Earlier today, Hawaii’s biggest and oldest ILEC, Hawaiian Telcom, filed for Chapter 11 bankruptcy in Federal court. The move was widely expected after HawTel and its owner, the Carlyle Group, ran into trouble paying its creditors and bondholders. Carlyle owes over US$1 billion in debt that financed their 2005 acquisition of HawTel.
The company’s half-a-million local subscribers won’t see any immediate changes in their service. In the long term, HawTel may need to restructure its union contracts, and shed or reconfigure its business units. The state Public Utility Commission has to approve these changes before they can take effect, so this bankruptcy may last longer than the largest previous bankruptcy in the state, which was done by Hawaiian Airlines in 2003.
IPTV to the rescue?
The company’s struggling IPTV business unit is one area of concern. HawTel needs a competitive television service to lock in its current residential landline customers. However, the company has delayed its plans for IPTV deployment over the last 3 years. This has given Time Warner an unprecedented opportunity to “skim the cream” and take HawTel’s best customers by offering VoIP, television and broadband Internet service packages. Once these customers leave Hawaiian Telcom, they’re unlikely to return.
Watch my YouTube video or see the same clip on Vimeo for more of my comments, and see the Honolulu Advertiser’s article, HawTel files bankruptcy, and the Star-Bulletin’s Monday update titled HawTel files for bankruptcy protection for more information.
Updated 2 December 2008: Here’s some good articles about the filing from other blogs and news sources:
- Honolulu Advertiser: HawTel’s efforts to compete hindered by rising debt load
- Honolulu Star-Bulletin: HawTel seeks bankruptcy protection
- bytemarks.org: Hawaiian Telcom files chapter 11
Related articles and pages on billso.com
- Hawaiian Telcom
- 25 July 2008: Fixing the DNS security hole with OpenDNS
- 22 February 2008: Customer lock-in
- 5 February 2008: HawTel replaces CEO with turnaround specialist
- 18 August 2007: HawTel to offer naked DSL and faster downloads
- 11 June 2007: HECO tests smart electric meters
- 7 June 2007: PC Magazine: HawTel, Time Warner Oceanic provide slow Internet connections
- 27 April 2007: IT services are ripe for acquisition
- 21 March 2007: About e-commerce 3: The broadband connection
- 16 November 2006: HawTel claims that system problems are consultants’ fault
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