Utility board gives Tacoma council a plan to save Click cable network

Sometime in the coming month, the Tacoma City Council could vote on a funding proposal to expand Click Cable TV into internet and phone service that won’t require any subsidy from the city’s general fund.

The proposal is expected to pass easily. It gives the council what it wants by keeping Click publicly operated as the means to get more Tacomans connected to broadband service. And it does it without impacting the city’s already cash-strapped budget.

The Tacoma Public Utilities board approved the funding plan Wednesday night as members of the council looked on. Councilman Anders Ibsen applauded when the resolution passed; Mayor Marilyn Strickland took to the lectern to thank the the board for its service.

The board was weighing two proposals to fund the losses Click is expected to incur over the next nine years. On a 3-2 vote, the board picked the plan developed by board member Bryan Flint, which will fund upgrades to Click’s networks and Click’s operations using Tacoma Power ratepayer funds and rate revenues.

Flint’s plan allows Click to upgrade its network using electric revenues, and asks Tacoma Power to give Click at least $6 million per year, but no more than $10 million. In addition, Click would be empowered to offer retail, voice over internet and other commercial services.

“They had a lot of hard decisions to make and every person approached it from the perspective of wanting to do what is best for the residents who are served by Tacoma Power, and I wanted to respect that,” Strickland said by phone Thursday, “but I do think this was the best possible outcome, given where broadband technology is moving and given the fact that it’s an essential service like water and power.”

The funding options the board was considering fell along the lines of a philosophical debate members of the City Council and TPU board have been having for months: One asked the city of Tacoma to contribute money to subsidize Click’s losses and left open the possibility of having one or more private operators run Click, and the other recommended Tacoma Power ratepayers continue to help pay for Click.

Click is the outgrowth of a fiber optic network build by Tacoma Power in the 1990s to improve maintenance and efficiency of the power grid. Tacoma Power still uses the network for that. But most of the costs are for providing the cable service that city leaders launched in 1998 to counter a local cable monopoly’s limited offerings and spotty service.

Flint said Thursday he had originally favored a plan he viewed as a “shared sacrifice,” in which both Tacoma Power and the city’s general fund kicked in each year for Click. But he said he knew such a proposal wouldn’t have the votes to pass the City Council, and he worked with Strickland while shaping the funding plan that ultimately passed.

“We have to work in a political world, too, so from my perspective not having the general fund contribution was a bit of a compromise,” Flint said, “but certainly we can justify Tacoma Power’s contribution through the benefits that Tacoma Power gets from having control of this infrastructure and being able to use it and having our customers benefit from it.”

After much public testimony Wednesday — the majority of it in support of Flint’s funding plan — board members Flint, Karen Larkin and Woodrow Jones offered their support for continued utility support for Click as it moves into a new business plan where it will compete with the internet service providers that now lease space on the network.

“You’ve got a situation where it’s general government — you’re talking about human services, you’re talking about the police department, you’re talking about the fire department,” Jones said. “I, for one, have some real problems with asking the City Council for money from the general government.”

The approved funding plan will allow Click to continue to contract with those ISPs to use surplus portions of its network — as long as doing so won’t interfere with Click’s operations or its ability to implement its new business plan.

Some audience members worried that could open up the door for a cable company such as Comcast to lease space on Click’s wires and then slash their rates, making it harder for Click to do business. Some were concerned that utility management, which has been critical of continuing to subsidize Click with power revenues, might try to undercut its success.

“People talk about privatization, and I think they’re correct when they say somebody could come in here and use the network and basically drive everybody else out of town,” said Kit Burns, a retired architect who is running for Pierce County Council.

Flint responded that the utility would weigh those contracts to see whether or not they would be harmful to Click’s business.

“This does not direct them to sign contracts, it allows contracts,” Flint said. “TPU has to sign those contracts and so I don’t think — I think it’s worst-case scenario, doomsday to think we’re going to sign a contract that’s going to compete directly with the business we’re trying to make successful.”

Board members Mark Patterson and Monique Trudnowski, who have said a private operator should run Click in order to shift the cost burden off public agencies, said they did not believe it was legal for TPU to force ratepayers to fund a service that many don’t use.

“I’m just very cautious and anxious about what this is going to open up if we continue to subsidize it,” Trudnowski said.

Flint’s plan allows Click to upgrade its network with electric revenues, and asks Tacoma Power to give Click at least $6 million per year, but no more than $10 million.

The funding plan preferred by Patterson and Trudnowski would have had Click borrow $12 million to $14 million from the city’s general fund to upgrade its infrastructure to gigabit internet service speeds. The city also would have been asked to steadily contribute more to help subsidize Click, starting at about $2.8 million in 2017 and ramping up to $7.5 million in 2025.

TPU’s contribution to funding Click would have decreased over time with this option, from $6.1 million in 2017 to $2.4 million in 2025. The proposal called for the utility to seek one or more public-private partnerships to operate Click if Tacoma Power and the city weren’t able to find money for the system’s expansion, but did not set a deadline for that decision.

Neither option included a controversial provision contained in a previous proposal that gave the City Council a deadline to bless whatever funding plan was sent its way, or risk having Click’s operations privatized.

The funding proposals have several features in common: Both authorized Click to provide retail internet, voice over internet phone, commercial broadband and cable television services as part of a new “all-in” business plan. Both plans also suggested negotiating with Click’s labor force to achieve $1.5 million annually in savings to make up for some of the losses Click is expected to face.

This story was originally published September 28, 2016 at 3:31 PM with the headline "Utility board gives Tacoma council a plan to save Click cable network."