Click Cable TV rates are one step closer to being raised for the first time since 2014.
The Tacoma Public Utilities board voted to increase the municipally owned and operated cable network’s rates an average of 12.9 percent in 2017, effective March 1.
That vote still must go to the city’s Government Performance and Finance Committee and be approved by the City Council before the rate hike would take effect.
At the utility board meeting Wednesday, Click general manager Tenzin Gyaltsen said programming costs for TV rose more than 16 percent in 2015-16, and labor costs per employee rose 15.5 percent.
In those two years, Click’s costs exceeded revenues by a total of $8.9 million, or 24 percent.
At a study session last month, staff members recommended boosting Click’s rates to get closer to what its competitors are charging, and to close the gap between what the cable network makes and what it costs to run.
Initially, staff members proposed rate bumps that would equal a cumulative average of 25.7 percent over 2017 and 2018, and asked that increases for both years be approved together.
Board members largely agreed on the need to charge more for Click, but asked Tacoma Power staff members to bring them only a proposal for increasing rates in 2017 this time around, since Click’s planned transition to selling retail broadband and phone service in addition to cable could change the pricing equation.
In September, the utility board approved a funding plan for Click’s expansion that directs Tacoma Power revenues to subsidize Click if it can’t make enough money to meet expenses as it moves to a new way of doing business.
The funding for Click’s expansion is baked into Tacoma Power’s 2017-18 budget, but the business and funding plan still awaits approval by the City Council.
The new rates for a broadcast TV package, which gives customers access to the low channels on the dial such as ABC, CBS, NBC and some others, would increase to $19.69 per month from the current rate of $17.99. The standard channel package would go to $59.99 from $52.99 per month.
Click’s competitors, such as Comcast, have rates so far above Click’s that if their rates continue to rise as they have, the city-owned system still will be slightly cheaper even after the proposed rate increases, Gyaltsen said at the study session last month.
The rate increase the utility board approved is expected to generate $2 million in cable TV revenue.
The five-member board unanimously passed the rate hike. But local businessman Mitchell Shook spoke out against it: The owner of internet service provider Advanced Stream, which leases space on Click’s wires and sells internet directly to customers, said increasing the rates for Click TV will push more cable and internet customers into the arms of Comcast, hurting his business.
“If you raise rates … it’s not only how many TV customers do you lose, it’s how many internet customers do you lose, and the answer is 80 percent of the TV customers that leave also take internet,” Shook said.
“The reality is those customers, when they take that TV service and pack off to Comcast, they’re taking that internet customer too.”