Keep up with the latest developments and legal issues in the telecommunications and emerging technology sectors, with exclusive access to a comprehensive collection of telecommunications law news,...
By Tim McElgunn
Nov. 30 — While a national debate continues over whether public utilities and city governments should compete with private providers to deliver broadband services, some municipalities that have built fiber networks are evaluating how to continue delivering state-of-the-art broadband without absorbing ongoing financial losses.
In Tacoma, Wash., the publicly-owned fiber optic network faces an uncertain future, with the Tacoma Public Utilities board (TPU) scheduled to vote on whether to continue operating the money-losing network under a new plan or lease it to a private provider, which would take over operations. Once the board makes its recommendation, the city council will vote on the measure Dec. 15.
According to the city, the network—which delivers both Internet access and pay TV services— costs about $240 million per year to operate and runs at a loss, even with wholesale revenue coming in, due to declining numbers of TV subscribers and increasing content costs.
Proponents of maintaining the TPU's management and operation of the system say that the city charter requires a vote by citizens before the city can sell or lease a utility system. They have proposed that the city continue operating the network under a new business plan.
That plan would determine whether the city would enter into new contracts with the ISPs now offering Internet services over the network, or buy them out. If the decision is made to buy them out, the TPU would begin offering Internet services in addition to pay TV. Proponents estimate that, assuming the city invests in upgrades required to deliver gigabit services, the city could reach positive cash flow after eight years.
Under the lease plan, the TPU would achieve positive cash flow of $6.9 million after five years, compared to a projected deficit of $37.4 million over the same period under the status quo. Providers would submit plans to meet certain requirements, including providing low-cost, broadband Internet access services to some city residents, delivering gigabit service within a defined period, and paying the city $2 million per year. Providers would also have to interview all current Click! employees and agree to hire at least 81 of them at a “living wage.”
So far, two providers have expressed interest in taking over the network.
In April, Wave Broadband proposed leasing the city's broadband infrastructure and taking over operation of the Click! pay TV service. Wave said it would deliver both retail and wholesale broadband services over the network; it proposes paying the utility with ongoing lease payments and crafting service agreements to support utility and municipal operations on the network.
Rainier Connect, one of the three providers now offering services under wholesale agreements with the TPU, has also said it is interested in assuming full operating responsibility for the network.
To contact the reporter on this story: Tim McElgunn in Cherry Hill, NJ at firstname.lastname@example.org
To contact the editor responsible for this story: Keith Perine at email@example.com
All Bloomberg BNA treatises are available on standing order, which ensures you will always receive the most current edition of the book or supplement of the title you have ordered from Bloomberg BNA’s book division. As soon as a new supplement or edition is published (usually annually) for a title you’ve previously purchased and requested to be placed on standing order, we’ll ship it to you to review for 30 days without any obligation. During this period, you can either (a) honor the invoice and receive a 5% discount (in addition to any other discounts you may qualify for) off the then-current price of the update, plus shipping and handling or (b) return the book(s), in which case, your invoice will be cancelled upon receipt of the book(s). Call us for a prepaid UPS label for your return. It’s as simple and easy as that. Most importantly, standing orders mean you will never have to worry about the timeliness of the information you’re relying on. And, you may discontinue standing orders at any time by contacting us at 1.800.960.1220 or by sending an email to firstname.lastname@example.org.
Put me on standing order at a 5% discount off list price of all future updates, in addition to any other discounts I may quality for. (Returnable within 30 days.)
Notify me when updates are available (No standing order will be created).
This Bloomberg BNA report is available on standing order, which ensures you will all receive the latest edition. This report is updated annually and we will send you the latest edition once it has been published. By signing up for standing order you will never have to worry about the timeliness of the information you need. And, you may discontinue standing orders at any time by contacting us at 1.800.372.1033, option 5, or by sending us an email to email@example.com.
Put me on standing order
Notify me when new releases are available (no standing order will be created)