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Hawaiian Telcom gets a license for cable TV

The permit allows the company to vie with Oceanic Time Warner

By Allison Schaefers

POSTED:
LAST UPDATED: 05:55 a.m. HST, Jun 25, 2011



Oahu consumers will have more choice and pricing options for cable TV once Hawaiian Telecom rolls out its new video service, broadening its competition with Oceanic Time Warner Cable across three telecommunication platforms.

The state Department of Commerce and Consumer Affairs issued a 15-year cable franchise license to Hawaiian Telecom on Friday. The decision, which allows Hawaiian Telcom to offer video service over its phone lines, means that the company now can bundle services like Internet, land-line phone and video for some Oahu customers.

In Hawaii, Oceanic was the first company to offer bundled services, a market it has dominated for some time. Oceanic has offered cable television service in Hawaii for more than 35 years, Internet since 1997 and phone service since 2005.

NEW SERVICE

» State approved cable TV license: Friday
» Hawaiian Telcom applied for license: 2006
» Services currently provided: Telephone land lines, Internet, cellphone
» Cable available: Oahu only
» Service to begin: No date set

COMPANY FACTS

» Employees: 1,400 as of Dec. 31
» Stock: Closed Friday at $25.90, down 7.5 percent this year
» CEO: Eric Yeaman

Hawaiian Telcom, the state's largest phone company, began competing with Oceanic as an Internet provider in 1998. The company applied for a cable TV license in 2006, but efforts were stymied after it fell into bankruptcy. The company's 2010 emergence from two years of bankruptcy protection allowed it to put old plans back into play. Now, at least on Oahu, some Hawaiian Telcom customers might be able to bundle up to four services: cable TV, Internet, land-line phone and cellphone. Cellphone service is not offered by Oceanic.

Hawaiian Telcom "is very pleased to have reached this important milestone in the development of our exciting new video service and will have more details to share about our plans in the next several weeks," said spokeswoman Ann Nishida Fry.

Nishida declined to provide details about the cable service until after the company reviews the state's 69-page order. However, the department said in a news release that Hawaiian Telecom's cable service will not immediately be available to all areas on Oahu and that the company will time its cable service to network upgrades.

The state agency also said that Hawaiian Telcom's license is subject to continuing supervision and review. Stipulations in the license provide for continued funding to Olelo for public, education and government access services, and the Hawaii Public Television Foundation-PBS Hawaii, the agency said.

"By issuance of this franchise, it will provide the consumer with more choices for video services, as well as to give (Hawaiian Telcom) the opportunity to provide bundled services that fit into its overall business model," department Director Keali'i Lopez said.

Bob Barlow, Oceanic's division president, said the company has faced stiff competition in Florida, South Carolina and California from "phone guys in the cable business."

"This is not my first rodeo," Barlow said. "We've been very successful against them, and we want to stay very competitive."

While Barlow has not seen the particulars of Hawaiian Telecom's plan, he said he suspects it could be similar to AT&T's U-verse, a formidable competitor in San Diego.

That said, Oceanic is up for the coming challenge on Oahu, Barlow said.

"Competition makes us all better," he said.

Oceanic's short-term improvement plans call for increasing Internet speed and offering free video on iPads to households with cable service, Barlow said.

"I know Hawaiian Telcom will be very aggressive in this market, and we'll be very aggressive, too," he said.

However, increased competition might not lead to huge differences in cable pricing, Barlow said.

"Most of our customers don't bundle services, and more than 60 percent of our video costs come from programming," he said.

This competition, at least on Oahu, is really going to be more about customer service, Barlow said.

"It's a matter of winning customers and keeping them," he said.






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