TACOMA, Wash. — Change to cable service is coming to all Tacoma Click customers via Rainier Connect, and the company’s CEO says they are in keeping with offering competitive broadband.
“The core of our network is providing world-class internet service to customers,” Rainier Connect president and CEO Brian Haynes told The News Tribune.
Click’s cable TV service is moving to an all-streaming format, meaning you need an internet connection to see its “Stream TV” viewable via a Smart TV, laptop or digital box, for example.
The service has an app that will work on Smart TVs, Apple TVs, Roku, Amazon Firestick and Apple iPad.
As some customers started to receive letters notifying them, with a date of legacy cable service going away, fear spread that there were specific cutoff dates for the end of cable TV as they know it.
The angst spilled into a Feb. 15 city Government Performance and Finance Committee meeting after such a letter was received and shared at the meeting during the Q&A segment, which followed a briefing on Click/Rainier Connect’s contract and performance metrics.
Rainier Connect took operational control of the network in 2020 from Tacoma Public Utilities, but the city retains ownership of the network itself.
City Council member John Hines, chairman of the GPFC, and TPU attendees at the meeting seemed surprised by the news.
“I would be very interested to know what that is going to look like. Because I have a feeling that if cable TV goes dark on March 17, I’m going to be hearing about it,” Hines said at the time.
While there’s no single cutoff date, the legacy cable TV in its traditional format ultimately will be replaced by the online streaming service, according to Haynes.
Haynes spoke to The News Tribune this week in a phone interview in response to questions about the change.
“We are slowly migrating over the next year to the streaming platform,” Haynes said, “and we’re notifying a group of customers at a time.”
There is a group, for example, that has a March 17 switchover time, but it’s not everyone’s deadline, and dates remain fluid.
IN LINE WITH PARTNERSHIP AGREEMENT
The changes, according to city officials, appear to be in line with the city’s public-private partnership agreement with the company.
In a statement sent this week in response to questions from The News Tribune, an attorney with the city addressed some of the issues raised at the Feb. 15 GPFC meeting.
“Rainier Connect’s Indefeasible Right of Use Agreement with Tacoma Public Utilities allows them to switch their service offerings after six months without notice to or approval from TPU, and they fulfilled that obligation as of October 1, 2020,” said Chris Bacha, chief deputy city attorney for Tacoma.
“Rainier Connect is still expected to pay franchise fees as stipulated in their franchise agreement with the City,” he added.
Tacoma Public Utilities director Jackie Flowers sent a memo to GPFC members Feb. 16 to answer questions raised during the meeting.
Among the questions: Was Rainier Connect obligated to continue providing legacy cable TV products?
The answer: No.
“...per terms and conditions outlined in Exhibit E of the IRU, the cable TV product must be maintained for a period of six months following the effective date of the contract. With an effective date of April 2020, the six-month term expired in October 2020,” Flowers wrote.
She made clear that rate-setting also was left to the company, writing: “The IRU only provides for rate notices to be made 30 days in advance. In most cases, there is market competition for these services and market cost pressures on providing the products.”
Council member Joe Bushnell, a member of the GPFC, said at the Feb. 15 meeting that he received complaints from his South Tacoma constituents about the changes, including lack of notification and steep rate increases.
“There’s some community members that are really concerned because they don’t actually have internet to their home. They actually utilize the cable services .... And so if this were to go through, then they would be completely cut off to television services,” Bushnell said. “So it’s very concerning.”
Mike Berry is one of those customers. He recently told The News Tribune he would have to get two devices for the upgrade at a cost of $15 each, adding $30 to his bill.
“And they removed the senior discount,” he added, which he said Click previously provided.
Haynes, when asked about the end of a senior discount for cable, noted that previous subsidies for cable service were untenable.
“Programmers charge at least what we’re charging the consumer at this point, so TPU at one point subsidized that and they were multiple years behind on their own rate increases,” he said. “That was one of the reasons why I believe TPU leadership was looking to get out of operating a cable TV network, because the programming costs were growing far, far faster than you could ever pass on to a consumer.”
“Programmers are raising rates at an alarming rate. Local programmers are raising rates at an alarming rate,” he added.
Flowers’ memo showed that Click’s rates had risen between 25 to 43 percent for legacy cable, compared with 10 to 15 percent on the Stream TV side. The previous rates represented average rates across the service and varied based on discounts or promotions.
Haynes noted there were still reduced-cost options available.
“We have many low-income programs that offer very discounted service to people that can’t afford full-rate internet service,” he said.
Flowers’ memo said that a cable TV rate increase, effective Jan. 1, was sent via customer notifications Nov. 18-22.
“Notices were sent separate from customer invoices to the mailing address on file, or email address for those customers who have opted for paperless billing,” according to the memo. “A second notice was also provided on subscriber’s December invoices.”
For the Stream TV rate increase, effective Nov. 1, notifications were sent Oct. 1 “to either the mailing or email address on file,” according to Flowers’ memo.
Berry and others told The News Tribune they had not received any letters of notification, but got information from the company after calling.
“We aim to make this transition as simple as possible,” Haynes said. “But in reality it is the next generation of going from the rabbit ears to a cable TV box. … We’re all going to be on this in a couple of years and it’ll be a distant memory for most folks that they had a cable box.”
MOVING AWAY FROM CABLE
Tacoma-based Rainier Connect took over management of the city-owned cable and internet service in 2020, with a transfer of operational control to the company in a 20-year agreement and two additional 10-year renewals possible. The agreement has Rainier Connect taking on the costs of maintaining the service and providing upgrades while the city retains ownership of the assets.
As part of the agreement, Rainier Connect is committed to investing $1.5 million annually in network upgrades.
“Our focus since we took over the Click network was to upgrade the network, get to a place where it’s not only stable, but very competitive and reliable and offers the service that our customers deserve. And for us moving over to the streaming platform really opens up a lot of broadband that people are requesting and really need,” he said, noting the improvements would also help those working from home needing faster internet.
The company sees cable’s days waning as it steers away from it.
“It’s just the next migration of service. The internet itself is the critical service,” Haynes said.
Haynes offered a more technical explanation as to the change taking the industry beyond rabbit ears and cable boxes:
“The traditional cable model, whether there were 30 channels or 180 channels, all those channels were flowing through that same little coax cable 100% all the time,” he said. “And now that we’re putting internet through it, there’s only one or two channels that are dedicated toward internet service. Going to a streaming platform, what that allows is instead of one or two channels for internet, you get all the channels for internet. If you have four people watching cable TV-type services in your house, on the streaming platform it’s four to five megabits per stream, instead of that entire allocated bandwidth going over that small little coax cable.”
The cord-cutting revolution accelerated during the pandemic, but streaming services, which quickly became favored as the cheaper way to bypass cable, also are raising their prices amid rising popularity.
A TransUnion-Harris Poll survey published Feb. 10 found that “more consumers are streaming now than watching cable and satellite TV. Between mid-November and mid-December 2021, 70 percent of Americans who watched TV during that time streamed, including 82 percent of 18-54 year-olds.”
TAKING IT SLOW
The change affects 250-500 customers at a time, Haynes said. A full switchover at one time, he noted, would be “chaos.”
The company would not disclose its total number of subscribers, but a business partner who posted a 2020 report online about Rainier Connect’s work during COVID and the Click transition listed it at more than 40,000.
While the Tacoma focus is on Click, Rainier Connect also offers its services to a wider audience, with an emphasis on underserved areas.
The streaming service so far has been made available in Tacoma, University Place, Fircrest, Fife and select Spanaway service areas, according to its website.
Taking it slow and in smaller groups of customers is by design.
“We’ve been in the customer service telecommunications thing for a bit. And what we realized in our demographics … a lot of folks rely on us to be their technical adviser,” Haynes said. “So we need a little bit more of a hands-on approach. That’s why it’s going to take us at least a year to transition everybody off the cable platform.”
There remains the fact that the new service requires internet. For customers now without internet and strictly wanting to stick to viewing via a standard cable TV box, “for a streaming platform you have to take the internet service, unfortunately,” he said.
“So those folks are going to have to find another provider.”
For those who have internet but want the old set-top box experience, he added: “We have a streaming box that looks and feels just like a cable box. If you have somebody that wants a remote and the old experience — we have that.”
Berry, the Click customer, noted,”If we switch to another provider, it’s going to be an additional cost.”
Others have noted they don’t have a choice to find another legacy cable provider.
Council member Sarah Rumbaugh, speaking at the Feb. 15 GPFC meeting, said: “I happen to live in an area that only has Click, and so only has Rainier Connect, and I guess they kind of have a monopoly over me. There’s no other choices. And so I’m curious because I didn’t get that notice. ... I think that should be something that we bring up again. And I would like more clarification on that.”
Hines told The News Tribune this week via email, “There will be further information provided to the joint City Council/TPU board study session on March 22.”
He added, “There should be an additional memo explaining where things are, and time for council members and board members to ask questions.”
The change was inevitable, as Haynes contends the move to the all-streaming platform is very much in line with the direction the industry as a whole is going, a view echoed by Flowers in her memo to the GPFC.
“While we don’t have clear visibility into Rainier Connect’s business strategy, it seems clear that the legacy cable TV product has a negative impact on their cost recovery,” Flowers wrote. “As the cable industry and their customers trend toward streaming services, it should not be surprising to hear a future deprecation announcement for their legacy Cable TV product.”
She added, “Click anticipated the same business need to remain competitive: converting to ‘Over The Top’ streaming services in order to allocate bandwidth capacity for Gigabit speed, expanding customer channel preferences and evolving cable TV technology.”
Haynes acknowledged competition for TV streaming is growing by the day, and he’s focused on not only retaining but growing the customer base.
“If you have world-class broadband, you can get any number of 10 different streaming providers. So you can get Hulu. YouTube TV has their own platform,” he noted. “There’s countless folks that are in this content-delivery market.”
“We’ve invested a lot of money in the network to get it to a reliable place that we can really now grow,” he added. “So it’s not that we didn’t see it coming and people would be somewhat frustrated about the changes in cable TV. But it’s what we’re all going to have to do to move forward to make sure that we continue to have incredible service.”
This story was originally published by The News Tribune.
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