Over the last few years regulators seem to have been handing out gifts to those they deem worthy even as they bestow lumps of coal and switches to others who have not caught their fancy. Call it a regulatory Santa Clause workshop.
The FCC has pursued this mindset aggressively, rewarding companies they favor by burdening others with regulations that only apply to one company. The usual vehicle for accomplishing this favoritism is when a company seeks permission to transfer a license as part of a sale or merger.
The FTC has joined in the merrymaking as well. In its case, new rules are layered on one company that last for a dozen or more innovation cycles, all but guaranteeing that the burdened company will not be able to continue innovating. The typical vehicle for such gift giving to the company’s competitors is when the FTC pursues a company for some presumed wrong doing, but then offers to settle if the company will accept the extra burden, hence benefiting the company’s competitors.
Recently, Kansas City, Kansas, decided to take its turn at being ol’ St. Nick. Facing a great investment by Google in high speed IP infrastructure in Kansas City, it offered a sleigh full of gifts by way of reduced or eliminated permit processes, or in other words, a great reduction in regulations and red tape.
The problem is the city handed these presents to only one company instead of allowing all that wanted to compete to do so on the same terms.
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. In Kansas City it is equally troubling that the compliance rules are so difficult that such breaks are even necessary to attract innovation investment.
Such government behavior is troubling. Rules and taxes are put in place that dissuade investment. Then when government removes or lowers those barriers, it does so in a way to favor just one competitor.
We all know what is next, when one competitor gains a clear advantage it will be branded a “monopolist,” and government will then strip away the gifts it gave and likely impose new burdens.
As it turns out, it is only the Grinch wearing a Santa suit.
December 20, 2012