Leaders of Tacoma’s Click Cable TV presented a case Wednesday for a 17.5 percent rate increase, which customers could see on their bills this summer.
The new rate has to be approved by the Tacoma Public Utilities board and City Council this spring. A proposal for another rate hike in 2016, tentatively outlined at 10 percent, could go to the utilities board and council next year.
Largely to blame for the rate increase is a rapid rise in fees Click must pay to Seattle broadcasters, Pam Burgess, business operations manager for Click, told the TPU board on Wednesday.
Costs for all over-the-air broadcast stations nearly doubled from 2014 to 2015. Fees for other cable channels also went up, but not as much as broadcast content, Burgess said.
For the two-year budget that began this year, the cost for all channels offered by Click increased by 24.3 percent. In the same time period, employee costs actually dropped by nearly 5 percent largely due to attrition.
The fee hike means people who pay for Click’s most popular package, an 88-channel suite, could pay $60.99 per month instead of the current $52.99. If both the TPU board and Tacoma City Council agree, the increase could appear on bills as soon as July 1.
Click’s cost just for the programming, broadcasters and all other cable channels, for that 88-channel package is $52.12. This does not include the cost of employee wages and benefits, taxes, marketing and debt payments.
“It’s increasingly challenging to remain competitive and recover our costs,” Burgess told the TPU board. “We have a bit more of a challenge of remaining competitive, in that we don’t have as much of an ability to absorb costs as our competitor, who has millions of customers.”
Burgess was referring to Comcast, the national telecommunications giant that also operates in Tacoma and Pierce County.
Comcast customers in Tacoma currently pay $54.99 for a similar 88-channel package. That is up $2 from a few months ago, Burgess said. Outside of Click’s service area, it costs between $66 and $75 for the same package from Comcast, according to information provided by Click.
Because of the large jump in the fees Click pays to retransmit signals from Seattle broadcasters, Click customers could see two new lines on their bills. One is a $4.25 “broadcast TV fee,” and another is a 25 cent “copyright fee.”
Other cable providers have used this tactic for years. Burgess said it’s used in part “to send a message. It’s because our costs have gone up that much.”
TPU board member Monique Trudnowski asked why Click can’t allow customers to drop broadcast channels if they don’t want to pay the extra fee.
“If that big, incremental increase is being caused by these greedy guys that won’t negotiate with us and lock us out, why not let (customers choose)?” she asked.
But federal law is on the broadcasters’ side, Burgess explained.
“We are not allowed to offer the customer a choice” because of federal law, Burgess said. “All customers are forced right now to share in the cost of those network stations.”
In all, Click is losing money and will continue to lose money — even if both the TPU board and City Council approves this rate increase, Burgess said. Without the rate increase, Click will lose about $5.6 million per year on a $61 million, two-year budget. With the rate increase, the loss would be about $1.6 million per year.
That difference is covered by TPU’s electrical rate payers, said Director Bill Gaines.
Burgess briefly outlined other suggested changes, including removing HBO from all premier channel packages offered by Click and selling it as a stand-alone add on for $19.99.
Low-income customers also could be required to pay more if they want to keep the cable packages they’ve enjoyed in the past. Currently low-income customers can get 20 percent off the standard 88-channel package. The change proposes offering the 20 percent discount only on the broadcast tier, which includes local TV stations, government access channels and a few foreign language stations.
The TPU board is scheduled to take up these issues at its April 6 meeting. The Tacoma City Council, which also must approve the changes before they take effect, could make a final decision on May 12.