Articles by James Gattuso

James Gattuso is a Senior Research Fellow in Regulatory Policy in the Roe Institute for Economic Policy Studies at The Heritage Foundation. Gattuso also leads the Enterprise and Free Markets Initiative at Heritage, with responsiblity for a range of regulatory and market issues. Prior to joining Heritage, he served as Vice President for Policy at the Competitive Enterprise Institute and also as Vice President for Policy Development with Citizens for a Sound Economy (CSE). From 1990 to 1993, he was Deputy Chief of the Office of Plans and Policy at the Federal Communications Commission. From May 1991 to June 1992, he was detailed from the FCC to the office of Vice President Dan Quayle, where he served as Associate Director of the President's Council on Competitiveness. He lives in Alexandria, Virginia with his wife Dana, 8 year-old son, Peter (whom he relies upon to operate his VCR), and his four year-old daughter Lindsey (who does the DVD player.) He has no known hobbies, but is not nearly as boring as he seems.

FCC Commissioner Robert McDowell penned an outstanding piece in today’s Wall Street Journal (subscription) on the commission’s vote tomorrow on neutrality regulation.   The final paragraph is worth a Pulitzer:

On this winter solstice, we will witness jaw-dropping interventionist chutzpah as the FCC bypasses branches of our government in the dogged pursuit of needless and harmful regulation. The darkest day of the year may end up marking the beginning of a long winter’s night for Internet freedom.

Strangely, McDowell’s dire warning is similar to that of Senate Majority Comedian Al Franken, who warned today in the Huffington Post that if the proposed rules are adopted, “the Internet as we know it would cease to exist.”    Of course, his reasoning is a bit different, as he calls for more, rather than less regulation. 

Despite complaints from Franken and others on the Left that the FCC proposal doesn’t interfere enough with the Internet, the betting at the moment is that the FCC will adopt neutrality rules of some type or another tomorrow.   The the real battle begins, on two fronts.  In Congress, GOP members are anxious to use their new House majority (as well as their increased Senate heft)  to take a whack at regulation generally, and neutrality regulation specifically.   Secondly, in the courts, which decimated the FCC’s prior attempt to impose neutrality rules, and will no doubt will look skeptically at these new ones.

Should be an interesting 2011.  (BTW, my own piece on the issue, released on Friday, can be found here.)

Americans are increasingly cutting the cord on their phones.   By the most recent estimates, 40 percent Americans  rely primarily on their wireless phone for voice calls, and most of those don’t have a wireline phone at all.

 But don’t count me in that number.   Its not that I wouldn’t like to cut the cord.  It’s that I can’t.   I live in a cellular hole, one of those thousands of places where wireless connections are weak or non-existent.   The reason isn’t geography – I live in a well-developed part of the Washington metro area, not an igloo in Alaska.   Nor is the problem the Federal Communications Commission, though its efforts to regulate wireless may do damage in the future.

 No, the problem is much closer to home – my local zoning authorities.   Wireless carriers, as it turns out, had not forgotten my corner of the world, and have been trying to build a cellular transmission site to erase the dead zone for some time, but have been been stymied by an infinitely elastic approval process. Continue reading →

As Steve Titch discusses below, Google and Verizon, two of the leading antagonists in the long-running drama over FCC net neutrality regulation, may be about to call a truce.   According to numerous media reports, the two firms have or soon will agree to a compromise framework for regulation, which would provide for a limited degree of regulation by the FCC.

The exact provisions of the compromise are unclear.   Reportedly, however, the plan would ban Internet access providers such as Verizon from blocking content outright, while allowing them to offer prioritized service for a fee.   The provisions would not apply to wireless Internet access, which would be kept mostly free of regulation.

While Google and Verizon have long been adversaries on this issue, it’s been no secret that the two have been working together to craft out common ground.   The two in fact, filed joint comments in the FCC’s rulemaking on the issue earlier this year, and the CEOs of the two firms even jointly authored a Wall Street Journal op-ed on broadband policy.

The incentives for both are clear.   With federal courts earlier this year rebuffing the FCC’s attempts to impose regulation, it was no doubt clear to Google that nothing could happen without a compromise.   Moreover, the “big is bad” tenor of the debate no doubt gave Google – one of the largest firms in our galaxy – reason to rethink.   For Verizon, a deal would provide some policy certainty, much-needed given the vast investments in broadband it is making.  And since the firm has always disavowed any desire to block wireline content, the new rules would come at little apparent cost.

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Could net neutrality rules be unconstitutional?  Maybe so, says Daniel Lyons of Boston College Law School.  In a piece released last week by the Free State Foundation (based on a more extensive research paper for Boston College last March) he argues that rules of the sort being considered by the FCC may constitute a taking of property under the Fifth Amendment. 

The idea that a regulation could be considered a “taking” is certainly nothing new.   For decades, courts have recognized the concept of “regulatory takings,” rules so restrictive that they constitute a seizure of property under the Fifth Amendment.  But Lyons doesn’t just argue that “net neutrality” is a regulatory seizure in some abstract sense. He argues that neutrality rules would constitute a very real  seizure of tangible, albeit invisible, property.

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“When I use a word, it means just what I choose it to mean — neither more nor less,”  Humpty-Dumpty said.     The famous egg could have worked for the Federal Communications Commission, which today took the first step toward re-defining broadband service as telecommunications.

 The decision comes only two months after a federal court — rather definitively – ruled that the agency had no authority to apply net neutrality rules to Internet service providers.  But it only took a few weeks for Chairman Genachowski to come up with a plan B:  re-classifying broadband service as telecommunications service.   At today’s meeting, the Commission — on a 3-2 vote — adopted a notice of inquiry on doing  just that.   Never mind that the initial that broadband is not telecom was the result of a years-long inquiry by the Commission.   If the FCC says a computer is really a telephone, then it is.  Lewis Carroll would be proud.  Continue reading →

No one disputes that a key goal of the FCC is to help foster diversity in, and minority access to, channels of communication. In practice, this all too often has been interpreted to mean ownership limits, set-asides, preferences and other mandates imposed by the Commission. Usually lost in the heated debates is the fact that ill-considered regulation itself can impede minority access and diversity.

In comments filed last week, a group of sixteen minority and civil rights organizations — ranging from the Lawyers’ Committee for Civil Rights Under Law to the National Conference of Black Mayors — argue that net neutrality regulation may do just that. “[T]his proceeding implicates one of the most important civil rights issues of our time,” the comments –written by David Honig of the Minority Media and Telecommunications Council — assert. Continue reading →

A funny thing happened to the FCC Friday on its way to regulating the Internet:  a federal appeals court panel questioned the agency’s authority to regulate the web.    There’s no final decision yet, but an adverse ruling could stop the agency’s Internet regulation plans in their tracks.    And for good reason.

In proposing new neutrality rules last October, the FCC one rather inconvenient obstacle:   there isn’t anything in the Communications Act, or any other statute, actually giving them power to regulate such things.   Internet service, by the FCC’s own reckoning, is not a telecommunications service, nor is it cable TV, or broadcasting, or anything else the law give the FCC authority to regulate. Continue reading →

With the advent of new technology, newspapers are being threatened.  Many are expected to go out of business, and the rest will have to change substantially.  Many observers fear that journalism will become too driven by speed, and that judgment and deliberation will be lost.  Others said that news reporting would be devalued and only those providing analysis and opinion would survivie.  Worst of all, worries that the new technology will lead to a monopoly over information.

A description of the dire situation faced by newspapers today as they face the Internet?  No.  These are the concerns expressed in the 1840s as the telegraph transformed the news business.   This week’s Economist tells the story of how Samuel Morse’s invention was thought to signal the death knell for newspapers, and to thoughtful journalism.

As it turned out, the news business was tranformed.   But not in the ways many feared.   With faster communications, the quality of news, and of the information Americans received, improved.  Newspapers had to adapt, but survived and even prospered.  And no one ever created a monopoly over information.

 Good reading.

Bidding has begun on Comcast’s acquisition of a majority stake in NBC Universal.  No, not the bidding between GE and Comcast over the terms of the sale.   That was the comparatively easy part.  The real bidding is over at the FCC, as various interests work to get concessions and pledges from Comcast as a condition of FCC approval of the deal.   The jostling may put post-Thanksgiving Black Friday sales to shame.   Everything from more kid’s shows to broadband open access mandates are potentially on the table.

And that’s if the sale is approved by the FCC at all.   Groups such as Free Press called for its rejection as soon as it was announced.   Commissioner Michael Copps underscored the alpine nature of the approval process, stating bluntly that the deal “faces a very steep climb with me.”

Amidst the din, however, one question has been drowned out:  Why is the FCC involved in this at all? Continue reading →

November was certainly a bad month, public relations-wise, for the Administration’s stimulus program, what with claims that the program had created huge new numbers of jobs debunked.  (Who would have guessed that numbers given for Arizona’s 15th congressional district or Minnesota’s 57th district were wrong?)  But, as pointed out last week by my collegue Meinan Goto, there may be further trouble ahead.    In a report recently released by the GAO, the government watchdog agency warns of possible waste, fraud and abuse in $4.7 billion broadband stimulus grants to be made by NTIA and the Rural Utilities Service.  

The risks stem from a variety of sources, including the speed with which the grants are to be made, and the two agencies near-total lack of any experience with grants of this magnitude.   The GAO  also points out that, in true cart before horse fashion, NTIA and RUS will have to complete its first, and perhaps both, funding rounds before  a  map showing where broadband is needed is completed, and before the FCC completes its congressionally-mandated plan on to make broadband available.

GAO, of course, isn’t the first to point out this cart-and-horse situation, but that doesn’t make it any less serious.  While less headline-grabbing than invented congressional districts, the report is nevertheless worth reading by anyone who thinks $4.7 billion is still real money.