Since Tacoma launched its Click cable TV venture in 1997, digital entertainment has morphed, multiplied and mutated without ceasing. The cable service made sense 17 years ago. It needs a thorough rethinking today.
Click is a perennial money loser and remains subsidized by the ratepayers of Tacoma Public Utilities. It lost $5.8 million in the 2013-14 biennium and has not paid off the original investment in its infrastructure.
Some options are obvious: TPU could sell the cable service and cut its losses. Or it could cut the cable business and continue sub-letting transmission to private Internet service providers. Or the public utility could plunge deep into the private sector and start offering retail Internet services of its own. If it did that, it would likely put some of its best customers — private Internet service providers — out of business.
These alternatives aren’t palatable. But the status quo is unsustainable. If no better choice appears, TPU would do better to divest itself of Click than to turn it into a retail Godzilla likely to stomp out risk-taking private businesses.
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For all its present troubles, Click has historically served Tacoma well.
It was created to help Tacoma Power pay for a state-of-the-art fiber-optic network designed to deliver electricity more flexibly and efficiently. The utility would market high-performance cable TV to homes, and wholesale bandwidth to Internet service providers. The sales would help defray the cost of the fiber optic infrastructure.
Click looked promising largely because Tacoma’s existing private cable TV company, TCI, was doing a spectacularly bad job of serving its customers. Its copper-cable technology was primitive, its programming skimpy and its reliability poor. A classic slacker monopoly.
By creating the underlying fiber optic system, Tacoma beat a host of other cities to community-wide high-speed Internet. Businesses moved here to take advantage of the speed. Families, schools and libraries got fast connections for the first time.
This all happened more quickly than it otherwise would have. Tacoma was on no company’s priority list for fiber optic investment. On the television side, Click forced the competing private network, now owned by Comcast, to respond to its speeds and prices. Tacoma’s cable TV customers came out winners — though the below-market rates they’ve enjoyed are part of the reason Click isn’t profitable.
But the cable TV industry as a whole is no longer what it was. Many people get all the entertainment they want by streaming movies and shows from the Internet. People get media from their phones and tablets. Some use modern TV antennas to pull in high definition signals directly from network broadcasts. It’s a different world, and cable TV is not flourishing in it.
Should TPU start doing its own retailing of Internet to homes as opposed to serving — as it does now — as a wholesaler to private businesses? In the absence of market failure, that’s not the role of government. In this case, the private market — unlike the old TCI — is eager and able to provide an abundance of entertainment.
Sell Click cable? Without a realistic plan to turn those losses and subsidies around, that may be a necessity. Tacoma is rightly proud of the fiber optic system Click helped catalyze, but the 1990s are long gone. Telecommunications companies must adapt to a rapidly evolving digital world; so should Tacoma.