Muni HFC broadband subsidy lands on Tacoma electric bills

by Steve Blum • , ,

The meter is running.

Tacoma’s municipal electric system customers are paying more than three bucks a month to keep the city’s ageing broadband system running, whether they buy service from it or not. The municipal hybrid fiber cable TV system, which also supports Internet service, is reckoned to be losing $9.5 million year, according to a story by Kate Martin in the Tacoma News Tribune

[Tacoma Public Utilities] bosses have said that anything Click cannot pay will be borne by Tacoma Power customers, not all of whom can buy Click cable or Internet service. The subsidy represents about 2.5 percent to 3 percent of a power customer’s monthly bill, or about $3.20 to $3.84 on the $128 monthly bill of a typical residential customer with electric heat, Gaines has said.

That subsidy – and the prospect of even greater losses as the system receives needed upgrades – is what’s driving the city to entertain purchase offers from Wave Broadband and a local ISP. The original assumptions, made back in 1997, about the cable TV business and the need for electric utilities to build out data networks no longer obtain, according to a presentation made to the TPU board

The original vision for Click was optimistic, placed emphasis on cable TV, and committed to an unsustainable hybrid business model. The hybrid business model has not been able to withstand business environment and consumer consumption changes. A wired network is no longer needed to support [automatic meter reading] as the industry shifted to wireless, as will Tacoma Power…Under the current business model, Click revenues do not cover the cost of Click services whether factoring in debt service or not.

The system is already losing subscribers: 19,000 now versus 25,000 five years ago. Tacoma has 170,000 electric customers. Say they’re paying an average of $3.50 a month to keep Click in business. To get the same amount of money from Click’s subscriber base, cable bills would have to go up by more than $30 a month. That’s not going to work.