Oceanic Time Warner Cable is now providing free Wi-Fi access for Standard Internet (or above) broadband customers on the island of Oahu.

“Increasingly, our Hawaii customers want to take their high-speed Internet with them out of the home and on-the-go,” said Oceanic president Bob Barlow. “The TWC Wi-Fi network we’re building for Hawaii will allow our customers to greatly maximize their TWC Internet subscription – at no additional charge.”

The company has launched the service on the island with more than 400 Ruckus Wireless-branded hotspots in areas like Sunset Beach, Stan Sheriff, and the Kailua District Park. The hotspots can be identified by their network name: TWCWiFi. Customers can get access by logging in with their Oceanic/Time Warner Cable MyServices account name and password. Guest users can buy a “pay as you go” TWC Access Pass starting at $2.95 an hour.

TWC’s Wi-Fi network is now focused on Honolulu, but customers in most major communities on the island will also find limited service.

Time Warner is gradually expanding its Wi-Fi services in high traffic areas and where it faces competition from Google Fiber. TWC Wi-Fi is available from 1,000 access points in Manhattan and more than 12,000 hotspots in Los Angeles. Wi-Fi service was also introduced in downtown Charlotte, N.C., Kansas City and Austin.

Spending money to earn more money is a fiscally sound principle of doing business, but short term investors often decry increased spending as harmful to the value of a company’s stock and dividend payout. That is why Hawaiian Telcom (HawTel) earns mixed reviews from Wall Street about the company’s aggressive infrastructure improvement project, a fiber to the neighborhood network that intends to bring television, phone, and faster broadband service to an increasing number of Hawaiians.

HawTel’s stock price has bounced up, down, up, and then down again as investors digest the company’s ongoing effort to reinvent itself as a 21st century telecom company.

The Old HawTel

HawTel’s fiber buildout began on the island of Oahu in 2011, eventually passing 27,400 homes on the island. At the end of 2011, 1,600 (6%) of those homes signed up for the service. That’s an acceptable number, especially for a service barely promoted. HawTel does not mention the television service on its primary website, and approaches potential customers one-on-one with in-person and targeted mail marketing.

At the end of the second quarter or 2012, HawTel TV had 6,400 subscribers. The company hopes to have an additional 50,000 homes enabled for its TV service by the end of 2012, with the goal of enabling 240,000 households across Hawaii over the next five years. HawTel hopes to eventually capture 30% of the Hawaiian market.

HawTel’s principal competitor is Oceanic Time Warner Cable, which provides traditional cable service across the Hawaiian Islands. HawTel had been at a substantial disadvantage competing with Time Warner’s television package and faster broadband service. But the fiber upgrades are allowing at least some customers to purchase speeds up to 50/10Mbps, slightly faster than what the cable operator offers.

Time Warner has taken note of the phone company’s re-emergence as a strong competitor, targeting Oahu with special promotional offers that lock customers in place with triple play discounts designed to make it inconvenient to switch providers.

The New HawTel

Unfortunately for HawTel, fiber upgrades do not come cheap, and the company’s earnings have taken a hit.

Capital expenditures totaled $41.2 million for the six-months ended June 30, 2012, up from $35.4 million for the six-month period a year ago due primarily to investments in broadband network infrastructure and expansion of video enabled households.

Hawaiian Telcom reported an 18 percent decline in second quarter earnings, which it blamed primarily on broadband network expansion.

The company also announced it lost another 6% of traditional landline customers during the second quarter, but that was offset by expansion in its broadband and television service. For HawTel, the solution to ending landline losses is to upgrade their network to compete with the types of communications services consumers are interested in buying today.

But those plans can and do conflict with at least some stock traders who are interested primarily in short term financial results. Spending can cut into profits, so some analysts downgrade stocks of companies spending the most, even if only to compete more effectively down the road.

So far, HawTel executives have not been discouraged carrying their network expansion plans forward. In July, Hawaiian Telcom announced it would acquire Wavecom Solutions Corporation’s local exchange carrier business in a stock purchase transaction valued at $13 million.

Wavecom’s undersea fiber network

The acquisition would give Hawaiian Telcom access to Wavecom’s fiber optic network connecting the main Hawaiian islands. Wavecom, formerly known as Pacific Lightnet, Inc., serves more than 1,700 customers across Hawaii.

In an application with the Federal Communications Commission, HawTel officials said access to Wavecom’s 400-mile undersea telecommunications cable network will permit the company to expand and enhance its broadband and television services beyond Oahu to other Hawaiian islands, and help position the company to effectively compete with Time Warner.

[flv width=”640″ height=”380″]http://www.phillipdampier.com/video/Hawaiian Telcom TV Tour.flv[/flv]

Watch a HawTel-produced video tour of the company’s new TV service.  (4 minutes)

Hawaiian customers of Oceanic Time Warner Cable can now obtain the cable company’s free viewing app for iPad — TWCable TV.

Although the cable operator has offered the free online viewing app for months, it has not worked in Hawaii until this week.

“We are tremendously excited about this app, which is the first of many that will allow our customers to harness the power of their tablet-type devices,” said Bob Barlow, president of Oceanic Time Warner Cable.

Time Warner customers can use the app only within range of their home wireless router connected to Time Warner’s Road Runner Internet service.  Restrictions imposed by the cable company and programmers mean customers cannot access the service from other broadband providers or outside of their own home.

Time Warner also requires TWCable TV app users to maintain a cable television subscription and register for access on the company’s website.

If this is a new way to attract customers, it’s sure stumping marketing experts who are questioning Hawaiian Telcom’s launch of its new cable TV service to compete with Time Warner Cable’s Oceanic Cable.  Nobody knows where exactly the service is available for sale, or for how much, and HawTel officials are not saying.

“If you call Hawaiian Telcom and ask them about the service, they essentially say ‘don’t call us, we’ll call you’ and they are the phone company!” says Oahu resident and Stop the Cap! reader Dan Ho, who first discovered HawTel was getting into the cable business from Stop the Cap!  “I realize we’re talking about another form of U-verse here, but that could still be a good thing for Hawaiians who cannot get Oceanic Cable and are stuck with HawTel’s awful DSL service.”

HawTel’s new fiber-copper hybrid network tested successfully for 250 mystery families who participated in a secretive beta-test.  The new service is expected to be sold mostly in a packaged bundle with extra high speed DSL (presumably up to 25Mbps), a central DVR terminal that can record up to four shows off the company’s digital cable TV package concurrently, and unlimited phone service.

Lester Chu, a HawTel spokesman, wouldn’t tell reporters the prices for the new service, instead offering to accept bills from competing providers and allowing HawTel to competitively bid for your business.  The company also wouldn’t say where the service was for sale, “for competitive reasons,” added Chu.

But HawTel has been licensed to provide service on the island of Oahu, and intends to rollout the service in contiguous service areas, so once the first new customers do go public, we’ll be able to ascertain where the service is slated to be delivered next.

HawTel says they will begin targeted advertising to alert residents when the service will be available.  That traditionally means direct mailers, door hanger tags, and door-to-door visits from sales teams hired by HawTel.

“It’s a crazy way to build excitement for the product, by keeping it a secret,” Ho believes. “More important, I suspect their pricing is not going to be very good if they require customers to bring in a current bill from a cable competitor in order to get a quote.”

Ho should know, he’s a marketing professional himself.

“I suspect the company wants face time with a customer to explain away the lack of visible savings by instead talking up the features they will offer that Oceanic Cable does not,” Ho suggests.

Among those features – the four-recordings-at-a-time DVR, the 250-channel all digital lineup, and the presence of NFL Network, a network Time Warner Cable systems have perennially refused to carry on their basic digital tier because of its cost.

[flv width=”480″ height=”290″]http://www.phillipdampier.com/video/KITV Honolulu Hawaiian Telecom Bring Cable Competition To The Islands 7-7-11.mp4[/flv]

KITV-TV in Honolulu opened their newscast with the mysterious launch of Hawaiian Telcom’s new TV service.  (2 minutes)

[flv width=”360″ height=”290″]http://www.phillipdampier.com/video/KHON Honolulu Hawaiian Telcom launches cable TV service in select location 7-7-11.mp4[/flv]

KHON-TV in Honolulu covers HawTel’s introduction of cable competition on the island of Oahu, even though company officials won’t say where it’s available or for how much.  (Loud Volume Warning!) (1 minute)

Hawaiian Telcom on Friday won a 15-year non-exclusive franchise to develop and market cable television service on the island of Oahu.

The telephone company will be the first major competitor to Oceanic Cable in at least a decade, at least where HawTel plans to provide service.

“We are very pleased to have reached this important milestone in the development of our exciting new video service and will have more details to share about our plans in the next several weeks,” said spokeswoman Ann Nishida Fry.

Many HawTel-watchers predict the phone company will choose an IPTV platform over a hybrid fiber-copper network to support the service, much like AT&T’s U-verse.  HawTel plans a gradual rollout as neighborhoods are “upgraded” to support the service.

Oceanic Cable president Bob Barlow said he wasn’t too concerned with HawTel’s entry into the market.  He told the Hawaiian Star-Advertiser customers should not expect any dramatic savings or price cuts.

“Most of our customers don’t bundle services, and more than 60 percent of our video costs come from programming,” he said.

Barlow expects the fiercest level of competition will come from who delivers the best customer service.

[flv width=”480″ height=”380″]http://www.phillipdampier.com/video/KHON Honolulu Hawaiian Telcom to Offer Cable TV 6-24-11.mp4[/flv]

KHON-TV in Honolulu leads their newscast with HawTel’s approval for a cable television franchise on Oahu.  (2 minutes)