Late last year, Kansas City, Kansas, offered greatly reduced regulations and red tape, such as right-of-way preferences and reduced-pole access rates, to encourage large investments in the community by building out a high speed IP infrastructure. The problem was that the city handed these presents to only one company, Google, instead of allowing all that wanted to compete to do so on the same terms.
No matter how compelling the investment, and Google’s is wildly compelling, this sort of personalized rule making is the worst of the regulatory world, tilting the playing field this way or that for one competitor while the others are subject to a different regulatory, tax or oversight regime. Equally troubling is that the compliance rules are so difficult that providing such breaks is necessary to attract innovation investment.
This month, Google disclosed plans to bring its high speed Internet access service to Austin. But Texas is different than Kansas.
According to an Austin spokesman, any deal negotiated with any provider must then be offered to any other provider interested in providing the same service. So, for example, if AT&T or Time Warner Cable wanted to opt into the same deal, they could. AT&T has underscored the importance and value of this appropriate public policy. "AT&T's expanded fiber plans in Austin anticipate it will be granted the same terms and conditions as Google on issues such as geographic scope of offerings, rights of way, permitting, state licenses and any investment incentives." Fair treatment attracts competition.
There is a lesson to be learned here. Companies tend to avoid going places where they face massive taxes and regulations. But when elected officials and regulators pare back those taxes and regulations, as in Kansas City and Austin, companies are eager to invest and compete—when it is on a level playing field.
While “being fair” has a certain appeal, also appealing is greater investment in tomorrow’s broadband infrastructure. Such investment does not require federal stimulus, but rather requires elected officials and regulators to ensure the appropriate conditions for investment.
April 12, 2013