Posted on: Friday, January 7, 2005
EDITORIAL
$20 credit shouldn't ensure Verizon deal
We suppose Hawai'i consumers should be grateful to John Cole, the state consumer advocate, for setting 10 conditions that must be met by the Carlyle Group before he will give his blessing to its acquisition of our telephone company, Verizon Hawaii.
The one condition sure to catch the eye of consumers is a "customer appreciation credit," which would be available to each customer in the amount of $20.70 five months after the purchase by Carlyle.
The other conditions address more technical aspects of the deal.
No one's sneezing at a one-time $20.70 phone bill credit, but this credit in the aggregate is worth $12 million, which might benefit all of us more in the long run if it were applied to updating the company's aging infrastructure and in turn improving our service.
We had hoped the consumer advocate would delve into the daunting technical and organizational complexities that surround today's telecommunications industry in general, and this acquisition in particular.
We had hoped he would address questions posed last fall by the CEO of Verizon's only competitor in Hawai'i, Pacific LightNet Communications:
Carlyle expects to pay $1.65 billion for Verizon's land lines and other infrastructure in Hawai'i. Big as that deal sounds, it's peanuts compared to an attempt by a consortium reportedly led by Carlyle to acquire the debts owed to Kuwait by Iraq: $30 billion in sovereign debt and $27 billion in war reparations.
President Bush is campaigning to have Iraq's debts forgiven so its economy can recover. He has appointed former Secretary of State James Baker as his special envoy to promote that idea, including in Kuwait.
In what seems a classic conflict of interest, Baker is also a Carlyle Group partner, which appears to be suggesting to Kuwait that it should let Carlyle acquire those debts before they become worthless.
With respect to Hawai'i, it remains unclear whether Carlyle's intention is to settle in for the long run in our rather prosaic and not particularly profitable telephone business or simply to dress the company up for a quick and profitable resale.
The latter possibility may not be in the best interest of the state's telephone customers. It's up to the Public Utilities Commission, which still must approve the acquisition, to look out for our best interests.
