Hawaiian Telcom Inc.'s much anticipated plan to get into the television business is going to make things interesting for consumers.

The local phone company has been talking about getting into the business ever since Washington, D.C.-based Carlyle Group bought the company for $1.65 billion in 2005. But for various technical and financial reason, the plan has stalled.

And when the company filed for bankruptcy protection in 2008, the plan looked moribund.

But now that the company is pursuing its stand-alone $460 million reorganization, cable service  is back in the forefront.

The company has been beta-testing its product in select isle homes and has been quietly laying more fiber optic cable in anticipation of the new service with will compete with Oceanic Time Warner Cable. Sources say that the company wants to launch its new video service once its reorganization gets approved by the state Public Utilities Commission.

Hawaiian Telcom probably won't slash prices for basic and standard cable service but it  probably will offer competition on the higher-end with more video on-demand, more high-definition channels and better bundled services.

On the Mainland, this strategy has worked well for Hawaiian Telcom's former owner Verizon Communications Inc. Through its FIOS "triple play" of bundled television, Internet and telephone service, Verizon has been able to make inroads in Time Warner dominated markets such as Dallas and Staten Island, New York.

Time Warner  remains the dominant player in Hawaii, reaching some 90 percent of the households in the state. Due to the islands remoteness and reluctance by many condominium and townhouse complexes to allow large satellite dishes, satellite providers such as DirecTV and Dish Network are only a niche player here.

According to records filed with the state Cable Television Division, Oceanic generated about $475 million in revenues in 2008. Those figures probably don't include Time Warner's Road Runner Internet service, which is not required to file financials with the state, which does not regulate Internet service providers.

Like Hawaiian Telcom, Time Warner has some weakness that the local phone company will try to exploit.

Consumers often wait hours for a technician to initiate service and subscribes calling for service repairs often find themselves on hold before getting to speak with a service representative.

No doubt, Time Warner will fight hard for its turf.

The local cable operation can endlessly advertise its product on its television network at little cost and has a broad array of product that will allow it to match any bundles offer by the local phone company.

What's more, Time Warner has a huge capital investment budget, allowing it to further upgrade its network and expand its offerings. Hawaiian Telcom, meanwhile, is only now emerging from bankruptcy protection and  has much less money to invest in its cable network

Hawaiian Telcom also can't afford to repeat the service and billing mistakes that plagued the company after Washington, D.C.-based the Carlyle Group $1.6 billion buyout in 2005.

But if Hawaiian Telcom is successful in launching its new video service, consumers will have more choice and could see better service.

Hawaiian Telcom took its reorganization plan to the state Public Utilities Commission.

In an 824-page filing earlier this month, the state's largest telecommunications company is asking the PUC to approve its $460 million, stand-alone reorganization plan.

The application comes after U.S. Bankruptcy Judge Lloyd King in November approved the company's reorganization plan, which slashes the company's debt by nearly $800 million by converting much of it into equity.

Details of the PUC filing are nearly identical to Hawaiian Telcom's filings in U.S. Bankruptcy Court, with the notable exception that Hawaiian Telcom will emerge with a little bit more cash.

Hawaiian Telcom previously said that it will receive a minimum of $45 million in cash. Now it's saying it will get at least $52 million in cash.

An extra $7 million doesn't sound like a lot of money for a company that generates nearly $500 million a year in revenue.

But that extra cushion is going to help Hawaiian Telcom as it emerges from its year-long bankruptcy, which is costing the company nearly $2 million a month in legal and consulting fees.

It's hard to say it will take the PUC to rule on the matter but it could take atleast six months. The PUC currently has a back log of about 30 telecommunication cases, although the state agency is likely to fast-track Hawaiian Telcom's reorganization plan due to its importance.

The PUC, which has hired its own financial experts to review Hawaiian Telcom's reorganization, would benefit from a more careful review.

In 2005, the agency quickly approved Washington, D.C.-based Carlyle Group's $1.6 billion buyout of Hawaiian Telcom despite concerns about the phone company's huge debt, which later forced the company into bankruptcy.

Facing potential financing difficulties on its massive undersea cable project, executives with Sandwich Isles Communications Inc. met with Federal Communications Commission officials earlier this month.

Sandwich Isle is seeking to tap into a special fund paid for by consumers around the country to finance the lease of a 358-mile cable connecting Oahu and the Neighbor Islands.

But the fund's administrator, the National Exchange Carrier Association, recently rejected Sandwich Isle's request as too costly.

In a Nov. 13 letter to FCC Secretary Marlene Dortsch, company attorney David Cosson said he and Sandwich Isles President Albert Hee met earlier this month with the chief of the FCC's Wireline Competition Bureau, Sharon Gillett, and Albert Lewis, the chief of FCC wireline bureau's pricing policy division, in an effort to overturn NECA's decision

It appears that the FCC officials asked a lot of questions and Sandwich Isles agreed to provide further financial data about the lease.

Cosson's letter did not say whether the FCC officials support or oppose the funding but he did say the financing is crucial to Sandwich Isles' survival.

"However, without Commission action to require NECA to accept the network costs, Sandwich Isles cannot survive financially while the network evolves to full utilization," Cosson wrote.

Sandwich Isles provides heavily subsidized phone lines to about 2,000 Hawaiian homesteaders.

The federal government pays Sandwich Isles about $13,000 per customer for providing the service, which is 100 times higher than the average subsidy for rural telephone service on the Mainland.

Under a 20-year lease, Sandwich Isles has exclusive rights to use the fiber-optic cable network, dubbed the Paniolo Cable.

The company recently proposed buying bankrupt Hawaiian Telcom Inc. for $400 million but Hawaiian Telcom opted instead to pursue $460 million, stand-alone reorganization plan, which recently received bankruptcy court approval.

To be sure, Cosson's doom and gloom tone belies Sandwich Isles' shrewdness.

The company earlier this year applied for more than $236 million in federal grant money and $67.3 million in low-interest loans as part of the Obama administration's broadband stimulus funding.

If anything, the company has proven that it's pretty persuasive when seeking federal money.

Hawaiian Telcom's bankruptcy is on its way to becoming the one of the costliest ever in Hawaii.

Eleven months in its reorganization, the state's largest phone company has spent more than $20 million in bankruptcy related costs for attorneys, accountants, consultants and investment bankers.

Only Hawaiian Airlines' 2003-2005 bankruptcy was more expensive at $36 million.

It exceeds  the second costliest Hawaii bankruptcy, Liberty House, whose reorganization costs from 1998 to 2001 topped $16 million, and is nearly double the $11 million in fees paid between in Aloha Airline's first bankuptcy in 2004 to 2006.

And there's at least seven months to go.

Hawaiian Telcom says it wants to emerge from bankruptcy protection in March, meaning that at the company's current $1.8 million a month spending rate the tab could exceed $32 million.

And those expenses don't include the post-bankruptcy costs such as those relating the approvals needed by the state Public Utilities Commission, which will review any reorganiztion plan and could take another year to do so.

Given the costs involved, it's no wonder that the U.S. Bankruptcy Judge Lloyd King has been urging all of the parties to move the case along.