With the deadline for the digital TV conversion fast approaching and with Congress still working on an extension, there are lots of people complaining about the lack of coupons and the fact that some people won’t get coupons in time to get converters before the analog TV signals go dark.
Of course, there is an equal number of people saying this is no big deal and that, at $60, the converters aren’t that big of an expense, especially for those who can afford it and are just asking for the coupons because they can.
But to me the interesting question is, Are the converters really worth $60 or did the $40 coupon program artificially boost the price by, oh, I don’t know, $40?
I’ve been hearing from more and more people who believe that this is exactly what is happening. And that if there had been no coupon program then there would be digital converters out there selling in the $20 to $30 range.
I picked up a $60 converter box from a local electronics store to take a look at (and to use in a bedroom that doesn’t have a satellite box). As a tech guy I couldn’t stop myself from opening it up, and I have to say, it sure doesn’t look like there’s $60 worth of technology in there. I’ve definitely seen more complicated pieces of hardware that are priced at half of what this device is.
Of course, I could be wrong and these things could be priced exactly what they should be. But common sense tells me otherwise.
Think of any situation that you’ve been in where you haggled for the price of an item. If you walk up to the salesperson and state right off the bat that you have $100 to spend, chances are you are going to pay around $100.
On the other hand, if you keep your resources secret, and even better, if you can play two sellers off each other, chances are you are going to pay a whole lot less than $100.
To me it seems that the same situation happened with the converter boxes. Rather than letting competition lower the prices, just as we’ve seen with other electronics such as DVD players, the coupon program basically prevented any vendor from offering a sub-$40 device.
And rather than being a discount, the $40 coupon became a price baseline.