Should oil companies pay
a windfall profits tax?
from experts in the field:
Fritz Messere is chairman of the communication studies department at State University of New York at Oswego. He is also co-author of Broadcasting, Cable, the Internet and Beyond: An
Introduction to Modern Electronic Media (McGraw-Hill, 2003).
Since Congress recently set February 2009 as the deadline for transition to
a new digital television system in the U.S., people have been asking questions: Will this make all TVs obsolete? How will this benefit consumers?
And, from a financial perspective, should the government provide a
subsidy to help people convert their televisions to receive digital signals? The switch to digital—
and the subsidy—are good ideas. Here’s why.
For years emergency service providers have had to communicate using a variety of different
frequencies. Firefighters did not use the same frequencies as police and ambulance services. As a
result, first responders were caught in dangerous situations where they were unable to communicate with each other.
When the government allocated new channels to begin broadcasting high-definition television, the Federal Communications Commission (FCC) decided to move TV channels higher
into the ultrahigh frequency (UHF) spectrum. Broadcasters will have to give back their old TV
channels in 2009. Some of those givebacks will go to create new commercial wireless services,
but many will be reallocated to create a new public service band for police, fire and rescue.
In terms of finance, when the FCC opens up new frequencies for commercial use, it auctions
them to the highest bidders. The Congressional Budget Office estimates that the auctions for
these TV frequencies could earn $10 billion from companies eager to offer new wireless technologies. With that kind of revenue stream, the plan will help create a desperately needed new
public service band and new wireless services.
While the majority of Americans wired to cable would not see a difference in service,
Congress thought about the 20 percent of Americans who still receive TV over the air. The
plan has allocated a fund to help those Americans buy converter boxes to receive the
The outcome will ultimately result in better TV and better public service communication.
This is an instance when a technology change has created a win-win situation. C
from experts in the field:
Peter Koeppel is founder and president of Koeppel Direct
www.koeppeldirect.com), a leader in direct-response television
media buying, marketing, campaign management and
In mid-February 2009 television stations will begin broadcasting via
digital signal instead of the analog signal they’ve always used. As part of
this conversion, the House and Senate recently approved a plan to pay a
$40 subsidy to low-income families toward a converter box that will allow
those with analog TVs to view the digitally broadcast programs. I don’t believe this is a good
idea, nor is it necessary.
The primary reason the federal government should not subsidize conversion boxes is that
watching TV is not a basic right to which Americans are entitled. TV watching is a form of
entertainment, which I would not consider a basic right. I believe the government should protect
certain rights such as freedom of speech, protect people from discrimination, provide education
and security, protect the environment, etc. These are important areas where the government
should be concentrating its efforts. I don’t feel that TV viewing fits into the same category as
these rights and protections that make this such a great country to live in. Therefore, the government should not be responsible for making sure that everyone has the ability to watch TV.
I think, with some preparation, most households currently not equipped to receive digital
TV could afford the cost of a converter box. They have plenty of time to save for them. And,
since the price of new TVs has dropped dramatically, perhaps they could afford a new or
Furthermore, the government could face a nightmare trying to identify people eligible for the
conversion subsidy. The government will most likely have to provide anyone who applies for the
subsidy with a $40 coupon.
An option to resolving the issue is a funding plan floated by the Consumer Electronics
Association. They have proposed that an additional tax of 3. 5 percent be added to the cost of
digital TV purchases, which would amount to about $40 per sale. This approach could quickly
generate the projected $3 billion or more needed for conversion. Manufacturers may not like
the idea of adding $40 to the cost of their product, but it’s an idea worth considering. C
Opinions expressed are those of the
individuals or organizations represented
and are presented to foster discussion.
Costco and The Costco Connection
take no position on any Debate topic.
MARCH 2006 The Costco Connection 17