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.
Gene Weingarten, in a column in today’s Washington Post magazine, has some fun with gmail. Google’s e-mail service, as all loyal TLF readers no doubt know, “reads” the text of messages to provide supposedly relevant advertising to the recipient. Weingarten finds this sometimes just doesn’t work the way it’s intented. Example: he says a colleague e-mailed him for his thoughts on the historical accuracy of Jesus. The message arrived with an solicitation to “Become Legally Ordained Today.” So Weingarten decides to have some fun with Google, writing some faux emails to himself with, well, interesting results. Worth reading, especially on a Sunday when you shouldn’t be doing any heavy policy wonk reading anyway.
A new Jupiter Research study released recently found, unsurprisingly, that the biggest attraction of Internet Protocol TV for consumers was prices–just over half said that they would switch to IPTV if they could get a lower price. Perhaps more surprisingly, however, was that potential a la carte service came in a close second–with 46 percent of those polled saying they would switch to get a la carte pricing. That number dwarfed features such as high-definition service and video on demand, which excited only six and three percent of consumers.
The lesson for potential IPTV operator, Jupiter says, is that their “services should focus on giving consumers greater choice and control over their television experience, if not true a la carte.” The lesson for policymakers interested in consumer choice is to reduce regulations that hinder IPTV competition, rather than impose new regulations on cable TV.
There is always a period of uncertainty whenever a new member of the FCC takes his or her seat. No matter what the background of the individual, no one ever knows how the new commissioner will fill the role. That has been true of Deborah Tate, the newest commissioner–despite her service at the state level, she is not yet well known in the insular world of Washington telecom policy. That’s one reason why some comments she made last week on the cable “a la carte” pricing issue are especially encouraging. At a meeting of the National Association of Broadcasters, she called on cable companies to do more to combat indecent content. But, rather than call for regulation, she indicated that new technology and new competition might be the answer to the problem, making regulation unnecessary. “If IPTV becomes viable, it’s not a problem because you are going to call [up] what you want.”
That point–one I’ve been pounding on for months–may sound obvious, but it’s been strangely overlooked by most policymakers. The next day, for instance, members of the House Appropriations committee, hearing testimony from FCC chair Kevin Martin, showed outright enthusiasm for regulation: “I think you have made such a powerful case for a la carte,” subcommittee chair Frank Wolf told Martin, “[i]t will be shocking if this Congress does not deal with the issue.” If the concept that IPTV and new competition could address the problem better than regulation was apparently not raised.
Tate deserves plaudits for her common-sense, pro-market approach to this issue. Its an encouraging and welcome start on her new job. We are looking forward to more such common-sense in the years to come.
Sen. Wyden yesterday introduced legislation to mandate “net neutrality” by Internet network operators. the proposal is pretty far ranging, banning everything from “priority lanes” for time-sensitive traffic to requiring transparent rates, terms and conditions for service (one wonders how the famously confidential but sucessful Internet backbone market would fare under such a requirement).
It’s a bad idea–for reasons many have outlined. (For an excellent discussion of the issues, check out this excellent study by Christopher Yoo published by the Progress and Freedom Foundation.)
What particularly got my eye, however, was a comment Wyden made to journalists defending the proposal. He said:
You kind of get the sense big network operators are saying we built he network we own the network. What I am saying no, consumers built network subscribers built the network, they paying for it (sic).
Imagine! Just because the operators built it they think they own it. Amazing. Next thing you know, everyone will be claiming they own what they built.
Wyden’s “this really isn’t private property” argument actually isn’t new. It’s a retread from the battle over forced access to telecom networks, where proponents argued that telephone networks belonged to the public, not to telephone companies. That argument was baseless, as I argued here.
If anything, declaring that privately-built Internet facilities belong to the “public” is less justified. Just because Internet providers get their revenue from customers doesn’t mean the customers “own” the facilities. Otherwise, I’d own vast stakes in everything from Starbucks to my dry cleaner. Moreover, at a time when private investment in the Internet is critically needed, loose talk about the network being socialized is definitely unhelpful, to say the least.
Telecom policy is famous for its acronyms. Everything from POTS (Plain Old Telephone Service) to PANS (Potential Advanced Network Services) has its own TLA or FLA (Three Letter Acronym or Four Letter Acronym). And technology being what it is, they change all the time–with new generations of acronyms constantly being coined. Thus its not surprising that most people I know just glaze over when hearing about them all. Most of the terms so familar to tech geeks and us policy wonks may as well be Aramaic to the average person.
For that reason, I found a new Harris Interactive poll released this week rather surprising: over half (56%) of Americans are familar with IPTV. Not bad for a relatively new acronym, and a service that’s only available in a few markets. Moreover, those polled are interested in getting IPTV–one in four said they’d like to have it on their TVs. One in five were interested in getting it on their PCs.
That’s good new for companies like Verizon and SBC, who are challenging cable firms with new IPTV (or IPTV-like) services. However, there’s bad news too for them: one-third of respondents said they’d be most comfortable getting IPTV from their cable company. Only 13 said their telephone company. Still, the overall numbers indicate that Americans are receptive to change here, providing more reason to believe a TV revolution may be coming soon.
Also interesting is the reasons that people are interested in IPTV. Not surprisingly, lower cost was the most important factor–with 42 percent citing that. However, the next two reasons related to individual choice and control over programming, with on-demand viewing mentioned by 33 percent, and a broader array of programming content cited by 24 percent.
This seems to support the argument that IPTV could be a major factor in the on-going debate over TV content. Pro-family groups are pressing for more consumer choice in cable (eg a la carte pricing) as a way to filter out offensive programming. IPTV very well may provide that choice, and this poll shows people are getting the message that IPTV is about choices as well as prices. This could be a classic case of TBOS (Two Birds, One Stone).
Much of the debate so far over cable tv franchising has been in generalities. For instance, the set of principles outlined by Sens. Burns and Inouye refers elegantly to “deliberately structured dualism”, recognizing that each local cable regulatory is “uniquely positioned to ensure that video providers meet each community’s needs and interests in a fair and equitable manner.”
That’s all very nice. But what is it that local officials are really asking for? In a recent filing with the FCC, AT&T provided some specific examples of what some creative local officials are requesting as part of their efforts to ensure that video providers meet their community’s needs and interests in a fair and equitable manner:
— One city asked the potential cable competitor to pay for a new recreation center and pool.
— Another city compiled a $13 million dollar wish list, including digital editing equipment, and video cameras to film a math tutoring program.
— A New York town asked for seed money (literally) for wildflowers, and a video hookup for its Christmas celebrations.
— A Massachusetts cable authority asked for free television for every house of worship and a 10% video discount for all senior citizens.
— Another asked for high-speed Internet for sewage facilities and junk yards.
— A no doubt aesthetically minded regulator asked for “flower baskets for light poles.”
Continue reading →
Aftersimmering on the back burner for months, the debate over video franchise reform came to a rapid boil over the past two weeks, with developments seeming to bubble up on every front. Last Friday, the FCC held a meeting in Keller, Texas–not so coincidentally the site of Verizon’s FIOS TV launch last fall. At the meeting, the Commission officially adopted its annual report on video competition. On the following Monday, comments were filed in the FCC’s proceeding on whether local franchise authorities are unreasonably limiting competition by in delaying application by (former) telephone companies. Then came Tuesday’s hearing in the Senate Commerce Committee, where–you guesed it–video competiton was the issues of the day. Add to that the nearly ubiquitious advertising campaign launched by Verizon and AT&T for cable choice, and the issue was nearly impossible to avoid.
Will anything come of all this? Perhaps yes. Senator Ted Stevens–the Commerce Committee chair, made news by expressing sympathy for telephone company entry into the cable TV markets, and saying he’d soon introduce a bill to reform franchise rules. That’s good news. But what would it say? Earlier this month, Sens. Burns and Inouye teamed up to release a set of “principles” for franchise reform, which called for elimination of “unnecesary” delays in franchising, but also warned of writing a “blank check” to new entrants, and endorsing a “deliberately structured dualism” with a strong local role in regulation. Get past all the buzz words, and that’s a pretty weak brew of reform.
The Burns-Inouye principles were met (also this week) with counter-statement from a surprisingly diverse group of six senators, including Republicans John Ensign and John McCain and Democrat John Kerry. This statement, stressing the consumer benefits of broadband called for congressional action “this year” to reform franchising. This “gang of six” letter gave a nod to some continued local role, but the overall implication was clear–local regulators are slowing down competition, hurting consumers, and Congress should step in to stop that.
After this week, video franchise reform seems to have real momentum. In the Senate, the next move is up to Sen. Stevens, who’s bill is expected soon. The question is: will he take this opportunity to push for real change, or stick with politics as usual? Stay tuned.
At the same time Google is digging in its heels against demands by the U.S. government, it has apparently caved in to demands by the Chinese government, agreeing to censor information available from its search engine in China.
Google reasoned that the move was necessary to allow it to continue operating in China. (Check out the recent discussion here at TLF over the pros and cons of engagement.) And in some ways this will make little difference to users–since China’s government has been blocking offending sites anyway. Still, there’s something unsettling about Google itself taking on the role of censor. And there’s a even more troubling feeling that Google will do the job better than the Chinese ever could.
(For a good discussion of pros and cons of engagement, see the recent debate here at TLF on the issue. Also, searchenginewatch.com has a good overview of the issue here.)
The battle between Google and the Justice Department has not suffered from a lack of coverage. The short story is that DOJ asked (well, “commanded” actually) that Google and other search engines turn over massive amounts of data regarding searches and websites on their systems, to be used in the government’s defense of the Child Online Protection Act. The legal case will be settled based on subpoena law, on which I’m no expert. On policy grounds, however, I’m with Google–which is defending its customers right to privacy. A loss could diminish the public’s trust that their online activity will be kept confidential, and hurt not only Google but the growth of the the Internet itself.
How broad is the DOJ request? Most of the media coverage has focused on its request for data on all searches made over a one-month period. That’s a lot. But its nothing compared to its original request for data on websites. Here, DOJ requested (and I’m not making this up): “all URLs that are available to be located through a query on your company’s search engine as of July 31, 2005.” Let’s repeat that: “all URLs that are available to be located through a query on your company’s search engine as of July 31, 2005”.
Correct me if I’m wrong, but that’s about everything isn’t it? All websites. DOJ wants a list of all the websites in the world. (Well, all that are on Google anyway, which is pretty close). How many is that? If you search “www” in Google itself, you get 9.2 billion results. Were Google to print out this list, say at 50 per page, it would be 184 million pages long. If you laid these pages end to end, it still wouldn’t be a bigger waste of time.
DOJ has since modified its original request, and is now asking for only a million URLs. That’s a lot less, but still a lot.
I’m not saying all such subpoenas should be rejected. There is a legitimate role for the right to subpoena in the legal system, even subpoenas by the government. But given the stakes here, there should be a stiff burden of proof that what is requested is actually what is needed, and no more. “Give me everything” doesn’t meet that burden.
Once again, the topic of the day for the Senate Commerce Committee today was indecency on TV. Following up on two forums late last year on the topic, today’s hearing featured a raft of witnesses–ranging from the cable and satellite TV execs to former superlobbyist for Hollywood Jack Valenti.
The quote of the day, however, must go to anti-indecency crusader Brent Bozell, who has long championed more and bigger FCC fines for broadcast indecency. But, how is indecency to be defined? As another witness asked, should Michaelangelo’s David be clothed? Bozell argued that its a simple matter of making distinctions, saying: “[w]e need to define the difference between “offensive” and “really offensive.”
Of course. Finally, a clear answer to what should be banned. A simple test–is it “offensive” or is it “really offensive.” Maybe the test could be expanded a little, to include a category for “really, really offensive” stuff, and maybe “really, really, super-offensive” stuff. Certainly, that finally provides certainty.
Bozell’s comment, of course, underscores the inherent difficultly in defining the scope of censorship. And to be fair, Bozell declined to endorse expanding the flawed system to cable TV. Instead, he argued that cable providers with a la carte choice. Of course, he didn’t call for regulation, he just “suggested” that providers do this. (See Adam Thierer’s excellent piece on the implicit threat in such jawboning.) There is, of course, an option besides suggestion and regulation–that’s competition. Let others into the video business. AT&T and BellSouth said they’d like to provide a la carte service–but regulations are slowing their entry into the market. But Bozell–nor any of the others at today’s hearing–mentioned that option. Perhaps that isn’t offensive, but it is certainly disappointing.
The Technology Liberation Front is the tech policy blog dedicated to keeping politicians' hands off the 'net and everything else related to technology.