TelHawaii bid to
serve Big Island
is derailed
The carrier, which may lose
By Rob Perez
millions, will utilize GTE in
the interim to serve the Kau region
Star-BulletinTelHawaii Inc. has invested millions of dollars as part of a state-approved plan to become the primary phone carrier in the sparsely populated Kau region of the Big Island.
But a recent judge's ruling has derailed those plans and, some say, could have a chilling effect on telecommunications companies considering entering the Hawaii market, especially sectors dominated by GTE Hawaiian Tel.
TelHawaii says it intends to appeal state Judge Kevin S.C. Chang's April 1 ruling -- a process that could take years.
In the interim, TelHawaii says that within a month it hopes to offer Kau service using company-owned equipment and part of the GTE Hawaiian Tel network already in place. GTE, the state's dominant phone carrier, currently serves Kau.
If TelHawaii isn't successful in getting Chang's ruling overturned, the company will re-evaluate its commitment to Hawaii, according to Bernie Murray, TelHawaii's vice president and general manager.
Chang overturned three state Public Utilities Commission orders that had opened the door for TelHawaii to enter the Kau market, where Murray said the company has invested several million dollars since 1996. One ordered granted TelHawaii's request to take over GTE's Kau assets through condemnation.
The commission in 1996 selected TelHawaii through a competitive bid process after determining GTE's rural service in places like Kau was inadequate. Kau was one of the few areas in the country that up until a few years ago only had party lines.
GTE appealed the PUC orders, saying such taking of assets was unconstitutional and that the commission overstepped its authority in mandating the transfer. Chang basically agreed.
"We were very disappointed in that ruling," Murray said. "We thought the judge was wrong in many parts."
The ruling is only the most recent development in what has been a contentious battle for a small market with only 2,400 customers. At one point, the commission fined GTE $255,000 for not abiding by a PUC order to give TelHawaii certain information.
Chang's ruling also marks a rare reversal of a PUC order. A court has not overturned a commission telecom order since 1982, and prior to the Chang ruling only two such reversals have occurred in recent history, according to PUC records.
A PUC attorney said the commission hasn't decided how it will respond to Chang's ruling.
Joel Matsunaga, GTE's vice president of external affairs, said the ruling underscores the notion that trying to condemn a competitor's facilities and creating a monopoly is contrary to state and federal law. "Competition means providing the consumer with choice," Matsunaga said.
He said TelHawaii always had the option of providing competition by using parts of GTE's network, just like other competitors are doing in other markets. But TelHawaii chose the unprecedented approach of trying to condemn GTE assets, Matsunaga said.
TelHawaii's Murray said she was disheartened because her company made its investments in good faith, guided by the commission's approvals.
Now that the PUC approvals have been overturned, other would-be GTE competitors may cast a wary eye on the Hawaii market, industry executives say.
"Judge Chang's ruling probably will make people think twice" about coming here, said Jessica Graff, a GST Telecom Hawaii spokeswoman.
Although the impetus for getting a new carrier to Kau was poor service, punctuated by complaints from scores of Hawaiian Tel customers, GTE has since invested millions of dollars -- under PUC orders -- to upgrade its facilities throughout rural parts of the state. Kau residents can now get single phone lines, and the area is part of GTE's statewide digital network.
Despite such improvements, many residents still are angry, saying GTE has mislead them for years. "They lied to me for so long I want nothing to do with them," said Bob Barry, 71, a retired engineer.
