The discussions about the future of the municipally owned Click Network won’t end after Tacoma Public Utilities’ stakeholder group meetings end later this month. Talks will just be starting … again.
The meetings with individual groups – Click Cable TV employees, business partners, subscribers to its cable TV services, technology experts and educators – provide attendees with the current state of the system and outline possible futures through a public-private partnership. Members of the public can voice their thoughts at a meeting from 6-8:30 p.m., Nov. 19 at 3822 S. Union Ave.
Comments and questions from these stakeholders meetings will be gathered in a report by the Center for Dialog and Resolution to the TPU Board and Tacoma City Council sometime this winter. The report will also go to the three companies that are interested in leasing the fiber optic network, so that they can flesh out their proposals after the new year. The hope is to have formal proposals for consideration sometime during the first quarter of 2019. But the timeline is a bit flexible.
“There are no dates on the calendar at this point,” TPU spokeswoman Chris Gleason said.
Click faces internal budget shortfalls of about $5 million a year in a changing marketplace that has an increasing number of people “cutting cords” by opting out of cable television packages for streaming-only services. That trend, however, could change following the loss of federal net neutrality rules.
To further confuse an already complex issue, TPU’s absorption of its cable arm’s annual shortfalls into the public utility’s general fund is under a legal cloud. A lawsuit now faces an Appeals Court decision sometime next year after a lower court decided that the accounting shuffle ran afoul of state law since internet access is not considered a utility function alongside water, power and heat. Click, however, started two decades ago as a side venture for the utility as a way to fully use the $100 million fiber optic network that TPU installed to more accurately gather power information.
Tacoma leveraged the investment in fiber optic network during the tech boom of early 2000, with the slogan of “America’s #1 Wired City.” Click served 30 percent of the marketplace at the time. The world has since moved to be more wireless, however. People are dropping cable television and landline telephones. Only about 12 percent of TPU’s service area subscribes to Click TV these days.
“Tacomans chose to invest in the City of Destiny,” the presentation’s script states. “The investment we made together 20 years ago created something great. Now we need to pivot to keep it great.”
Suffice it to say, there is no clear path ahead for a complicated and ever-changing technological landscape. That uncertainty prompted TPU to research options three years ago that lead to a possible deal to lease the utility’s broadband network. Blowback from that news prompted a pause, a call for an audit that never happened and another round of consultant reviews.
TPU then issued a call for ideas on ways to operate the network based on 12 policy goals that the City Council and TPU Board drafted as they seek options. The 12 policy goals centered on public ownership of the rate-payer assets; equitable access; low-income affordability; open access; financial stability, and consumer privacy. Three companies answered that call. Rainier Connect, Wave Broadband and Yomura Fiber have offered, at least in concept, to lease the network. Those deals would end Click Cable since each would operate its own cable networks. Another option being batted around is for the network to go “all in” by upgrading the network and offer phone, internet and cable services alongside private companies. Yet another idea is to continue the current course.
For its part, the utility has presented a balanced budget for Click Network with two-tiered rate increases for cable TV subscribers of 9.8 percent in 2019 and an 18 percent jump in 2020 and a $5 a month increase for internet services each year. Those changes should cover the once-projected budgetary shortfall until a decision is made and implemented.
Mitchell Shook, CEO of Advanced Stream, a local internet service provider that leases bandwidth on the fiber optic network to then retail internet, phone and Click TV packages to residential customers, has long raised questions about TPU’s drive to close Click. He particularly targets the utility’s accounting methods dating back to 2015 that shifted more of the expenses onto Click’s ledger – creating a paper loss between branches of TPU’s operations while downplaying the governmental savings born by the municipal system, namely I-Net. That’s the free network of 130 local government offices, schools and public agencies that would otherwise have to pay for internet access.
“With Click as an open access municipal network, we’ve built an amazing rocket ship, but we have never had a chance to launch it,” Shook stated, noting that the efforts to lease out the network during the last three years have raised uncertainly. That uncertainty has hampered efforts to gain customers and invest in upgrades.
“If we can just get back to work, let our current IPS partners do their job, we can double (even triple) our market share and customer counts,” he continued. “Then it won’t matter how many costs are shifted onto the very profitable Click business.”
Voice your thoughts
Members of the general public will have a chance to hear about the public-private partnership option and voice their thoughts at a meeting from 6 to 8:30 p.m. on Nov. 19 at 3822 S. Union Ave. The future will ultimately face approval by the TPU board and the City Council after the new year.