Folks suing over Click subsidies not dropping case despite decision to abandon ‘all-in’ plan

A plan to turn Tacoma’s Click Cable TV network into a municipally owned and run internet, cable and phone company funded in part by Tacoma Power revenues might be dead. But that doesn’t necessarily mean a lawsuit challenging the legality of paying for Click with ratepayer money is over.

As a subfund of Tacoma Power, Click’s operating losses have been buoyed by power revenues for years, said attorney Dave Jurca. Jurca represents the lawsuit’s plaintiffs, including a former Tacoma Public Utilities director and a former TPU attorney. They contend it’s illegal for electric ratepayers to be subsidizing a commercial telecommunications operation.

“We’re pleased to see their decision not to go forward with all-in, but even without the all-in, which just would have expanded the subsidies, there are still subsidies,” Jurca said Friday. “Electric ratepayer funds are still being used to pay for Click commercial telecommunications expenses, and we don’t think that’s appropriate, so our plan is to go forward and try to prevent that.”

Any outcome for Click’s commercial future that includes funding from Tacoma Power would be problematic, he said.

“We don’t really have any problem with Click going forward as a separate entity, as long as electric ratepayers aren’t being saddled with its expenses,” Jurca said.

On Wednesday, the utility board voted to rescind a September 2016 vote that authorized using between $6 million and $10 million a year in electric ratepayer revenues to help buoy Click as it transitioned into its new business model. Currently, Click sells retail cable and wholesale internet to two local internet service providers. On Tuesday, the City Council is expected to accept that vote and also rescind a directive it gave to the utility in 2015 to develop a retail business plan that would keep Click in public hands.

City and utility officials said they’re backing off the so-called “all-in” plan, funded with power revenues, because of the lawsuit and because of a recent analysis from an independent consultant that showed it would be difficult for Click to make enough money and meet a list of 12 community policy goals under that plan.

The lawsuit has challenged the funding for the all-in plan but also the longtime, ongoing subsidies for Click, Jurca said. The recent analysis by consultant CTC Technology and Energy, discussed at a joint City Council and utility board meeting Tuesday, said Tacoma Power faces roughly $5 million in annual operating losses on the commercial uses of Click.

Initially, the plaintiffs wanted Tacoma Power and its ratepayers be reimbursed for more than $21 million in subsidies they contend the utility gave to Click since 2014. They still want ratepayers to be reimbursed, and Jurca said the dollar figure likely will rise because subsidies for Click have continued since the lawsuit was filed.

Meanwhile, the city and TPU are trying to figure out Click’s future.

If the council votes Tuesday to back off the all-in plan, that future would be wide open. City officials are expected to solicit bids in the next month seeking high-level ideas on how to fund Click, which could include public-private partnerships with telecom companies or local ISPs, or even public-public partnerships with nonprofits or other municipalities.

The idea of privatizing Click ruffles feathers. The last time a public-private partnership was proposed, there was huge community backlash from Click lovers who want the network to stay public. Kirkland-based broadband company Wave offered to lease Click for 40 years, a plan that was ultimately rejected by the City Council.

Now, some people like TPU board member Mark Patterson see a private partnership as a good option for relieving the utility and the city from the financial burden of Click.

The approach is different this time around, some board and council members said, because Click’s future is being guided by those 12 community principles, including net neutrality, open access, equity, affordability, customer service and protecting customer data privacy. While all 12 are unlikely to be realized with a private partner, policy makers hope they will guide the discussion about Click’s future.

“We’re going to ask entities both internally within Tacoma Power and outside to give us an idea of how they would achieve as many of these 12 public-policy goals as they can through a business model,” board member Bryan Flint said at Wednesday’s meeting. “I’ve never been against having a private partner per se. I was against the Wave deal because it wasn’t done competitively, it wasn’t done with policy goals from the front end, and it gave away public ownership of the infrastructure.”

Flint also noted that Click has private partners now: Advanced Stream and Rainier Connect, the local ISPs that lease space on the network. They’re currently on month-to-month contracts pending a decision on Click’s future.

One option floated by some utility board and council members this week is developing a public telecom utility, said utility board member Karen Larkin.

City attorney Bill Fosbre said Tacoma already has the legal authority to create such a utility.

“No change in state law is necessary to ‘stand up’ Click and call it a public telecom utility,” Fosbre said in an email Friday. “What would be helpful is if the Legislature were to grant to all cities explicit taxing authority to support these services.”

While the idea hasn’t been fully researched by city and utility staff, Larkin envisioned it as a way to provide internet for everyone and keep it affordable. It’s been done in Washington. Ellensburg created its own telecommunications utility in 2014.

Larkin and others, including Flint and council members Ryan Mello and Anders Ibsen, are drawn to the idea because it would keep Click public.

“It remains a public utility,” Larkin said. “I believe telecommunications services are a basic utility, as necessary as water and power are for families and businesses to be able to participate and compete in today’s society.”

This story was originally published January 28, 2018 at 8:00 AM with the headline "Folks suing over Click subsidies not dropping case despite decision to abandon ‘all-in’ plan."