Hawai'i Internet service providers shifting focus
By Sean Hao
Advertiser Staff Writer
A Federal Communications Commission ruling giving big telephone companies more control over high-speed fiber-optic networks puts further pressure on Hawai'i's Internet service providers as they struggle to compete in an increasingly difficult marketplace.
Some firms say they have been forced to shift their business strategies to remain profitable amid unfavorable regulatory rulings and falling prices for Internet access.
The FCC's ruling last week, approved by a 4-1 vote, was aimed at making high-speed Internet available to more Americans. However, critics contend the action will hinder competition in broadband services and keep prices high.
"What's frustrating is that FCC prefaces these rulings as nurturing competition," said Yuka Nagashima, president for Internet and business services company LavaNet Inc. "What's sad is that it's the consumers who lose out at the end on the quality and the variety of service they could be getting if it weren't for those rulings."
The changing market landscape has forced some companies to adapt away from competing with Verizon on prices to focusing on service. For example, LavaNet has shifted its business from providing Internet access to also offering Internet-based business solutions and business services such as Web design and network consulting.
"We knew access was getting commoditized," Nagashima said. "There have been several unfavorable rulings by the FCC in the last few years."
Last week's "FCC ruling doesn't affect LavaNet's business direction, because we've already positioned ourselves to not be at the mercy of favorable FCC rulings for open access."
The FCC decided that phone companies building fiber-optic networks for residential customers do not have to make them available to rival companies within 500 feet of a residence. The new rule extends the portion of a phone company's network that doesn't have to be shared with competitors.
That decision puts the big local phone companies in a much stronger position to compete with cable companies for broadband customers. Verizon Hawai'i spokeswoman Ann Nishida said the FCC decision will encourage deployment of fiber to the home.
"This is a positive development," she said.
San Antonio-based SBC, California's dominant local phone company, said it would spend up to $6 billion to build an IP network reaching 18 million homes in 13 states over the next three years. That would shave two years off its original plans.
BellSouth Corp. said it would step up its investment 40 percent next year by putting 180,000 more homes within reach of its fiber-optic network.
Amid other decisions last week the Federal Communications Commission set standards for offering broadband service to consumers over power lines and cleared some spectrum for advanced wireless services such as video-conferencing and movies.
Power companies are expected to boost their investment in broadband as well now that the FCC has set rules on technical standards for doing so.
Only a handful of communities can receive broadband over power lines now. The service allows customers to obtain high-speed Internet service by plugging a computer cord, with an adaptor, into an electrical outlet.
Locally, Hawaiian Electric Co. has tested such technology in McCully, but has not announced plans for any further rollout. The power lines are being used to provide high-speed, two-way communications links that let HECO read meters and monitor electrical use.
The FCC also cleared certain government communications off a slice of spectrum that commercial cell-phone carriers use, giving wireless companies more bandwidth to deploy high-speed services.
Reach Sean Hao at 525-8093 or shao@honoluluadvertiser.com.
