Consumer Alert: Study Shows Consumers Will Pay Too Much In 2009 Digital TV Broadcast Transition

For several years now, the American consumer has been overwhelmed by ads from government, digital cable companies, satellite service providers and the consumer electronics industry noting that the end is near for free "Over the Air" analog TV. This barrage of advertising has led to record sales of new television sets touting all of the latest gizmos and gadgets: LCD, DTV, HDTV and on and on and on. The home theatre industry has seen ongoing explosive growth as people prepare for the Congressionally Mandated (it's a Law) DTV transition, which will take place on February 17, 2009. Everybody wants to be ready. The question is, has the consumer electronics industry been honest with consumers about what they really need to be ready for the transition? According to a new study published by the U.S. PIRG the answer to that question would be no.

The U.S. PIRG conducted secret shopper surveys at 132 consumer retail stores in 10 states. The report shows logos from retailers like Wal-Mart, Best Buy, Circuit City and Radio Shack, indicating that the surveys were conducted at those retailers. Certain sections of the report show that secret shopping was indeed done at some of those retailers.

The study was initiated to gauge whether or not America's largest electronics retailers are properly preparing consumers for the upcoming digital TV transition. Here's what the study states as findings:

"Our survey shows that the majority of retailers provide inaccurate or misleading information about the digital transition. Many sales clerks tried to persuade our surveyors to buy new, expensive digital televisions or high-definition televisions rather than explaining the availability of the less expensive option such as buying converter boxes, discounted by government coupons available to anyone who needs one.

Specifically, staff at these132 locations provided the following inaccurate or misleading information about the digital transition.

• 81% of the sales staff did not know about or gave out inaccurate information about converter boxes.

• 78% of the sales staff provided inaccurate information about the federal government's coupon program for converter boxes.

• 42% of sales staff provided inaccurate information about the month of the digital transition deadline date."

The study further went on to give the following recommendation: "To protect consumers against misinformation or consumer fraud, the U.S. PIRG Education Fund makes the following recommendations.

Retailers must ensure:

• they adequately educate staff about converter boxes and the coupon program.

• converter boxes are made available at fair prices.

• consumers are informed of the availability of federal coupons.

• analog TV sets remaining on store shelves are properly labeled.

Who is the U.S. PIRG? U.S. PIRG Education Fund is the research and policy center for U.S. PIRG, the federal lobbying office for the state Public Interest Research Groups (PIRGs).

As you can see by the presentation above, the CEA (Consumer Electronics Association) is clearly trying to persuade you to purchase a new TV for the DTV transition. Notice how they changed to really cool graphics when they talked about the new tv's and made everything really exciting... watch it again... when they talk about HDTV, there is a definite energy shift. Then, when they "come back to reality" notice how all of the fun is gone from the presentation. It's kind of like... well, if you're not going to get a new TV, here's a box that you can use instead.... We thought it was really funny.

Marc Pearl, executive director of the Consumer Electronics Retailers Coalition, took issue with the U.S. Public Interest Research Group secret-shopper study in an interview with Broadcasting and Cable Magazine.

Pearl stated: "With respect to the 'study,' it is really unfortunate that it would have any credence whatsoever given its methodology flaws. The 'secret shopper surveyors,' for example, were sent out before the program was in place, during a time when converter boxes were not yet available and where sales associates (and we don't even know from their study whether TV sales staff or a cashier was surveyed.) may have been seasonal/holiday employees who would not have been briefed on a product not yet on the shelves. The standardized questions cited in the report raised by the secret shoppers were so vague and ambiguous that they could not have yielded accurate answers. "

The U.S. PIRG rebutted in a statement by consumer program director Ed Mierzwinski saying "PIRG stands by its data. We validated the study by shopping 10 more stores in January. Got the same result as in the fall. Then, the night before it was released this week, one of our researchers purchased a converter at Best Buy and a checkout clerk deleted the 'eligible for coupon' screen that popped up automatically and charged him full price $60.00..."

If the retail salespeople are misleading the consumers, where can you go to find out what you need and what it will cost. One of the goals at the Debt Free Project is to help each consumer maximize the power of their dollar. This means that we want you to make informed decisions about how, when and where you spend your hard earned money. Because of this, we put our experts to work on the subject. Here's what they came up with.

Question: Who will be affected by the DTV transition in 2009?

Answer: There are approximately 22 million Americans who will be affected by the transition. These people currently receive FREE open-air TV by the use of an analog set top antenna or an analog roof top antenna.

Question: Do you need a new T.V. in order to receive the new DTV signal?

Answer: NO. All existing TV's are compatible with the new DTV signal through the use of new digital to analog converter boxes. These boxes began hitting store shelves in early 2008 and were expected to range in price from $40.00 to $70.00. In order to make the transition even less expensive for consumers, the U.S. Government has initiated a coupon program where families can apply for up to 2 coupons valued at $40.00 each which can be applied toward the cost of the converter box.

Question: If I already subscribe to a cable or satellite service, will I need to do anything to convert to the new digital signal?

Answer: No. There are several ways to make this transition. First, if you are currently subscribed to cable TV, satellite TV, or TV provided by a telecommunications company, you don't need to do anything else. In February of 2009, it will be business as usual for you other than you will probably get some new features.

Question: Is DTV and HDTV the same thing?

Answer: No, in a kind of sort of way. DTV is the basic digital tv signal (also called SDTV or Standard Digital Television). HDTV stands for High Definition Television which provides a more clear television image. However, the DTV transmission technology is capable of transmitting an HDTV signal. Providers will use the DTV signal to provide HDTV content. However, if you don't have an HDTV, you'll not notice any difference in the HDTV picture quality in comparison to your normal DTV signal. The basic reason for this is the HDTV image is much more high resolution (basically smaller dots on your screen) than the DTV image. A normal TV does not have the capability of displaying the extra resolution. If you want HDTV, you will need to purchase an HDTV compatible television and subscribe to some sort of HDTV programming (often offered as part of a standard DTV programming package from cable and satellite providers). Also, depending on which HDTV service you subscribe to, other components may be necessary to receive the HDTV signal.

One of the interesting findings of the survey was that very few retail salespeople provided accurate information about the government coupon program. In fact, here's what the study had to say about it:

"The government issued ‘TV Converter Box Coupons' cover only "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." In instance after instance sales staff pointed to luxury multi-function converter boxes, with no mention of less expensive stand alone converters. It is the basic boxes that are eligible for the coupon discount in the "TV Converter Box Coupon Program." By failing to mention the less expensive options the sales clerks not only sell the customer unnecessary gadgets but effectively make their coupons null and void. Not one of the sales clerks informed our shoppers that the $40 coupons issued by the federal government were void on premium converter boxes."

It's also important to note that by law, all TV reception devices (TV's, VCR's, DVR's, etc.) imported into the U.S. or shipped via interstate commerce are required to contain a digital tuner compatible with the DTV format after March 1, 2007 . Retailers may continue to sell these analog devices, however they must prominently display the following Consumer Alert:

Consumer Alert

This television receiver has only an analog broadcast tuner and will require a converter box after February 17, 2009, to receive over-the-air broadcasts with an antenna because of the Nation's transition to digital broadcasting. Analog-only TVs should continue to work as before with cable and satellite TV services, gaming consoles, VCRs, DVD players, and similar products. For more information, call the Federal Communications Commission at 1-888-225-5322 (TTY: 1-888-835-5322) or visit the Commission's digital television website at: www.dtv.gov.

Now that you are armed with the correct information, what are you going to do? Well, based on our consumer survey, you're probably going to go ahead and buy that new 42" HDTV that you've been eyeing.

We know that you want it and who are we to stop you. In fact, maybe this is what you should spend that forthcoming government economic stimulus check on.... or not. Think about this though. If you do decide to get that new HDTV, and you decide to finance it, make sure you're using the interest cancellation principle to get it. If you're not going to use interest cancellation, pay cash. American consumers can't afford more debt.

The Debt Free Project is a consumer education company focused on helping the American Consumer minimize debt through education. The Debt Free Project consists of a free consumer education website, www.DebtFreeProject.com, a seminar program called the My Debt Edge^TM Advanced Credit Strategies Workshops, a Monthly My Debt Edge E-Newsletter and weekly (FREE) web based consumer education presentations. Founded in 2007, the Debt Free Project is advised by a group of professionals in the Mortgage, Insurance, Financial Planning, Accounting, Retail Consumer Products, Tax, and Credit Scoring sectors.

The mission statement of the Debt Free Project is: "The Debt Free Project exists to re-educate and enable the American consumer to properly use debt and credit as wealth building tools. To that end we will be ambassadors of institutions, people and products who share similar visions and philosophies."

For more information on the Debt Free Project, visit www.debtfreeproject.com.