The state's largest phone company pursues strategies to counter its rivals
POSTED: 1:30 a.m. HST, Mar 29, 2011
Hawaiian Telcom hopes a new television service will help counter a continuing decline in customers using the traditional land lines.
The state's largest phone company revived its long-stalled plan to deliver video service over telephone lines after it emerged from bankruptcy protection last fall. The company did not say when it plans to launch the service.
Hawaiian Telcom's television service would compete with Oceanic Time Warner, with its 94 percent penetration rate for cable service in Oahu households.
Hawaiian Telcom officials are negotiating with the state's Cable TV Division, part of the Department of Commerce and Consumer Affairs, for a video franchise on Oahu, and public hearings are scheduled for next month.
"With the launch of Hawaiian Telcom TV, we will be positioned to capture a share of the significant TV and entertainment opportunity that we currently do not address today by bringing choice to the marketplace and changing the way Hawaii consumers experience video entertainment," Eric Yeaman, Hawaiian Telcom president and chief executive officer, said yesterday.
"Our planned video service will be a critical growth component," he said.
Also yesterday Hawaiian Telcom reported it increased the number of business and residential high-speed Internet accounts to 99,700 in 2010, a 4 percent increase over 2009. Oceanic Time Warner continues to be the dominant provider in that market as well with 272,000 accounts.
Hawaiian Telcom said its traditional phone, or land-line, customers, fell by 6 percent to 441,187 in 2010. However, the decline was smaller than an 8 percent drop in 2009. Hawaiian Telcom also said it added 16,700 packages of "bundled" telephone and Internet services in Hawaii households last year.
The company said its revenues were relatively steady in 2010 despite being in bankruptcy for most of the year. Hawaiian Telcom logged $401.4 million in revenue compared with $408.6 million in 2009. Growth from new Internet-based business services, higher demand for communications systems and equipment, and higher demand for network capacity from wireless carriers were more than offset by revenue declines as a result of access line losses, the utility reported.
Hawaiian Telcom said it expects intense competition going forward from a range of communications service providers. Wireless broadband providers constitute a significant source of competition, especially as such carriers expand and improve their network coverage and continue to lower their prices, the company said.
"As a result, some customers have chosen to completely forgo use of traditional wire-line phone service and instead rely solely on wireless services. We anticipate the wireless substitution trend will continue and could pose additional threat to our high-speed Internet product, particularly if wireless service rates continue to decline and the wireless service providers upgrade their networks to 4G technology and are able to deliver faster data speeds."
Hawaiian Telcom said it is pursuing a number of strategies to combat the competitive pressures, including preserving and generating new revenue through customer retention, upgrading and up-selling services to existing customers, new customer growth, winning back former customers and introducing new products.
Shares of Hawaiian Telcom closed up 50 cents, or 1.9 percent, at $26.50 yesterday in over-the-counter trading.