In an attempt to stave off continued, year-after-year multi-million deficits, Tacoma Public Utilities is looking to lease out Click! Network to Kirkland-based Wave Broadband.
At a Tacoma City Council study session earlier today, TPU officials outlined why leasing the service was the best option available. Click! manager Tenzin Gyaltsen said that TPU wants to continue providing an open access network, a competitive market and quality customer service.
But in the end, it comes down to money. Since 2010, Click! has seen a sharp decline in the number of cable television subscribers, from 24,000 to 18,500. Click! is losing about $9 million a year, with the difference made up by Tacoma Power.
The proposed lease is for 40 years with an optional 10 years, with various agreements set in place that would allow the city to terminate the contract if Wave does not meet its complications.
Wave would be paying $2 million per year for the lease, invest $1.5 million in capital and help TPU avoid $6 million in losses by taking over operations. This results in a total of $9.5 million, or $380 million over 40 years.
In addition, Wave has committed to rolling out gigabit services, making capital investments (or providing cash value for unmet capital commitments) and maintaining TPU’s active fiber network infrastructure.
Wave also expects to hire about 81 employees and have agreed to interview all of Click! employees. Any employees that are not offered employment will be given a severance package.
TPU staff also considered other options to resolve the financial conundrum, such as shutting down or selling Click! outright, cutting labor costs, going full retail and competing with ISPs, offering only wholesale broadband, or keep operating at the current operational model. Only three options — shutting down, selling or leasing Click! — would result in positive net present value over a 10-year period.
TPU Director Bill Gaines has already signed a letter of intent with Click!, but to finalize the deal, city council and the TPU Board will have to sign off on the deal. Councilmembers and TPU staff will continue to discuss the proposal and town hall meetings will be held on April 9 and 15.