The Tacoma Click Saga of 2015: Part 4: Accumulating Spillover Effects

Tuesday June 28, 2016

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.

While we can’t give Click all of the credit for the city’s efforts to rebound from that period of economic downturn, analysts like the U.S. Conference of Mayors cite the $86 million Click network as a major component. The network was part of an ambitious and highly successful economic development effort in the 1990s that helped to revitalize Tacoma. In 2005, the Sierra Club named Tacoma’s revitalization effort one of 2005’s top 12 economic development projects in the nation.

As part of Tacoma’s revitalization project, the city opened a new downtown branch of the University of Washington that remains successful today. And as we noted in a 2010 article about Tacoma Click, more than 100 high-tech companies arrived in Tacoma within a couple of years after the network launch. This means that many current Tacoma citizens also arrived in town through jobs that Click helped create.

Broadband Competition Spills Over Too

A recent study from the Organisation for Economic Co‑operation and Development (OECD) shows that the arrival of a municipal network in a city typically improves competition in the local broadband market. That is, municipal networks tend to prompt private broadband companies to lower prices and improve services in places where there are municipal networks. Indeed, a Tacoma resident reported a few years ago that Comcast customers had been consistently paying about half of what Seattle Comcast residents were paying for the same services. It’s also likely that Comcast would have delayed its 2008 upgrade of its infrastructure in Tacoma if the city had never built Click in the first place.

This evidence suggests that, were it not for Click’s impact on the ISP marketplace, the city’s Internet services from private ISPs like Comcast would likely be slower and more expensive than they are today. If Click disappeared and the city had no municipal broadband service to compete with Comcast, citizens, businesses, and government agencies in the city could expect prices to increase while customer service declines.

What many people in and outside of Tacoma may not realize is that, like most community-owned networks, Click strives to keep prices for telecom services below market rates for the good of the community. The city of Tacoma also saves on telecommunication costs because it uses Click rather than leasing. Click has essentially contributed untold savings to the City of Tacoma.

So who would be the big winner if Tacoma decided to lease out Click to a private company? Tacoma businesses and residents? The private ISP that would take over the Click’s operations? Leasing Click to a private company would almost certainly benefit Comcast more than any other party. The company with the dubious distinction as both the largest media company in the world and a perennial contender for most hated company in America has the most to gain.

Another Historical Moment for Click

As the importance of broadband access expands, we expect the City of Tacoma to see the wisdom in the words of Tacoma’s former mayor Bill Baarsma, who in 1999 described Tacoma Click’s historical significance for the city and its potential for the future:

“This is the single biggest economic decision the council has made since the turn of the last century, when the City Council decided to move forward with the construction of the first hydroelectric dam on the Nisqually River. Things are happening here that are happening nowhere else."

In the years immediately following Click’s launch, this municipal network helped the City of Tacoma to re-emerge from a decades long economic slump. The question facing Tacoma between leasing Click to a private ISP and keeping Click as a publicly owned and operated asset will once again culminate in a pivotal decision with far-reaching implications for Tacoma’s future.

Our observation of community-owned networks around the United States suggests that the benefits of keeping and remaking Click as a city-owned asset will only become more apparent in the years ahead. A renewal and restructuring of Click operations to meet the needs of the changing telecom landscape would help to optimize the network’s potential as a driver of local economic development and cost savings. These changes will allow the Tacoma leaders of today to carry on the legacy of the city officials who took the initiative to create the historic Click network nearly 20 years ago.