Oceanic takes on Verizon

By Sean Hao
Advertiser Staff Writer

Starting in November, Oceanic, Hawai'i's largest cable company and high-speed Internet service provider, will begin a phased rollout of a flat-rate local and long-distance phone service to be delivered over standard telephones.

Although the price in Hawai'i has not been set, Oceanic's Digital Phone service is sold in other markets to cable TV customers for $39.95 a month ($10 more for non-cable customers). That price buys unlimited long-distance and local calls.

"It's exciting," said Norman Santos, Oceanic's vice president for operations. "We're going to be taking on a very established competitor."

Cable companies long have wanted to use their cable lines to offer a so-called triple play of services that includes television, telephone and Internet. However, the foray into the telephone business was delayed by high costs and technical challenges.

Now, as a result of network upgrades needed to provide digital cable service, Oceanic said it will soon take on Verizon Hawaii's telephone business, before the telephone company can respond by offering TV service.

Verizon was first to move into Oceanic's territory when Verizon launched its high-speed digital subscriber line, or DSL, Internet service several years ago. That service competes directly with Oceanic's RoadRunner internet service.

"Recently they've been coming hard with their own (high-speed Internet) product, which competes with (RoadRunner)," Santos said. "This is sort of a competitive answer."

Ann Nishida, spokeswoman for Verizon Hawaii, said in an e-mail, "No (Internet-based) system today matches the reliability of Verizon's wireline telephone service, and it's important that customers understand the differences."

Verizon Hawaii recently announced its own flat-rate phone service that, like Oceanic's, uses a technology that routes phone calls as data over the Internet. Both services allow customers to continue to use their current telephones, which are connected to the Internet via an adapter and modem.

Verizon's offering, VoiceWing, is a voice-over-Internet service costing $34.95 for digital subscriber line customers and $39.95 a month for non-DSL subscribers. Verizon DSL subscribers ordering the service by Oct. 31 get the VoiceWing service for $29.95 a month for six months.

In addition, Verizon VoiceWing users who connect to the Internet via Verizon DSL lines will need to maintain their Verizon Hawaii local telephone service, which costs an additional $35 to $40 a month.

Apart from those two local companies, others also offering flat-rate long-distance calling in Hawai'i include Boston-based Vonage Holdings Corp., whose service starts at $29.99, excluding the cost of high-speed Internet service. Like Vonage, Verizon's service is available nationally, but customers must choose a phone number with a Mainland area code. That means callers from Hawai'i to those numbers pay a long-distance fee.

Oceanic said its customers will have phone numbers with 808 area codes, which eliminates that problem. Verizon Hawaii customers making the switch to Oceanic's service will be able to keep their current phone numbers, Santos said.

In addition, 911 calls placed by Oceanic customers will provide emergency responders with the location of callers. Location-based 911 service isn't currently available to Vonage phone users.

Santos said it will take about a year to roll-out the new Oceanic phone service statewide.

Companies offering Internet calling also offer a variety of features which range from call forwarding and voicemail to caller ID and call waiting. However, the main factor behind an increase in the popularity of Internet calling is the potential to cut costs, said Daryl Schoolar, a senior analyst with high-tech research firm In-Stat/MDR.

On the price issue, cable companies could have the advantage because their customers don't necessarily need to pay for a separate telephone line into their homes, he said. In addition, cable companies will be able to package more services on one bill.

"It certainly gives an advantage to the cable company because they have the whole triple play rolled out now," Schoolar said. "But I think it's hard to say who is going to be the winner."

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