Tacoma muni fiber upgrade will need city subsidies, and that’s the optimistic case

by Steve Blum • , ,

If the City of Tacoma wants to hang on to control of its municipal cable system, adding broadband to the service – as the city council voted to do – won’t be enough to pay the bills. Financial help from the city will be needed to upgrade the system to gigabit capacity, according to a presentation prepared by a consultant for the Tacoma public utility board, which shares oversight responsibilities with the council.

The plan – called the “All-In Retail Option” – would have the city reject offers made by local companies to lease the system, called Click, and take over operations, and instead take over the broadband business other private ISPs run via re-sold wholesale access. Internet speeds would be boosted to a gigabit and a triple play bundle would be developed. That costs money, though, and the presentation concludes that “based on legal and financial advice, do not believe it is responsible or prudent for Tacoma Power to consider”, but the upgrade “could be financed by General Government”.

Even then, the system would need a complete makeover. Union contracts – which boost costs above comparable systems – would have to renegotiated, head count would have to be cut and subsidies – from the city or electric ratepayers (it’s run by the muni electric utility) – would still be necessary until breakeven is reach. And that’s the best case scenario, which assumes the system will double its broadband subscriber count.

Acting against those assumptions is increased competition. Comcast is in the market, and CenturyLink is already exploring its own fiber upgrade. According to the presentation, CenturyLink has approached the utility department about hanging fiber on city poles. “As a new triple play provider, and one with a gigabit network, they will significantly impact Click!’s future success”, it reads.

Even so, the Tacoma city council gave utility staff until April to come up with a business plan to make it all work. It’ll be interesting to see if the council still wants to go “all in” once it knows what the stakes will be.