Sunday, January 21, 2001
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Posted on: Sunday, January 21, 2001

Isles not quite a high-tech magnet

By John Duchemin
Advertiser Staff Writer

A meal in his stomach and a deal in his pocket, Barry Pasternak went to Maui pleased with Hawaii - and with the business he’d just done on Oahu.

"Happy? Sure. I got a land lease out of this," said Pasternak, a telecommunications executive from Florida, as he leaned against a bus window en route to Honolulu International Airport.

In one afternoon, Pasternak had figured out how his Florida company, SunGlobe Fiber Systems, would be able to use Hawaii as a key connecting point for a transPacific communications link between Latin America and Asia.

Venture capitalist Robert Harbison left Oahu less elated. While he liked what he saw in Hawaii and enjoyed a tour of some of the island’s top technology developments, Harbison, of VentureView Associates in Sausalito, Calif., hadn’t come away with a firm business proposition despite his desire to start a software company in the state.

"I’ve just been in three days of intense negotiations with government officials, and when you try to get them to commit, it’s like you zapped them with an electric cattle prod," Harbison told a group of fellow executives over lunch.

Pasternak and Harbison’s views illustrate the challenges Hawaii faces as it works to develop and polish its image as a technology center for the Pacific. State government and business leaders have taken significant steps - including a package of tax incentives and several high-tech job fairs - to drum up support for the fledgling local industry. And there has been some success.

But leaders acknowledge that Hawaii’s technology industry is still very much a work in progress - as revealed by the views of a group of Mainland executives, including Harbison and Pasternak, that last week took a technology tour of companies, enterprise zones and facilities on Oahu.

The tour, designed to give attendees of the annual conference of the Pacific Telecommunications Council a glimpse of the local technology industry, included stops at growing high-tech firms such as Adtech, WorldPoint, Summit Communications and NetEnterprise, as well as the Kapolei business park.

By and large the scene stood up to executives’ scrutiny. Some came away with new contacts and potential business leads. Others didn’t. Some had critical comments. But each said he was impressed with the state’s potential as a place for business.

"What you’ve got here is the real thing - you’ve got it all here," Pasternak said. "It’s just a matter of getting people to realize it."

Refining sales pitch

While Hawaii clearly has a lot going for it, several executives said local high-tech advocates must be clearer, more specific, up-front, focused and aggressive in trying to attract technology companies.

Hawaii appears to be marketing itself from a government mindset, said Scott Chase, president of The Strategis Group, a 90-employee telecommunications consulting firm in Washington, D.C.

"I don’t need to meet the government bigwigs. I don’t need to meet all the CEOs," Chase said. "Instead I should be learning what are the capabilities of this place, who are the go-to people, and what do I need to do to be successful here."

Harbison, who travels frequently between California and a house in Kona, called the approach of some local community and government leaders too "parochial" for technology companies, which are often involved in complex, delicate deals that need support, speed and flexibility.

Harbison also noted that some companies appeared to take a cavalier attitude toward ensuring the safety of their hardware and software. Harbison said he would have preferred to see perimeter fencing and security beefed up around several key communications centers.

Hawaii may be far from violence, but local businesses shouldn’t feel too secure, others said.

"If a big company says they want cages to protect their computer equipment in your data center, then you give them cages. You don’t just say, This is Hawaii,’ " Pasternak said. "You’ve got to be able to show me you can stop anyone from walking in off the street and sticking a disk in your computers."

Hayden Moore, a consultant with San Diego-based Wessex International, was surveying the Pacific Rim last week for likely manufacturing sites. "Material costs and wages are too high here," Moore said. "There’s no way Hawaii would be able to compete with somewhere like Hong Kong."

Likewise, low-value-added technology - such as large-scale writing of basic computer code - has no place in Honolulu, Moore said, because those procedures could be done by lower-wage workers in Singapore, Hong Kong or India.

On the other hand, Hawaii is perfect for developing companies based on ingenuity and creativity, Moore said. "This environment is ideal for software development because it stimulates the brain," he said.

Meanwhile, fiber cable’s trans-Pacific expansion has the potential to be a windfall for Hawaii. Three major undersea fiber-optic cable lines have "landed," or are planned to land, in Hawaii, and more will come, Pasternak said.

The cables, which can carry huge quantities of high-speed Internet traffic around the globe, are so long that the signals being transmitted on them start to decay; Hawaii is the ideal, and possibly only, spot to lift the cables out of the water, "regenerate" a signal at a transmission site, and send it on its way.

Pasternak’s SunGlobe is interested in buying capacity on a transpacific fiber cable through Hawaii. Oahu would thus become an operational hub for the company. "The cables have to come here, they have no choice - there’s nowhere else for them to go," Pasternak said. "It’s also the only place you can cross-connect with other cables.

"So Hawaii has to realize this is a huge opportunity for itself. That’s the type of infrastructure companies will look for here. It hasn’t been offered yet, but when it is, that’s what will bring jobs, and kids will come back here to work."

Fiber cables not only bring infrastructure - huge amounts of Internet bandwidth and extremely high-speed connections - but the chance to attract a variety of technology companies, from small software firms to massive data centers that act as storage and exchange sites, said William J. Barattino, chief executive officer of Global Broadband Solutions LLC, a consulting firm in Leesburg, Va.

"There’s no reason why Hawaii can’t develop a technology scene," he said, "once you get the infrastructure here."

And the state should move quickly to capitalize on fiber’s expansion, Barattino said.

In five or 10 years, fiber cable companies will probably fix the signal "decay" problem — meaning Hawaii will no longer be an essential stop for a trans-Pacific cable.

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