Digital switchover delays

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This article from the New York Times is interesting due to a number that caught my eye:

Mr. Podesta said that the number of requests -- possibly hundreds of thousands each day -- could overwhelm the National Telecommunications and Information Administration, which is running the program. The coupons are worth $40, and the most basic converters cost about $50.

A little bit of background. The United States is currently in the process of switching off its old analogue TV broadcast networks - a wise move, and one which the UK is currently in the throes of and which Switzerland finished a while ago. These days, analogue terrestrial television is an extremely wasteful method of broadcasting - the powers needed are far, far higher than digital terrestrial requires, and frankly the quality it provides is poor relative to modern technologies, especially given the USA's pisspoor 525-line NTSC standard.

In an attempt to entice people to buy digital set-top boxes for their existing analogue-only tellies, the federal government is issuing people with $40 vouchers which can be redeemed against the cost of a digital converter box. All well and good.

However, it's fairly predictable what's happened. The voucher programme has issued all the vouchers it has funding for, and the cheapest digital boxes I can find on cost $54.99. This price surprised me, as these days it's difficult to spend over £20 on a digital box in the UK. The cheapest available from Argos at the time of writing is £12.74 - at the current exchange rate, $19.28. Electronics in the US is usually cheaper than in the UK, and the market for these boxes is proportionally larger in the US as well, so why does the cheapest box in the US cost at least two and a half times as much?

Well, I guess that if the federal government's handing out $40 subsidies per box you'd be stupid to sell a box costing less than $40, and "$40 plus a few bucks" seems like a reasonable price point.

As a result, those people who can't get the vouchers are having to pay ridiculous prices, and the federal government is getting fleeced as well. I don't often say this, but this seems to be one of those occasions where the free market actually would have done this better than the government. All it needs now is for someone to sell a converter box in the US that's comparable in price with the UK, and they'll clean up completely in that market. Why bother waiting an age to see if you could get a voucher from the government when you could just plunk down $20 and get a box right away?

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US digital receivers have to be able to decode HD MPEG-2 even if they only have SD outputs. This presumably adds some price premium to them, but I don't know how much.

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