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.
The L.A. Times has an interesting report today arguing that runaway spyware and other Internet pests are driving people away from the Internet. Many web users, it says, are hanging up their mice in frustration over unwanted intruders on their home computers. The problem is real–the LAT cites a survey finding that 31 percent of surfers are buying less online than before due to security issues.
Importantly, and maybe surprisingly, the Times doesn’t hold out much hope that proposed legislation floating around Congress will do much good. They are right–for reasons I’ve argued elsewhere.
The ultimate solution to this problem is in fact already coming from the private sector–where every entity with a stake in cyberspace seems to be coming up with anti-spyware tools. (See Jim Harper’s post on this if you don’t believe me.) While not perfect by any means, these tools are still new, and are getting better. While “spyware kills Internet” makes good newspaper copy, such reports of the death of cyberspace are highly exaggerated.
For those of you who can’t imagine Christmas without a good dose of telecom policy, you should know about the Heartland Institute’s Telecom Reform Conference tomorrow and Saturday at the Hilton O’Hare. It promises to be a good one, with a focus on developments in the states. I’ll be there, speaking on a panel on Saturday, but this should be an interesting event nonetheless.
The media seemed flummoxed yesterday on the FCC’s order on UNE’s. Certainly not an easy thing to digest, and a scan of headlines shows them all over the board. Typical of the dueling headlines: CBS Marketwatch’s “FCC ruling seen benefiting Bells; critics blast decision“, vs. Forbes’ “FCC Decision ‘Slight Negative’ For Baby Bells“.
The substance here is a bit complex, and will take a while to sort out. (The full text hasn’t been released yet.) But the short story is that the FCC did significantly cut back its rules on telephone companies yesterday, most notably taking mass-market switches off the shared assets table. This means telco’s will not have be forced to share their assets as much as before, meaning MORE investment, and MORE real competition, as others build their own networks.
The flip side is that the FCC KEPT far more rules in place they they should have. Most controversially: lines used to serve big office buildings in downtown areas. Although most downtown areas are intensely competitive–remember all those streets being torn up a few years ago? –the FCC will still force telcos to share their high-capacity lines with competitors in 99.5 percent of line centers.
Thus a mixed bag. Expect more litigation.
And, because you UNE-buffs can’t get enough of this stuff, this excellent article by Randy May of the Progress and Freedom Foundation appears on National Review Online today…
Heritage just released this article on the upcoming UNE vote by the FCC:
Telecom Competition Rules: D©j Vu All Over Again?
by James L. Gattuso
WebMemo #621
December 14, 2004
On December 15, the Federal Communications Commission is expected to vote on regulations requiring telephone companies to lease, or “unbundle,” parts of their networks to competitors. The FCC has adopted rules on this subject three times since 1996, and all three times the rules have been struck down by the courts as overreaching.
On this fourth try, the FCC needs to get it right. This means limiting mandatory unbundling rules to markets where competition otherwise could not feasibly exist. Importantly, any such determination should take into account competition from new communications services, such as wireless and Internet telephony. The result would benefit consumers, as well as avoid an embarrassing fourth defeat for the FCC in court… (read the rest)
While sex on television may get more headlines for the FCC, its more important work may be the most arcane: telephone regulation. But it’s not without drama–the Commission is scheduled to vote on its new, improved unbundled network element rules this Wednesday. All reports indicate the debates within the FCC are intense, and no one really knows what the final order will look like. The good news is that the rules will almost certainly be scaled back (as all but ordered by the D.C. Circuit).
But how much? Here the question gets fuzzy. On some important issues, the indications are not good. For example, the market for “high-capacity” loops is one of the most competitive in the industry–with Bells outpaced by CLECs in many areas, and even being challenged by cable companies. Yet rather than declare success and sweep controls away here, the commission is looking at rather timid relief. UNE requirements would not only be lifted in areas where the density of lines is enough to support competition, but where there is a certain number of actual facilities based competitors. The problem, of course, is that this could be a self-defeating prophecy, as the availability of cheap UNEs discourage others from putting facilities in those areas. Perhaps worse, the test could be applied on a builing-by-building area.
In other words, downtown areas would be examined building-by-building to see whether there are competitors lines coming in. This seems a recipe for a regulatory quagmire–with CLECs and LECs fighting over buildings one at a time at the FCC and in the courts over which has whose lines installed. One imagines platoons of FCC officials digging around in basements on the lookout for stray wires and telltale circuits.
Instead of this Fallujah approach, the FCC should lift UNEs in areas where competition has been shown to be economically possible–perhaps based on line density alone, then get out of the way.
Will airline passengers soon be able to use their cellphones while in flight? Perhaps. The FCC announced today that at its meeting next week it would consider changing its rules to “facilitate” cellphone use in aircraft. This is welcome news. The phone ban was imposed in the early 1990s due to concerns that the then-new wireless technology would interfere with vital onboard safety equipment. However, in the years since, researchers have been able to come up with little or no evidence of a problem. Rather than protect safety, some say, the prohibition has merely served to protect firms that offer seatback phones.
Of course, not everyone will be looking forward to freer phone use in flight. Who, after all, will want to share an aisle with Chatty Charlie during their next 12-hour flight to Tokyo? Still, there’s a big difference between allowing cell phone use and requiring it. If telephones look to be enough of an annoyance to enough passengers, smart airline managers will move quickly to restrict them. One can even imagine “quiet” areas in the cabin, much as Amtrak now offers “quiet” cars. No government rules are required to solve this problem.
Still, its hard to imagine air travel without the familar warning when its time to put away “all cellular telephones and other electronic equipment.” Scientifically justified or not, it has become a ritual of air travel for many, somewhat comforting in its predictabilty. But traditionalists need not worry. If they want ritual, they can always watch the cabin crew demonstrate how to use a seat belt, as required by the FAA’s rules.
The Heritage Foundation’s weblog yesterday posted a good piece yesterday questioning the way Pew’s recent report on P2P was (mis)reported in the news. If you haven’t seen it, Jim Harper’s excellent post yesterday on the same topic is also worth a look.
ABCnews.com posted an interesting piece on Saturday questioning how strong public support really is for the FCC crackdown on indecency. The piece is keyed off numbers obtained by Jeff Jarvis for his buzzmachine.com blog. Last month, you may remember, the FCC fined Fox $1.2 million for a raunchy scene on its (quite unsuccessful) reality show “Married in America.” At the time, the FCC said it had received 159 complaints about the show. But a FOIA request by Jarvis found that there were only 90 complaints, written by only 23 individuals. And 21 of those were copies of the same form letter.
Its not clear whether this case is typical–there were certainly more complaints about the Janet Jackson exposure, for instance. But in a related story, Mediaweek is reporting today that 99.8 percent of FCC complaints in 2003 were filed by one organization–the Parents Television Council. PTC has been responsible for a similar proportion so far this year, when complaints related to Janet’s expose are excluded.
All this reminds us that broad brush statements that the FCC is flooded with complaints should be taken with giant shakers of salt.
It also indicates that the FCC can be pressured quite easily even by a few complaints. The ABC report memorably quotes Chris Sterling of George Washington University as saying “the FCC is a leaning tower of Jello” on such things,” easily pushed one way or the other.
Last week, I posted a comment on the Monday Night Football/Desperate Housewives tempest, arguing that rather than have the FCC censor broadcasts, Americans should tune out offensive material the old fashioned way, with our thumbs on the remote control.
The post garnered a sprited dissent from a reader who argued that because broadcasting is so pervasive, viewers don’t really have a choice. I suggested that he should get out of the house more. Uh oh. The reader really launched on me after that one, writing:
“Yeah, you’ve got a point James. Let’s let all the shit in the world over the public airwaves. Hardcore porn in primetime. Anybody who doesn’t like it doesn’t have to own a tv. Or go to stores with tv’s. Or own cars with radios. Or let your kids have friends with either. How about a little full frontal nudity on the nightly news? It’s my fault for watching tv at all. “Get out more?” You’re basically telling me that it’s a parent’s responsibility to shield their kids from anything they don’t want them to see, but the only way to do that is to become Amish. Tell me, do you support having ANY decency standards on tv or radio at all? If so, what is that line?”
Wow. I really got him mad, which is probably my fault for being so flip. (And it’s not like we have so many readers here we can afford to offend any of them!) And he does raise points which deserve an answer.
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