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.
It’s no Watergate, but the FCC is still roiling over charges made that it deep-sixed a staff study on media ownership because it didn’t like the results. The allegations–and the study–surfaced last week at a hearing on Chairman Kevin Martin’s reappointment. Sent anonymously to Sen. Barbara Boxer, the paper was reportedly written in 2004 by two commission staffers and found that locally-owned television stations aired more local news that those owned by national chains. According to former Media Bureau attorney Adam Candeub, unspecified higher-ups at the agency were appalled at the results because they undercut ongoing efforts to reform media ownership laws. As a result, Candeub said, every copy of the report was ordered destroyed. “The whole project was dropped, “end of discussion, he said.
Kevin Martin–who was a commissioner, but not chair, of the FCC at the time–was apparently blindsided by the claims. He stated that he had never heard of the study, but pledged to look into the matter. He also had the study–or at least a PDF of the copy provided by Boxer–put on the commission’s website. (Bizarrely, this copy–even as posted by the FCC–has the authors names blacked out).
The mini-scandal–perhaps it should be called Papergate–was widely reported in the press, and has led to a barrage of criticism in the blogosphere and a stream of press releases from pro-media regulation advocacy groups (Typical was a headline used by the advocacy group Free Press: “FCC Buried Evidence to Protect Friends in Big Media“.)
The reaction was understandable–the image of FCC officials ordering all traces of a study destroyed, Carthage-like, just because they don’t like the results is a disturbing one. But is the real story that simple? I’m skeptical, for several reasons. Anyone who has worked at the FCC knows that the place leaks like an Italian warship. Its simply is hard to believe that such a step would remain a secret for two years, especially given the intense outside interest in the broadcast ownership debate. That’s not to say that studies are not quietly set aside–that happens all the time. But–as described–the end of this study was anything but quiet, and it’s hard to see the noise not reaching outside the FCC’s building.
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The New York Times today has an excellent article on the incredible shrinking audience for broadcast radio. Increasingly, the Times points out, Americans are tuning out their AM and FM stations and going elsewhere for music and news–to satellite radio, the Internet, their iPods and more.
More than 9 of 10 Americans do still listen to broadcast radio each week, but they are listening less. Americans aged 12-24 in fact listen to broadcast radio as startling 15 percent less than they did only seven years ago. “We’ve lost the hipness battle,” one executive is quoted as saying, along with a fair amount of stock value. The major radio firms are fighting back in a number of ways–but many are also selling stations.
The trend has obvious implications for the FCC–which has just launched an inquiry into, among other things, its radio ownership limits. For some time, the radio ownership debate has been focused on the dominant position of Clear Channel Communications, which is routinely trotted out as example number one of a Media Monopolist (oddly, since it holds only some 10 percent of licenses nationally). But dominance in broadcast radio today isn’t what is used to be. After all, what’s the point of being a monopolist when there’s so much competition? It simply may not matter how many AM or FM stations someone owns when their customers can so easily listen elsewhere.
Are you good at geography? If so, you may enjoy the small geography quiz buried deep inside of the telecommunications bill now pending in the U.S. Senate. Hidden on page 121 is a paragraph directing the FCC to expand universal service payments to “insular areas, including any insular area that is a State comprised entirely of islands…”
Can you name all the states that are comprised entirely of islands? No, Rhode Island isn’t one of them. As it turns out, the list of states covered by this provision is quite short:
1. Hawaii.
And, by total coincidence, a senator from that state–Daniel Inouye–is the co-chairman of the Senate Commerce Committee–which wrote the bill.
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The Associated Press reported yesterday on the latest battlefront in the broadcast indecency wars: a CBS documentary on 9/11. The film–which has aired before without controversy–has been criticized by some indecency advocates because of bad language used by firefighters as they struggled at the World Trade Center on 9/11. The American Family Alliance, for example, has readied its members to complain to the FCC and CBS. As a result, some two dozen affiliates have announced they will replace or delay broadcast of the piece.
“This is example #1” of the chilling effect of the FCC indecency rules, said Martin Franks, CBS’ executive vice president. “We don’t think it’s appropriate to sanitize the reality of the hell of Sept. 11,” Franks was quoted as saying. “It shows the incredible stress that these heroes were under. To sanitize it in some way robs it of the horror they faced.”
Well said. The simple fact is that some Americans will not be seeing this documentary because of the threat of FCC-imposed liability. Would the FCC actually find the piece indecent? That’s anybody’s guess. But the mere possibility has been enough to cause some stations–rationally enough, given increased fines–to cut and run.
A better example of the folly–and outrage– of government content controls would be hard to find. However well-intentioned, the FCC’s rules blow a clear, cold wind on speech.
Don’t look now, but your VoIP service may be getting worse. According to a report released this week by Brix Networks, an Internet monitoring firm, VoIP quality measurably declined in the past 18 months. Specifically, it found that 20 percent of VoIP calls had “unacceptable” quality, as opposed to 15 percent a year and a half ago. (The data was gathered from testyourvoip.com, a web site operated by Brix).
The chief tech offier of Brix, Kaydam Heydarat, says the decline is the result of VoIP having to compete for resources on an increasingly crowded web. If that sounds familar, it should–opponents of mandated net neutrality have long argued that congestion could hurt time-sensitive applications such as VoIP if network owners aren’t allowed to prioritize traffic. As Mr. Heydarat says: The network is ready for VoIP… But now that there are more services running over the same pipe, carriers need to differentiate packets and prioritize service.”
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One of the most frequently asked questions in the net neutrality debate has been why big Internet companies like Google and Microsoft support regulation so strongly. If, as they say, an unregulated market would squeeze out the little guy, you’d think these big companies would be dead set against regulation. And if opponents are right, regulation would make the Internet on which these companies depend much less efficient.
This should make more than a few shareholders of these companies nervous. So much so that one group–the Free Enterprise Action Fund–wants a shareholder vote to require Microsoft to prepare a report on its stance toward this regulation.
The Fund, it should be noted, is not a neutral observer. It is a mutual fund specifically geared toward “investment and advocacy to promote the American system of free enterprise.” But it raises a reasonable point. “We feel they should be worried about innovation and competition rather than perhaps running to the government for regulation,” says Tom Borelli of the Fund. ” “If they have thought this through and they know what they’re doing, what’s wrong with a report to your shareholders explaining your rationale?” he asks.
Good points. Of course, the proposed shareholder vote will probably not take place–corporation law provides plenty of ways to avoid such embarrassing things. Still, it would be interesting to see such a vote, and if Microsoft shareholders think regulation is in their best interest.
Remember the digital TV subsidy? Last year, as part of the price for establishing a firm date for broadcasters to return their old (now) analog frequencies by 2009, making them available for new uses, Congress set up a program to subsidize converter boxes for those that don’t already have digital TV sets. More precisely, it ordered the Department of Commerce to set one up. It has now started that process–proposing rules on exactly who will will get money and how.
The total cost authorized for the program was $990 million–with an automatic extension up to $1.5 billion if Commerce so requests. That’s much less than the $3 billion at one time being considered by Congress, but still real money.
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CNN famously made its mark during the first Gulf War, as its 24-hour, on-the-spot reporting brought that conflict into people’s homes in a way never done before, marking a revolution in TV news. A story in today’s Washington Post suggests that the current Lebanon war may mark another revolution in how people get information However, this time the change isn’t coming from a news organization, but from videos posted by countless individuals on youtube.com
Up till now, youtube has been known mostly as a place to watch home videos shot by others, and perhaps the odd Jon Stewart clip. But, the Post reports, in recent days it has taken on a more serious role. As the Post explains it: “In a matter of weeks, YouTube has become a video Dumpster for a global audience to share first-hand reports, military strategies, propaganda videos and personal commentary about a violent conflict as it unfolds.”
While not likely to replace professional journalism, the amateur posts on youtube have a substantial audience. According to Robert Niles of USC’s Online Journalism Review: “in real numbers, I think any broadcast executive would consider it a huge audience–it’s just dispersed around the globe. It would probably challenge hourly ratings at NBC or CNN.”
A trend worth watching.
Heritage has just released a new paper by my colleague James Carafano, THF’s homeland security guru, on the federal role in emergency communications. The paper finds that throwing more money, or spectrum, emergency communications systems is not the answer. “The commercial space uses the spectrum about 20 times more efficiently than governments,” Carafano writes. “The spectrum licensed to federal, state, and local public safety users supports fewer than 3 million users across the U.S. In contrast, commercial operators (such as Sprint and T-Mobile) support about 80 million users in a comparable amount of spectrum.” Instead, he argues, policymakers should focus on:
– Scaling back bloated, bureaucratic programs and wasteful homeland security and interoperability grants;
– Focusing on developing capabilities to enhance regional information sharing and response to catastrophic disasters;
– Revising federal policies and laws to open dual-use spectrum for commercial and emergency management use, as well as facilitating the sharing of spectrum among local, state, and federal users;
-Setting national standards to promote open-architecture, non-proprietary systems that are compatible with commercial standards;
-Establishing services that can provide an emergency wide-area network wireless system to support existing responder communications equipment and emerging capabilities like VoIP; and
-Assigning specific missions and responsibilities to agencies for the implementation of critical policies.
Worth a read.
Could Google execs go to jail for bit discrimination? Theoretically, yes, according to a proposal by Sen. Jim DeMint (R-SC). Submitted as an amendment to the telecom bill now being marked up by the Senate Commerce Commitee, DeMint’s proposal would make it unlawful to “prioritize or give preferential or discriminatory treatment in the methodology used to determine Internet-search results based on an advertising or other commercial agreement with a third party.” Any person found in violation would face a maximum fine of $5 million or imprisonment for up to one year.
The plan seems targeted at Google’s sponsored links system, under which users get prominently placed, paid for, links with their search results. (The paid content is separate from the non-paid results, which are not influenced by payments).
For the record, this is a terrible idea. And, I’m willing to bet that Sen. DeMint thinks so too. Instead, the amendment seems intended to underscore Google’s uncomfortable position in the net neutrality debate. While the company has spearheaded the call for net neutrality for telephone and cable firms, its own practices–and power–mirrors that of those companies.
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