Hawaii Direct to stop part of phone service

By Sean Hao
Advertiser Staff Writer

Hawaii Direct Telephone said it is closing the portion of its business that competed head to head with Verizon for residential customers.

The company, which entered the Hawai'i market in 2002, said it will continue offering services such as telephone and in some cases Internet connections to 13 buildings, including the Manoa Innovation Center and its headquarters at 1132 Bishop St. It also provides call-center services for the Hawaii Visitors and Convention Bureau.

However, on June 1, Hawaii Direct will suspend local phone services offered to other customers, said company Vice President Jared Grugett. The change won't affect Hawaii Direct's employment, Grugett said. The company employs 20 people.

That business was built on laws created in the mid-1990s requiring large incumbent phone companies to lease their telephone lines to competitors at reduced rates.

As a reseller, Hawaii Direct relied on Verizon to establish connections and service Hawaii Direct customers. However, Grugett said Verizon's high prices and service delays made it hard for Hawaii Direct to satisfy customers.

"It's become entirely too difficult, and our customers have become unhappy," he said.

Verizon spokeswoman Ann Nishida said the wholesale rates charged to competitors are comparable with other regions and haven't changed since Hawaii Direct entered the market.

Nishida added that Hawaii Direct received the same level of service as Verizon's own customers and that Hawaii Direct did not take advantage of a process created to handle such disputes.

Hawaii Direct, which made a big advertising push last year, said it had reached a peak of about 1,000 customers. Grugett said customers won't be automatically cut off, but they are being encouraged to find another service.

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