Hawaii utility regulators have agreed to force a telecommunications firm to answer questions about its ability to continue providing service to thousands of Native Hawaiian customers living on Hawaiian homelands.

A lawyer for Sandwich Isles Communications has called the quest for information a “witch hunt.”

But the Hawaii Public Utilities Commission has given SIC until Aug. 22 to turn over information to the Consumer Advocate’s office.

With a certificate of authority to operate issued by the Hawaii Public Utilities Commission, Sandwich Isles Communications provides phone and broadband services to more than 3,000 Native Hawaiian households.

The company defaulted on loans from the U.S. Department of Agriculture’s Rural Utilities Service, prompting an investigation by the Federal Communications Commission and the approval of a $49.5 million FCC fine in September 2020. In a related matter, a district court granted the U.S. government a $138.5 million judgment against Sandwich Isles in February 2020 for defaulting on a series of loans and promissory notes.

Based on complaints that Sandwich Isles was blocking access to the network and filing false police reports against Hawaiian Telcom employees, the Public Utilities Commission stepped in. The panel opened an emergency investigation on March 11 to assess Sandwich Isles’ “fitness, willingness and ability” to provide phone and internet service to customers living on land administered by the Department of Hawaiian Home Lands. The investigation allows the state Consumer Advocate and other parties to exchange formal written requests for information.

Department of Hawaiian Home Lands building located in Kapolei.
State officials are worried that people who live on Department of Hawaiian Home Lands properties may lose their internet and communications systems if the local provider can’t continue to provide service. Cory Lum/Civil Beat/2022

For months, the Consumer Advocate, on behalf of the public, has sought detailed information from Sandwich Isles over a variety of matters. These include the company’s finances, access to capital, customer metrics and concerns, status of fines levied by federal agencies, operational structure, and technical details related to circuits, network outages and redundancy.

The information received in response has been scant and insufficient, according to the Consumer Advocate.

Some of the information sought by the Consumer Advocate lies buried in previous filings with the commission. The company “does not have the resources to spoon feed the CA just because you are too lazy to review all the information,” Sandwich Isles responded.

Sandwich Isles also has said the Consumer Advocate’s inquiries are overly broad and burdensome, beyond the scope of the investigation, or involve proprietary matters.

Lawyers for Sandwich Isles and the Consumer Advocate have met on several occasions to try to resolve the matter but both sides agree the meetings were unproductive and that further talks would prove “fruitless and unproductive.”

The Consumer Advocate asked the commission on June 23 to compel Sandwich Isles to provide information. The telecom company objected saying the commission has limited legal authority to regulate the firm. It also said the Consumer Advocate’s inquiries have “nothing to do with honest concern about SIC’s ability to provide service.” Rather, the questioning is aimed at bringing harm and loss of service to Native Hawaiian customers, according to an SIC filing.

The company accuses the Consumer Advocate of conducting a “witch hunt” that is outside its authority. It also says there is no threat to service to Hawaiian homelands “other than the joint effort of Hawaiian Telcom working in concert with the Department of Hawaiian Home Lands,” according to a July 11 filing by Lex Smith, an attorney representing Sandwich Isles.

DHHL “has the ability to prevent Hawaiian Telcom from cutting off service to SIC,” Smith wrote.

Smith also alleged that Hawaiian Telcom, DHHL and the Consumer Advocate are all trying to use the PUC proceedings to get details about Sandwich Isles’ network that have nothing to do with the company’s ability to provide service.

Smith did not respond to a request for an interview. Dean Nishina, executive director of the Consumer Advocate, was unavailable, according to a public information officer. A spokesperson for Hawaiian Telcom said the person most familiar with matter is on vacation this week.

Dean Nishina is the executive director of the Office of the Consumer Advocate. DCCA

A person who answered the phone at Sandwich Isles Communications said no one was in the office or able to speak with a reporter.

The PUC instructed Sandwich Isles on June 30 to provide specific responses to the Consumer Advocate’s questions. On July 11, the company responded, repeating much of what it had stated previously – that the PUC’s authority to regulate it is limited, that the Consumer Advocate’s questions are intended to harm Sandwich Isles and that the agency is conducting a witch hunt.

In an order issued last week, the PUC said its authority to regulate a public utility like Sandwich Isles is unequivocal.

The quasi-judicial agency has the same powers to compel the production of documentary evidence, to examine witnesses and punish for contempt as a circuit court, the order notes.

Further, the commission found that all the Consumer Advocate’s questions of Sandwich Isles were relevant, proper in scope, allowed under the rules of discovery and that Sandwich Isles’ objections were unfounded and improper.

Voting to approve the motion to compel Sandwich Isles Communication to answer questions were two of the commission’s three members: chair Leo Asuncion and Jennifer Potter. The panel’s newest member, Naomi Kuwaye, recused herself.

Sandwich Isles has had a long and troubled history since it came into existence in 1995.

In 2015, founder Albert Hee was convicted of criminal tax fraud. Federal prosecutors found that Hee steered millions of dollars from the business into his personal accounts.  Hee was sentenced in 2016 to 46 months in prison.

Four years later, the FCC fined Hee nearly $50 million for defrauding the Universal Services Fund which supports carriers providing telecom services in high-cost parts of the country.

In May, Waimana Enterprises, the parent company of Sandwich Isles Communications, sued the Department of Hawaiian Home Lands and the Hawaiian Homes Commission. The lawsuit alleges breach of contract, implied covenant of good faith and fair dealing, and fiduciary duties for allowing Hawaiian Telcom to provide non-voice services to customers on Hawaiian homelands and for other actions.

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