![\"stop](\"http:\/\/www.mikepellegrini.com\/Graphics\/stop6%20mbs.jpg\")
\nBelow is an open letter to Click! Network management.<\/p>\n
\nBelow is an open letter to Click! Network management.<\/p>\n
For nearly six months now, Click! Network subscribers in the City of Tacoma and surrounding areas have had to pay 33% more for their broadband Internet service than similarly situated customers of Comcast and Qwest.<\/p>\n
Why is this? There really is no rational answer.<\/p>\n
How could anyone have failed to notice that Comcast and Qwest had changed their product offerings, effectively lowering their prices? How could anyone have thought that Click could be competitive with the \u201cbig boys\u201d by allowing their rates to remain 33% higher than everyone else?<\/p>\n
Click\u2019s management decisions defy logic.<\/p>\n
I sent Mayor Baarsma and the Tacoma City Council a letter outlining these and other problems in great detail, about a month and a half ago. Councilmember Julie Anderson sent me back a note thanking me for the information, then later I heard from the Mayor that three council members were going to meet with Click management to hear their response to my charges.<\/p>\n
And since then, nothing.<\/p>\n
In all fairness, we\u2019ve had a bunch of holidays in the interim.<\/p>\n
But metro Tacoma citizens are still paying 33% more than Comcast and Qwest customers for the same exact service \u2013 and I for one, am getting tired of it.<\/p>\n
My big gripe is that the only reason municipal utilities exist is to provide citizens with essential services at prices the same or less than the competitive market rates.<\/p>\n
If Comcast or Qwest charges 33% less than Click for the same exact service, then what\u2019s the point of having a city-owned internet service? So we have an option to pay more to get the same service? I think not.<\/p>\n
Maybe it\u2019s to help pay for the Tacoma Public Utilities executive\u2019s recent raises? Or if not that, then what? I really don\u2019t have a clue.<\/p>\n
In Into to Business 101, they teach you that for a business to be competitive, it needs to set its prices in accordance with the going market rates. If you set the prices too high, you\u2019ll eventually lose all your customers. Likewise, you need to have a similar range of product offerings if you want to attract and retain customers. These are some of the most basic concepts in marketing. Very, very basic stuff.<\/p>\n
But apparently Click management does not comprehend.<\/p>\n
\nTo have allowed this situation to exist for nearly six months is prima facie evidence of gross incompetence on the part of the Click! Network management. The responsible parties need to be replaced with managers that understand basic marketing and the broadband internet business. And it must be done quickly \u2013 before our investment in Click is irretrievably lost.<\/p>\n
I urge everyone to write the Tacoma City Council, requesting that the council replace the Click managers directly responsible for these problems as soon as possible and hire some new people that have a clue \u2013 before it\u2019s too late.
\nHere\u2019s a link to the City Council email addresses. City of Tacoma – City Council
\nIf anyone has questions, please call me at 253-686-4946, or contact me via email.<\/p>\n
Thanks for your time.<\/p>\n
Michael Pellegrini
\nBelow is my letter to M<\/p>\n
Mayor Baarsma:
\n***********************************************
\nNovember 16, 2005
\nThe Honorable Bill Baarsma, Mayor
\nCity of Tacoma
\n747 Market Street, Suite 1200
\nTacoma, WA 98402-3766<\/p>\n
Dear Mr. Mayor:<\/p>\n
The purpose of this letter is to draw to your attention a critical problem that exists with the city-owned broadband internet provider \u2013 Click! Network.<\/p>\n
Basically, through inattention or misdirection, Click has allowed itself to be priced out of the local broadband internet market. This has come as a result of Click choosing to maintain its existing price\/service levels, even while the other local broadband internet providers have upgraded their product offerings and\/or lowered prices.<\/p>\n
Comcast, the largest broadband internet provider in the Tacoma market, upgraded its service levels nationally last summer. Their standard \u201cSilver\u201d tier currently has speeds of 6 mb\/s, and is offered locally at $45 per month; their \u201cGold\u201d tier has speeds of 8 mb\/s and costs $55 per month.<\/p>\n
Prior to the most recent upgrades, Comcast\u2019s \u201cSilver\u201d tier had speeds of 4 mb\/s, and the \u201cGold\u201d tier had speeds of 6 mb\/s \u2013 which at the time, were roughly similar in price and bandwidth to Click\u2019s \u201cRes 2\u201d (3 mb\/s) and \u201cRes 3\u201d (6 mb\/s) service levels.<\/p>\n
Comcast\u2019s speeds were upgraded to the 6 and 8 mb\/s levels without any price increase to the customers.<\/p>\n
So while a Comcast customer pays $45 per month for 6 mb\/s service, Click subscribers pay $60 per month \u2013 $15 per month more for essentially the same product. Click offers no product to compete with Comcast\u2019s 8 mb\/s service level.<\/p>\n
To make Click\u2019s price disadvantage worse, Comcast is also offering steeply discounted introductory rates for signing up \u2013 as low as $19.95 for the first six months for its \u201cSilver\u201d tier, and only $10 more for the \u201cGold\u201d tier.<\/p>\n
It\u2019s been nearly four months now, since Comcast made these most recent upgrades, and Click has made no move whatsoever to match Comcast\u2019s prices or product offerings. Nor has Click offered any comparable introductory rates. In truth, they have done absolutely nothing at all.<\/p>\n
At the same time, Click has also allowed itself to be priced-out of the entry-level broadband market (the \u201cRes 1\u201d \u2013 1 mb\/s tier).<\/p>\n
Starting last summer, Qwest began offering a 1.5 mb\/s product for an introductory rate of $19.99 per month for one year \u2013 undercutting Click\u2019s price for that product by $10 per month. Qwest also offers a 5 mb\/s tier for $29.99 per month for one year (which could actually even compete with Click\u2019s $60 a month \u201cRes 3.\u201d).<\/p>\n
The other players have not been idle: Earthlink offers cable broadband locally and has matched Comcast\u2019s prices and product offerings; On the low end of the broadband spectrum, Verizon now offers a 768 kb\/s entry-level product in the Seattle area for $14.95 per month.<\/p>\n
None of these upgrades by the various companies has been conducted in secret: Comcast began widely publicizing it\u2019s most recent round of upgrades early last spring; The Qwest upgrades have been public knowledge for almost as long.<\/p>\n
But inexplicably, Click has made no move to adjust its prices or product offerings.<\/p>\n
This is not the first time this sort of problem has occurred. Click actually has a long history of making similar marketing blunders.<\/p>\n
To briefly summarize:<\/p>\n
\u00b7 March 2003 \u2013 Click cut its customer\u2019s speeds in half and raised the prices. Click\u2019s new entry-level 1 mb\/s \u201cRes 1\u201d tier then cost $29 per month; the premium, 2 mb\/s \u201cRes 2\u201d tier cost $45 per month. For the first week or so, actual \u201cRes 1\u201d speeds varied wildly, from a low of about 300 kb\/s, up to 1.2 mb\/s downstream.<\/p>\n
Due to the heavy volume of protests from its customers, Click finally raised the cap on the speeds to 1.5 mb\/s for \u201cRes 1\u201d and 3 mb\/s for \u201cRes 2.\u201d The \u201cRes 2\u201d price was lowered to $39.95 per month (for Advanced Stream \u2013 HarborNet and NetVenture went to $44.95).<\/p>\n
\u00b7 February 2004 \u2013 Comcast upgraded the Seattle metro area standard \u201cSilver\u201d tier customers to 3 mb\/s downstream and 256 kb\/s upstream. These upgrades had been widely publicized many months in advance.<\/p>\n
\u00b7 April 2004 \u2013 After a two-month wait, Click finally matched Comcast speeds, but also at the same time implemented \u201ctraffic shaping\u201d which made it impossible for users to play online games, because of extreme high latency. After numerous customer complaints, the traffic shaping was discontinued a couple weeks later.<\/p>\n
\u00b7 August 2004 \u2013 Click introduced a \u201cGamer\u2019s Package\u201d \u201cRes 3\u201d tier. This had a downstream rate of 3 mb\/s with a slightly higher upstream rate \u2013 384 kb\/s. The increased upstream rate was the sole difference between that and the standard \u201cRes 2\u201d package. However, because it was such a small increase in upstream bandwidth, this upgrade was essentially worthless. It made no appreciable difference for online gaming or anything else.<\/p>\n
Yet Click set the pricing for this \u201cRes 3\u201d tier at between $60-65 per month (depending upon provider). That works out to as much as $25 per month extra for a paltry 128 kb\/s extra, worthless upstream bandwidth.<\/p>\n
\u00b7 September 2004 \u2013 A month after Click premiered its \u201cGamer\u2019s Package,\u201d Comcast introduced its \u201cGold\u201d tier service with speeds of 4 Mb\/s down and 384 kb\/s up for $10 per month extra \u2013 $55 per month. The fact that Comcast would be offering this new tier with higher downstream and upstream rates had been widely publicized for months in advance.<\/p>\n
Secure with their apparent tunnel vision, Click continued offering its \u201cGamer\u2019s\u201d package \u2013 a substantially inferior product that cost more money than the closest Comcast product \u2013 for another eight excruciating months.<\/p>\n
\u00b7 March 2005 \u2013 Comcast upgraded the Seattle metro area to speeds of 4 Mb\/s down, 384 kb\/s up for the \u201cSilver\u201d tier, and 6 Mb\/s down and 768 kb\/s up for the \u201cGold\u201d tier. Prices remained the same.<\/p>\n
\u00b7 May 2005 \u2013 Click finally attempted to match Comcast\u2019s \u201cGold\u201d tier product offerings, by changing the \u201cRes 3\u201d level to 6 mb\/s down and 768 kb\/s upstream. However, because of technical problems \u2013 which for the most part, Click made no effort to resolve \u2013 most customers were unable to achieve the advertised speeds for the next several months.<\/p>\n
The Click \u201cRes 2\u201d speeds were never changed and remain at 3 mb\/s even while the comparable Comcast product at that price point was at 4 mb\/s.
\n\u00b7 August 2005 \u2013 Comcast once again upgraded its service to the present levels of 6 mb\/s down and 384 kb\/s up for \u201cSilver\u201d customers, and 8 mb\/s down and 768 kb\/s up for its \u201cGold\u201d customers.<\/p>\n
As stated above, in the four months since, Click has made no effort whatsoever to offer competitive products or prices.
\nAt close to every step over the last several years, Click has misjudged its market. They seem to believe they exist in a vacuum; that they exist without competition.<\/p>\n
They do not appear to understand the market, or their product.
\nMunicipal utilities exist solely to benefit resident citizens by offering competitive products at or below market rates. This is their reason for existence.<\/p>\n
If Click fails to provide a full range of products, or if they charge $10-15 per month more than the going market rates, then they have failed to meet their primary goal.<\/p>\n
Tacomans should not have to pay $10-15 per month extra just to do business with Click franchisees. Contrarily, they should have a full range of products available at or below the going market rates.<\/p>\n
Over the last several years, I have worked hard at getting Click to change its business practices. I\u2019ve met with its management; I\u2019ve written numerous letters to them and Tacoma Public Utility officials, highlighting these problems.<\/p>\n
Uniformly, I\u2019ve been unable to effect any real or lasting change.<\/p>\n
But change they must.<\/p>\n
I believe it\u2019s time for the City Council to get involved in this \u2013 before our city\u2019s investment is irretrievably lost. Click must offer market-competitive products and prices if it is to continue in existence.<\/p>\n
And if it cannot offer market-competitive products and prices, then we should think about selling its assets while they are still worth something.<\/p>\n
To help you better understand the market dynamics, I\u2019ve included a price comparison of the local internet providers as an attachment.<\/p>\n
I\u2019d like to meet with you to discuss this situation next week. If you have any questions prior to then, please call me.<\/p>\n","protected":false},"excerpt":{"rendered":"
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