Consumer groups are up in arms over what they believe will be an unfair financial penalty on up to 21 million households, as the United States begins its transition from analog/digital to all-digital television.

The U.S. House of Representatives on Monday set a switchover date of February 17, 2009 when over-the-air, analog TV will be a thing of the past. All U.S. households will need a converter box to receive any TV broadcast, including free TV.

For viewers who pay for digital cable TV service, the transition will have no effect. But for the constituency of viewers who don’t subscribe to digital cable TV, the legislation passed by the House will provide each household with up to two coupons worth $40 each for converter boxes that will allow their TV sets to pick up digital transmissions.

But Consumers Union, a consumer watchdog group that publishes Consumer Reports, said the legislation will saddle consumers with more than $3.5 billion in out-of-pocket expenses. And the House allocates less than $1.4 billion to compensate those consumers.

“The consumer compensation program established in this program is unworkable, unfair, and unacceptable to consumers,” said Jeannine Kenney of Consumers Union. “It provides only a fraction of the funds needed to compensate consumers for the costs of a digital transition they never asked for.”

Consumers Union estimates the cost of each converter box at $60 and charges that the $1.4 billion in funding that allows two $40 vouchers for each household will only partially offset the cost of the converter boxes. The watchdog group estimates that consumers will have to absorb more than $2 billion in transition costs.

The group estimates that four in 10 households own a total of up to 80 million televisions that will need converter boxes (see Senate Tackles Digital TV).

The Senate had earlier approved a $3-billion fund for converter boxes and a deadline of April 7, 2009, while the House had approved a $990-million fund and a December 31, 2008 cutoff date. The two houses compromised on Monday’s agreed-upon fund amount and date.

Valuable Spectrum

When broadcast television stations complete the transition to digital, it will free up wireless spectrum because digital transmission is more efficient in its use of precious spectrum.

Most of the newly available spectrum will be auctioned to commercial interests. The auction is scheduled to begin in January 2008. The legislation calls for the auction to raise at least $4.81 billion, but the Congressional Budget Office estimates the auction could raise as much as $10 billion.

“This is very valuable spectrum,” said Max Weise, principal with Adventis, a Boston-based consulting firm. “It comprises frequencies that lend themselves to next-generation broadband services such as WiMAX. A lot of people are going to be affected by this, including the average consumer who does not have a clue that this is going on.”

The House has set aside $5 million for consumer education, but Consumers Union believes that amount is not enough, so millions of households could be in for a big, static-filled surprise when they turn on their TV sets in February 2009.

“Consumers will have no idea what’s coming and what they need to do to prepare for it, making it likely that tens of millions of televisions sets will go black on February 17, 2009,” said Ms. Kenney. “And by requiring consumers to jump through restrictive hoops to request vouchers, those who most need compensation will be the least likely to receive it.”