Tacoma city council votes to double down on muni broadband

by Steve Blum • , ,

Go, but try to keep it in the city.

Tacoma’s municipal cable system will remain city owned and operated, at least for the foreseeable future. The Tacoma city council voted to reject offers made by locally-based broadband companies to lease the system, invest money in upgrades and operate it as a private business. Instead, the council told the city’s municipal electric utility, which runs the system, to come back with a business plan for keeping it in public hands by next April.

That plan is supposed to include Internet service. The system, called Click, delivers broadband to users, but it’s via private companies that re-sell wholesale access. The Tacoma council wants Click to bring everything in house, in the hope that broadband will improve the business case to at least breakeven.

As it is, the cable system is losing money and the city’s many electric customers are picking up the tab for the relatively few cable and broadband subscribers, according a memo prepared by the head of the muni utility department

Due to unanticipated evolution in power utility metering technology and in telecommunications technology and the CATV and broadband marketplace, Click! is now costing electric ratepayers approximately $5.5 – 7.5 million per year more than it is collecting for its services. The 1997 Business Plan is no longer viable and offers no financial value to Power or the electric ratepayers.

In other words, the electric utility doesn’t need an in house telecoms system to manage itself, and Click isn’t paying its own way. Another problem is the upgrades the system will need to remain competitive against Comcast and CenturyLink. Rising programming costs and a slowly deteriorating competitive position make continued city ownership difficult without subsidies of some kind. But the Tacoma city council wants to give it try.