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TACOMA POWER CLICK! CABLE TV TACOMA WATER TACOMA RAIL

TPU Worker
Tacoma Public Utility
TPU Rails

Dear City Council and TPU Board members.

Please be careful about embracing the premise that some would have you believe – that the cable TV business is shrinking or that folks are “cutting the cord” and Click is a loser. It’s simply not true.

In fact, within 5 years, Click could be contributing $5Million a year in profits to TPU! Please let us show you how. We should be working on finishing to build out the Click Network, so it can serve all the ratepayers. Comcast and Rainer Connect would hate to see that, for they operate a friendly monopoly down there and would be hurt if Click over-build them south of 120th Street. We can expect that they will do what they can to stop that from happening.

Here are a few real facts. The total number of pay-TV subscribers in the USA is slightly higher now than it was at the end of 2008. Also, more people were paying for television subscriptions at the end of 2013 than at the end of 2012, as reported by Bloomberg.

In the third quarter, ATT added 216,000 TV service subscribers, and a total of 924,000 last year. Verizon added 536,000 (growing by nearly 8%) in 2013. Since the end of 2008, these two companies have added about 8 million pay-tv subscribers.

The satellite companies are growing too. Last year DirectTV U.S. added 169,000 subscribers. Although the growth is not spectacular, like in the old days, you can see from these numbers that folks are no longer “cutting the cord”.

Certainly things looked bleak during the recession, as unemployment skyrocketed. As people lost their jobs and homes, they were forced to cut-the-cord. Since then, with the recession over and jobs coming back, nationwide video subs have leveled off at 100 million and are not falling anymore.

With the recent low oil prices and continued low interest rates, the economic recovery is taking hold. The pace of growth in TV subscribers could very well increase rapidly. There are millions of “Youngsters who should be living on their own that are still living with their parents” They don’t pay for TV, since their parents are already doing it. According to the Pew Research, 36 percent of 18-to-31-year-old “millennials” are living with their parents, up from 32 percent in 2007. That’s nearly 22 million people!

Also, “Cutting the cord” is not easy for most people. It requires hooking up a device or two. Learning how to use a streaming stick, like the Chromecast, or a media receiver, like a Roku or Apple TV. Most folks don’t realize that Internet “throughput” (or usage) has a value. Cutting the cord can cost them more in Internet service charges and put them in violation of their ISPs usage policies.

Look at what Comcast is doing with “usage thresholds”. They have 300GB usage allowances in current test markets and are charging $10 for each additional allotment of 50GB as an over-limit fee.

Cutting the cord creates more Internet “usage” and costs those users more money. The owners of the networks need to spend money, in buying routers and increasing capacity to carry all that traffic, so it’s not free. ISPs already kick customers off their networks (or cap their usage), if they use too much. Folks are beginning to learn that cutting the cord may not bring the savings they hope for. To avoid getting kicked off, heavy internet users need to pay more to upgrade to a plan that allows more usage and thus will generate more wholesale revenue for the Click Network.

The average American watches 5 hours of TV per day, a recent report shows. The time is soon coming, when folks will learn that it’s not free, “all you can eat”, for online usage. They will discover that the amount you use, if too much, will cost more money.

At Advanced Stream, we are already trying to educate our customers about the difference between “SD” and “HD” on Netflix. We make about 20 phone calls per day, to explain this to our customers. Nationwide, cable providers are starting to charge customers for the amount of Internet they are using. Many ISPs are already “Capping” the speed on those who have ‘Cut-the-cord” and exceed their AUP limits during a month.

Cutting the cord is not simple, convenient or cheap. There are many things you can’t watch if you cut the cord. For sports fans, the availability of programming online is thin, especially if you want to watch a live game on your huge living room TV screen. Many sports leagues will let you watch a streaming game online for a fee, but only if that show is not being broadcast nationally or locally. (ESPN does have an app for digital viewing, but you need a cable TV subscription to log in and access it.) Also, you won’t find the current season of cable hits like “Mad Men” or “Sons of Anarchy” available anywhere besides your cable television package. That means a year of missing out on post-show discussions and trying to avoid spoilers.

If you do try to “cut the cord”, you’ll will still need a paid subscription (or two). CBS online, HBO online, Netflix, Amazon Prime, or Hulu are all relatively cheap, but none of them offer unlimited access to all the new movies and current shows you want to watch. The CBS All Access service is $6 a month. HBO will cost about $10-$15 per month. Netflix, Amazon Prime, and Hulu currently charge about $8 per month. An annual subscription for online access to National Football League games is $199.99 ($16.50 a month). It adds up.

For new release movies and just-run television shows, you will have to pay for them through Amazon, Apple TV or Google Play. Nationwide, the average basic cable subscription costs about $65 (Less in Tacoma, thanks to Click!). If you cut-the-cord, you may not save as much as you think.

About 85 percent of all Netflix subscribers also pay for cable TV. Folks are simply not shutting off their traditional TV service in droves. They appreciate the hundreds of channels they get with basic cable. It is not only the premium services that they are after.

One other important point, is that if a TV customer really does “cut-the-cord” and stops paying for video, they usually upgrade their Internet Service package for faster speeds; so, Click gets additional revenue from that upgrade.

Please understand that there is light at the end of the tunnel for Click. Please don’t be so hasty to believe those who would try to convince you otherwise. The false information about Click being a loser and folks cutting the cord is part of a campaign to steal Click from us and deliver it into private hands. Please be on the lookout for this.