Current Events in January 2008

As Wal-Mart sneaks quietly out of the online movie business, Netflix, the video rental company that pioneered renting movies by mail, now wants to bypass the U.S. Postal Service and send those videos directly to your TV, in high-definition, using an Internet connection.

Netflix and TV set manufacturer LG Electronics, announced a joint project to develop a set-top box for consumers to stream movies and other programming from the Internet to HDTVs -- bypassing the need to use a personal computer. The companies say they hope to roll out the new technology in the second half of 2008.

Wal-Mart quietly closed its movie-download service Dec. 21. Hardly anyone noticed, illustrating the retail giant's failure to make much of a dent in the business. In 2005, Wal-Mart gave up on trying to run a DVD rental service similar to that offered by Netflix.

Netflix said the technology collaboration supports its core strategy of offering a multi-dimensional, or "hybrid," service that gives its more than 7 million members a variety of ways to receive movies and TV series for one monthly fee.

The company did not specify how much it would charge for the service.

Netflix subscribers currently have the ability to watch movies online, but must do so on their computer monitor.

With the availability of the networked LG product planned for later this year, Netflix said its subscribers will be able to watch movies streamed from the Netflix Web site on their large-screen home theater HDTVs as well.

Currently, mail subscribers may choose from among more than 90,000 titles delivered on DVD. The online service currently offers more than 6,000 titles, the company said.

"Internet to the TV is a huge opportunity," said Netflix Founder, Chairman and CEO Reed Hastings.

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Wal-Mart had launched its online movie business in February 2007, offering about 3,000 films and TV episodes. Its downloads were not usable on standard DVD players or on iPods, which analysts said hurt sales.

In its little-noticed Web site notice announcing the abandonment of the service, Wal-Mart said customers who had already bought movies would be able to continue watching them.

AOL also abandoned its online movie service recently. That leaves Apple's iTunes and Amazon.com to compete with the new Netflix offering.

Consumers fell behind on loan payments in a number of categories in the third quarter, according to the latest numbers from the American Bankers Association.

The bankers blamed much of the decline on problems caused by higher oil prices and slumping home values.

Delinquencies for home equity lines of credit the lowest delinquency rate category rose seven basis points to 0.84 percent. Delinquencies for closed-end home equity loans rose 29 basis points to 2.28 percent and property improvement loan delinquencies went up 14 basis points to 1.60 percent.

The number of delinquent accounts in the composite ratio, which tracks eight closed-end installment loan categories, increased 17 basis points to 2.44 percent.

The lone bright spot was credit card delinquencies, which fell 21 basis points to 4.18 percent of accounts in the third quarter (seasonally adjusted). The ABA report defines late payments as 30 days or more overdue.

"Credit card holders continued to improve on-time payments during the third quarter despite obvious stress in the housing market," said James Chessen, ABA chief economist. "Modest income and job growth helped ease consumers' financial stress even as they worried how to pay for the rising costs of gas, food, and energy."

The fact that credit card repayment rates continue to improve as mortgage repayments worsen may seem contrary to conventional wisdom, Chessen said.

"Consumers facing mortgage resets may be under financial pressure, but they still want to keep up with other payments," Chessen said. "They still need to heat their homes, put food on the table and fill their cars with gas."

"Consumer loans directly related to the housing market were hit the hardest," Chessen said. "We anticipate delinquency rates will continue to rise on these types of loans in the fourth quarter of 2007 reflecting continued weakness in the housing sector."

Get help fast

"Any borrower experiencing financial stress should seek out their lender promptly as it's important to address the problem early when more options for help are likely to be available," Chessen recommended.

ABA advises consumers to review their finances often and watch for the warning signs of overextended credit:

• Paying only the minimum payment month after month;

• Being out of cash constantly;

• Being late on important payments such as rent or mortgage;

• Taking longer and longer to pay off balances; and

• Borrowing from one lender to pay another.

For others having trouble paying down debts, ABA advises consumers to take action - sooner rather than later - to solve debt problems with the following tips:

• Talk with creditors hiding only makes the problem worse;

• Don't charge more purchases until your problems are solved;

• Avoid bankruptcy it's a short-term solution with long-term consequences; and

• Contact Consumer Credit Counseling Services at 1-800-388-2227.

There's only one year left before over-the-air television signals switch from analog to digital, and many watchers who rely on "rabbit ears" or roof-top antennas will wake up to blank screens without the right equipment. 

To that end, the government is offering $40 coupons for anyone who needs to purchase a converter box to properly watch digital television on an analog set.

The National Telecommunications and Information Administation (NTIA), an arm of the Commerce Department, is offering the coupons through its official digital television site.

Beginning January 1, 2008, and continuing until March 31, 2009, television watchers can apply for up to two coupons per household towards buying converter boxes, one per set. Consumers can also call a 24-hour hotline to take requests at 1-888-DTV-2009 (1-888-388-2009).

Beginning February 18, 2008, the government will mail the coupons to applicants, which can then be used to purchase the converter boxes at major electronics retailers.

Although most electronics retailers have not begun advertising or selling digital converter boxes yet, the devices are expected to cost between $60 and $70. LG and Phillips are expected to unveil their converter box models at next week's Consumer Electronics Show in Las Vegas.

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If you're confused by the news that you may suddenly need a new piece of equipment to watch your favorite television shows, don't worry--you're not alone.

The Nielsen ratings service and the Consumer Electronics Association estimated that as many as 11 to 14 percent of American households, or 13.5 million people, still watch over-the-air television and don't use cable or satellite services. Many of those households are unaware that the transition is taking place, or that they will be affected.

Consumer groups believe that the number of households that still use analog televisions is much higher, and that consumers should have been fully compensated for the cost of buying new converter boxes for their televisions.

Although the government has stopped short of offering full subsidization for the conversion, it was still willing to pony up nearly $1 billion dollars to fund the coupon program.

The government has been also criticized for not working hard enough to publicize the switch from analog to digital and informing consumers of the need to buy converter boxes.

Although Federal Communications Commission chairman Kevin Martin said he wants alerts about the change broadcast several times a day, Congress and the Government Accountability Office (GAO) have claimed NTIA and the FCC have no comprehensive plan in place to address the transition, or what will happen if thousands of angry television viewers wake up to blank screens once the change is complete.

The portion of the wireless spectrum used to broadcast analog television signals is being auctioned by the FCC, provoking a fierce bidding war between technology titans such as Google and AT&T. Although a portion of the newly free spectrum is required to be used for public safety services, the rest is up for grabs to the highest bidder.

What you can do

The following sites have more information about the analog-to-digital transition:

• Our Dawn Carlson provides a thorough overview of what you need to know.
• Visit the FCC's official DTV site to get more information.
• Apply for a converter box coupon at the NTIA's converter program Web site.