Barring unforseen delays, Hawaii consumers can expect to see a barrage of advertising touting local phone service early next year.

For the first time, residents will be able to pick the carrier from which they purchase basic dialtone service.

That development will be the first major step in government efforts to open the local market to competition.

At the onset, however, the companies won't be offering service on their own networks. They'll be leasing capacity on Hawaiian Tel's and reselling it - under their names - to customers. (GST initially will have a limited network connected to Hawaiian Tel's).

Opening the local market to competition, even on a resale basis, will be a massive, complex endeavor, one that has no precedent. Local phone monopolies have been the rule nationwide for decades.

Some liken the breakup of the local monopolies to the breakup of AT&T's long distance domain in 1984, though on a much more complicated scale.

"There's no blueprint for all of this," said Kevin Payne, Hawaiian Tel's vice president for external affairs. "Some of it inevitably willbe by trial and error."

Trial and error, of course, assumes mistakes will be made along the way, some likely to affect consumers. Hawaiian Tel and the resellers are spending big bucks and devoting numerous staff hours to ensure that doesn't happen. But given the complexity of the process, snags are almost inevitable, just as snafus beset the

opening of the long-distance sector, regulators and telecom experts say.

"We'll try to anticipate all the problems, but I'm not sure we'll be able to cover them all in this initial phase," said Yukio Naito, chairman of the state Public Utilities Commission, the regulatory agency overseeing all the change.

Thomas J. Jousel, a University of Southern California visiting associate professor who has worked in the telecom industry since 1983, said billing presents the most potential for problems.

Local carriers typically use systems that are so convoluted - and, in many cases, outdated - that providing information on a timely basis to resellers may be troublesome, Jousel said.

"The billing issue is not a trivial one," he said. "When you start messing around with a fairly old, entrenched bureaucracy, the risks and problems of delay can be significant."

AT&T spokesman George Irion said he doesn't anticipate problems. AT&T and GTE already have a working relationship on long distance, including exchange of billing information, and that should help in local service, he said.

"We're putting a lot of attention and resources into making (the resell process) go smoothly," he said. "It's not like we're starting from ground zero on this."

Another concern, though not shared by Irion, is whether Hawaiian Tel will place priority on servicing its customers before those of resellers, especially when phone troubles are reported.

"That's really an open issue at this point," said state consumer advocate Chuck Totto.

Hawaiian Tel says such a concern is unwarranted. "When you're maintaining a network, who is on the other end is invisible to you," Payne said.

Moreover, the resellers intend to closely monitor GTE to make sure they get what they pay for.

"We're going to be in their shorts. If they don't deliver the service, we're going to complain," said Eric Tom, general manager of Sprint Hawaii, formerly Long Distance/USA-Sprint.

Naito said he expects resellers to begin entering the market the first quarter of next year.

How effectively they can compete will depend to a large extent on how cheaply and under what terms they can lease capacity from Hawaiian Tel. State regulators and the companies are now wrestling with those issues.

Both state and federal regulations require Hawaiian Tel to allow competitors to tap into its network. The idea is to foster competition without the need for companies to invest tens of millions of dollars - at least initially - to develop their own facilities. The interisland toll market was opened in similar fashion recently.

If the process works, a reseller eventually could win enough business to justify its own network.

Once competition arrives, consumers are expected to benefit from a pricing standpoint. Much of the battle will focus on the business market, which provides more lucrative margins. But residential customers should benefit as well, experts say.

Beyond the dial tone, resellers must offer service at least as good as Hawaiian Tel's at cheaper rates if they want to entice customers to switch, Tom and others said.

Consumers likely will be offered better deals if they purchase all their telecom services - local, long distance and Internet, for instance - from one company. Such packaging will be heavily pushed.

"There will be lots of incentives and promotions," said Irion.

True competition, however, won't come until people have a choice of networks, said Edward Murley, state regulatory director for Oceanic Communications, which is building a competing system on Oahu.

Until such choice is available, he said, companies will be marketing the same underlying service - just using different packaging.

For consumers, the challenge will be separating the marketing mumbo-jumbo from the numbers that matter. It likely will be akin to sorting through the maze of offerings in the long distance and wireless markets.

Said the PUC's Naito: "The consumer might be confused as to which is the best deal."

The issue is price.

How much should AT&T Corp. have to pay GTE Hawaiian Tel to lease capacity on the utility's statewide phone network so AT&T can resell local service to customers?

The state Public Utilities Commission yesterday began a week-long series of hearings to settle the pricing dispute and other matters on which AT&T and Hawaiian Tel disagree.

For consumers, the hearings hold considerable significance, though that may be hard to decipher with all the industry jargon dominating the sessions.

But what the commission decides on the AT&T case - the first to reach arbitration - will help determine what resellers charge when they begin offering local service early next year.

On pricing, AT&T said it should get a nearly 24 percent discount off Hawaiian Tel's retail rates. GTE says such a discount is too steep and would subsidize AT&T's entry to the market. It is proposing a discount between 7 percent and 12 percent.

The Federal Communications Commission has issued rules saying a discount of 17 percent to 25 percent is appropriate if states opt not to decide the level. But GTE says that range also is too steep and, along with other industry players, has challenged the rules.

In its opening arguments, AT&T representatives yesterday said a sufficient wholesale rate is essential to bring consumers the benefits of lower prices and enhanced services.

The PUC has until mid-December to issue a ruling in the AT&T case.