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.


Some surprising news from the folks at Broadcasting and Cable magazine: Barack Obama is now against restoring the Fairness Doctrine.  In an email Wednesday to B&C, press secretary Michael Ortiz wrote: “Sen. Obama does not support re-imposing the Fairness Doctrine on broadcasters.”  With John McCain already firmly in the anti-fairness regulation camp, that means that both major presidential candidates are now on record against reinstituting the former FCC policy.

So is it time for fans of the First Amendment to break open the bubbly?   Well, not quite.  While welcome, the Obama statement was hardly a vigorous denunciation of the doctrine, or its chilling effect on speech.   In fact, it doesn’t seem the senator actually opposes the rule, as opposed to not supporting its return.  (Notably, he hasn’t yet signed onto the “Broadcaster Freedom Act,” which would ban its re-imposition). According to Ortiz, the reason for the senator’s non-support is that he “considers this debate to be a distraction from the conversation we should be having about opening up the airwaves and modern communications to as many diverse viewpoints as possible.”

Not because it is a violation of free speech principles, or because it is insidious government censorship, not even because it is counter-productive, but because it’s a “distraction.”

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Human Events’ John Gizzi is reporting today that House Speaker Nancy Pelosi “signalled her strong support” for revival of ‘The Fairness Doctrine,'” yesterday at a breakfast meeting hosted by the Christian Science Monitor.  The report sparked a flurry of activity by supporters of Rep. Mike Pence’s stalled Broadcaster Freedom Act, which would permanently ban re-institution of the regulation.  

The reaction to Pelosi’s comment is rather surprising, given that its hardly news that the Democratic leader would support the doctrine.   Last year, in fact, it was reported that she would “aggressively” pursue reinstituting the doctrine.   That never happened, and in fact the House ended up voting for a one-year appropriations rider banning the FCC from reviving it.   

News or not, the renewed attention for the Pence effort is welcome.   Still, supporters of free speech shouldn’t fool themselves into thinking that this is the whole of the battle, or even the main theater of conflict.  In truth, while many still give lip service to the Fairness Doctrine, the real battle over media regulation is moving forward — with closed lips — elsewhere.   Free Press and the Center for American Progress laid out the strategy last year in a report on how to balance the “conservative bias” on talk radio.   Their recommendations ranged from media ownership restrictions to vague “public interest” requirements enforced by the FCC.  Tellingly, the report dismissed the Fairness Doctrine itself as ineffective.

The battle over stealth fairness regulation may already underway at the FCC, which has already launched a proceeding to consider imposing rules on broadcasters to ensure local content and diversity on radio and TV, giving regulators renewed powers to control what is said and heard.     And, as Cord Blomquist has pointed out: “Localism will compel speech of which FCC Commissioners … approve. In a world of limited broadcast hours, compelling one sort of speech means sacrificing speech of another, effectively censoring speech.”

We’ve heard that song before.

Mike Masick over on Techdirt yesterday decried the “amount of misinformation flying around” on the retention marketing issue.  Unfortunately, however, his attempt to clear things up actually added to the airborne debris. 

Specifically, Mike claims that I erred the other day in writing that the question at hand was whether Verizon can contact customers who have agreed to switch telephone service providers, and ask them not to switch.  That, he says, is incorrect.  Saying that “no one” is saying that telcos can’t try to convince customers not to switch, he claims the issue is instead whether Verizon can delay  making the change while it trys to take them out of it: 

What the FCC has said is that Verizon cannot abuse its position to block the switch while it tries to convince customers not to switch. That’s what Verizon is doing. When it gets the request from the cable companies to switch, it basically goes into procrastinate mode, even though it’s required to process the switch. It codes the switch request as a “conflict” which gives it extra time to resolve the “conflict” before obeying the switch request.

Masick is simply wrong.  The FCC’s order, released Monday, explains clearly that a conflict code is entered only after Verizon is successful at convincing a customer not to change carriers.  There’s no claim that, or even a reference to, Verizon improperly delaying any pending switch requests (although the cable industry is certainly pushing for telcos to be required to make switches more quickly).

What the FCC did say was that the information contained in the switch request (i.e., that the customer wants to change), is “proprietary,” and that — to quote Commissioner McDowell: “marketing efforts [based on that information] cannot take place during the window of time when a customer’s phone number is being switched”.

Bottom line:  I stand by my original post.

Targeted by Chairman Kevin Martin’s apparent war on cable, the cable industry has had a tough time at the FCC of late. Being a cable lobbyist at the FCC today is like being a Communist in the State Department in the 1950s. One can just imagine the question: “Are you now, or have you ever been, a user of coaxial technology?”

That said, the cable folks don’t always lose. Just this Friday, they won one – handing a defeat to Martin. The problem is that its one they really should have lost.

The question at hand (addressed ably by Berin Szoka on Friday, and by Adam Thierer earlier) is whether telephone companies should be able to contact customers who have requested that their phone numbers be switched over to a competitor, and try to convince them not to switch. Several cable firms filed a complaint against Verizon over the practice early this year. The practice is anti-competitive, they said, pointing out that Verizon was able to ply customers with “price incentives and gift cards” to convince them not to switch.

In April, the FCC staff said it would side with the telcos on this one. But on Friday the commission voted 4-1 – with Chairman Martin the only ‘no’ vote – to ban the practice.

That is unfortunate. Far from being a threat to competition, being able to fight to keep your customers – and even to ply them with a few incentives – is at the heart of it. The practice is common in other highly competitive industries – just try letting a magazine subscription expire. In fact, as Verizon’s Tom Tauke argues, cable firms have long engaged in similar activity to keep customers from moving to telco video service. Why should it now be wrong for telcos to do the same thing for telephone services?

I don’t say this often, but Chairman Martin was right on this one. Not because cable should lose, but because consumers would win.

Americans have a love-hate relationship with their cellphones.   Consumers have adopted wireless telephony with a passion — with over 250 million subscriptions at last count.  Many would rather venture out without their pants than without their phones.  Yet,  at the same time,  Americans seem deeply suspicious of the little devices,  perhaps believing that anything this convenient must be harmful.  

The latest case in point:  a video circulating on the net purportedly showing how radiation from cellphones can pop popcorn.   Posted on youtube and circulated endlessly by email, the video has been viewed millions of times.  It appears to to be an amateur recording made in someone’s living room, with a group of friends to put three cellphones in a circle around some popcorn kernels, then call them — making the phones ring and the popcorn pop to much merriment.

The unspoken message:  if these gizmos can explode a kernal of corn, what are they doing to your brain?

The problem though is that the whole thing is a hoax.   A total fabrication.  As it turns out, the radiation from even three cellphones isn’t even enough to warm up corn, never mind pop it.  As one commenter on the video put it:  “A 1 kilowatt microwave takes around one minute to pop its first kernel, and that’s in a closed environment. A cell phone transmitter operates from 0.1 to 1 watt, but this video shows these kernels popping almost immediately.”

And I’m not an electrical engineer, but I suspect that having the phones ring doesn’t change the equation much.

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Remember the Sirius-XM deal?   It was in all the papers March before last, when the two satellite radio firms asked the FCC for permission to merge.   The FCC still hasn’t made a decision on the issue (the Justice Department approved the deal earlier this year.)

Yesterday on CNBC, FCC chairman Kevin Martin was asked when an answer might be forthcoming.  “We’re taking a close look at that and I suspect the commission will act soon,”  Martin stated.   CNBC’s Mark Haines was a bit taken aback by the vague response, asking how it could possibly take nearly a year and a half to review the transaction.  “Aren’t you under some obligation to answer these guys, if not today, tomorrow or very soon?, ”  he asked.  

Martin wasn’t at all plussed, responding: “I do hope we’ll be able to get back to them soon.” 

Hope to get back to them soon?   Talk about putting someone on hold.  One can just imagine it:  “Thank you for calling the FCC.  Your $4 billion transaction is very important to us.  A regulator will get back to you very soon.”  

After 445 days of consideration, you’d think the FCC could do better than this.  This is an agency, after all, that used to brag about it’s 180 day “shot clock” for merger review.   But that clock has long expired (even though the FCC didn’t even formally start the ticker until the 78th day).

XM and Sirius deserve more than “we’ll get right back to you on that” platitudes.   The FCC needs to decide on the merger — yes or no.  Then it needs to review it’s merger review procedures to find out what’s gone so terribly wrong.   Although there’s no telling how long that could take.

 As Mark Twain might have said if he followed spectrum policy: the reports of the death of central planning in Washington have been greatly exaggerated.  As early as next week, the Federal Communications Commission may vote on a plan mooted by Chairman Kevin Martin to auction off 25 MHz of spectrum to the highest bidder, with a catch:  reportedly, the licensee will have to use the spectrum to offer free broadband service, with a network to be built out on a timetable specified by the FCC, and with content that doesn’t offend the regulators in Washington.

For most of the last century, the FCC was in the business of defining how spectrum would be used – deciding not only who would get it, but what services they would use it for, and under what conditions.  Over the past 20 years, however, the idea of central planning has fallen into disrepute, not only internationally (see Soviet Union) but in Washington.   The idea that five individuals in Washington – no matter how intelligent and well-dressed – could know the proper uses and methods of providing wireless services for millions of people became increasingly hard to defend.  After a disastrous start to the cell phone era – which was delayed by a decade or more do to FCC delays, the central planning model was largely replaced by markets, with licenses assigned by open auction, and (more importantly) uses and business models defined by consumer demand.

By the turn of the 21st century, the FCC’s planning colossus had been effectively toppled, with some of the biggest tugs at the ropes by the Clinton era-FCC.  The rest, as they say, is economic history.   Over the last 20 years, the number of Americans with wireless has grown from two to 255 million, while the devices they use have transmogrified from brick phones to multipurpose units that do everything but the user’s laundry.

 Chairman Martin’s proposal would take a giant leap backward from this marketplace success.  It isn’t the first attempt by the present FCC to try to direct spectrum use.   In auctions earlier this year of former analog television spectrum, the FCC set aside blocks for “open access” uses, and for spectrum to be used in partnership with public safety users.   The auctions were remarkably unsuccessful – with the one block failing to meet its reserve price, and the other fetching far less than similar, unencumbered, spectrum. Continue reading →


“[T]here are two policy goals on which we need to make real progress,” the FCC’s Michael Copps told Congress last year, “minority and female ownership is one, localism is the other.”   Indeed, the two goals have long been sandwiched together like ham and cheese by media reformers on the left.  

 But it turns out the two may not mix so well after all.   According to the Minority Media and Telecommunications Council and the Independent Spanish Broadcasters Association,  many of the FCC’s proposals to advance localism will actually harm minority broadcasters.  Because of their “relatively small size and limited access to capital,” David Honig and Jocelyn James of MMTC say in two recent filings at the FCC, the proposals would have a “negative impact on minority broadcasters.”

 Among the proposed new requirements cited by MMTC and ISBA:  mandating permanent advisory boards, requiring a physical presence in broadcast facilities, prohibiting voice-tracking and adopting localism programming guidelines.

 The two groups took particular aim at what is known as the “main studio rule.”   Repealed in the 1980s and now being considered for resurrection, the rule required broadcasters to maintain a “main” studio in their community of license.  The problem, MMTC and ISBA point out, is that quite a few minority-owned stations – being late entrants into the broadcast industry (in part, it is argued, because of past discrimination by the FCC itself) – don’t have a central community of license.   Instead of having a powerful signal licensed from a single, central location, a disproportionate number of minority-owned broadcasters use clusters of small signals, each licensed to a separate, suburban community.  Thus, rather than maintaining a single “main” studio, the rule would require them to maintain multiple – and costly – studios.

 Because of this discriminatory effect, MMTC and ISBA say  — rather bluntly — the rule would operate as a “tax on Blackness and Brown-ness.”



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In case you haven’t read about it in a newspaper yet,  The Heritage Foundation this week released a new paper of mine on the FCC’s new newspaper cross-ownership rule and congressional efforts to “disapprove” the changes.  I argue that the 21st century hasn’t been kind to the newspaper.  As I’ve pointed out before (here and here) newspapers just aren’t the powerhouse they once were: few citizens today get their first or last news of the day from a bundle of paper tossed in the azaleas by a teenager on a bicycle.

Bottom line:  not only are the FCC’s changes justified, but the agency didn’t go nearly far enough. 

Here’s the full piece.

Justine Bateman may have grabbed the headlines, but she wasn’t the only witness from Hollywood at yesterday’s Senate hearing on neutrality regulation.  Nor did she have the most interesting resume.  That honor goes to Patric Verrone, the president of the Writer’s Guild of America, west, whose own writing credits include work for everything from The Simpson’s and Futurama to Rugrats and the Muppets.   As Verrone himself put it, “I am the only panelist to have written a film about a robot poker tournament in space Vegas in the year 3009 so I think my expertise in the area is unquestionable.”

Strangely enough, I first came into contact with Verrone not from his WGA work, or even from 31st century poker tournaments, but from Ebay, where he sells miniature figures of U.S. presidents and other notable individuals.   My six-year old son Peter and I have become avid collectors of the figurines. 


Verrone is no stranger to market power – being the only known vendor of the pricey presidents.  (Although I suspect the demand side is rather thin as well). 

Outside of the tiny figurine world, Verrone is best known for leading Hollywood writers through a 100-day strike, which finally ended in February of this year.  Oddly, however, Verrone, in his testimony, uses that experience as evidence of the need for Internet regulation.  

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