Tacoma Click customers face rate increases as network addresses ongoing deficits, uncertainty
Customers of Tacoma’s Click network face rate increases as the publicly owned cable and internet provider works to address a multi-million budget deficit at the same time it explores a new business model.
Click plans to raise retail cable TV and wholesale ISP Advantage rates.
The network proposes two rate increases for Click Cable TV, 9.8 percent in January 2019 and 18 percent in 2020.
Click also proposes a $5 increase per service tier in 2019 and 2020 for the wholesale ISP Advantage Service, with increases in speeds for most tiers of service.
“Cable TV rates have not changed in three of the last four years, and wholesale ISP Advantage rates have not changed in over a decade,” said Pam Burgess, business operations manager for Click, at a presentation Tuesday to the Tacoma City Council.
The increases come as the network appeals a legal challenge over using Tacoma Power electric utility revenues to cover Click budget deficits. A decision on that appeal is not expected until late 2019, according to Chris Gleason, community and media services manager for TPU.
Meanwhile, the city is looking at options for the network’s future, including a public/private partnership.
Given the uncertainty and deficits, the rate increases are necessary, Tacoma Public Utilities director Jackie Flowers wrote in a memorandum provided to the City Council.
“In order to achieve a fully self-funded budget for the 2019-2020 biennium, drastic cost cuts and revenue enhancements are necessary,” Flowers wrote.
Proposed cable rate changes require amending the city’s Municipal Code. The first reading of the ordinance was held by the City Council on Tuesday, Nov. 13. The information was initially presented to the city’s Government Performance and Finance Committee on Oct. 2 and the public utility board Oct. 24. The ordinance will have its second reading at the Tuesday, Nov. 20, City Council meeting.
Click has presented the rate increases as a “transitional” plan, assuming it moves to a new business model.
“The city is currently pursuing negotiations, so depending on the outcome of that, rates may not need to be set for 2020,” Gleason told The News Tribune via email. “If a transition does not occur in 2019, the policymakers will consider the 2020 rates.”
The problem, Click says, is twofold.
A March ruling by the Pierce County Superior Court prohibited the city from using Tacoma Power funding to cover Click deficits. And Click’s informational memos note that the city has said its general fund is “not in a position to support Click Network deficits.”
Those deficits are estimated at about $6.5 million for the 2017-18 budget and $9.9 million in the 2019-20 budget.
To help offset the losses, the memo states, Click has cut 32 full-time equivalent positions and capital expenditures in the past two years.
Those measures, Click contends, have not been enough.
RATES GOING UP
Tables show rates remaining below market rate next year before going above market in 2020, but the memo further explains that is “expected to reverse when Comcast adjusts their rates, as they typically do every year.”
New Click rates would depend on level of service and whether a customer is inside or outside Tacoma, with the digital tier seeing the biggest dollar increase both years. The list of rates below is per month, not including taxes and fees:
Inside Tacoma:
▪ Broadcast 2018: $19.69
2019: $21.62
2020: $25.51
▪ Standard 2018: $59.99
2019: $65.87
2020: $77.73
▪ Digital 2018: $81.99
2019: $90.03
2020: $106.23
Outside Tacoma:
▪ Broadcast 2018: $21.29
2019: $23.38
2020: $27.58
▪ Standard 2018: $62.39
2019: $68.50
2020: $80.83
▪ Digital 2018: $87.39
2019: $95.95
2020: $113.23
Click also proposes increases for each ISP Advantage Service tier in 2019 and 2020 for the wholesale service, with increases in speeds for most tiers.
Burgess told the council in her presentation that speeds would increase from 12 to 25 Mbps, 20 to 50 Mbps, 30 to 75 Mbps, and 55 to 100 Mbps.
Those ISPs are Rainier Connect and Advanced Stream.
Mitchell Shook, founder of Advanced Stream, told the Public Utility Board at its Oct. 24 meeting: “This price increase allows us to take that step toward making Click profitable. Let’s make Click profitable. The technology is improving all around us.
“Let’s not fool ourselves into thinking we’re down and out and we have to find a private partner because who knows where that private partner ends up. ... Let’s keep our destiny in our own hands.”
NEXT STEPS
The system is currently negotiating with three companies as potential private partners: Tacoma-based Rainier Connect, Kirkland-based Wave Broadband and Europe-based Yomura Fiber.
The public utility board and City Council are anticipated to review the results of those negotiations in the first quarter of 2019, Gleason said.
Stakeholder meetings that have been led by the Center for Dialog and Resolution include a public meeting Monday, Nov. 19. The meeting is set for 6-8 p.m. at 3822 S. Union Ave. in Tacoma. Doors open at 5:30 p.m. and more information on the meeting is at the MyTPU Facebook page.
The meeting will seek input on Click’s policy goals, including continuing public ownership of its assets, equitable access, creating low-income affordable access and enforcing net neutrality, among others.
“We anticipate the Center for Dialog and Resolution will provide a summary of the stakeholders sessions to the City Council and Public Utility Board in December or January. It looks like further action by the policymakers will likely be in first quarter 2019,” Gleason told The News Tribune last month.
