State acts to prevent telecom service cutoff on Hawaiian home lands
Gov. Josh Green issued an emergency proclamation Friday evening to prevent the loss of telecommunications services for about 1,500 Sandwich Isles Communications customers on Hawaiian home lands throughout the state.
The proclamation was followed hours later by a state Public Utilities Commission notice of violation to Sandwich Isles, ordering the company to drop its plan to abruptly cut service today and “to continue service to its customers without disruption or reduction in quality.”
“Sandwich Isles Communication failed to provide timely notice to the Public Utilities Commission of its intent to abandon or discontinue service, as required by commission rules and regulations. In line with the Emergency Proclamation issued by Governor Josh Green, M.D., the commission is also concerned that the company may be engaging in conduct that is detrimental to the public interest,” PUC Chair Leo Asuncion said in a statement.
Green’s proclamation directs all state agencies to assist in ensuring continuity of service and orders telecommunication providers to prevent any interruption of telecommunications and broadband services.
The state Department of Hawaiian Home Lands announced earlier Friday that up to 1,500 customers were at risk of suddenly losing phone and internet service provided by Sandwich Isles.
The financially struggling private company informed customers Thursday via email that it would cease services just two days later, leaving more than a thousand households, businesses, schools and other institutions on Hawaiian home lands without phone and/or internet services.
“We must ensure that our communities remain connected to critical services, including emergency medical, police and fire services,” Green said in a statement announcing the proclamation. “Providers carry a responsibility to maintain services for their customers.”
DHHL officials thanked the governor for the proclamation. “This action will allow DHHL and other agencies to more rapidly assist affected households and businesses on Hawaiian Home Lands.” they said in a statement. “The proclamation will allow DHHL to more swiftly procure technology, extend telecommunications infrastructure, and work with alternate service providers to reestablish phone and internet service for the customers SIC has disconnected.”
Earlier Friday they said the company’s plans to terminate service breaches its contract with DHHL, which mandates reliable services.
According to the contract, Sandwich Isles must continue to offer phone and internet services unless it notifies regulatory authorities such as the Federal Communications Commission and the Hawaii Public Utilities Commission in advance and obtains their approval to cease services.
DHHL officials said they have not received any notifications and that they have been working with the agencies to formulate a response.
In a statement early Friday, DHHL said Sandwich Isles has had numerous chances to collaborate with the agency and alternative service providers to maintain services for its customers but that the company opted to terminate service instead.
Earlier this week DHHL urged beneficiaries to “immediately switch their service (from SIC) to another provider to avoid interruption of their phone and/or internet service.”
The affected households — many of which are in remote communities — are spread throughout the state.
Jerry Painter, who lives in the remote DHHL Keokea Farm Agricultural Lots in Kula, Maui, is one of about 50 households in the remote area that has been using the company’s service for about 10 years.
“It is disappointing because now starting tomorrow, June 1, the residents in this area won’t have service,” Painter told the Honolulu Star-Advertiser. “So they have to figure out how they’re going to get their service for the internet moving forward.”
Painter received an email, in all capital letters, last week from Sandwich Isles that began, “It is with great difficulty that we must inform you that it appears your internet and voice services with Sandwich Isles will end on June 1.”
The company said in the email that Hawaiian Telcom — the winning bidder in a federal auction on SIC telecommunications assets — only bid for parts of Sandwich Isles’ network and will not continue serving its customers.
The result of the auction was accepted by the federal government and left Sandwich Isles unable to sustain its operations and cover costs, forcing it to cease service, the company said.
“It seems unfair to me because, it’s like, ‘You guys aren’t making us money, so we’re not going to worry about you guys.’ Seems selfish in a way,” Painter said.
The company email alleged that DHHL has refused to participate in finding a solution and accused the department of prioritizing nonbeneficiaries over ensuring service for current customers.
“DHHL allows Hawaiian Telcom to use (Hawaiian home lands) without a commitment to serve you or compensation to SIC,” the company’s email said.
In a May 17 letter to Sandwich Isles’ customers, DHHL broadband coordinator Jaren Tengan said that “SIC is a private company with a troubled history.”
That “troubled history” includes company founder Albert Hee being sentenced to 46 months in federal prison for tax fraud in 2016 after being convicted of booking nearly $3 million in personal spending as corporate expenses.
His companies also faced financial problems: The U.S. Department of Justice in 2018 took legal action to recoup $130 million that Sandwich Isles reportedly owed the federal government because it failed to repay loans from the U.S. Department of Agriculture. The same year, Paniolo Cable Co. — a Sandwich Isles affiliate — was forced into bankruptcy by private lenders who said they were owed $257 million for financing Paniolo’s interisland network of telecom cables leased to SIC.
And in 2020 the FCC levied a $49.6 million fine against Sandwich Isles, parent company Waimana Enterprises and Hee. The penalty was imposed for what the agency said were $27 million in improper payments received from the federal Universal Service Fund.
In his letter, Tengan alleged that Sandwich Isles stopped providing services to some beneficiaries even though a contract with DHHL requires the company to provide reliable service, and that company officials falsely told other beneficiaries that Sandwich Isles is not responsible for continuing to provide service.
He said Sandwich Isles’ threats to stop providing service is a result of the company being fined $50 million by the FCC.
“In a separate case, a jury ruled that an SIC executive used company money for massages, vacations and personal luxuries,” Tengan wrote. “Now SIC says they don’t have enough money to provide service to you.”
In response to Tengan’s letter, Sandwich Isles sent an email May 24 telling customers, “SIC has never lied to you. DHHL cannot say the same. Please excuse Mr. Tengan since he was not yet in high school when this began.”
Sandwich Isles executives said in the email that they cannot continue service because “changes in the Federal programs that SIC used required a restructuring of their loan, which although initially approved, was never finalized. SIC has actually been continuing to provide service to homesteaders for the last five years even though it has been losing money.”
Company officials could not be reached Friday for additional comment.
PUC officials said they scheduled a hearing for June 17, requiring Sandwich Isles “to explain why it should not be held in violation for failing to comply with rules relating to its provision of regulated service.”
