HAENA, Kauai — Rose Vali, a computer programmer and technology consultant who lives in Wainiha, wakes up every morning uncertain whether her internet access will hold up.
She has good reason. Two of the three cables that Hawaii relies on to keep data flowing are nearing the end of their useful lives. The third is newer, but its ownership is tied up in a bankruptcy proceeding scheduled for a hearing Monday in U.S. Bankruptcy Court in Honolulu, casting uncertainty over its future operations.
That bankruptcy hearing, meanwhile, comes on the heels of a real estate fire-sale consummated on May 18 in which a company controlled by disgraced businessman Albert S.N. Hee — which owns one of the three undersea cables the entire state depends on for its data services — effectively sold parts of itself to another company controlled by the same family. The companies in question are Honolulu-based Sandwich Isles Communications and Paniolo Cable.
In the bankruptcy and a related but separate case in U.S. District Court in Honolulu, the federal government contends that the two companies are responsible for squandering more than $243 million in federal money intended to provide phone and other communications services to Native Hawaiians who reside on property owned by the Department of Hawaiian Home Lands.
In the middle of the mess is Albert Hee, the brother of former state Sen. Clayton Hee. Albert Hee was convicted on related federal tax charges in 2016 and served about two years in federal prison.
With uncertainty about the future of the cable owned by Paniolo, the two remaining cables have attracted new concern. One is owned by Hawaiian Telcom and the other by a partnership of Hawaiian Tel and CenturyLink, based in Monroe, La.
Hawaii’s data life depends on a largely antiquated system of three underwater cables. They all connect with Oahu and bounce outward to the other islands. Many businesses statewide rely on uninterrupted internet access to transmit and receive countless daily business transactions.
A Kauai network consultant likened the three cables to water mains constantly pumping data. When the cables emerge on land at what are called “landing points” on each island, the flow splits into fire hoses of data that go from the ocean to population centers.
From there, the flow gets broken up into data “garden hoses.” Rose Vali lives at the end of one of those.
With dramatic — and likely permanent — alterations in internet use brought about by COVID-19, students relying on distance learning and employees working remotely from home as Rose Vali does, are also at the end of the garden hoses. The sudden, COVID-driven shift to telehealth adds to the complexity.
Vali’s internet quits at least once a week, she said. “Two days in a row is nothing for us to be off,” she said. “We’ve had lots of nights with no internet at all.”
Sometimes Vali must do her complicated tech work using only her smartphone.
The three cables include the one owned by Paniolo, the company whose assets are in the process of being sold by a bankruptcy court in Honolulu. Paniolo’s cable is fairly new, laid in 2007.
The two others are close to 25 years old — toward the end of their service lives, though cable experts say there is no magic in that number. They were installed in the mid-1990s.
On Oct. 28, the cable between Honolulu and Kauai owned by Hawaiian Tel and Centurylink failed. Spectrum Cable, which along with Hawaiian Tel provides much of Kauai’s service, furiously searched for the problem. Spectrum only leases capacity on the undersea cables. Eventually, Hawaiian Tel concluded that the failure — whose cause has not been disclosed — would require repair by CenturyLink. Data transmission shifted to Paniolo.
It took one or two days for service to be restored, more on some parts of the island. But then, a couple days later, the system crashed again. Kauai was dark for another two days.
Spectrum said in a statement that it is “continually working” to strengthen its network and that there are “redundant connections to Kauai.”
Hawaiian Tel said in a statement that the company “continuously monitors and maintains all parts of our statewide network and infrastructure. Our interisland fiber network is strategically designed to include alternate paths so if one path goes down, traffic can be rerouted.”
Ann Nishida, a Hawaiian Tel spokesperson, said the cable that failed had been repaired, though some computer specialists are skeptical of that claim.
CenturyLink did not respond to inquiries from Civil Beat.
On Monday, the plight of Hawaii’s fiber optic cable network comes before U.S. Bankruptcy Judge Robert Faris in Honolulu. The hearing may hasten final resolution of a case whose tortuous path since 2018 could partly determine Hawaii’s broadband future.
The hearing is on a potential settlement of Paniolo’s bankruptcy, in which its assets — including real estate and the undersea cable and rights to use it — will be put up for auction. It follows closely on the May 19 sale in which Paniolo sold much of its real estate for $2 million to Blue Ivory Hawaii Corp., another one of the web of Albert Hee-owned or controlled companies.
In other words, the Hee empire sold part of itself to itself.
In a separate matter now pending in U.S. District Court, Sandwich Isles is accused of fraudulently diverting federal dollars from the Rural Utilities Service, an agency of the U.S. Department of Agriculture.
Court documents show that starting in 2002, SIC borrowed and defaulted on tens of millions of federal dollars, ostensibly to provide telephone service on land owned by the state Department of Hawaiian Home Lands. At its high water mark, however, SIC served fewer than 3,700 customers.
Through a confusing web of at least a half-dozen companies, SIC and Paniolo — an ostensibly separate entity controlled by Albert Hee’s relatives — own or control one of the three underwater fiber-optic cables that connect Oahu to the neighbor islands.
SIC’s misdeeds are so severe that in 2015, the then-chairman of the Federal Communications Commission, Ajit Pai, contended that Albert Hee “apparently used the company as his family’s personal piggy bank.” Money was squandered on massages, lavish trips, hotels, restaurant meals, extravagant homes in California and college tuition and housing expenses for Albert Hee’s three children.
Albert Hee was found guilty in 2016 on tax fraud charges and sentenced to 48 months in federal prison. He was released in 2019. In his 2015 statement, Pai concluded that “for five years, we’ve known of Hee’s penchant for self-dealing and skill at pocketing taxpayer dollars. It is time for the taxpayer-funded party to end.”
Repeated attempts to reach Albert Hee, his wife Wendy Hee and representatives of SIC and Paniolo over a two-week period were unsuccessful.
To Burt Lum and many members of the Hawaii Broadband Hui, which Lum organized in March at the start of the COVID-19 crisis, a fundamental problem in Hawaii is that the three critical submarine cables are all owned by private companies reluctant to discuss their businesses publicly. Spectrum Cable, for example, declined to say how much cable capacity it uses. A spokesman said the company sees specifics about its network as confidential business information.
Hawaiian Tel said it, too, could not describe its technical operations, cable capacity and system redundancy in any detail.
Lum, who runs the Hawaii Broadband Initiative in the state Department of Business, Economic Development and Tourism, has advocated for creation of a publicly owned interisland fiber system.
Although it likely won’t happen anytime soon, Lum said, he’s starting to search for private sector partners. He’s even identified sites on Oahu and Hawaii island that could serve as publicly owned and controlled cable landing points.
Lum said that when fiber optic cable first started to be developed around the world, systems needed way stations in the middle of the Pacific and Hawaii was a natural venue. More recently, he said, big data companies like Google and Facebook have started using more sophisticated technology and no longer need Hawaii to keep their systems running.
“The whole trans-Pacific cable business has changed because of these large players,” Lum said. “Their perspective is there is no market in Hawaii. We’re too small. Hawaii is going to be a wayside unless we figure out how to attract some of these trans-Pacific cable projects.
“Before the pandemic, I was making the argument that if Hawaii is going to be a player in the global market — e-anything, artificial intelligence or big data — we need to have a robust connection to the rest of the world.”
But within the state, he said, the neighbor islands will still be out of luck unless they have access to the most sophisticated connections, too.
“It doesn’t matter if you have it in downtown Honolulu, if you can’t get off that island, you’re pretty isolated,” he said. “Then you have the problem that may people aren’t connected at all.”
Ken Hughes, who runs an islandwide computer consulting business on Kauai, said internet speeds vary wildly all over the island, in part because of the fiber cables that bring the signal.
Hughes said he finds it hard to believe the cable failure last October was fully repaired. With Paniolo Cable’s future so uncertain, he fears that it will be difficult to maintain the redundancy necessary to keep Kauai — or any other neighbor island — running. He said a minimum requirement should be two fully working cables, a situation he’s not convinced Kauai now has.
“It’s all about speed in the future,” Hughes said. “With everyone home instead of at work, capacity has moved.”
“If you don’t have the superhighway that’s paved and not full of potholes, wherever the pothole is, you’ve got to slow down,” he said. “It all comes back to the fiber.”
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