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Click!: Worth Keeping Around?
"Is it time to cut the cord on Tacoma's Click! Cable?" That's the question The News Tribune's Sean Robinson asks in a recent article.
TPU has been operating Click! since the late 90s. Back then private cable company TCI, which had a monopoly on cable services in Tacoma, was charging more and providing less to Tacoma customers than customers in Seattle. Tacomans didn't like that, but private competitors weren't showing interest in coming here, so Click! was born as a public entity.
Since then, TCI has been replaced by Comcast as the big private provider. Publicly-owned Click! continues to offer better rates to its customers than Comcast, keeping rates lower in Tacoma than in surrounding areas. It worked like it was supposed to.
But Click! is losing money. The world of cable services providers is not an easy market, even less so now that so many households are dropping cable in favor of internet streaming.
The network was never truly profitable, Robinson writes, but in its early years it was able to cover operating costs. In today's even tougher market, though, retransmission fees for the content that Click! transmits over its network continue to climb, and the small provider is in a tough negotiating position with the big content providers. TPU can afford to cover those losses, but it essentially boils down to Click! services being subsidized by Tacoma Power revenue.
The question is whether that's worth it.
Robinson quotes local officials including Mayor Strickland and TPU Director Bill Gaines pointing to the benefit of competition in the market, which is born out by the lower rates here. They do, however, concede that changes are needed if Click! is to continue to be an asset, rather than a liability.
“What we’re trying to do,” Gaines said, “is find a new business model that preserves the benefits of Click, retains a competitive alternative here in this market both for cable TV and for Internet, but in a way that doesn’t continue to burden the electric power customers.
But how do you get there?
One suggestion from a consultant's report is to start offering retail internet service. Currently Click! sells broadband access wholesale directly to large organizations, and to three local internet service providers (Rainier Connect, Advanced Stream, and Net Venture), who in turn sell it to the consumer. Click! could cut out the middleman and connect homes to the internet itself. That would give the network a larger piece of the growing demand for high speed internet. It would also mean that Click! would be directly in competition with the ISPs it has been working with to this point, likely putting them out of business.
ISP owners certainly don't want that, and they think that by continuing to work with Click! they can continue to grow the broadband side of the business together, improving profitability for the utility.
Another possibility Robinson raises is the potential hand-off of the cable side of operations to a private operator, while TPU maintains control of the actual fiber optic lines. Or they could cut their losses, and drop Click! altogether.
Gaines isn't ready to commit to any one path, waiting at least until early 2015 when the financial situation will be a little clearer. It sounds like change is on the way, but what that change will be is uncertain.
TPU could get rid of the whole Click! operation, or just the cable side. They could choose to compete in retail internet delivery, or they could continue to work with the ISPs to grow market share that way. Or maybe there's another more creative solution that hasn't been put on the table yet...
Read the full article in The News Tribune here.
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