How to engage the regulator

About fifteen years ago I worked for a local government agency that was responsible for regulating basic cable rates and managing the franchise agreement the county had with two cable providers.  One day I received a call from a Bear Sterns analyst. He wanted some information on the probability that the county would approve a cable company’s new franchise, if I recall correctly.  While we did not get too many calls from investment bank analysts, I was not completely surprised that an investment bank would take interest in a regulatory matter, especially one that would impact the cable company’s revenue.

What does surprise me, however, is how little the investment community appears to know about how people in government think.  This lack of knowledge may start as far back as business school.  Take a cursory review of an MBA program’s curriculum and there is a dearth of coursework on how government operates or the impact of policy making on private sector revenues.

I don’t know the specific reason for this gap in knowledge.  I can hazard the guess that the investment sector like the general public sees government as that inconvenience, that necessary institutional evil comprised of soulless rules and laws and unaware bureaucrats that slows down innovation while imposing undue tax burdens.  The cynic in me would agree with this overall assessment, but I would caution that any member of the investment community engaging a regulator stop short at viewing the staff member or ultimate decision maker in a government agency as “soulless” or “inconvenient.”  That approach won’t get you far, especially when trying to either anticipate an event, understand a policy, or influence an agency’s proposed regulatory action.

Government and politics is a people business. With all the talk of artificial intelligence and machine learning, government decision making is a human endeavor, with agency heads and staffs taking into account the positions of various stakeholders, all of whom are human as well.  While being “best friends” with a government analyst is not necessary to effectively extract information or exercise influence, understanding an agency’s mission and its decision making methodology or mechanism is important.  Knowledge of a staffer or decision maker’s educational background can also help. Being a fellow alum can be an icebreaker.  Also, understanding past decisions and the rationale behind them can help in anticipating future outcomes.

Also, keep in mind that the agency staffer or decision maker is interested in the private sector as well.  The staffer may have an interest in the evolution of the product she regulates. For example, while a staffer at the Florida Public Service Commission I found the emergence of the internet fascinating. Watching telephone companies and cable companies position themselves and develop the technology that would later power what is today called broadband was a great experience.

If that interest on the part of a staffer is recognized by a private sector player, an opportunity is created to make more robust, detailed presentations because an interested staffer is one that has done her homework about the service being regulated.

Bottom line, engage the regulator as more than someone presenting a legal or regulatory barrier or espousing rules.