by Andrew Walden

Is Sen. Inouye pushing for a new or continued operating subsidy for Sandwich Isles Communications (SIC)?  In the Star-Advertiser July 18 Inouye crows:

I recently had the privilege of sharing Hawaii with Federal Communications Commission Chairman Julius Genachowski. My goal was to show him the many challenges we face as an island state, as well as our exciting cutting-edge opportunities.

Without a sufficient population base, there is little commercial interest in making any significant investment. That is why government resources are critical to help buy down a part of the private risk, and to encourage sustaining partnerships. A pending application for federal stimulus dollars was jointly submitted by our three neighbor island counties. Such a broadband investment, while targeted for public safety, will also enhance distance learning, tele-health, and economic opportunities….

We journeyed to Waimea for a native roundtable on the importance of broadband deployment on tribal lands, including Hawaiian Homelands. The comments were amazingly similar, whether from Barrow, Alaska, the Apache in New Mexico, to Hawaiian homesteaders in rural Waimea.

Sandwich Isles exists to service DHHL properties and the SIC system of mostly dark cables is nearing build out.  Inouye’s Genachowski tour likely signals an effort to extend or protect an ongoing Federal operating subsidy for the secretive company—and the executive salaries—built from Al Hee’s $500M pot of taxpayer gold.

The FCC is currently embroiled in debate over reform of the USF.  Republican members of Congress are pushing to cut subsidies to companies like SIC.  Some Democrats are pushing for so-called "network neutrality"-- a censorship-oriented scheme which would place the Internet under FCC control.   Genachowski is pushing for the USF to be re-focused away from providing land-line telephone service to deployment of broadband infrastructure--a strategy which could benefit SIC.   

In 2009 the US House Energy and Commerce Committee nailed Sandwich Isles as one of the nation’s “10 worst abusers” of Universal Service Fund (USF) tax dollars—which every telephone customer pays with their monthly phone bill. 

According to the report, SIC costs the USF $13,408 per phone line in annual operating subsidies.  In 2008 SIC had 1,967 customers.  $13,408 x 1967 = $26.4M annual operating subsidy.  Rest assured that a lot of Hawaii political operators' high six-figure salaries and “consulting” contracts are included in that $26.4M per year.  See:  Congressional report nails Sandwich Isles Communications: One of worst ten abusers.

SIC’s cables run to Hawaiian Homelands properties-most of which are unoccupied and are not going to be occupied anytime soon.  The installation cost per actual user of broadband services is estimated at $278,000 per customer.  This compares unfavorably to service from HawaiianTel, Roadrunner, and satellite-based high speed internet service providers which are capable of reaching each and every one of SIC’s customers.  Here’s the story: Sandwich Isles Communications: Political Connections Pay Off.

Sandwich Isles failed in a 2009 bid to purchase Hawaiian Telecom. 

For a decade, Inouye received only a few sporadic thousands from SIC personnel.  Much more regular money went into Neil Abercrombie’s Congressional campaigns. But starting in March, 2009 SIC-related contributions have been flowing into Inouye’s war chest from SIC insiders such as Al Hee, and Broken Trust figure Gilbert Tam (see p111, 115, 259-260).  Sandwich Isles cronies now account for $9200 in Inouye contributions.  The list of donors—including KSBE “interim Trustee” Admiral Robert Kihune (Ret) (see p 254-5, 283)—is one of the best sources of information about the secretive publicly funded private corporation.

If the Akaka Tribe is created, SIC will be able to shield its operations from all State oversight and most federal oversight behind the protection of tribal law.  But they would still be able to make campaign contributions and receive State and Federal funds.

---30---     

Sandwich Isles Comm. Federal campaign contributions 2000 -2010