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The Honolulu Advertiser
Posted on: Sunday, February 21, 2010

Revamped Hawaiian Tel betting on BAIO to survive


By Jay Fidell

If you've had anything to do with the new cell phones, you know about their extraordinary functionality. No area of electronics is moving faster, and many people are using cell phones as their only phones.

Voice over IP (VOIP) on landlines has also gone on steroids. Consumers have marvelous choices, and the market is flooded with VOIP products, some better than others. Analog landlines will soon be obsolete.

Where is our local telephone company, Hawaiian Telcom, in all this? It lost customers to the point of filing Chapter 11 in 2008, and seeking special help from the Legislature in 2009. But is it keeping up with the technology?

NEW PLAN

Carlyle's equity and $500 million in bonds will be wiped out in the bankruptcy; creditors will be paid off in fractions; and secured creditors will be the new owners. This restructuring is traumatic. Telcom can't afford to fail again.

Telcom submitted a plan of reorganization to the Bankruptcy Court last fall, and in December the court confirmed the plan subject to approval by the PUC and the FCC.

On Jan. 4, 2010, Telcom asked the PUC to approve the plan, and on Jan. 22, 2010, it asked the FCC to approve the plan. These regulatory approvals may take a while.

Since the court has already vetted the plan, CEO Eric Yeaman has told Telcom employees that they should start acting as if Telcom had already emerged from bankruptcy.

'BUSINESS ALL IN ONE'

In an effort to enter the VOIP market, Telcom has added software to a "soft switch" it had acquired earlier, and it is now rolling out a new product called Business All in One.

BAIO's base component is high speed Internet access for voice and data. This is nothing new, but Telcom says its integrated control over the network allows it to provide guaranteed priority for voice and the result is better voice quality.

BAIO provides a variety of advanced functions too numerous to mention here. A key function is "single number service" when someone calls that number the call rings anywhere you like.

Customers can change these functions through Telcom's Web portal. Although competing VOIP providers already have these portals and many of these same functions, Telcom maintains that its product makes things easier for business.

PRICE AND SERVICE

The price is a flat $60-$80 per month per phone. This includes a router, an Ethernet switch, the IP phone instrument itself and unlimited domestic calls. For voice and data, these prices are competitive with other local providers.

Telcom offers up to 11 megabits per second for business VOIP. It hopes to take VOIP to the residential market, but its aged network is fraught with last-mile challenges, and that aspect of the network will ultimately have to be upgraded.

Telcom has had problems with service over the years, but now promises to install BAIO within 15 days. It also promises service 24/7, and guarantees response in four hours and resolution within eight hours.

Jennifer Dotson at MADD is happy using BAIO. She pays $70 per phone, half of what she paid before. She likes the voice clarity, the free long distance, the voicemail to e-mail, the level monthly payments and the local service hotline.

ADAPTING TO SURVIVE

BAIO can't be the end of it. Telcom will have to keep moving, and show its users it has embraced high tech and is ready to meet the competition. That includes giving great service and better back office, as well as providing a continuing stream of innovative products.

"We're like every other business trying to survive in a changing world," said Telcom's Jeff Coomans. "We've got to adapt to new markets and embrace the future. No one in this industry can afford to stand still."

A strong and healthy telephone company is important to the future of the state. We should wish Telcom well in its efforts to emerge, and survive.

Jay Fidell is a business lawyer practicing in Honolulu. He has followed tech and tech policy closely and is a founder of ThinkTech Hawaii. Check out his blog at www.HonoluluAdvertiser.com/Blogs