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.

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Pew: Broadband Access Soars, Prices Drop

by James Gattuso on June 2, 2006

The Pew Internet Project came out with a fascinating report this week about broadband usage in America. According to their most recent survey, the number of Americans with broadband access at home has soared by 40 percent in the past year (growing from 60 million in March 2005 to 84 million in March of 2006). And the growth wasn’t just among the well-to-do: some of the biggest growth rates were among African-Americans and those with less thatn a high school education).

Much of this growth is no doubt due to dropping broadband prices. Pew found the average month broadband rate dropped from $39 in February 2004 to $36 last December. Interestingly, all of this decrease was from DSL, which decreased from $41 to $32, with cable modem prices holding steady.

These findings are especially interesting in light of the current debate in Congress over neutrality regulation. The case for regulation rests, in large part, on an assumption that their is no competition in broadband. Instead, the market is said to be “a cozy duopoly”. But, Economics 101 tells us monopolists (and duopolists) restrict supply and maximize prices. Pew’s numbers show things going in the opposite direction.

Of course none of this proves that competition is working. And Pew did note that some people don’t currently have a choice of broadband provider (although regulation would make it less–not more–likely they will ever get a choice). Moreover, the report didn’t compare what prices and access rates might have been under alternative industry structures.

Still, this has got to be bad news for those arguing that the broadband market needs regulation. And, if I were an aspiring duopolist, I’d be unhappy too–this industry doesn’t sound all that cozy.

As a consumer, though, I see Pew’s report as pretty good news. Now only if Congress doesn’t muck it up.

Another 15 Minutes: A Guy Goma Update

by James Gattuso on June 2, 2006 · 2 comments

What’s the hottest topic in the tech/media world today? Neutrality regulation? DRM? Wiretapping? No, its Guy Goma. Remember him? He’s the “wrong Guy” who was interviewed live on BBC a few weeks ago by mistake. Goma–a Congolese-born IT job applicant was waiting for a job interview at BBC’s offfices, when he was mistaken for Guy Kewney, an Internet policy expert whom BBC had meant to interview. (see here for my earlier post on this.)

Turns out that Goma’s time in the spotlight didn’t end with that appearance. He now has his own website–guygoma.com–featuring Goma’s worldwide media coverage, Goma’s followup interview on BBC (this time they intended to talk to him), a Goma news feed and e-mail update list.

At the same time, it seems Guy still hasn’t gotten a job (its unclear whether he ever even got the job interview he was waiting for.) But he’s working on it – the website features an on-line petition to “urge the BBC to give Guy the job he applied for, or a better one.” The petition now has close to 6,000 signatures from around the world, and growing fast. The comments on the petitition are effusive: ” a national hero,” “a legend,” “a true star.”

No telling where this Goma-mania will end. But certainlly Goma is making the most of it, parlaying few minutes of accidental airtime into a virtual movement.

He certainly will get a job. But if he doesn’t, perhaps he could join us here at TLF. We could use his media savvy.

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TV From The OC to DC: Event at Heritage, Thursday, June 8

by James Gattuso on June 2, 2006

Those of you in the DC area (or who will be next week) may want to stop by Heritage for what should be an interesting panel discussion on video competition. Our featured speaker is Anaheim, CA mayor Curt Pringle, who is one of the (too) few local officials who have actually welcomed video competition to their cities. He will be followed by the irrepressible Tom Hazlett of George Mason University and by Mike Sullivan, chief technology advisor to Sen. John Ensign, a leading voice for competiton in the Senate.

Festiviites will begin at 11 am, with food to follow. You can RSVP here. And those of you who can’t make it can always tune in via Internet from here.

Sensenbrenner and Antitrust: Bootstrapping Neutrality Regulation

by James Gattuso on May 25, 2006 · 4 comments

At today’s Judiciary Committee mark-up session, Chairman James Sensenbrenner contributed a new and quite imaginative argument as to why neutrality regulation is ok: its not regulation at all. It–at least the Judiciary Committee’s version–is simply good old fashioned antitrust. Specifically he said:

Opponents of this legislation have sought to portray efforts to provide a meaningful remedy for anti-competitive misconduct by broadband providers as regulatory in nature. However, the antitrust laws have served as a competitive backstop against competitive abuse by market-dominant forces for over a century.

In other words, just move along, nothing new here that hasn’t been around for a century.

But wait a second. The provisions of the Sensenbrenner bill are very much the same, even using some of the same language as, many of the other “regulatory” bills out there. There are some differences of course–one key one is that Sensenbrenner has no role for the FCC, the provisions are to be enforced by the courts. But substantively the regulations imposed look very much the same.

Oops. Did I say “regulations”? I meant to say “antitrust laws”. Its not regulation, you see, because all the provisions are to be tacked on to the existing Clayton Act. That makes it part of that hundred-some year old antitrust law.

This is a nice feat of bootstrapping. In fact, maybe Congress could try it elsewhere. Having trouble funding the newest bridge to nowhere? Put it in as an amendment to the Clayton Act, and– “poof”– its antitrust law, not wasteful spending. Or maybe the immigration reform controversy could be settled that way–put it all at the end of the Clayton Act and its instantly part of the long antitrust tradition. The possibilities are endless.

The ironic thing is that it actually might make sense to apply existing antitrust law to broadband providers instead of creating a whole new regulatory scheme. In fact, the chairman of the FTC says that it already does apply.

But that’s not what the Judiciary Committee proposed. It proposed regulation. It should call it that.

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Not-So-Strange Bedfellows on Neutrality Regulation

by James Gattuso on May 25, 2006

Every reporter loves a “man bites dog” story, something that’s out of the ordinary, a reversal of the norm. Especially so when the subject is something as abstuse to the average reader as, to give a random example, Internet regulation. Add in the opportunity to use the term “strange bedfellow” and you’ve got an irresisitible angle.

Thus, it’s far from surprising that so much ink and bandwidth has been spilled on the “strange bedfellow” coalition supporting neutrality regulation. Most recently, National Journal spun the tale, with a story today on the “unusual alliance” that has brought together rock band such as Nine Inch Nails with the Gun Owners of America and the Christian Coalition. “[T]he battle to ensure net neutrality has created an atmosphere where the lion can lie with the lamb,” NJ reports.

The problem is that, with a few exceptions, political animals are not mixing in this debate. Each species is pretty much sticking with its own.

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More on Underdogs and Net Neutering

by James Gattuso on May 19, 2006 · 4 comments

A few months ago I posted about a site called Consumeraffairs.com that referred to supporters of net neutrality regulation as a “rag tag band.” Pointing out that any coalition that includes the likes of Microsoft and Google simply cannot be “rag tag,” I concluded that “even wearing Underdog’s cape, net neutrality rules just won’t fly”.

Now it seems that while they didn’t quite get the substantive message, consumeraffairs.com has picked up some of the terminology. In a story posted yesterday, it lauded Rep. James Sensenbrenner for introducing a net regulation bill, saying “when it comes to the issue of net neutrality, Sensenbrenner is on the side of the underdog.”

At the risk of becoming repetitive, the underdog in this particular catfight includes the following companies (along with their rank on the Fortune 500 list):

Microsoft (48)
Intel (49)
Amazon.com (272)
Google (353)
Yahoo (412)
ebay (458)

Add to this the potential support of financial services firms, and underdog is looking like a pretty big pooch. This is not to say that regulation opponents don’t have some heavy-hitters on their side (for instance, a pack of tech manufacturers announced their opposition Wednesday). But it doesn’t take a bloodhound to see that this isn’t a big guy v. little guy fight.

Underdog’s cape still just doesn’t fit.

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Who Was That? BBC Interviews Wrong Guy

by James Gattuso on May 16, 2006

Last week, in a much-anticipated decision, a judge in London ruled that Apple Computer’s use of the Apple logo on its iPod did not violate an agreement with Apple Corp., a Beatles-owned music label. Its no doubt a fascinating intellectual property case, and I’ve no doubt that TLF’s Tim Lee willl cover it (and blame the DMCA for it somehow).

But the real interesting thing here isn’t the case, but BBC’s coverage of it a few days later. It seems that the British network’s News 24 channel had meant to interview Guy Kewney, the editor of newswireless.net, and an expert on the subject. Turns out though that, due to an inexplicable Green Room fiasco, the man actually interviewed, live on-air, was Guy Goma, a Congolese IT expert who was at the BBC’s office’s for a job interview.

The video tells the whole story. Mr. Goma’s face shows horror when he is introduced as Mr. Kewney. The first question: was he surprised by the verdict? Yes, he was surprised, he says, no doubt sincerely.

Meanwhile, the real Guy Kewney, back in the reception area, sees himself being interviewed on TV. Well, not him, but another Guy. (Kewney later recounted the story in his blog.)

Meanwhile, the interview goes on. And it turns out that Guy Gomo, despite a thick accent and precious little knowledge of the subject, actually does rather well, mumbling things about Internet cafes and the popularity of downloads.

There are no doubt lessons here about 24-hour news and the mistakes that format engenders. But as a policy wonk and occasional guest on similar shows, I felt an enormous empathy for Mr. Goma. Who hasn’t felt that nagging fear that the next question will be on a subject they know nothing about? And that they will nevertheless be expected to answer?

The whole episode should raise concerns, moreover, for the whole policy wonk community. After all, if journalists find they can get half-decent interviews from someone randomly plucked from their lobby, we may be out of a job.

Well, there’s always the blog.

Net Neutrality: Urban Legend # 5

by James Gattuso on May 5, 2006 · 10 comments

One of the most useful websites I know of is snopes.com, which provides information and analysis of e-mails circulating on the Internet, from the “Bill Gates is Giving Away Money” hoax to the famous 602B e-mail tax bill. Among other things, Snopes ranks the e-mails based on circulation and other factors. Currently, the number five hottest email–beating out warnings about ether-laced perfume and the dangers of rat urine on soda cans–is a missive in support of net neutrality regulation circulated by Move.on org.

The surprising appearance of net neutrality–which until very recently was a term known only to hopeless tech geeks and policy wonks–is a worrying evidence of the efforts being made by Move.on and others in support of Internet regulation. And, unfortunately, for most who get this e-mail, and forward it on–it may be the only thing they hear of the controversy.

Of course, the issue is not fictional–unfortunately the push for regulation is no urban legend. Although Snopes classifies it as “true,” the e-mail does get some important facts wrong. For instance, it says Congress is considering “a radical law” to eliminate net neutrality. In truth, there currently are no neutrality rules in place. Moveon.org is asking for new regulations to be imposed. At the same time, the letter warns darkly of “giant corporations” who are fighting these rules, but doesn’t mention the rather large firms–including Microsoft–who are fighting to have these restrictions imposed on their potential rivals.

Its hard to follow up on mass-forwarded e-mails like this to explain the other side of the debate. (Though it wouldn’t hurt if sympathetic readers forward\ed on relevant posts from TLF–such as this, this, this, this, this, this or this–or perhaps this from Heritage, as a counter-point.)

In any case, it is clear that this debate has passed beyond the small world of telecom wonks, and is now squarely in the public eye–or at least the public’s inbox. And the outcome of this battle over Internet regulation may depend upon the Internet itself, and all of its advantages and flaws as a medium of mass communication.

Stay tuned. This should be interesting.

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Recherche de l’Internet, Partie Deux

by James Gattuso on May 5, 2006 · 2 comments

Once again, some comic relief from France. A year ago, I wrote about French efforts to create a French search engine for the Internet, a kind of Gaullist Google. The idea, presumably, was to create a search tool consistent with French rather than Anglo-Saxon values. (And I thought Google just let people find what they are looking for.)

It all sounded like a bad joke. But, according to a a report today in MIT’s Technology Review, the French government is still serious about the project, and last week made a grant to Thomson, the French electronics manufacturer, to develop the product. The 90 million Euro grant was one of many given to big French companies for high-tech products.

“It is essential,” said French president Jacques Chirac in announcing the grants, “for us to rediscover a taste for risk and pride in innovation.” But he has certainly chosen an odd way to achieve that–government grants to large corporations. Meanwhile, some observers noted, France’s (less politically powerful) start-ups remain starved of capital.

It’s a good sign that France’s leaders are asking why Europe has yet to produce an infotech success story like Google,” the article quotes French IT consultant Alexis Mons saying. But, he says, the top-down approach is the wrong one. As he puts it: “There is no innovation iin innovation management in Europe.”

The bottom line, according to Bernard Buisson, coauthor of a recent book on innovation: “Instead of enabling the creation of new companies, the [French] state is going to waste several billion euros in large projects that won’t deliver.”

The French government wasting money on large projects that won’t deliver? Stop the presses. We have news here.

Somehow, I suspect Google isn’t worried.

(Oh, by the way, the title of this post was translated into French by, of course, Google’s translator tool.)

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Wrong Focus: Real Indecency Reform is Competition

by James Gattuso on April 27, 2006 · 8 comments

Technology Daily (subscription) reports that several conservative groups blasted Senate leaders Tuesday for not acting on legislation to increase broadcast indecency fines, and “failing to deliver an issue to values-oriented Republican voters”. Said Amanda Banks of Focus on the Family: “[t]here is no reason why in 2006, just months before this Congress is going to be out of session, it has not passed the Senate and moved on to the [president’s] signature.”

But Focus’s focus is wrong here. Increased fines on broadcasters would do little to help parents protect their children from programming they see as offensive. Broadcast TV, remember, is only a small part of TV viewing–most is now on cable channels not under the FCC’s authority. And that authority, for good constitutional and policy reasons, is unlikely to be extended. If anything, given the legal challenges recently filed against the FCC’s latest round of indecency fines, that authority will be pared back.

Rather than the dead-end of goverment content regulation, the real goal should be to increase the ability of consumers to themselves control the content of what appears on their TVs. Congress this week took a giant step toward that goal yesterday–as the House Commerce Committee approved legislation to speed the launch of new, Internet-based, video TV services developed by Verizon, AT&T and others. Not only will these new offerings provide welcome new choices for consumers, but the technologies they use promise to make it easier for individual consumers to get individualized TV programming packages.

Such service would be a boon to beleagured parents. Rather than criticize Congress for not increasing the FCC’s power, conservatives should be cheering on this very real step toward consumer choice.

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