Disruptions at Hawaiian Telcom are anticipated

Hawaiian Telcom's half-million or so customers might have to wait longer to get a new line installed or to talk to a customer service representative starting this weekend, as the company takes its final step to change into a stand-alone communications firm.

Executives say that any glitches will be relatively short-lived and that customers will benefit in the long run from a new, $100 million back-office operations system designed to give Hawaiian Telcom more flexibility in responding to customers. Nonetheless, executives are trying to prepare consumers for possible growing pains.

Spun off from Verizon Communications Inc. and acquired by the Carlyle Group last year for $1.6 billion, Hawaiian Telcom continues to rely on Verizon for its back-office systems, which support scores of operations, including such complex tasks as billing and human resources functions.

The new project, which is owned by Hawaiian Telcom, will encompass 80 separate systems, said Ann Nishida, a company spokeswoman. The company plans to make the switch Friday night, Nishida said.

"We've anticipated that every single process could have a failure, so we have created contingency plans for everything," said Harvey Plummer, Hawaiian Telcom's senior vice president of engineering and operations.

But customers still could face glitches. For example, billing cycles could change so that a customer who normally received a bill on, say, the fifth of each month might not receive one until the 10th. Customers might have to wait a few days longer than normal to have a new line installed, Nishida said. And customers might have to wait longer than normal to speak to a customer service representative, as all of those functions will be handled from a call center in Honolulu.

Also, all customers will begin receiving a newly designed bill starting in April.

Because of the project's enormity -- Nishida said no other phone company had ever made such a complex system change at once -- the transition period could last as long as a few months, she said.

Precisely how many customers will be affected is unclear. Although Hawaiian Telcom has reported that its network has approximately 650,000 land-line phones, that number refers to lines, not customers. Nishida said it would be reasonable to estimate the company has about 500,000 customers, but she said the company does not report that.

In any case, the new system is essential for Hawaiian Telcom's future. The company has been paying Verizon for back-office support, so the new system will let Hawaiian Telcom invest that money in its local operations instead of paying it out to Verizon.

Perhaps more important, the system will let Hawaiian Telcom offer a broader menu of options to customers. In an age of increasing competition among telecoms, old-style land-line phone companies such as Hawaiian Telcom are expanding services in order to compete with their upstart wireless, Internet and cable-based competitors. In addition to land-line phone service, Hawaiian Telcom offers DSL Internet and wireless phone services, and plans to offer video content over the phone lines as an alternative to cable television.

So far, Hawaiian Telcom has shown only glimpses of the sorts of bundled packages executives say the company ultimately will offer. That is in part because the company has been limited by its back-office services contract with Verizon, said Dan Smith, a Hawaiian Telcom spokesman. The agreement required Hawaiian Telcom to keep its services pretty much the same as they were before the spinoff, which meant that Verizon did not have to spend a fortune to customize back-office systems to serve a small customer that soon planned to launch its own operations system anyway.

The new system will allow Hawaiian Telcom to provide customers many more bundling and billing options, Nishida said.

Sean McLaughlin, chief executive of Hawaii Consumers, a research and advocacy organization, said the new system, and the jobs it will bring, appear to be good for the local economy and consumers, as a locally based enterprise is more likely than a big conglomerate to respond to the community's needs. In that context, the potential short-term pain associated with the transition is a minor trade-off, McLaughlin said.

"There may be some short term inconvenience or not, who knows?" he said. "But clearly it's moving in the right direction."