HI. TECH
Phone service competition offers hope for greater economic diversity

By John Duchemin
Advertiser Staff Writer

It could be a shot heard across Hawai'i, or it could be a shot in the dark. It's too early to know whether Hawaii Direct Telephone's bid to compete head-to-head against Verizon for residential phone customers will be a mighty success or a mighty nice try.

Hawaii Direct Telephone is the local arm of a nationwide company that is pursuing an audacious strategy: Infiltrate local phone company monopolies by leasing the monopolies' own network equipment, then offer similar services. Hawaii Direct started last year and is now making its first big advertising push.

Verizon would have you believe that Hawaii Direct is a fly-by-night operation that offers nothing more than a cheaper way to do what it already does. Customers will choose their old stand-by, Verizon, because it offers "the best value for services," a spokeswoman said.

But the truth is, competition for phone service can lead to nothing but good things for Hawai'i. On an obvious level, competition means lower rates. On a more indirect but possibly more important level, phone competition can help diversify the economy and boost the high-tech sector.

It would be hype to say Hawaii Direct will have a big impact. This is not a huge company — it outsources most of its work — nor is it providing or creating innovative new technology. Hawaii Direct's business plan merely manipulates the money-making opportunity provided by the federal government when local phone networks were opened for competition in the 1990s.

But the presence of competing telephone companies means greater demand for skilled high-tech personnel, plus more high-tech equipment if the competitors decide to bring in some hardware, instead of leasing every last bit from Verizon.

All that means more bright, well-paid people doing jobs that have nothing to do with tourists, and that means greater economic diversity.

The presence of competing phone providers should therefore be welcomed by technology advocates who have struggled for years to create a "critical mass" of workers, the idea being that if enough high-tech-trained people accumulate in Hawai'i, an industry will spontaneously generate.

High-tech Hawai'i has had trouble generating momentum in its core industries, such as biotechnology, software development and telecom R&D. It has had better luck pursuing non-core industries, which offer peripheral help to the high-tech cause. It was for this reason that high-tech advocates in the late 1990s began pursuing call centers, trying to make the state a hub for customer service.

While call centers are hardly high-tech engines, they do give people jobs, and in doing so train them for a different set of skills than those used by hotel workers and retail employees.

The call-center push was a qualified hit, with a handful of highly successful centers being mitigated by a few failures. But each of the successes represents a net gain for the state's technology brain trust.

Could Hawaii Direct do the same thing? Its business model is unproven in Hawai'i, and similar operations have had mixed success on the Mainland. But if the company sticks around, Hawai'i tech advocates should be glad — the smallest push toward a high-tech future is better than none at all.

Reach John Duchemin at jduchemin@honoluluadvertiser.com or at 525-8062.