Hawaii communications company ordered to refund millions, faces even more in fines

A local telecommunications company has been ordered to refund millions of dollars.

The Federal Communications Commission voted Monday to take multiple actions against Sandwich Isles Communications, which provides phone and broadband service to customers on Hawaiian Home Lands, for violations and apparent violations related to Universal Service Fund (USF) support.

It happened over the course of 13 years dating back to 2002.

The company will be required to repay over $27 million in improper payments of universal service support. In addition, following an investigation by the FCC’s Enforcement Bureau, the Commission has proposed more than $49 million in fines against the company, its parent company Waimana Enterprises, and its former controlling owner Albert Hee, for apparent violations of rules relating to the high-cost program.

Sandwich Isles is charged with violating the Commission’s accounting rules and methods, and submitting and certifying inaccurate data used to obtain millions of dollars in improper high-cost support payments. This is the Commission’s first enforcement action in the high-cost program.

The company released the following statement Tuesday: “Sandwich Isles Communications believes it used the high-cost support program to provide, maintain and upgrade its facilities and services, as the funds were intended, to serve its subscribers. We will be reviewing the allegations in the FCC order and will be responding to them.”

In January, Hee was sentenced to nearly four years behind bars for tax fraud.

Sen. Brian Schatz, D-Hawaii, said in a statement:

“I fully support the FCC’s efforts to combat waste, fraud, and abuse of the Universal Service Fund by Sandwich Isles Communications. The mishandling of these funds is morally and legally unacceptable, and I expect SIC to fully comply with the order without disruptions in service or additional costs to their customers on Hawaiian Home Lands.

“At the core of the nation’s communications policies is the idea that all Americans deserve to have access to communications services – especially broadband. The Universal Service Fund was created in an effort to ensure universal service and provides essential support to communications companies to provide telephone and broadband service in hard-to-serve areas of our country. As an island state with many rural communities, we understand the economic and social importance of telephone and broadband service and the need for a robust universal service support system. But those companies who accept support from the fund must be good stewards of that money and use it appropriately.

“I have contacted FCC Chairman Wheeler to request his personal attention to this issue in order to ensure that customers are not made victims of SIC’s mishandling of funds. I am confident the FCC will apply all of its statutory and regulatory powers to protect customers on Hawaiian Home Lands from disruptions in service in this case.”

View the Order in its entirety online here.

View the Memorandum Opinion and Order here.

View the Notice of Apparent Liability here.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s