Union decries PUC decision

By Sean Hao
Advertiser Staff Writer

The Hawai'i State AFL-CIO requested a hearing on behalf of Local 1357 of the International Brotherhood of Electrical Workers, which represents most Verizon Hawaii employees. Last week, the PUC denied the request opting instead to allow the public to submit comments and concerns in writing through Sept. 30.

The Carlyle Group Inc., a Washington, D.C.-based investment firm, has agreed to buy most of Verizon Hawaii's operations pending state and federal regulatory approval. The union's chief concerns center on maintaining employee benefits, job security and customer service, said Scot Long, business manager for Local 1357. Given Verizon Hawaii's critical role as the state's primary telecommunications company, the public should have an opportunity to directly address the commission, he said.

In denying the request, the PUC stated that a public hearing is not required by law. Kris Nakagawa, chief legal counsel for the commission, said a hearing is required only for general rate increases and when new locations for high-voltage electricity transmission lines are under consideration.

Nakagawa also noted that when Bell Atlantic Corp. bought GTE Corp. to form Verizon Communications in 2000, there was no public hearing in Hawai'i.

Before that, the local phone company changed hands in 1967 when GTE bought Hawaiian Telephone Co. The PUC could not immediately say whether public hearings were held at that time.

The proposed transaction between Verizon Communications and Carlyle includes Verizon Hawaii's local telephone operations and print directory, long-distance and Internet service provider businesses, but excludes Verizon Wireless. Carlyle hopes to close the deal early next year.

Other concerns raised about the Carlyle deal include Carlyle's lack of experience operating a major U.S. telephone company. Carlyle mainly specializes in leveraged buyouts, equity investments and equity private placements using money raised from institutions, wealthy families and individuals, and other investors.

However, Carlyle does have executives with substantial experience in the telecommunications industry, including James Attwood Jr., a former executive vice president of Verizon and GTE, and William Kennard, a former chairman of the Federal Communications Commission.

Carlyle also has extensive political ties, with a list of former and present employees including Presidents George W. Bush and George H.W. Bush; former British Prime Minister John Major; and former Secretary of State James Baker III. The company also has sought out leaders with local experience and influence such as Walter Dods, chairman of First Hawaiian Bank, who will head a group of local investors that will join Carlyle in the purchase.

Union officials hope such ties won't influence the PUC's deliberations on whether to approve the deal. Long said, "I would hope that (the PUC) would recognize that the concerns we've raised were valid and that they would be addressed."

Nakagawa said the commission's decision will be based solely on the information provided by Verizon, Carlyle and others involved in the process.

"It's a quasi-judicial agency which has to render its decision based on the record submitted by the parties," he said.

Reach Sean Hao at 525-8093 or shao@honoluluadvertiser.com.