Retailers Fear Shortfalls of Digital TV Converters

Best Buy Inc.'s chief executive said Tuesday that he is "very nervous" about being able to supply customers with the millions of digital TV converter boxes needed ahead of the shutdown of most analog TV transmissions in 13 months.

"I think it's one of the biggest risks our industry has," vice chairman and CEO Brad Anderson told an industry audience at the International Consumer Electronics Show in Las Vegas.

Full-power television stations will turn off their analog signal on Feb. 17, 2009, after which they will broadcast in digital only.

Viewers who receive their signals through an antenna instead of cable or satellite and don't have a digital-ready TV will have to buy a converter.

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The Nielsen Co. estimates that 14.3 million households rely on over-the-air television broadcasts for programming. Still others have sets that receive analog broadcasts as a complement to cable, satellite or digital sets in the same household.

"The number of converter boxes that is going to be required could put tremendous pressure on us to solve all those problems" in a short time, said Anderson.

"We're very nervous about the potential risk. Once it gets turned off, it could be very interesting," he added.

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Apart from the supply issue, customer education looms as a problem for the retailers.

Speaking on the same panel, Phil Schoonover, the CEO of Circuit City Stores Inc. said Anderson's caution was appropriate.

He contrasted the digital TV transition to the introduction of high-definition television sets, which mainly attracted the well-heeled and technically savvy.

"I think it will feel very different in this next round of TVs, because we're through the early adopters," Schoonover said.

At the same time, Schoonover defended the transition as "well thought out," and said it has been handled in a very responsible way.

The airwaves to be vacated by the analog transmissions will be auctioned by the federal government to providers who will use them for wireless broadband services.

Customers are likely to look to specialty electronics stores like Circuit City and Best Buy for guidance ahead of the transition.

Steve Eastman, the Target Corp.'s vice president and general merchandising manager for consumer electronics, was less apprehensive about the digital transition.

"From a category standpoint, I think it's great — it's getting people to talk a lot about HD and what technology they have in their home," he said.

But he acknowledged that a lot has to be done to prepare. "The clock's ticking and this is coming very quickly," he said. The company plans to have converter boxes in stores by April.

The converter boxes are expected to cost between $40 and $70. The National Telecommunications and Information Administration has begun accepting requests for two $40 coupons per household to be used toward the purchase of the boxes.