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.
Peter Suderman of National Review Online has an excellent piece up this morning on the 2nd Circuit’s slap-down of the FCC on indecency. He argued that even conservatives — especially conservatives — should be concerned about FCC powers to regulate speech:
..from a conservative point of view…FCC regulation of broadcast speech creates exactly the sort of centralized, out-of-touch control mechanism that conservatives should want to avoid. One of the two measures the FCC is supposed to use when deciding whether or not speech is indecent is whether the broadcast is “patently offensive as measured by contemporary community standards for the broadcast medium.” Does anyone really think the FCC is equipped to enforce “community standards” from its coastal perch in Washington? It’s like some Bizzaro-world notion of local governance: putting a single federal agency in charge of “community standards” for a large, diverse country.
Worth reading. (Content warning: contains words “heck” and “asparagus.”)
FCC Commissioner Robert McDowell marked his one-year anniversary at the commission last week. More than a symbolic milestone, the anniversary means the end of most of the conflict-of-interest restraints that — due to his prior tenure as a lobbyist — has kept him from voting on some key issues. Now that he’s freed, the commission will truly have, for the first time since Chester Arthur was president I believe, a full contingent of voting members.
McDowell marked the occasion by, appropriately enough, speaking his mind. He gave a barnstorm of a speech at the Broadband Policy Summit, taking a hefty swipe at the OECD and its recently-released stats on broadband. The OECD showed the U.S. lagging at 15th place interenationally in broadband penetration, leading to massive hangwringing from the media and from most policymakers. But McDowell, playing gloombuster, took issue with the OECD’s numbers in detail, pointing out its “fundamental flaws.” Among his criticisms:
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Ever since the American Spectator reported a few weeks ago that the House leadership would “aggressively pursue” reinstatement of the FCC’s old Fairness Doctrine, there’s been lively speculation as to whether the regulation will really be brought back to life. Despite much discussion, Dem leaders have — pardon the pun — maintained complete radio silence.
So how to determine the likelihood of this actually happening? Through markets of course. Yesterday, the online “prediction market” InTrade.com opened a market on the question of whether the fairness doctrine would be brought back by the end of this year. Essentially the system works like a stock market, with investors buying and selling future contracts on the event, which will pay a set sum if the event occurs.
So far there haven’t been any contracts completed — the market is just one day old. But bids so far have ranged from 10 to 20 or so (translating into a 10-20 percent chance of regulation.
That seems high to me – I don’t think reinstatement is that likely for 2007 (2007 is another story). But I’m not sure I’m willing to bet on that.
“We suck less,” said Sirius CEO Mel Karmazin to shareholders yesterday at the firm’s annual meeting, comparing the firms dismal performance to that of XM Radio. While perhaps better than sucking more, the statement could not have cheered investors.
Satellite radio investors looking for optimism, would have been better off reading a letter from Senate antitrust subcommittee chairman Herb Kohl, sent Wednesday to the FCC and to the Justice Department. The proposed XM-Sirius merger, he said should be rejected, since there aren’t any competitors to the two. Old-fashioned terrestrial radio, he wrote, just can’t compete with satellite’s “tremendous variety” of formats, “far superior sound quality” all provided on a commercial-free basis. Kohl similarly dismisses Internet radio and MP3 players, finding they also provide no alternatives for consumers.
It must have come as a surprise to satellite investors — who have never seen a profit — that they hold such a stranglehold on the market. It would no doubt be a surprise to consumers as well – hundreds of millions of whom do not subscribe to either satellite service, along with countless others who use iPods instead of radio. These consumers have no alternative to satellite radio service — according to Kohl — they just don’t know it yet.
Unfortunately for any shareholders hoping to start raking in monopoly profits, Kohl is wrong. There is no satellite stranglehold on radio, and no lack of competitors. And that competition will continue — or even increase — if the proposed merger takes place. For U.S. consumers, that doesn’t suck at all.
Last week, Nancy Pelosi reportedly put the Fairness Doctrine in play in Congress — stating that the House leadership would aggressively pursue its restoration. At this point it’s unclear how serious she is about it — will there be a real effort to reimpose this relic of the 1940s, or is this just a bone for the Rupert-and-Rush-Need-to-Be-Stopped Left?
One thing is clear — serious or not, its a bad idea. I explain why is this just-released Heritage paper.
The American Spectator reported yesterday that House leaders have decided to “aggressively pursue” reinstatement of the Fairness Doctrine this year. In January, Rep. Dennis Kucinich raised a stir by saying he would pursue the issue, but — while always entertaining — the far-left Kucinich doesn’t always speak for his party’s leadership. The Spectator report indicates that that leadership is now behind the effort in a big way.
The report also includes some mind-bogglingly frank statements by a House staffers on the reasons for the effort. “Conservative radio is a huge threat and political advantage for Republicans and we have had to find a way to limit it,” a “senior advisor to Pelosi” is quoted as saying. A Government Reform committee staffer is then quoted as saying: “Salem [Broadcasting Co.] is a big target, but the big one is going to be Limbaugh. We know we can’t shut him up, but we want to make life a bit more difficult for him.”
The quotes are amazingly reminiscent of statements by Richard Nixon and his staff, who routinely used the Fairness Doctrine to cow opponents in the media. The surprising thing, though, isn’t the sentiment — most everyone after all knows the political dimension of this issue — but the fact that staffers would let themselves be so quoted. The statements sound (suspiciously) more lilke GOP talking points on the issue than anything a halfway experienced staffer would let himself utter.
If these quotes are accurate, however, those of us on the anti-regulation side may as well put our pens away now. We couldn’t possibly make a better case against this regulation than those staffers have.
The question then would be: will they get equal time to rebut their own arguments?
Good article in this week’s Economist on last week’s Supreme Court decisions on patent law. The magazine compares the KSR decision to a decision by the Privy Council 435 years ago:
“In 1572 the Privy Council of Elizabeth I, the queen of England, refused to grant patent protection to new knives with bone handles because the improvement was marginal. It is only natural that things progress, the council reasoned; minor ameliorations do not cut it. This week America’s Supreme Court decided likewise.”
That’s what I call historical perspective. Worth reading.
Are TV antennas making a comeback? It may be hard to believe, but according to Joe Milicia of the Associated Press, there’s a mini-boom going on in the antenna business. And it’s not just technophobes who are buying them. 
According to Milicia: “…some consumers are spending thousands of dollars on LCD or plasma TVs and hooking them up to $50 antennas that don’t look much different from what grandpa had on top of his black-and-white picture tube.”
According to the head of an antenna company: “Eighty-year-old technology is being redesigned and rejiggered to deliver the best picture quality. It’s an interesting irony.” The reason is that quite a few people believe HD signals are actually better over-the-air, and with digital technology snow and other interference is less of a problem. “Over-the-air everything is perfect,” said one consumer.
It’s a controversial point, to say the very least. And it hard to imagine the general public returning to the world of over-the-air. Most people, one researcher is quoted as saying, don’t even know they can get HD over-the-air. And many — as Gary Shapiro has pointed out — just don’t care. Still, if there is even a short-term boom in antennas, this is a rare bit of good news for the beleagured broadcast industry.
Perhaps rotary-dial phones will come back next…
Say what you want about Rupert Murdoch, but the man certainly knows how to make news. His bid for Dow Jones two days ago – despite being initially rejected by Dow Jones’ controlling family — is still reverberating through media, financial, and political circles.
From the start, the proposed deal came under a hail of criticism. That is in itself unsurprising. Murdoch is so unpopular that any acquisition would be roundly condemned. If he tried to buy a ham sandwich for lunch that would be condemned.
But isn’t this a debate over media concentration, not just Murdoch? Anti-media consolidation activists, of course, have trotted out all the usual concentration-of-power arguments. The media market has been called a monopoly, an oligopoly, and every other type of poly that can be found in Greek dictionaries. But these arguments have sounded even more hollow than usual. There’s little overlap between Dow Jones and Murdoch’s News Corporation. Dow Jones owns newspapers – mostly small ones and one really big one – but has no broadcast holdings. News Corporation owns TV stations but only one newspaper in the U.S.
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The public policy world lost one of its most colorful personalities yesterday with the death of super-lobbyist Jack Valenti. For 38 years, Valenti was the motion picture industry’s man in Washington, bridging the yawning gap between the worlds of Capitol Hill and the Hollywood hills. He was perhaps the most recognized lobbyist in the country – in no small part due to his long-running annual appearances at the Academy Awards.
His Washington credentials were extensive, having served as a staffer for Presidents Kennedy and Johnson. 
But Valenti was no typical blue-suited, Code of Federal Regulations-quoting D.C. rep. Like a seasoned actor playing a role, he brought Hollywood-like style and drama to Washington in a way that few others could ever match.
With a voice like that of a Roman senator, the silver-haired Valenti – dressed nattily, often with a trademark red handkerchief in his pocket – could make even the most mundane debate sound like a Shakespearean drama. Among his more quotable and provocative lines, from the 1980s copyright battle over the video cassette recorder: “I say to you that the VCR is to the American film producer and the American public as the Boston stranger is to the woman home alone.” There’s a reason he is the only D.C. lobbyist with a star on the Hollywood Boulevard Walk of Fame.
Valenti was by no means always right on the issues. The VCR, for instance, wasn’t much of a Boston strangler. He wasn’t consistently pro-free market, nor consistently anti-free market. But then again, that wasn’t his job. His job was to represent the interests of the motion picture industry, as the industry understood them. And that he did exceptionally well. Both Washington and Hollywood will miss him.
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