Hawaiian Telcom service is vital; it cannot be allowed to fail


POSTED: Monday, March 30, 2009

Hawaiian Telcom owns, operates and maintains the backbone of Hawaii's communications system. The company provides basic phone service to a majority of the state's residents and businesses, and core communications service to our banks, hospitals, military, civil defense, schools and other vital organizations.

Included in this vast array of telecommunications activities is 911 emergency call and cellular services. The company also is the host for most local wireless phone service carriers and long-distance communications.

Unlike conventional businesses, public utilities play a key role for the benefit and welfare of the state. Hawaiian Telcom is a state-regulated company. This is why the state became a party to the legal proceedings when Hawaiian Telcom filed for bankruptcy protection in December, stating at the time that it had $590 million in secured and $530 million in unsecured debt, including $30 million owed to vendors who provided the company with goods and services.

Bankruptcy allows a company to set aside its contractual obligations, including those with its employees, in order to preserve cash that it will need to continue operating and successfully emerge from bankruptcy. It is therefore understandable that Gov. Linda Lingle would raise concerns about bonus payments to managers and staff at a time when the company has turned to the court for protection from its creditors during its reorganization efforts (Star-Bulletin, March 21).

Should Hawaiian Telcom fail to successfully emerge from bankruptcy and regain a firm financial footing, the state will have no choice but to become directly involved to assure that uninterrupted service will continue. This obligation to maintain vital communications will fall upon the residents of our state.

As a result, the state has been closely involved in the bankruptcy proceedings from the moment they began. When Hawaiian Telcom filed its bankruptcy action in Delaware, the governor sought to have the court hearings held in Hawaii. Because of the critical nature of the telephone utility service, hearing the case in a court outside of the state would have denied Hawaii residents the ability to easily monitor its proceedings. The state's vested interest in this public utility also required the appointment of a special bankruptcy lawyer to represent the public's interest in court.

The situation that Hawaiian Telcom finds itself in is of great importance to all of the residents of our state. This is a company that cannot be allowed to fail, and therefore decisions made during this perilous time in its operation must be made in consideration of all of us who depend on it, not just those who are employed by the firm.

We recognize and respect the hard work of the employees of Hawaiian Telcom and want to ensure they have jobs in the future. It is important for the company to come out of bankruptcy as soon as possible. The company is paying millions of dollars in legal and consulting fees. These payments and others need to be scrutinized, as conserving every dollar the company has is critical to successfully completing the bankruptcy proceedings.

The activities of the company during the period it is in bankruptcy must be conducted in a transparent manner that instills public trust and confidence and, more importantly, with respect for its obligations to the people of Hawaii.

Anyone who believes otherwise, or attempts to politicize this situation through uninformed and inaccurate statements, fails to understand the significance of the situation in which Hawaiian Telcom finds itself and the cost and impact that the loss of the company would bring to our state.

This is a company with a proud heritage of service to our islands and one that engages in a vital activity. Hawaiian Telcom is too important to be allowed to fail.


Barry Fukunaga is chief of staff to Gov. Linda Lingle.