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The Honolulu Advertiser
Posted on: Monday, October 1, 2007

Oceanic debuts turbo Road Runner in Hawaii Internet-service war

By Sean Hao
Advertiser Staff Writer

Hawaii news photo - The Honolulu Advertiser

Lionel Tetreault, communications engineer, maintains video-routing equipment at the Oceanic Time Warner Cable facility in Mililani. Today, Road Runner goes Turbo Plus.

JOAQUIN SIOPACK | The Honolulu Advertiser

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"While they're fighting it out, the real winners are the consumers who have a better choice than they had a year or two ago."

Mike Paxton | principal analyst for In-Stat

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Oceanic Time Warner Cable today is rolling out a faster version of its market-leading Road Runner Internet service.

Dubbed Road Runner Turbo Plus, the service offers a maximum download speed of 15 megabits per second, or three times faster than standard Road Runner service. That's the fastest, mainstream residential Internet service available in Hawai'i so far.

The new service represents the latest salvo in a battle for customers being waged between Hawai'i's two main Internet providers Oceanic Cable and phone company Hawaiian Telcom. Oceanic's faster Internet offering comes just one month after Hawaiian Telcom launched the state's fastest residential Internet service at the time, which featured a maximum speed of 11 megabits per second, or 11 million bits of information per second.

Oceanic's new service is a direct competitive response to Hawaiian Telcom's new high-speed services.

THE LEAPFROG GAME

"Since our competitors came with 11 (megabits) we said fine ... we're in an arms race," said Oceanic Cable President Nate Smith. "We want to remain the fastest guy on the block."

Faster Internet speeds, which come at a premium price, allow for quicker transfers of music, pictures and video. However, speeds of 11 to 15 megabits per second are, for now, expected to appeal to a relatively small segment of Internet users. For both Oceanic and Hawaiian Telcom the push to offer speedier residential broadband connections is at least partially an effort to claim bragging rights as fastest Internet service in the state.

That's a title Hawaiian Telcom isn't ready to relinquish. Although 11 megabits is its fastest "basic" residential product, Hawaiian Telcom can provide Internet service, with special equipment, at speeds in excess of 100 megabits per second, said Mike McHale, Hawaiian Telcom's senior vice president for sales and marketing.

"We have (those high-speed products) and they're available so we're hanging on to the notion that we can still deliver Hawai'i's fastest Internet," he said.

Hawai'i's residential Internet market is currently dominated by Oceanic Time Warner Cable, which has 217,000 Internet subscribers, followed by Hawaiian Telcom, with 92,000 high-speed Internet subscribers, then various resellers and wireless service providers.

For consumers, increased competition has driven up speeds, pushed down prices and resulted in new services. For example, last week Oceanic nearly doubled the maximum upload speed of standard Road Runner service from 512 kilobits per second to 1 megabit at no added charge. In addition, both Oceanic and Hawaiian Telcom have started offering free wireless Internet service to existing customers at various locations around the state.

"It's really good for consumers because in essence you have two competitive heavyweights vying for their dollar and improving their infrastructure and offering new services," said Mike Paxton, principal analyst for multimedia at industry research firm In-Stat in Scottsdale, Ariz. "While they're fighting it out the real winners are the consumers who have a better choice than they had a year or two ago."

The new services come as a result of continual technical upgrades at both companies. Hawaiian Telcom said it invested more than $100 million during the past two years into systems and network upgrades. Oceanic said it plans to invest $153 million on its systems over two years.

NEW VIDEO OPTIONS

In addition to faster Internet speeds such upgrades will pave the way for new video offerings including increasingly popular high-definition TV channels. During the last year Oceanic has roughly doubled its HD channel lineup to 21 HD channels, including pay-per-view and premium channels such as HBO HD and Showtime HD.

"You'll see more and more HD going forward," Oceanic's Smith said. "High-def really resonates with the consumer, so we're going to start very aggressively talking about an unlimited amount of high-definition channels."

For Hawaiian Telcom, network upgrades are laying the foundation for future video services, including HDTV. Hawaiian Telcom has said it plans to launch Internet technology-based television service during the first half of 2008. So far the company isn't disclosing much about its planned video offering.

"Our intention is to come to the market with a very compelling and competitive offering," said Hawaiian Telcom's McHale.

With prices and speeds converging, both companies are seeking ways to differentiate their offerings via new services and content. For Oceanic that means forays into new services such as video yellow pages and classified listings and products such as Photo Show, which allows customers to place pictures and short videos on a TV channel.

Consumers can expect to see a wider array of such such interactive services piggy-backing on ever-faster broadband networks, said In-Stat's Paxton.

"It's hard to tell what's going to be hot two or three years from now," he said. "Two or three years ago who would have thought of YouTube being such an Internet hog. But if you offer the bandwidth, the developers for these applications can say 'Hey, I can do this.' "

Reach Sean Hao at shao@honoluluadvertiser.com.

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