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How Congress Can Avoid Delaying the Digital TV Transition

Democrats in the Senate have introduced a bill to delay the nation's transition to digital television from February to June. Senate Republicans have blocked the bill, saying a deadline extension would confuse consumers and delay businesses from using the valuable wireless spectrum. Do we really need to delay digital TV to get everyone ready?

As of today, a valuable band of wireless spectrum is being used to broadcast analog TV nationwide; these are the basic 10 channels we all get with an antenna. The FCC has mandated that broadcasters switch to a hard-wired digital signal before February 17th, leaving that wireless spectrum open to be used for more technologically advanced uses (like long-range wireless Internet, which may or may not be free to all Americans.)

The problem with the digital conversion is that most televisions aren't equipped to handle a digital signal directly. If you have a modern flat-screen TV, it probably has a tuner built in, and you'll be fine. But older TVs will require a converter box that acts as an intermediary between the wall and your decrepit, now-obsolete analog TV. Of course, this box is not free. It's anywhere from $50-$70. Here's where we encounter problems.

The National Telecommunications and Information Administration, the part of the Commerce Department that is administering the conversion program, has tried to make this process a little more palatable by offering voucher cards worth $40 to homeowners who can't (or don't want to) pay full price for the converter boxes. Each home can request two. The program has a $1.34 billion funding limit, most of which is devoted to these vouchers.

To anyone with a calculator handy, the problem becomes evident quickly. Plenty of people want vouchers — there's a 2.1 million person waiting list — but an unlimited number of dollars that can back the vouchers. Now, these vouchers expire if not used after 90 days, making more funds available for new vouchers. The NTIA is waiting for the first round of unused vouchers to expire, making more funding available to issue new vouchers.

However, this may not happen before the February 17 cut-off, leaving some people — notably, the elderly and the rural poor — without a converter box when the airwaves go dead. They'll be flummoxed. Senator Jay Rockefeller (D-WV) has called for a June 12 extension, saying "We risk leaving those who are most reliant on over-the-air broadcast television for their information literally in the dark."

According to this article by the AP, as many as 10 million households will need converter box vouchers, meaning that the NTIA voucher program could be up to $1 billion short of funding. Consumer advocates are saying that money should be readily available, since the FCC has made $19 billion auctioning off the freed-up white space, but with Congress controlling the funding, there's no telling if or when more money could flow.

But the solution isn't budgetary; it's monetary.

Think of these vouchers as a sort of currency that can be accepted in lieu of dollars to buy converter boxes. Currencies don't have to be backed by any actual asset; our Federal Reserve Notes have been succeeded as an un-backed fiat currency for decades. The NTIA should distribute "converter box notes" that can be paid to box-makers, detaching them from dollar backing. That way, they can issue as many as they need to without increasing the project's budget, just as banks can lend you money they don't have in their vaults.

Once box-makers receive these "box notes," they can be given incentives (tax breaks) for paying them back to the government as a portion of their taxes, in lieu of using dollars. (This way, we don't have box-makers trying to circulate "box notes" into the money supply.) Rather than having to front Federal Reserve Notes by a certain date, Congress can simply spend a tiny pool money into existance for this project, and re-absorb it as taxes.

There's no law saying that Congress can't do this — indeed, we financed the Civil War this way, with currency called "US Notes" issued directly by the Treasury — but it's an admittedly unlikely solution. Somehow, the best ideas never quite make their way to the floor; as Mark Twain once joked, "Suppose you were an idiot and suppose you were a member of Congress. But I repeat myself."

President Obama has endorsed the delay, despite Republicans' block on Friday. Democrats in the Senate say they'll re-introduce the bill this week.