Friday, April 24, 2009


Legislature to pass bill deregulating your phone bill, a gift to Carlyle Group

by Larry Geller

The legislature is about to deregulate your phone bill. Yes. SB603 just cleared its conference committee and judging by its history, will sail through to the governor’s desk.

This bill doesn’t demand better service from Carlyle’s Hawaiian Telecom in exchange for the windfall of deregulation. In fact, like the bank bailout, this bill richly rewards a company that has demonstrated poor service and has been losing customers.

From the bill:

The purpose of this Act is to require the public utilities commission to:

   (1)  Classify the State's local exchange intrastate services as fully competitive with respect to certain classifications of services; and

   (2)  Require telecommunications carriers to file their rates, fares, charges, and bundled service offerings for information purposes only.

Nothing in the bill substantiates the claim that Hawaiian Telecom should be classified suddenly as “fully competitive.” The Public Utilities Commission has declined to make that determination based on the evidence, so this bill makes an unwarranted end-run around the regulatory process.

Consumers are the losers when this kind of arbitrary decision is made just because a company lobbies for it.

From the Public Utility Commissions’ testimony to Bob Herkes’ Corporate Protection Committee:

…Again, this proposed amendment to chapter 269, HRS, is fraught with unintended consequences that could dampen competition in the industry and increase rates for ratepayers.

Pacific Business News appears to be the only paper to catch on to the danger. In an article today, reporter Nanea Kalani wrote: 

While Hawaiian Telecom and state lawmakers say Senate Bill 603 is intended to level the regulatory playing field, similar deregulation in other states, most notably California, resulted in big rate hikes for customers. Phone companies also have been raising prices for popular services such as caller ID and call forwarding.

Hawaiian Telecom's local competitors say the phone company still dominates the marketplace and without regulation could temporarily cut prices to put them out of business. [Pacific Business News, Hawaiian Telcom seeks end to PUC oversight, 4/24/2009]

The article states clearly that if this bill becomes law, your phone bill would change at the whim of Hawaiian Telecom:

“Once you determine the market is fully competitive, rate regulation is stopped,” Caliboso said. “We wouldn’t oversee how much they’re charging people.”

It also addresses the legislature’s arbitrary and unfounded declaration that Hawaiian Telecom is suddenly competitive:

“Under our rules, to determine if a provided service is competitive or not, there’s a lot to consider,” [PUC Chairman Carlito] Caliboso said. “The Legislature is making a finding that telecom service is fully competitive without any data.

What this bill takes from Hawaii’s consumers it gifts to the Carlyle Group. Should they move to sell this toxic asset, its bad smell will be dispelled quite a bit if it is deregulated. So SB603 will translate into potential profits for Carlyle as they look for a buyer.

Carlyle's purchase of Verizon Hawaii was quite controversial with the public and competitive local exchange carriers, Time Warner Telecom and Pacific LightNet, who had doubts about the Carlyle's lack of experience operating telecommunication businesses, and their intentions as to raising rates, upgrading the network with optical fiber as former-parent Verizon was doing on the mainland, and possible resale of the business in just a few years, all seen as being detrimental to the public interest.

Since breaking off from Verizon in April 2005, the company has been overcoming difficulties transitioning to its own systems. Issues ranged from extremely long hold times to speak to representatives, to duplicate and delayed bills. [Wikipedia]

n_Gen Image-50 Can this bill be stopped? It would be difficult at this point. But why not give it a try. You’ll need to email all legislators because it’s headed for a floor vote next. To do that, send emails to and to  You can write letters to the newspapers too: and

No? Well, if you are still a Hawaiian Telecom customer and this bill passes, you could be paying more in the future for your phone service So please write (and don’t forget, the legislature is deregulating your cable bill too!).


Just wanted to be sure you caught that Dr. Kanaaneh will be at Revolution Books on SUNDAY at 3 p.m. (Thursday is only at Harris UMC). 'disappeared news' is a great service, Larry! BG Ripple

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