Tacoma shouldn’t continue to use money from Tacoma Power to cover Click Cable TV’s financial losses, utility officials said Tuesday, citing a legal opinion.
And only one option is likely to ensure the end of such subsidies: leasing the city-owned cable system to a private company.
That was the upshot of a two-hour presentation to the Tacoma City Council and Tacoma Public Utilities board.
Florida consultant Doug Dawson, responding to the council’s July request to come up with ways to keep Click in city control, presented several options. But none — other than a lease to a private company such as Wave of Kirkland or Rainier Connect of Tacoma — would be self-supporting.
And Dawson warned the council that his projections were optimistic and would require operational changes.
One of his suggestions — offering a $45 per month gigabit Internet service after buying out the Internet service providers who currently buy access to Click’s fiber — could still lose between $25 million and $51 million over a 10-year time frame.
Those figures do not consider what would happen if Comcast or CenturyLink were to offer higher Internet speeds in Tacoma, giving Click competition.
Dawsonsaid the utility should hire outside sales staffers and pay them bonuses to sign up new customers. TPU bosses say they cannot offer bonuses to city employees, and they say they can’t hire outside workers because union contracts prohibit it.
Dawson’s scenarios assume a continued decline in cable subscribers, which mirrors the industry trend of “cord cutters” who cancel cable TV service in favor of programming that streams online through websites such as Netflix.
Click operates a retail cable system, which provides service to around 19,000 homes. Several separate Internet service providers, who pay Click money to ride the city’s fiber infrastructure, serve more than 20,000 Internet customers.
Tacoma Public Utilities bosses say Click loses around $7 million per year. Tacoma Power makes up the difference. TPU recently changed the formula to require Click to pay more of the costs than it has in the past.
Around 3 percent of each Tacoma Power customer’s bill helps pay for Click, TPU Director Bill Gaines has said.
Mayor Marilyn Strickland encouraged council members Tuesday to focus on big-picture policy and not just the finances.
Missed in the discussion, said Councilman Marty Campbell, is what’s best for the citizens of Tacoma.
“We come into this debate and all that’s put before us is mathematical equations,” Campbell said toward the end of the meeting. “… We don’t talk about personal impact to people in their homes.”
Campbell wants the council to talk about how the city can have fair, equitable and affordable access for all Tacomans.
If Tacoma Power continues to subsidize Click, asked TPU board member Monique Trudnowski, is that a gift of public funds that puts the city at legal risk?
“The simple fact of losing money is not gifting,” said city attorney Elizabeth Pauli.
City officials did not say who should pay for Click’s shortfalls going forward. They asked Dawson to return at a future meeting with more information.