Politics & Government

Tacoma council votes to explore business plan for Click, rejects lease

The lobby of Click Network at Tacoma Public Utilities offices in March.
The lobby of Click Network at Tacoma Public Utilities offices in March. dkoepfler@thenewstribune.com

Tacoma Power has until late April to develop a business plan for keeping Click Cable TV in public ownership under a deadline set by the City Council this week.

The council voted 8-0 Tuesday to study how Click can offer telephone service and gigabit Internet speeds alongside its current cable TV product line, a plan that’s become known as “all in.”

All but one council member — Joe Lonergan — voted to nix the other option: privatizing the operations of the city-owned cable and broadband network.

A seven-member committee will assist and oversee development of the business plan. The committee will be a mix of council members, utility board members, members of the public with experience in the broadband industry and a Tacoma Power customer.

The council’s decision followed testimony from more than 40 people, all but one of whom spoke in support of the city continuing to operate Click instead of leasing the system to a private company.

Many speakers and one councilwoman expressed skepticism about Click’s true financial position, which cannot be precisely determined because Click’s finances are so intermingled with those of Tacoma Power. Tacoma Public Utilities Director Bill Gaines said in a memo to the council last week that Click is losing money to the tune of $5.5 million to $7.5 million per year.

Councilwoman Lauren Walker said she questions whether Click is really a money-loser.

“The numbers have been a struggle from the beginning,” Walker said. “We all don’t really trust the numbers.”

Mitch Robinson, a former business and marketing manager for Click, said that “when it comes to numbers, you can throw the numbers up in the air and come up with a different result” every time.

TPU management isn’t driven to save the cable system, he said.

“The leadership at the time, and I believe still today, had no passion for the business,” Robinson told the council. “The leadership at the utility did not even have Click service. That would be comparable to the mayor not living in Tacoma.”

Gaines’ memo had raised the question of whether the public utility board would have to ratify the council’s decision. City Attorney Elizabeth Pauli and chief deputy city attorney Bill Fosbre both said Tuesday night that the utility board does not have to bless the council’s decision for Tacoma Power to proceed.

Utility board chairman Bryan Flint said now the city can move forward after months of debate, which began in March when broadband company Wave proposed leasing the system.

TPU executives declined to be interviewed Wednesday about how they will go about putting together a business plan for Click, but Flint said a lot of the ground work has already been done.

“We have some idea of what’s going to work and what won’t,” he said. “We will engage some industry consultants to help us get down to brass tacks and come up with the best plan and make it work.”

To effectively compete, the utility needs to buy out the Internet Service Providers that currently serve residential and business customers by leasing capacity from Click, Flint said.

Brian Haynes, CEO of Rainier Connect, which provides service over Click wires, said the all-in plan likely means an end to his company providing Internet service in Tacoma. He asked the council for a two-year agreement during which the city would not compete with his company. Haynes said that time would allow his company to leave the Tacoma market and prepare employees and customers for the shift.

“If the city is going to compete with us, we would like a transition (period) or to be purchased at a fair market price,” Haynes said Wednesday.

The idea behind the all-in proposal is not new. A consultant told TPU management, the utility board and City Council in 2012 that in order for Click to make money it had also offer Internet service and allow customers to bundle services.

“The whole idea of this is to put Click on a sustainable financial footing going forward,” Gaines said in 2012.

However, the TPU board put the proposal on hold after representatives from the ISPs complained that municipal competition would put them out of business.

Three years later, Click continues to lose cable subscribers, like the rest of the industry. Meanwhile, fees for television content have skyrocketed.

Alice Phillips, business manager of the IBEW 483 union, whose members work for Click, said the council’s unanimous vote Tuesday could help turn the tide.

“It was a message to TPU leadership that we need to make a 150-percent effort to make Click successful,” Phillips said.

Kate Martin: 253-597-8542, @KateReports