Aloha.  A few weeks ago, I was lucky enough to spend some time on the beautiful Hawaiian island of Maui.  One sunny day forsaking a typical day at the beach, I decided to spend a few hours driving around the top of the island.  The trip provides beautiful views but is not for the faint-of-heart!  The road weaves a narrow path between the West Maui Mountains and the Pacific Ocean.  There are numerous switchbacks in which it is impossible to see oncoming traffic. 

After a few miles the road becomes so narrow that leaves brush your car on both sides.  When someone comes around this bend in the road, one car has to back up just feet from the cliffside.  It is extremely scary.  Thankfully, that happened only a couple of times.

Just when you think that no one could possibly live in such an isolated area, you suddenly enter a picturesque valley, with several houses.  You have entered the small community of Kahakuloa, an old Hawaiian town of about 100 people. 

Remarkably, even in such an isolated area as this, there are several businesses, an artist enclave and wireline telephone service!  While others in my group sought out the delicious banana bread sold there, being a telecom geek, my thoughts immediately turned toward the unique difficulties and costs of providing telephone service to such an isolated area and the Hawaiian Islands in general. 

There are many isolated areas on Maui (such as the well-known beautiful community of Hana in East Maui), and on the other Hawaiian Islands and yet, they all have voice, and some have broadband service.  In fact, nearly every Department of Education school on the islands now has fiber-based broadband service.

I knew that these isolated communities and the entire state is served by Hawaiian Telcom, and I was curious to see just how they were able to provide service to these folks and what were some of the unique difficulties they faced in serving a population living on six islands located thousands of miles from the U.S. mainland.  Moreover, I wanted to find out if the Connect America Fund (CAF) was working for them, in such a clear high-cost difficult to serve area. 

Hawaiian Telcom employees Jason Thune, Director of Network Development and Ann Nishida, Senior Manager of Corporate Communications were kind enough to discuss these issues with me.  But first some background on Hawaiian Telcom. 

Hawaiian Telcom is the incumbent local exchange carrier (ILEC) for the entire state.  That means that although they face competition, they are the carrier of last resort for residents.   According to its 2016 Annual Report, the company's Telecommunications sector provides local telephone service including voice and data transport, along with high speed Internet, long distance services, next generation television service, next generation Internet protocol (IP) based network services, customer premises equipment, data solutions, managed services, billing and collection, and wireless services.

Like many ILECs, Hawaiian Telcom continues to build out its broadband network.  It recently completed a Multiprotocol Label Switching (MPLS) core network statewide and deploys both fiber-to-the-node (FTTN) and fiber-to-the-premise (FTTP) access technologies.

The company has invested more than half a billion dollars in expanding its next-generation terrestrial fiber network and systems statewide.  In addition, Hawaiian Telcom invested $25 million as a part-owner and operator of the Southeast Asia – United States (SEA-US) trans-Pacific submarine fiber cable that ensures tha bandwidth needs of Hawaii's residents and businesses are met for many years to come.  SEA-US provides the fastest direct route between the U.S., Philippines and Indonesia, extending 9,000 miles on a route that bypasses congested earthquake-prone regions and strengthens Hawaii's position as a key strategic hub. 

To help extend broadband to more rural areas in Hawaii, Hawaiian Telcom is currently receiving annual CAF Phase II support of approximately $4.4 million through 2020.  In return, the company must provide broadband services at 10 Mbps downstream and 1 Mbps upstream or better to approximately 11,000 eligible locations in high-cost areas in the state.

The support dollars Hawaiian Telcom and other price cap ILECs are eligible to receive is calculated through an ultra-complex computer model that was adopted by the FCC in 2015.  The model estimates the forward-looking cost of providing telephone service for non-rural companies.  It targets support to census blocks lacking unsubsidized competitors offering service at speeds of less than 4 Mbps downstream/1 Mbps upstream, where the cost of providing service exceeds $52.50 but less than $198.60 per line.

As complex as the cost model is, Jason and Ann believe it fails to account for some of the issues serving a (primarily) 6-island state.  For example, the model does not take into account the logistics and costs of transferring heavy equipment between islands using private company barges.  Making the situation even more difficult is the fact that for the smaller islands, those barges may make only one or two stops per week.

Transportation between islands is also a cost issue for employees.  Although Hawaiian Telcom has permanent personnel on the four major islands, the only practical way to move employees between is by flying them back and forth.  Those costs add up over a year.

A significant deficiency with the model is that it does not account for the fact that the unemployment rate for Hawaii is only 2.2 percent.  That means that many skilled workers must be identified and brought to Hawaii from the mainland.  Relocation costs to move a new employee are huge compared to mainland to mainland moves.

With transportation issues such a factor, the cost model cannot even guess at the planning that must done months or even years in advance to bring in new technologies and keep them functioning.

In recognition of its unique circumstances, Hawaiian Telcom sought a waiver of the rules, to adjust the model to better represent Hawaii's island geography and receive additional support.  The request was denied by the FCC.  The Commission ought to recognize the unique costs of serving island areas such as Puerto Rico, Guam and Hawaii in its next cost model revision. 

Nevertheless, Hawaiian Telcom continues to meet its annual broadband deployment obligations with the remarkable result that when one is visiting the islands, there is no obvious difference in fixed or mobile broadband capability between most of Maui and New York City!  And for a telecom geek like me, I can only say Mahalo!