This is the last in a four part series about the Click network in Tacoma, Washington, where city leaders spent most of 2015 considering a plan to lease out all operations of this municipal network to a private company. Part 4 highlights Click’s often unseen “spillover effects” on the City of Tacoma’s economy and telecom marketplace over the network’s nearly 2 decades in operation, contributions that Tacoma should expect to persist and even expand in the future.

We published Part 3, an analysis of why the municipal network is positioned to thrive in the years ahead within the modern telecommunications marketplace on June 21st. In Part 2, published on June 7, we reviewed why Tacoma Public Utilities considered the possibility of leasing out all of the Click operations. On May 31, we published Part 1, which reviewed the community's plans for the network.

Part 4: Click’s Accumulating “Spillover Effects”

Regardless of any impending changes with Tacoma Click’s operations, it’s clear that the network has and will continue to support and enhance the overall economic interests and the public good in the City of Tacoma. “Spillover effects” - the benefits to the community that don’t show up clearly in any financial statements - tend to appear after communities developing their own municipal broadband networks.

Click’s spillover effects start with the broad economic development benefits that arose when Click appeared. Before Click came to town, Tacoma was a city in economic decline. Many businesses had fled downtown for the suburbs over the 50-plus year period after World War II. 

This is Part 3 in a four part series about the Click network in Tacoma, Washington, where city leaders spent most of 2015 considering a plan to lease out all operations of this municipal network to a private company. In Part 2, published on June 7, we reviewed the main reasons why Tacoma Public Utilities considered the possibility of leasing out all of the Click operations. On May 31, we published Part 1, which shared the community's plans for the network. Part 3 covers why we believe the Click municipal network is positioned to thrive in the years ahead within the modern telecommunications marketplace.

Part 3: Positioning Click for the Future

If Tacoma leaders decide to move ahead with the “all in” plan that they're currently exploring, several factors suggest that Click can become an increasingly self-sustaining division of Tacoma Public Utilities (TPU). To recap, the “all in” plan would reportedly involve two major changes at Click. One, it would mean upgrading the network to enable gigabit access speeds. Two, the all in option would likely mean cutting out the “middlemen” private companies that currently have exclusive rights to provide Internet and phone services over the network. Instead of the current system, where Click only offers cable TV services while middlemen provide Internet and phone, the new all in plan would position Click as the retail provider for all three services.

Adapting to A Challenging and Changing Telecom Landscape

It makes sense for TPU to keep Click and improve it. TPU’s slide from Part 2 in this series reveals:

(1) Click’s subscriptions for Internet-only customers turned a corner in 2014 and started to exceed projections.  This data indicates that the most important component of Click’s future business prospects—its Internet access service—is growing.

It’s good for you, it’s good for all of us, and for many people, discussing it is as thrilling as watching paint dry. We’re talking about the principle of network neutrality, if course.

Stephen Colbert has found a new way to share this important issue and he has found a thrilling way to do it - on a roller coaster with Professor Tim Wu!

Check it out!

Over the past few years, a number of media outlets have spotlighted Chattanooga’s rebirth from “dirtiest city in America” to a high-tech economic development engine. Recently, the BBC World Service produced “Chattanooga - the High Speed City” an episode in its Global Business Podcast series.

Peter Day presents the 27-minute story, described by the BBC as:

Chattanooga has been re-inventing itself for decades. In the late 1960s Walter Cronkite referred to the city as "the dirtiest in America." Since then heavy industry has declined and, to take its place, civic leaders have been on a mission to bring high-tech innovation and enterprise to Chattanooga. In 2010 the city became the first in America to enjoy gig speed internet following an investment of a couple of hundred million dollars from its publicly-owned electricity company, EPB. What economic and psychological benefits have super-fast internet brought to this mid-sized city in Tennessee? Has the investment in speed paid off? 

In the podcast, Day interviews a number of people who describe how access to the fast, affordable, reliable network offered by EPB Fiber Optics has benefitted the community. The story includes interviews with business leaders, artists, entrepreneurs, and others who recount how the community’s Internet infrastructure has influenced their decision to locate in Chattanooga. The Times Free Press covered the BBC podcast in detail and reprinted an excerpt from Mayor Andy Berke:

"The city that I grew up in in the mid 1980s was dying," Berke told the BBC. "We held on to our past for too long. We're not the best at something and that's really important for a community. When you are the best, that changes how you look at things and allows you to take advantage of and utilize your resources. Chattanooga was a community that didn't have a tech community."

You can listen to the podcast on the BBC World Service Global Business website.

Business and residential electric customers in Bristol, Tennessee are experiencing shorter power outages thanks to recent upgrades to the city’s municipal fiber-optic network. And collectively, that represents annual savings of about $6 million for electric users, according to the CEO of the Bristol Tennessee Essential Services (BTES):

In an opinion piece for the Bristol Herald Courier newspaper, BTES CEO Mike Browder, said a recent upgrade to the electric system, which uses the city’s fiber-optic network, has helped cut power outage time by 35 percent:

“Our goal is less than 60 minutes average outage time per year per customer. In 2015, we exceeded that goal, reducing our outage time to 34 minutes per customer.”

According to BTES' About Us page, customers who lose power can depend on the smart grid to alert the utility to any outages:

Those customers with fiber services to their homes have automatic power outage detection, meaning that they do not need to make a telephone call if their power goes out. In addition, the system provides automatic meter reading and theft detection.

Browder offered this example in his piece:

"BTES recently had an outage that caused half of The Pinnacle, including Bass Pro Shops and Belk, to lose power. Using the fiber optic system, the BTES electric system automatically opened one switch and closed three more in sequence while testing each section of line. All of The Pinnacle had service restored in less than one minute!"

Bristol’s Smart Network

Reducing outage time is among a number of benefits that Bristol's 26,000 residents and its local businesses are enjoying from the city’s municipal fiber network, which it launched in 2005. The city also uses the infrastructure for fast, reliable, affordable connectivity in the community.

Now that a judge has legally approved it, Ammon is forging ahead with an innovative approach to financing Internet infrastructure in Idaho.

On May 19th, the city council unanimously voted to create a Local Improvement District (LID). Ammon’s decision has secured a way to finance its open access Fiber-to-the-Home (FTTH) network.

Local Improvement Districts: You're In or You're Out

LIDs have been used for fiber-optic infrastructure in other places, such as New Hampshire and Poulsbo, Washington, but the approach is still not widespread. In Ammon, the city council's action creates a district from five subdivisions, where residents can “opt in” or “opt out” of participation in the FTTH network. The district includes 376 individual properties, and 188 of those property owners have expressed a desire to "opt in" to the benefits, and costs, of the network. Those who have chosen to "opt out" do not use the network, nor do they pay for deployment.

LIDs are specifically designed to take advantage of any boost to local property value -- and studies have linked FTTH with increased local property values. We’ve previously summarized the most common ways communities finance networks, but LIDs are a little different.

This is Part 2 in a four part series about the Click network in Tacoma, Washington, where city leaders spent most of 2015 considering a plan to lease out all operations of this municipal network to a private company. Part 2 explores the major reasons why Tacoma Public Utilities has considered the move to lease out all Click operations. Part 1, published on May 31, examines possible plans for Click in the immediate future.

Part 2: TPU’s Challenges with Click

When TPU officials proposed last March to lease the network to a private ISP for 40 years, they cited revenue losses for Click as high as $7.6 million annually, indicated by troubling financial reports in recent years. Some critics, however, such as those with the advocacy group “Stick with Click,” countered that this figure is inaccurate. They say that TPU manufactured the revenue losses through an accounting decision that resulted in a deceptively bleak picture of Click’s financial performance.

To shed light on the disagreement, we're examining relevant facts about Click.

Allocating the Costs of a Shared Infrastructure

When Tacoma first built the Click network in the late 1990s, the Hybrid Fiber Coax (HFC) infrastructure was to support services for two divisions of the TPU: TPU Power and Click. Besides the infrastructure’s function for supporting Click’s services, the city designed the HFC infrastructure to support a smart electrical metering program for TPU Power services.

This dual purpose meant that for accounting purposes, TPU had to allocate the costs of a shared network based how much each division would rely on the network. This cost allocation (a common accounting practice) would assign each division a portion of the original capital construction costs for building the network and a separate portion of the network’s ongoing operations and maintenance (O&M) costs. 

Ultimately, and with the help of an independent consultant, the city settled on cost allocation ratios in 2003, which determined how the TPU would assign capital and O&M costs to each division. TPU Power would pay 73 percent of the capital costs to build the HFC infrastructure; Click would pay the remaining 27 percent. Click would then pay a 76 percent of the network’s ongoing O&M costs, with TPU Power paying the remaining 24 percent of O&M.