Photo Illustration by Ken Ige, Star-Bulletin


WIRED!



Plugging into the market maze will
be a totally bewildering task

By Rob Perez
Star-Bulletin



THE phone company wants to get into the cable TV business.

The cable TV company wants to get into the phone business.

Long-distance companies want to get into both.

Trying to keep up with planned changes in Hawaii's telecommunications market over the next few years will be like trying to find your way through a new city - without a map.

Changes already are happening at a frenzied pace. Hawaii's telecom market, for decades dominated by a single company, is on the verge of a new and radically different era of competition, one that will affect virtually everyone who uses a phone, television or home computer.

While many believe the changes ultimately will be good for consumers, providing more choice at better prices, the transition to a competitive market will not occur without pitfalls, industry experts say.


Racks of equipment line the Oceanic offices.
Photo by Dennis Oda, Star-Bulletin

For one, consumer confusion could rein - at least until the industry goes through an inevitable shakeout. As regulatory barriers fall, existing and new companies plan to jump into each other's markets, almost requiring a scorecard to keep track of the changes.

And residents will be bombarded with so many marketing pitches - have you seen all the cellular phone ads lately? - they'll have a tough time sifting through the hype, experts say.

Digital phones? Satellite TV? Internet access?

The choices will seem endless.

"It'll be crazy, absolutely crazy," said Phil Brown, market manager for United States Cellular on the Big Island, describing the barrage of hype consumers likely will face. "It'll be kind of like dealing with smoke and mirrors."

But once the smoke clears, consumers will see considerable gains at home and at work.

Within the next few years, local residents should be able to get all their communications services - ranging from cable TV to wireless phones - from any one of a handful of large players, officials say.

And the costs of those services are expected to drop, giving customers more telecom bang for the buck.

Just look at what happened when the interisland toll-call market, once the exclusive domain of GTE Hawaiian Tel, was opened to partial competition last year. Rates dropped by double-digit percentages immediately.

"You're going to be able to save a lot of money," said Edward Murley of Oceanic Communications, sister company to Oahu's main cable TV operator and a planned entrant in the local phone market.

"But you've got to figure it all out... The good news is you've got choice. The bad news is you've got choice."

For the state's economy, the telecom revolution is mostly good news.

While there will be some corporate losers - deregulation usually hurts the least efficient players - the economy is expected to get a healthy boost from the changes.


Oceanic Cablevision computer specialist Randal Pacheo, front, and project engineer Doug Stanfield work on high-speed cable modems that will enable schools to go online with each other.
Photo by Dennis Oda, Star-Bulletin

Companies big and small are investing tens of millions of dollars to establish or upgrade communications networks. Hundreds of new jobs are being created.

Consider two typical cases:

Those are just two small players in the local industry. Include what everyone else has been doing or is planning to do and the numbers soar, triggering fairly optimistic - some say pie-in-the-sky - predictions.

"The changes are so profound that I actually see (the industry) becoming - behind tourism - the major producer of economic wealth here in Hawaii," James Harrow, president of a security-

alarm company, told the Public Utilities Commission recently. "It's that significant."

How quickly the state's phone market becomes competitive will be partly determined by Hawaiian Tel, currently the sole provider of wire-based local service.

The recently passed federal telecommunications act basically requires monopoly companies like Hawaiian Tel to allow competitors to buy access on phone networks, enabling the competitors to offer local service.

The idea is to foster competition without the need for companies to invest huge sums in building their own wire-based networks. The state PUC will play a critical role in that process.

But Hawaiian Tel's would-be competitors, including two long-distance carriers, fear the company will drag its feet on negotiating access agreements while jumping into the domestic long-distance market itself. That would give Hawaiian Tel a crucial headstart in the race to offer local, interstate and long-distance services at a packaged, or discounted, rate.

As the only company able to bundle such services initially, Hawaiian Tel may be able to lock up an even greater share of Hawaii's market, effectively diluting the benefits of competition, competitors say.

"We'll end up playing catch-up because we all come in trying to get back what (market share) we may have lost," said Ken Sandefur, AT&T's Hawaii vice president.

Hawaiian Tel says such concerns are unwarranted. With the industry changing so rapidly, the company wants to free itself from inhibiting regulations of a monopoly market, and the only way to do that is to accommodate competition as quickly as possible, Hawaiian Tel officials say.

But the complex, time-consuming process essentially entails reinventing the company, erasing 60-plus years of a government-regulated system, executive Kevin Payne said.

"That's what's consuming GTE - how we embrace that change, not how we stop it," Payne said. "This is a little like putting Humpty Dumpty back together again."

Payne predicted Hawaii's market will be fully competitive no later than the beginning of next year, with various segments changing even sooner.

Once those changes occur, local companies will be jockeying to offer as wide an array of services as possible. Some may even form once-unthinkable alliances with competitors, further muddling the picture for consumers.

"The lines are getting very fuzzy between who are competitors and who are partners," said Kathi Hishinuma, president of GTE Mobilnet in Hawaii.

A long-distance carrier, for instance, might offer a package that includes local phone service provided by Hawaiian Tel but sold under the carrier's name.

The aim would be for the consumer to have to deal with only one company - no matter what services are sought.

Within two years, Hawaiian Tel, AT&T, Sprint and Oceanic are likely to be the main "one-stop-shopping" providers on Oahu, with Pacwest possibly in the fray, industry observers say.

Not all consumers, however, will benefit. Competition and improved technology are expected to reduce costs of gadgets - wireless phones, high-speed modems and the like - needed to participate in the telecom revolution.

Still, some people won't be able to afford the technology, a handicap in a world becoming increasingly high-tech.

"It could become a society of information 'haves' and 'have-nots'," said Sean McLaughlin, a telecommunications consultant.

Another concern: companies and governments will be so quick to embrace the new technology that consumer rights and protections will be compromised.

"Technology is going to make it much easier and quicker for businesses to access personal information," said Vanessa Chong, executive director of the American Civil Liberties Union of Hawaii. "But do people unwittingly trade off their privacy (and other rights) for the perceived gain" technology brings?

Such issues and the complexity of the new market will force people to become more sophisticated shoppers of telecom services. It will be akin to what customers had to go through following deregulation of the airline industry or long-distance phone business.

To Honolulu resident Sharon Mingle, the tradeoff seems fair.

"If I can get better services at cheaper prices, I'm willing to do some homework," she said.




Text Site Directory: [News] [Business] [Features] [Sports] [Editorial] [Community] [Information] [Feedback]