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.


FTC to Regulate Blogger Claims (I was Not Paid to Say This)

by on October 6, 2009 · 16 comments

Should the federal government regulate what blogger’s blog? Yes, said the Federal Trade Commission yesterday — at least when it comes to product endorsements.

At issue were the FTC’s guidelines concerning the use of endorsements in advertising. These guidelines, among other things, require paid endorsers of products to disclose their relationships with advertisers. The goal is a good one, to prevent deception and fraud. In practice, the lines are hard to draw — what exactly is an endorsement? What constitutes payment? It gets even harder in today’s world of user-generated media, in which much advertising is by consumers themselves on blogs and elsewhere, sharing recommendations and opinions on just about everything. Continue reading →

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The Chicken Littles of Broadband

by on October 5, 2009 · 20 comments

Is the Internet in clear and present danger?   Yes, say proponents of neutrality regulation of the Internet.  In his speech last month calling for FCC neutrality regulations, Chairman Julius Genachowski stopped short of quoting Oliver Wendell Holmes, but did all he could to paint a dire picture of the Internet’s future: “This is not about protecting the Internet against imaginary dangers,” he said.  If we wait too long to preserve a free and open Internet, it will be too late.”

The warning evoked a certain sense of deja vu, and for good reason.  As Link Hoewing over at Verizon pointed out the other day, proponents of neutrality regulation “have been yelling ‘fire’ in the movie theater ever since 1999,” when they decried the trend toward cable firms providing exclusive ISP service on broadband networks, saying that the move would result in “more price increases and fewer choices for consumers and content providers alike.”

The end has been nigh many times since.  In 2003, when a court upheld the FCC’s decision not to regulate broadband as a telecommunications service, Commissioner Michael Copps said “the Internet may be dying,”  glumly predicting that if the Commission continued its free-market policies, “we will look back, shake our heads and wonder whatever happened to that open, dynamic and liberating Internet that once we knew.”  Continue reading →

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FCC Speech Czar a Myth, FCC Threat to Speech is Real

by on September 22, 2009 · 10 comments

FCC chair Julius Genachowski has certainly been busy.  This week, of course, he’s been occupied with regulating the Internet.   But last week, he was busy fending off charges on talk radio and elsewhere that the FCC has its very own “speech” or “diversity” czar.

At issue was the appointment in August of ex-journalist and Center for American Progress fellow Mark Lloyd to be the agency’s “chief diversity officer.”  That appointment instantly caused controversy, with Lloyd has becoming a cause celebre  on conservative talk radio and in the blogoshere, where he was been portrayed as yet another in a long line of powerful and unaccountable Obama policy czars and – in light of his support of government regulation of TV and radio content – a threat to free speech.   Nationally syndicated talk show host Glenn Beck led the charge, at one point twittering his listeners: “Watch Dogs: FIND OUT EVERYTHING YOU CAN” about Lloyd and several other “czars.”

But the critics had their facts wrong.   Lloyd was never chosen to be a “czar” of anything. That regal title – and its connotations of unlimited influence — were entirely invented by overactive imaginations in the media. Lloyd’s actual position in the FCC bureaucracy is much more prosaic — “associate general counsel.” He serves in that position along with three other associate general counsel, and three deputy general counsels. Anyone who’s worked at the FCC knows that  is an unlikely locus of power.

Continue reading →

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Dead Air Walking: Prisoners Face Loss of TV After Digital Transition

by on September 8, 2008 · 10 comments

Haven’t they been punished enough?  Inmates in our nation’s prisons may find themselves without over-the-air television next February, unless Congress acts to fill a gap in the subsidy program for TV converter boxes.  That’s right: according to a story run last week by Associated Press, “the upcoming switch to digital television is presenting a challenge to prison officials who want to make sure prison TVs are up and running. When broadcasters make the switch in February, televisions that aren’t hooked up to cable, satellite or a converter box will be reduced to static”.

The reason?   Under the converter box subsidy program established by Congress, prisons are not eligible for the $40 subsidy for the converter boxes needed to let old televisions pick up broadcast signals after next February.  That means — unless prison officials somehow find $40 elsewhere — or unless their penal institution has a cable or satellite subscription — incarcerated murderers and thieves will be forced to watch static.

Honest to god.  I’m not making this up.  This was an actual news story.  The AP story went on to explain that “[w]hile TV might seem like an undeserved luxury for inmates, both prison officials and prisoners said the tube provides a sense of normalcy.”

Oh, now I understand.  “Normalcy.”  I didn’t understand that prison is supposed to provide a sense of normalcy.

Excuse me while I sit in stunned silence for a moment.

One interesting side note.   I found the AP story on the website of WYFF in Greenville, SC, which — perhaps not surprisingly — is an over-the-air TV station.  Go figure.

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Free Press: Internet Too Important to Tie Up in Legal Limbo

by on September 5, 2008 · 10 comments

Communications Daily (subscription) reported today on the avalanche of lawsuits being filed challenging the FCC’s Comcast “net neutrality” order.   Four were filed this week in four different U.S. appeals circuits — the lucky court that will actually decide the case will be decided by lottery.

The story quotes Ben Scott of Free Press, the energizer rabbit of pro-regulation media groups, decrying Comcast’s appeal.  “The Internet is too important to let Comcast tie it up in legal limbo,’ he says.  “Congress should act now to pass Net Neutrality laws that clear up any uncertainty once and for all.”

Huh?  On what planet, exactly, is Free Press based?  Put aside for the moment the question of whether Comcast is responsible for the legal chaos that has ensued from the FCC’s decision to regulate the way it manages Internet traffic.   Strangely enough, when Free Press petitioned the Commission to get involved, I didn’t hear them decrying the “legal limbo” it would cause.

But even more jaw-dropping is the idea that Congress could “clear up any uncertainty” by adopting its own Internet regulations.   The mind boggles.   The last major congressional foray into communications policy was the Telecommunications Act of 1996, which spawned over half a decade of litigation.  There are still children of telecom lawyers going to college off the fees generated by that one.

And that legislation was a relative piece of chocolate cake compared to the torte of net neutrality.   Proponents of mandated neutrality — which Commissioner Robert McDowell has likened to a regulatory Rorschach test — can’t even agree on what it is.  Lord know how long it would take the courts to sort it out — if ever they are able to.

Free Press is right, of course, to worry about the endless litigation which will — and already is — being caused by FCC Internet regulation.   Rather than even more rules from Congress, however,  the solution is for the FCC to reverse course on the regulation it unwisely imposed last month.

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Blogger Freedom Re-Affirmed by FEC

by on August 14, 2008 · 6 comments

Some good news for bloggers.  This was posted today on the Heritage Foundation “Foundry” blog by Dave Mason, former chairman of the FEC (Mason is now working with us at Heritage as a Visiting Senior Fellow):

“Bloggers and web site operators may support, oppose, link to, and work cooperatively with federal political candidates. This freedom was reaffirmed when the newly re-constituted Federal Election Commission released its first two enforcement cases August 12.

The Commission’s refusal to regulate blogging and internet sites is not new, but it is notable is that the pro-blogger decision was made within a week or two of the new Commission taking office. Of the scores of items on its docket, the new Commission chose to address this one first: quite likely because they wanted to send a signal to that bloggers are free to engage in politics

Specifically, the Commission said that Gordon Fischer, a former state political party chairman, did not violate election law when he maintained a web site and blog (Iowa True Blue) promoting Barack Obama and criticizing Hillary Clinton. (Our friends at CCP note that the complaint was filed by a Clinton supporter: observing that all too many FEC complaints are filed for political harassment

–Money that Fischer spent creating and maintaining the site was not regulated by the FEC.

–Even if Fischer coordinated (discussed the blog and postings) with the Obama campaign, the site remained free from Federal election regulation.

–A link to a campaign web site or video does not subject the site linking to the campaign to regulation.

–blogs and web sites may “republish” campaign material without violating election laws.

Bottom line: by making this case one of the first two it released, the Federal Election Commission reaffirms that bloggers and web site operators may support and oppose political candidates, republish or link to campaign material, and work as closely as they wish with campaigns in doing so.

The one activity that remains subject to FEC regulation is paying for an ad on someone else’s web site supporting or opposing a Federal candidate.”

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Rasmussen: Fairness Doctrine Supported by Nearly Half of all Americans

by on August 14, 2008 · 4 comments

An interesting poll out today by pollster Scott Rasmussen:  Asked whether the government should require all radio and television stations to offer equal amounts of liberal and conservative political commentary,  47 percent — nearly half — said “yes.”  (39 percent were opposed).  Perhaps even more surprising, support has increased since last year, when Americans split evenly (41-41) on this issue.

Perhaps this shouldn’t be a  surprise.  Americans, after all, have long been lukewarm about the First Amendment, with opinion polls famously (though perhaps apocryphally) have long shown  would itself be opposed by most Americans.   Moreover, a casual answer to a pollster is a long way from active support of a particular law.

Still, the results of this poll should be troubling for defenders of free speech in general, and opponents of the fairness doctrine in particular.   Although an explicit re-institution of the long-dead doctrine is still not likely, this poll underscores the general danger of other content controls that may achieve the same ends under a different name.

Oh, and those of you who get their news from blogs shouldn’t feel too cocky about the dangers faced by the old-fashioned broadcasters.  The same Rasmussen poll showed that 31 percent of the public supports Fairness Doctrine controls on blogs, too.

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FCC’s McDowell on Fairness and Neutrality

by on August 13, 2008 · 11 comments

This morning’s Drudge Report features the stories everyone is talking about today, with reports on U.S. swimmer Michael Phelps winning another couple of gold medals, the latest on the Russia-Georgia war, and — of course — FCC commissioner Robert McDowell on threat of the Fairness Doctrine and net neutrality regulation.

Well, maybe the first two stories are getting a bit more attention, but McDowell’s remarks —  made at The Heritage Foundation yesterday after a blogger’s briefing  — is getting a surprising amount of coverage in the blogsphere and trade press.

The remarks were originally reported in a story on the Business and Media Institute website, in response to a question about prospects for a Fairness Doctrine revival.   McDowell responded that it the issue hadn’t been raised at the FCC, but went on to state that there is a danger of similar rules put into place under a different name.   A spot-on analysis, as we’ve argued many times before. (see video here.)

He then went on to say that the Fairness Doctrine “will be intertwined with the net neutrality debate” (net neutrality was the primary focus of his remarks at the Heritage briefing).  Referring to concerns of regulation supporters — including what he called “a few isolated conservatives” that large corporations will censor their content, he said the “bigger concern should be if you have government dictating content policy.”

Most of the coverage of McDowell’s remarks interpreted McDowell as saying that the Fairness Doctrine itself might be extended to blogs (i.e, the Drudge headline: “Return of ‘Fairness Doctrine’ Could Control Web Content…”).  Such a direct extension of the old broadcast-only fairness rules is unlikely though.   Instead, McDowell I think was raising the danger that net neutrality regulation could be the source of such web content controls.

Continue reading →

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Day 505: The XM-Sirius Circus Is Finally Over

by on August 7, 2008 · 9 comments

It’s over.   The FCC, which voted to approve the merger between satellite radio firms XM and Sirius two weeks ago, finally released its formal report on the case on Tuesday, ending the drama 505 days after the firms submitted their application to the Commission.

The episode was not the FCC’s finest hour.  The agencies once-vaunted “shot clock” — by which the FCC pledged to decide on mergers within 180 was left in shreds, with the counter going around almost three times before the circus finally ended.   Even at that, XM and Sirius managed to claw their way to approval only by making an (ever-longer) series of “voluntary” commitments:  including offering “a la carte” programming, capping prices for 36 months, making 8% of its capacity available to others to non-commercial and other entities, and extending service to Puerto Rico.   Even more was being considered when the music stopped, including a proposal to require all satellite radio receivers to have built-in HD broadcast tuners as well. (Apparently, there was concern that broadcasters would be frozen out of the audio market, in which they hold a market share of about 96 percent).

This regulatory free-for-all contrasts with the approach taken by the Department of Justice, which — after a fact-specific inquiry, approved the merger –  without conditions – five months ago. Continue reading →

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Regulate the Internet? FCC.gov Has It Right

by on August 6, 2008 · 8 comments

The FCC last Friday may have jumped with both feet into the business of regulating the Internet, but someone forgot to tell the folks that run the Commission’s website.   “The FCC Does Not Regulate the Internet or Internet Service Providers (ISP)” the “consumer publications” page of FCC.gov is still proudly telling visitors, referring them over to their state consumer protection office or to the Federal Trade Commission as the proper agencies for such things.

In the past, I’ve been critical of the shambolic way in which the FCC’s website is run.  But in this case, the problem isn’t with the web folks – they have the policy exactly right.  It’s the FCC, not FCC.gov, that’s bungled the job.

Someone at the Commission will eventually tell the website folks to fix the error.  But who will get the Commissioners to fix theirs?

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