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Sandwich Isles Communications Inc. won a partial victory from the Federal Communications Commission in its effort to have consumers help pay for an undersea fiber-optic cable connecting Oahu to the Neighbor Islands.
The Honolulu-based telecommunications company appealed to the FCC after another federal agency rejected Sandwich Isle’s request to draw $15 million a year from a special fund to pay for the lease on the 358-mile cable network.
The National Exchange Carrier Association, which administers the fund paid for by consumers around the country, rejected Sandwich Isle’s initial request, saying the lease payments made to Paniolo Cable Co. did not meet NECA’s standard as a "used and useful" cost.
In a ruling last week the FCC said Sandwich Isles was entitled to tap the fund to pay for half of the lease cost. The FCC staff said that although using the fund to pay the entire cost of the lease was not appropriate, it disagreed with NECA’s decision to block Sandwich Isles from using the fund at all.
"In determining what percentage of the lease expenses should be included in the NECA pool, we note that the commission has flexibility itself to consider a variety of equitable factors beyond current actual usage in evaluating the costs that are ‘used and useful’ and appropriate for inclusion in the revenue requirement," according to the ruling.
"Based on that analysis and relevant Commission precedent as applied to the unusual facts here, we find that 50 percent of Sandwich Isles’ lease expenses subject to dispute should be included in the revenue requirement for recovery in the NECA pool."
The ruling was welcomed by Sandwich Isles, which provides heavily subsidized phone lines to about 2,000 Native Hawaiian homesteaders.
"We appreciate the FCC’s efforts on this matter. Sandwich Isles Communications is committed to moving forward on our mission to ensure that all native Hawaiians have access to the economic, educational, and social benefits that stem from access to state-of-the-art broadband technology," said Bob Kihune, the company’s chief executive officer.
Both Sandwich Isles and Paniolo Cable have had financial difficulties. Moody’s Investor Service downgraded Paniolo’s debt ratings after NECA initially rejected Sandwich Isle’s request for cost recovery.
