Commerce TV Subsidy Compromise: Spend First, Limit Later

by on March 13, 2007 · 6 comments

The Commerce Department today issued its long-awaited final rules on the new federal subsidy program for digital converter boxes. As expected, the program was expanded include households that have cable TV subscriptions, but want to keep using those non-cable TV’s in the basement or kitchen. In a nod to fiscal responsibility, however, the expansion came with one caveat: these “basement TVs” would be eligible only until the first batch of program funding ($990 million) runs out. The second batch (up to $500 million more has conveniently already been provided for by Congress) would be reserved for households that don’t have cable service.

In other words, the cash till will be wide open until the first billion or so is spent. Only when the money starts running low will sensible limits be applied.

Why the two-part process? After all, Commerce’s initial call was the right one: if subsidies go to anybody, they should go only to those who actually would lose TV service in 2009, when the analog lights go out. In addition to being good policy, excluding cable households made fiscal sense too: no one knows how many cable households would apply for benefits, and total spending could easily go over the total authorized by Congress.

Yet, however sensible Commerce’s initial decision, Capitol Hill didn’t like it. Fearing a public backlash when analog signals are discontinued, members of Congress pushed the agency to expand eligibility. Thus the compromise: spending will only be constrained once the money starts to run out.

This regulatory fine line-drawing, in any event, may all be for naught. Commerce Committee chairman John Dingell has already complained that Commerce didn’t open the floodgates more fully. Morever, conventional wisdom holds that once the alloted funds start to dwindle — or even before then — Congress will fall over itself to spend more money on TVs. Dingell has already stated the program is “underfunded.” Even more worrisome, he and others have raised the prospect of delaying the DTV transition entirely — preserving rabbit ear reception for basement televisions for a few years, at a cost of billions in lost revenue (and forgone new wireless services).

Like a bad primetime lineup, this promises to get worse before it gets better.

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