Bill Virgin: Tacoma must be careful not to be left behind in digital high-speed dust

Staff writerMarch 30, 2014 

It may be hard to recall now just what a big deal Tacoma’s Click Network was when it was rolled out in 1997. It wasn’t just the opportunity for the public to have a competitive alternative to the incumbent cable TV company. It was a source of civic pride, a nationally mentioned anecdote that vaulted Tacoma into the conversation about technologically progressive cities. Maybe even better, it was something Seattle didn’t have. Tacoma would seize some of the tech-sector’s sizzle as the “Wired City.”

But 17 years is a near eternity in modern telecommunications — that term itself is a vestige of another age. Some context is useful. When the fiber-optic light was turned on for public use on Click, Amazon was just 3 years old. So was Facebook. Google was a year away.

It’s been a long time since anyone used “the Wired City” in any context, even ironic about Tacoma, the moniker proving to have a short shelf life. Tacoma didn’t become a tech hub because of its high-speed fiber-optic network for data services. While Click did bring some financial benefits to consumers of cable TV services, the competitive landscape is so much broader today, with the high-speed Internet services offered by Click and Comcast helping to cannibalize their own cable TV businesses. And that term high-speed is now relative, under threat not only from faster speeds offered elsewhere but from technology promising the same cord-cutting hitting the cable TV business.

Click Network still uses an exclamation point in its logo and its official material. A very large question mark, and a quantity of them, might be the more appropriate form of punctuation.

The immediate question has to do with finances. As detailed by Peter Callaghan’s recent column, the city is getting some unhappy news about the trend lines in customer counts, revenues and needed rate increases.

That leads to the broader question: What to do?

Option 1: “Well, that was fun, but it makes no sense for us to be in this business much longer. Let’s see if we can find someone to sell this thing to, recoup a little of our investment and cut our coming losses.”

Option 2: “Let’s double down on our bet.”

Notice there’s no Option 3, which would be “keep muddling along as is.” Increasing costs for cable services and the availability of much of cable’s programming elsewhere (as long as cable TV service providers refuse to offer a la carte or choose-your-channel services, viewers are going to do it themselves) means fewer customers, which means higher rates for those left, which means fewer customers, which means … .

But if maintaining the status quo is not an option, then Tacoma will have to make some sizable investments in its network to keep up with the rest of the world, or find someone who will.

Seattle signed an agreement with Gigabit Squared to offer ultra-high-speed Internet service to more than a dozen neighborhoods by leasing the city’s fiber system. But the Cincinnati-based company ran into financial trouble and the agreement was canceled, leaving Seattle stuck with some unpaid bills.

The city says it’s still interested in finding someone to develop a network that would offer Internet speeds comparable with the rest of the world.

Not that it’s much consolation to local ratepayers, customers and decision-makers, but Tacoma is hardly alone in trying to figure out what role, if any, it has in the future of telecom. Tacoma wasn’t even the only utility in Washington to leverage an internal fiber-optics communications network into a new line of business. Several public-utility districts did likewise, including Chelan County where the system has been losing money and officials have been wrestling with whether to sell it or increase electric rates to continue supporting it. The PUD’s commissioners recently approved an increase in wholesale fiber and telecom rates, designed to bring in 5 percent more revenue a year.

Chelan PUD has one thing going for it — residents there can get Internet speeds of up to 1 gigabit (1,000 megabits) per second (for business customers), according to the utility’s website. That was the goal of the Seattle network.

Tacoma’s Click announced in 2012 that system improvements would allow Internet service providers to offer at 100 megabits per second. Google, meanwhile, is rolling out its own ultra-high-speed service; the closest it’s getting to us, so far, is Portland.

In yet another meanwhile, the chairman of wireless carrier Sprint — hoping to take over Bellevue-based T-Mobile US — is making noises about development of high-speed wireless Internet service.

What all these players and proposals do is crowd the competitive landscape, making Tacoma’s challenge even more difficult, and potentially expensive.

Not only is Tacoma no longer a “Wired City” leader, it needs to spend money and take action just to keep up. Does being that sort of leader matter in Tacoma? What’s that worth to businesses and consumers?

Consumers, business owners and politicians will have to decide, but thanks to increasing Internet speeds they no longer have the luxury of a leisurely pace to make those choices. Choose wisely – but quickly.

Bill Virgin is editor and publisher of Washington Manufacturing Alert and Pacific Northwest Rail News. He can be reached at bill.virgin@yahoo.com.

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