDA’s members, however, are
not limited to retailers, but also include
manufacturers, suppliers and vendors.
Moreover, both PARA and NARDA members
may be specialty electronic dealers not
interested in selling converter boxes.
8 See U.S. Census Bureau, 2002 Economic Census,
Industry Statistics by Employment Size, Radio and
Television Broadcasting and Wireless
Communications Equipment Manufacturing (NAICS
Code 334220), Table 4, available at http://
www.census.gov/econ/census02.
9 See http://www.ce.org/Membership/Divisions/
98.asp.
10 See http://www.narda.com.

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D. Description of Projected Reporting,
Recordkeeping and Other Compliance
Requirements
The proposed rules place certain
compliance requirements on manufacturers
and retailers that choose to participate in the
program. For example, the proposed rule
requires retailers to certify under law that
they: (1) Will educate their customers on the
necessity for and the installation of a
converter box; (2) have systems in place that
can be easily audited as well as systems that
have the ability to prevent fraud and abuse
in the coupon program; (3) are willing to be
audited at any time during the course of the
coupon program; (4) have the ability to
electronically provide NTIA with sales
information related to coupons used in the
purchase of converter boxes, specifically
tracking each serialized coupon by number
with a corresponding certified converter box
purchase; and (5) will only submit coupons
for redemption as a result of purchases made
for converter boxes certified by NTIA. The
Notice also requires retailers to submit
coupons for redemption within 30 days after
they have been used for a purchase, and to
retain hard copies of sales information for
one year after the purchase.
With respect to manufacturers, the
proposed rule provides standards that will be
required for converter boxes for the coupon
program. These standards are necessary to
comply with the Act and to ensure that
converter boxes function properly.
Manufacturers will be required to submit a
self certification that affirms that these
standards have been met.
E. Steps Taken To Minimize Significant
Economic Impact on Small Entities, and
Significant Alternatives Considered
The proposed rule has minimal economic
impact on small entities. Participation in the
coupon program on all levels—consumers,
manufacturers, and retailers—is voluntary.
Thus any significant economic impact would
not be caused by the proposed rule that
creates and implements the coupon program,
as small entities are not required by the rules
to participate in the program. However, if a
small entity does participate in the program,
there is no indication that they will incur
significant economic impacts. Moreover,
there does not appear to be any economic
impact on small businesses by a decision not
to participate in the program.
Associated Costs
Although there may be costs associated
with accepting the coupons and distributing
the converter boxes, the coupon program
does not restrict the retailer in pricing the
converter box. Manufacturers and retailers
may consider these associated costs and
establish the wholesale and retail price of the
converter boxes to recoup any associated
costs. In fact, the coupon program anticipates
that there will be a co-pay element to the
purchase price. Thus, to the extent that a
small retailer or manufacturer incurs costs as
a result of this program, those costs can be
recouped though the retail or wholesale price
which the retailer and manufacturer are at
liberty to choose.
Section D of this IRFA provides the
compliance requirements of the proposed

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rule that retailers must assume if they decide
to participate in the coupon program. Besides
the time that it takes to submit a certification
form to NTIA, there will be actual costs
associated with meeting these compliance
requirements. These costs, however, are
difficult to quantify because of many varying
factors. However, we anticipate that the costs
would be minimal because retailers and
manufacturers may already have the ability
to meet the requirements associated with
participation in this program. For example,
retailers would have to ensure that
employees are capable of educating
customers about the necessity for and
installation of converter boxes. The costs for
this compliance would be calculated by the
number of hours it would take to train
employees. The estimate would depend on a
number of factors such as the existing sales
force’s expertise, number of employees,
salary levels, type of converter box that is
certified, and the consumer knowledge.
The proposed rule also requires retailers to
have systems in place that can be easily
audited as well as systems that have the
ability to prevent fraud and abuse in the
coupon program. We assume that most
businesses would have systems in place that
can be easily audited, and therefore, we do
not anticipate that small businesses will have
to assume a cost to purchase a new system
for the coupon program. Retailers must also
have systems in place that have the ability to
prevent fraud and abuse in the coupon
program. We assume that most retailers are
familiar with and accept coupons for
merchandise, and that they have in place
systems to prevent fraud. The nature of this
coupon program, however, may require
participating retailers to assume additional
costs associated with preventing fraud. These
costs cannot be estimated at this point in the
rulemaking process. There may be costs
associated in complying with an audit. These
costs would most likely be calculated in
terms of employee hourly rates. The
associated costs depends on the nature and
extent of an audit.
There are also costs associated with
handling coupons, that is, accepting the
coupons, submitting the coupons for
redemption, and retaining hard copies of the
coupons pursuant to the regulations. Again,
these associated costs depend on a number
of factors such as the particular systems that
retailers currently have in place, as well as
the extent to which these costs can be
absorbed within existing procedures that the
retailer has in place.
Likewise there are costs associated with
small manufacturers complying with the

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proposed rule. Manufacturers must ensure
that the converter box meet the standards
outlined in the final rule. Manufacturers
would also have to assume up front costs of
manufacturing and distributing the boxes to
certified retail outlets. These costs are
dependent upon a number of factors such as
the cost to the manufacturer to build the
converter box pursuant to regulations, the
manufacturer’s established distribution lines,
the number of retailers participating, and any
relationship that may or may not exist
between the manufacturer and the retailer.
Exemptions and Waivers
The proposed rule does not provide a small
business exemption for any compliance
requirements. To the extent possible, the
proposed rule limits reporting and
recordkeeping requirements to only those
necessary to provide the coupons in
accordance with the Act. Any exemption or
waiver of the requirements imposed on
manufacturers or retailers would potentially
subject the program to waste, fraud and
abuse.
It is not essential that small businesses
obtain a waiver of the certification
requirement outlined in the section above. It
is important for small retail businesses
participating in the program to be
knowledgeable on the particular converter
boxes certified by the program, and for their
sales staff to be able to provide direction and
guidance for consumers. Moreover, these
retailers would have to utilize systems that
accommodate the government issued
coupons. In the long run, the certification
program may provide some protection from
consumer liability for small businesses that
provide converter boxes consistent with the
government-established certification
requirement. As such, a small business could
assure customers that the converter box
meets government standards, which may
offset returns and other issues that could
cause additional costs for the business.
The requirement for retailers to submit
coupons for redemption within 30 days after
they have been used for purchase, and the
requirement to retain hard copies of sales
information for one year after the purchase
also should not be waived for small
businesses. These redemption and recordkeeping requirements are necessary to keep
track of the number of coupons used and to
ensure that the program can be properly
audited at any time. The ability of the agency
to monitor the program and to audit the
program outweighs any burden on small
businesses to comply with these
requirements. Again, any costs imposed on

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small businesses to comply with these
requirements can be recouped through the
retail price of the converter box.
Likewise, compliance requirements cannot
be waived for small businesses that
manufacturer converter boxes. The standards
outlined in the proposed rule are necessary
to comply with the Act and to ensure that the
converter boxes certified by the program
function properly.
Regarding alternatives considered, the
proposed rule requests comment on whether
a paper coupon or an electronic coupon card
should be used. If an electronic coupon card
is used, small businesses may not be able to
participate in the coupon program if they do
not have a system in place that accepts
coupons electronically. On the other hand,
paper coupons may present an additional
burden on small businesses in processing the
sale and submitting the hard copy for
redemption. Either of these alternatives will
only affect small businesses to the extent that
they choose to participate in the coupon
program.
Alternatives To Minimize Burdens
NTIA has taken steps to minimize burdens
on small retailers and manufacturers in its
proposed rule. For example, NTIA has
proposed a self-certification process for both
retailers and manufacturers for the
compliance requirements discussed above.
Alternatively NITA could require a thirdparty certification process, or institute a
procedure whereby NTIA certifies the
compliance requirements. Either option
includes additional steps in the certification
process and therefore would increase time
and cost.
We have also sought to minimize burdens
on small retailers by proposing clear rules
with respect to the redemption process.
Retailers have certainty that if they submit
their coupons within the time established in
the rules, they will be reimbursed in a timely
manner. This proposal removes any
uncertainty on the part of the retailer as to
when they can receive full payment.
F. Federal Rules That May Duplicate,
Overlap, or Conflict With the Proposed Rules
NTIA is not aware of any Federal rules that
may duplicate, overlap or conflict with the
proposed rules.
The preceding analysis indicates that the
expected burden on small entities to
implement the proposed rule would be
minimal.
[FR Doc. E6–11754 Filed 7–24–06; 8:45 am]
BILLING CODE 3510–60–P

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