Sandwich Isles Communications gains partial victory in FCC ruling

Sandwich Isles Communications, a small Hawaii telco that has become a poster child for the excesses of the Universal Service program, won a partial victory last week. The Federal Communications Commission ruled that some of the carrier’s costs that were denied by the National Exchange Carrier Association should have been covered.

The carrier had requested reimbursement for $15 million annually for capacity leased on an inter-island network built at its request. The FCC ruled that 50% of the carrier’s costs should have been recoverable through the funding pool that NECA administers.

Sandwich Isles Communications has drawn criticism for serving fewer than 2000 customers at a cost of more than $13,000 per line funded through the Universal Service program. Critics have noted that those customers could be served for considerably less money using satellite service—and policymakers seem to be increasingly interested in using satellites as a means of minimizing the cost of serving the country’s most remote and highest cost areas.

In the meantime, the FCC’s decision about Sandwich Isles leaves other carriers with the responsibility for footing the revised, but still extremely hefty bill for SIC’s lease.

According to some local news reports, SIC was facing potential bankruptcy if the FCC were to rule against the company. Whether or not the halfway measures the FCC chose will change that prognosis is unclear.