The Tacoma Public Utilities management team presented a recommendation today to enter into a public/private partnership with Wave Broadband, a local, private telecommunications company, to take over operation of its telecommunications network – which currently operates as Click! Network and Click! Cable TV.
If the Tacoma Public Utility Board and Tacoma City Council vote to pursue a proposed agreement, Wave Broadband could start serving Click! customers by the end of the year.
When Tacoma Power launched Click! in the late 1990s, it created competition in the cable television market that didn’t previously exist. That competition brought lower rates and better service to our community.
Although Click! immediately captured a large share of the cable television market, it has not been able to grow, or even sustain, that share.
Programming costs have increased dramatically and changes in how people consume programming have occurred – many people have moved from subscribing to traditional cable to watching shows online or through services like Netflix. As a result, cable rates have increased and cable subscriptions have declined.
As a cable-only provider, Click! has not been able to cover approximately $9 million in operating costs each year, and has required financial support from Tacoma Power electric revenues.
“We have a responsibility to create a business model that removes that burden from electric customers while maximizing our investment in the telecommunications infrastructure we’ve built,” said Tacoma Public Utilities Director/CEO Bill Gaines. “We explored several options. Allowing a private company to operate the network maintained many benefits our customers have enjoyed from Click!. This proposal includes provisions for improved products, services and technology at rates that compare to Click!’s, and TPU maintains ultimate ownership of the network.”
A public/private partnership with a third party would come with several benefits:
· Maintains choice of service providers, market competition keeps rates low
· Better products and services -more channels, TiVo DVR, faster Internet – gigabit speeds
· TPU maintains ownership and oversight of the network, which is important for the operation of the electric system
· It ensures continuity of service for customers
· The contract terms will require continued investment in the network
· The long-term value will improve
· It provides the best opportunity for cost recovery, while maintaining essential customer components
“Several months ago, Wave Broadband, a cable, Internet and phone company headquartered in Kirkland, Wash., approached us with an offer to take over operations from Click! Network,” said Click! Network Manager Tenzin Gyaltsen. “We were interested in exploring that course of action and began discussing a potential agreement. The terms we discussed are favorable to all concerned – Click! customers, Tacoma Public Utilities, and the City of Tacoma – and does not unduly burden Wave, ensuring a solid, longstanding relationship.”
Some of the highlights of the Wave Broadband proposal presented today include:
· 40-year contract with an option to renew for 10 years
· $2 million per year in lease payments
· $1.5 million per year in infrastructure improvements
· Wave Broadband would bear all costs of operating Click! Network
· Total value of $380 million
The three Internet service providers – Advanced Stream, Net Venture and Rainier Connect – would still have the option to offer service on Click!’s network. Wave Broadband would be their wholesale service provider.
“It’s up to the Public Utility Board and City Council to decide whether to pursue this arrangement with Wave Broadband or pursue another option,” said Gaines. “Our responsibility is to provide information that can help our leaders make the best decision about the future of our telecommunications system.”
People who want to learn more and weigh in on this proposal have several options:
· Attend one of the Town Hall meetings:
o April 9 at 7 p.m. in the Stadium High School Auditorium, 111 N E St., Tacoma
o April 23 at 7 p.m. in the Tacoma Public Utilities Auditorium, 3628 S 35th St., Tacoma
· Listen to the March 31 Public Utility Board and City Council joint study session on TV Tacoma’s website: bit.ly/1EHI5PH.
· Get updated information at ClickCableTV.com/click-proposal
· Email Customer Care to ask questions and share concerns.