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 rag-tag army myth has made its return — this time in a front-page story in the Washington Post. In case you don’t remember, I wrote several times last year (here, here, and here) on the persistent myth that advocates of net neutrality were an outnumbered and outgunned “‘rag-tag” army fighting against the odds. The idea of course, is preposterous — the firms supporting neutrality regulation are among the largest on Earth.

Preposterous or not, the Washington Post picked up the theme today in a piece on the FCC’s 700 Mhz auction, writing that “Google’s 12-person Washington team, based in temporary quarters on Pennsylvania Avenue, has aggressively confronted the legions of lobbyists behind the two telecom behemoths [Verizon and AT&T].

One can just imagine the poor, outnumbered Googleers fighting off endless hordes of telecom company lobbyists. Things are looking desperate, they take stock of their resources and find they are down to their last… $160 billion.

That’s right, Google’s market capitalization tops $160 billion. That’s larger than Verizon (though less than AT&T). By any meaure, Google is one of the largest corporations on earth. While perhaps new to the Washington policy world, it’s hardly outgunned in terms of resources. This is a company that pledged last week to bid $4.6 billion for spectrum if the FCC adopted the regulations it wanted. As Everett Dirksen might have said, $4.6 billion here and $4.6 million there and pretty soon you are talking about real money.

Don’t get me wrong — Google has every right to its wealth, it earned it. And I have nothing against their DC team, who all seem like nice fellows. But can we please call a halt to this game of “who’s the underdog?” These guys are big cats, and underdog’s cape would just look silly on them.

Everything in the digital world moves fast, but this has to be a record. Apple’s new iPhone has gone from cool new innovation to a new form of slavery in less than two weeks. Just released on June 29, Rep. Ed Markey (D-MA) seems to consider it already a “must-have” — complaining yesterday about restrictions placed by Apple and AT&T on its availability. Speaking yesterday at a Commerce Committee hearing, he lambasted the fact that the iPhone is only available with AT&T service, as well as the $175 early termination fee on its 2-year contract.

The iPhone is like the Hotel California, he said — “you can check out any time you like, but you can never leave.”

Some critics go even farther. On CNBC’s “On the Money” show last night, I debated the issue with Gary Goodman, of Customersatisfaction.com, who (and I’m not making this up) argued that “what we have here today is the equivalent of consumer slavery.”

Slavery? I’ve heard people say they are slaves to their cellphone, but are they slaves to their provider because they signed a contract? Is there perhaps a Thirteenth Amendment problem here that should be examined?

The idea is of course ludricrous. If this is slavery, it is a strangely popular kind.

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It’s no secret that the Fairness Doctrine isn’t popular in the talk radio world. The effort to revive the rule is largely aimed at curbing that media, and most major talk shows hosts have (rightfully) turned the idea into a policy pinata. Less well known, however, is the fact that the Fairness Doctrine is also taking a major caning online. Usually, the blogoshere is friendly territory for the left. But when it comes to the Fairness Doctrine, its been anything but.

A quick google blog search earlier today on the term “fairness doctrine” shows the extent of the problem for supporters: of the top ten posts on the subject which take a position, nine were against reimposing the Doctrine. And it doesn’t seem to get much better in the next 10, or the 10 after that. Sure, there’s been some spirited defenses of regulation coming from the Huffington Post and elsewhere, but they’ve been vasted outnumbered by critics.

And it’s mostly not from professional policy wonks, judging by the names of the blogs, which often are as colorful as their arguments. Here’s a sampling:

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Only a couple of days ago, it seems like the debate over the Fairness Doctrine was fading. Opponents were reduced to citing overheard elevator conversations for Pete’s sake.

Then the dam burst. So far this week three Democratic senators have come out in support of reimposing the restriction. (One — John Kerry — was probably as surprised as anyone, since his comments had been recorded months ago, but only released Tuesday by New York public radio host Brian Lehrer).

In the House, all the action has been by Fairness Doctrine opponents, led by Rep. Mike Pence of Indiana — who have crafted a bill to take away the FCC’s authority to impose such regulation.

Now comes the real shocker — the idea will be voted on today by the full house, as an amendment to the FCC appropriations bill. Now that’s what I call fast action.

Odds are that the amendment won’t pass. But the up or down vote will tell us a lot, as members will, on the record, have to declare whether they believe in government control of the media or not.

The results should be interesting. Stay tuned.

Dick Durbin — the Senate’s Majority whip — came out four-square in favor of the Fairness Doctrine today, declaring in The Hill — a newspaper for Capitol Hill: “It’s time to reinstitute the Fairness Doctrine” It’s the clearest statement yet from a member of the congressional leadership that there will be a real fight over the issue.

Oddly, Durbin explained his position with an appeal to old-time values: “I have this old-fashioned attitude that when Americans hear both sides of the story, they’re in a better position to make a decision.”

Unfortunately, that “old-fashioned attitude” comes with other old-fashioned ideas — such as government restrictions on what the media can and can not say. Memories of Torquemada no doubt bring tears to his eyes as well.

Of course, if he really wants to be old-fashioned, he could dig up a copy of the First Amendment, adopted way back in 1791, which says “Congress shall make no law… abridging freedom of speech, or of the press.”

How quaint is that?

The debate over the Fairness Doctrine has up until now had a bit of a shadow-boxing quality to it. While opposition to the FCC rule has been abundant — it’s hard to turn on the radio without hearing some discussion of the issue — actual legislative proposals to reinstate the rule have been scarce.

Politics, like nature, abhors a vacuum, however. So, rather than wait for advocates of the doctrine to make their move, Rep. Mike Pence, a Republican from Indiana, has decided to take the offensive by introducing his own legislation to ban the FCC from reinstating the rule. Specifically, Pence’s bill, to be introduced later this week, provides that the Federal Communications Commission “shall not have the authority to prescribe any rule, regulation, policy, doctrine, standard, or other requirement that has the purpose or effect of reinstating or repromulgating” the Fairness Doctrine.

While the bill’s chances for passage in the Democratic-controlled Congress are unclear, Pence’s bill is significant. First, it gives opponents of the Fairness Doctrine a clear goal around which to rally — endng the “will they or will they not” guessing game. Perhaps more importantly, the legislation potentially redefines the question at hand from “should regulation be imposed?” to “should regulation be allowed?”

It’s a good question, and a debate well worth having. Stay tuned.

Why do conservatives do better on the radio than liberals, and what can be done about it? That’s the question addressed in a study released today on talk radio by two left-leaning policy groups, the Center for American Progress and Free Press. The conclusion: conservative success in radio is due to the ownership structure of radio, and Washington can fix the problem through greater controls on radio ownership.

The conclusion is no doubt a comforting one to left-of-center radio programmers. No one, after all, likes to be told they are unpopular. Yet, it is as wrong as it is dangerous. None of the number-crunching in the CAP/Free Press study contradicts the essential fact that conservative talk radio is more successful because it is more popular. More people listen to it, so radio stations provide more of it. And that’s not a problem that Washington can – or should – “fix.”

The CAP/Free Press study is based first on one unsurprising finding: there’s a lot more conservative radio on the air than liberal radio. Of the political talk radio programming in the top ten markets, for instance, the study found 76 percent is conservative, and 24 percent is liberal. That percentage varies quite a bit by market – some markets were overwhelmingly conservative, while others – such as Chicago and New York – were split almost evenly between left and right.

The $64,000 question is why conservatives are doing better. To their credit, the authors dismiss the repeal of the Fairness Doctrine as the root cause, saying correctly that the “Fairness Doctrine was never, by itself, an effective tool to ensure the fair discussion of important issues.” (What they don’t mention, however, is that the doctrine was very successful at discouraging such discussion.)

Instead, CAP and Free Press point to the ownership structure of radio. Radio stations owned by women or minorities, and those owned locally, they conclude, have less conservative programming than those that are not. Twenty-eight percent of minority-owned stations, for instance, air conservative talk shows, compared to just over 50 percent of non-minority owned stations. Their conclusion: Washington should strictly enforce broadcast ownership rules, combined with strict “public interest” requirements, to solve the “problem” of conservative radio predominance.

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Broadcasters have long had one of the most powerful lobbying organizations in Washington. But it now seems that the National Association of Broadcasters has met its match — an equally powerful outfit known as the National Association of Broadcasters. Yes, that’s right — NAB, under new president David Rehr, has been shooting quite effective bullets recently at itself.

The battle was triggered by the proposed merger between XM and Sirius Satellite Radio. NAB has gone on the warpath against the merger, arguing that it would create a monopoly. Of course, to argue that, it has to argue that broadcast radio doesn’t compete with satellite radio. That argument, however, was rebutted by NAB’s David Rehr (yes, the same one), who just last year gave a stirring speech about broadcast radio’s satellite competitors, declaring:

In 2006 we have satellite and Internet radio. And barely a day passes without the introduction of a new competing device or service. And we have news for our competitors: “We will beat you — as we have beaten those change agents in the past.”

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The Broward County Commission triggered a political mini-hurricane this week, when it considered cancelling its emergency communications contract with a local radio station because its programming is too conservative. For the past year, WIOD-AM has been the county’s “official” station for emergency news and information. On Tuesday, the county commission delayed its renewal of the station’s contract. The problem: the station airs conservative talk show hosts such as Rush Limbaugh and Sean Hannity. The station is out of step with area politics, explained Commissioner Stacy Ritter. “They have every right to speak, but we don’t have to do business with them,” she said.

How thoughtful. I know when I’m looking for disaster information, I’ll want it to be from someone who is in step with my area’s politics.

The reaction, of course, was swift – with Limbaugh, Hannity and others ridiculing the decision – and county officials were deluged with complaints. And to Broward’s credit, several commissioners on the all-Democrat board who had missed the Tuesday meeting came to WIOD’s defense. Yesterday, the county backed off, with a majority of commissioners pledging to renew the contract.

It’s tempting to dismiss the episode as just another bizarre Broward controversy. But the petty censorship attempt by local officials here may be a dry run for a much broader attempt at content control by Congress. Can you say Fairness Doctrine?

It’s also interesting to observe how the national media covered the story. While the controversy received nationwide coverage from conservative outlets, the mainstream national media largely ignored it. Of course, the Miami Herald – the largest newspaper in Florida – did run a piece on the events in Broward. They missed the censorship angle, though – instead they focused with horror on the fact that Rush Limbaugh had called Ritter a “babe.”

So much for the MSM.

The FCC is famous, even among its regulatory bureaucracy peers, for its mollusk-like pace of action. Not that it hasn’t tried to improve. For instance, a few years ago it put into place a 180-day “shot clock” for reviewing mergers — giving itself six months to give an up-or-down decision on transactions. It was a nice idea. It came with a few loopholes, however — for instance, nothing says when the vaunted “shot clock” must begin. Photo Sharing and Video Hosting at Photobucket

(chart from Engadget, numbers as of May 31).

The folks at Sirius and XM Radio have learned this the hard way. Last Friday, the FCC started its 180-day clock — launching a proceeding to review their merger, 78 (seventy-eight) days after the firms submitted their merger plans. That’s a record.

No official word on why the mergers was left hanging so long. Its certainly been a controversial deal — surrounded by quite a bit of uncertainty (bizarrely, even on whether the FCC has a rule banning the merger). But that hardly justifies a 78-day delay: its the controversial and uncertain deals that need a deadline, not the easy ones.

Anyway, for now, the clock is ticking, giving the FCC some 176 more days to decide. Unless it decides to stop the clock again.