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                                   Before the

                       Federal Communications Commission

                             Washington, D.C. 20554


                             )                                
                                                              
                             )   File No.: EB-11-IH-0442      
     In the Matter of                                         
                             )   NAL/Acct. No.: 201232080016  
     Hawaiian Telcom, Inc.                                    
                             )   FRN: 0001520980              
                                                              
                             )                                


                  NOTICE OF APPARENT LIABILITY FOR FORFEITURE

   Adopted: February 14, 2012 Released: February 14, 2012

   By the Chief, Enforcement Bureau:

   I. INTRODUCTION

    1. In this Notice of Apparent Liability for Forfeiture (NAL), we find
       that Hawaiian Telcom, Inc. (HTI) apparently willfully violated the
       conditions of the submarine cable landing license for the Hawaii
       Interisland Cable System (Cable System), by failing on two occasions
       to obtain Commission approval prior to transferring substantial
       control of the submarine cable landing license. Based on our review of
       the facts and circumstances surrounding this matter, and for the
       reasons discussed below, pursuant to Section 503(b) of the
       Communications Act of 1934, as amended, we conclude that HTI is
       apparently liable for a total forfeiture of $16,000 for the two
       unauthorized transfers of control.

   II. BACKGROUND

    2. Section 1 of the Cable Landing License Act states that no person shall
       land or operate in the United States "any submarine cable directly or
       indirectly connecting the United States with any foreign country, or
       connecting one portion of the United States with any other portion
       thereof, unless a written license to land or operate such cable has
       been issued by the President of the United States." Additionally, the
       submarine cable landing license for the Cable System may not be
       assigned or transferred without prior authorization from the
       Commission.

    3. HTI, previously known as Verizon Hawaii, is the holder of the
       submarine cable landing license for the Cable System. HTI is also the
       incumbent local exchange carrier for the State of Hawaii and provides
       service to all of Hawaii's major islands. Hawaiian Telcom
       Communications, Inc. (HTCI) (previously named Paradise MergerSub,
       Inc.) is the parent company of HTI, and Hawaiian Telecom Holdco, Inc.
       (Holdco) is the parent company of HTCI. In addition to local exchange
       service, Holdco and its affiliates (collectively, the Companies)
       provide exchange access, broadband services, and resold wireless
       services. The Companies use the Cable System to provide at least some
       of these services.

    4. In 2004, GTE Corporation (GTE) and Verizon Holdco LLC (Verizon) filed
       several applications seeking Commission consent to transfer control of
       various entities holding FCC authorizations, including Verizon Hawaii
       (subsequently renamed HTI), the licensee of the Cable System, to
       Paradise MergerSub (subsequently renamed HTCI). This transaction was
       approved on August 17, 2004, and the transfer was consummated on May
       2, 2005. Although the Commission reviewed and approved the license
       transfers relating to the transfer of control of Verizon Hawaii to
       HTCI, the parties to the transaction failed to file a transfer
       application covering the submarine cable landing license for the Cable
       System.

    5. Additionally, on December 1, 2008, Holdco and its subsidiaries filed
       for voluntary bankruptcy protection pursuant to Chapter 11 of the
       United States Bankruptcy Code. Under the court-approved reorganization
       plan, ownership of Holdco was transferred to HTI's secured creditors
       on December 30, 2009, resulting in a substantial ownership change in
       HTI. Soon thereafter, the Companies applied to the Commission for
       approval of several bankruptcy-related transfers. The Commission
       authorized these license transfers. Once again, the transfer of
       control applications omitted the submarine cable landing license for
       the Cable System. Holdco and its subsidiaries emerged from bankruptcy
       and the transfer was consummated on October 28, 2010.

    6. On January 12, 2011, the Companies filed applications seeking
       Commission consent to transfer control of the submarine cable landing
       license held by HTI. The Companies filed these applications to correct
       the earlier omissions. The International Bureau granted these
       applications on March 28, 2011, but referred the matter to the
       Enforcement Bureau for investigation. On August 9, 2011, the
       Enforcement Bureau issued a Letter of Inquiry (LOI) to the Companies
       requesting information concerning their compliance with the
       requirement to obtain Commission approval before transferring control
       of the submarine cable landing license. The Companies responded to the
       LOI on September 8, 2011. That response makes clear that control of
       HTI, holder of the submarine cable landing license, was twice
       transferred without prior Commission authorization.

   III. DISCUSSION

    7. Under Section 503(b)(1) of the Communications Act of 1924, as amended,
       "[a]ny person who is determined by the Commission . . . to have . . .
       willfully or repeatedly failed to comply substantially with the terms
       and conditions of any license, permit, certificate, or other
       instrument or authorization issued by the Commission . . . shall be
       liable to the United States for a forfeiture penalty.  Section
       312(f)(1) of the Act defines "willful" as the "conscious and
       deliberate commission or omission of [any] act, irrespective of any
       intent to violate any provision of this Act or any rule or regulation
       by the Commission authorized by this Act."  The legislative history to
       Section 312(f)(1) of the Act clarifies that this definition of
       "willful" applies to both Sections 312 and 503(b) of the Act,  and the
       Commission has so interpreted the term in the Section 503(b) context.
       "Repeated" means that the act was committed or omitted more than once,
       or lasts more than one day. To impose a forfeiture penalty, the
       Commission must issue a notice of apparent liability, and the person
       against whom the notice has been issued must have an opportunity to
       show, in writing, why no such forfeiture penalty should be imposed.
       The Commission will then assess a forfeiture if it finds, based on the
       evidence, that the person has violated the Act, a rule, a Commission
       order, or the terms of a Commission license.

   A. Apparent Violations of the Terms of the Cable Landing License

    8. The submarine cable landing license for the Cable System prohibits the
       transfer of control of the license without prior Commission approval.
       We conclude that it is apparent that the Companies willfully and
       repeatedly violated that license term by failing to obtain Commission
       authorization prior to consummating two substantial transfers of
       control of HTI, the holder of the submarine cable landing license. The
       first apparent violation occurred when Verizon and Paradise MergerSub
       transferred control of the cable landing license to HTCI; the second
       occurred when control of HTI was transferred from Holdco's prior
       shareholders to the new shareholders, in conjunction with the Chapter
       11 bankruptcy reorganization. The Companies concede that the license
       was "inadvertently omitted" from the FCC applications that were filed
       to effectuate these transfers.

    9. The requirements to obtain prior approval for ownership changes
       involving cable landing licenses serve important public policies,
       notably the identification of any foreign ownership interests and the
       prevention of anti-competitive behavior that could result in
       competitive harms in the U.S. market. The Companies' failure to obtain
       prior Commission approval of these ownership transfers prevented the
       Commission from examining whether control of the license for the Cable
       System should be transferred to the entities that, in fact, operated
       that System for a five-year period. In light of these considerations
       and the admission by the Companies that they failed to obtain prior
       Commission approval of the license transfers, we conclude that the
       Companies apparently willfully and repeatedly violated the express
       terms of the license, and therefore a forfeiture is warranted.

   B. Proposed Forfeiture

   10. In determining the amount of a forfeiture penalty, Section
       503(b)(2)(E) of the Act and Section 1.80(b)(6) of the rules direct the
       Commission to take into account "the nature, circumstances, extent,
       and gravity of the violations . . . and the degree of culpability, any
       history of prior offenses, ability to pay, and such other matters as
       justice may require."  The Commission's Forfeiture Policy Statement
       and implementing rules prescribe a forfeiture of $8,000 for each
       separate unauthorized substantial transfer of control. In this case,
       there were two separate unauthorized transfers of control. Based on
       the facts and circumstances presented, HTI is therefore apparently
       liable for a total forfeiture of $16,000 for willful violations of the
       express terms of the cable landing license for the Cable System.

   IV. ORDERING CLAUSES

   11. ACCORDINGLY, IT IS ORDERED that, pursuant to Section 503(b) of the Act
       and Sections 0.111, 0.311, 0.314 and 1.80 of the Rules, Hawaiian
       Telcom, Inc. is hereby NOTIFIED of its APPARENT LIABILITY FOR A
       FORFEITURE in the amount of $16,000 for apparently willfully or
       repeatedly violating the conditions of the submarine cable landing
       license for the Hawaii Interisland Cable System.

   12. IT IS FURTHER ORDERED that, pursuant to Section 1.80 of the Rules,
       within thirty (30) calendar days of the release date of this Notice of
       Apparent Liability for Forfeiture, Hawaiian Telcom, Inc. SHALL PAY the
       full amount of the proposed forfeiture or SHALL FILE a written
       statement seeking reduction or cancellation of the proposed
       forfeiture.

   13. Payment of the forfeiture must be made by check or similar instrument,
       payable to the order of the Federal Communications Commission. The
       payment must include the NAL/Acct. No. and FRN referenced above.
       Payment by check or money order may be mailed to Federal
       Communications Commission, P.O. Box 979088, St. Louis, MO 63197-0000.
       Payment by overnight mail may be sent to U.S. Bank - Government
       Lockbox #979088, SL-MO-C2-GL, 1005 Convention Plaza, St. Louis, MO
       63101. Payments by wire transfer may be made to ABA Number 021030004,
       receiving bank Federal Reserve Bank of New York, and account number
       2700001. FCC Form 159 (Remittance Advice) must accompany any payment.
       When completing the FCC Form 159, enter the NAL/Account number in
       block 23A (call sign/other ID), and enter the letters "FORF" in block
       number 24A (payment type code). The Companies will also send
       electronic notification within forty-eight (48) hours of the date said
       payment is made to Theresa Cavanaugh at Terry.Cavanaugh@fcc.gov,
       Pamela Kane at Pamela.Kane@fcc.gov, and Mindy Littell at
       Mindy.Littell@fcc.gov.

   14. The written statement seeking reduction or cancellation of the
       proposed forfeiture, if any, must include a detailed factual statement
       supported by appropriate documentation and affidavits pursuant to
       Sections 1.80(f)(3) and 1.16 of the Rules. The written statement must
       be mailed to Theresa Z. Cavanaugh, Acting Chief, Investigations and
       Hearings Division, Enforcement Bureau, Federal Communications
       Commission, 445 12th Street, S.W., Room 4-C330, Washington, D.C. 20554
       and must include the NAL/Acct. No. referenced above. The written
       statement should also be emailed to Theresa Cavanaugh at
       Terry.Cavanaugh@fcc.gov, Pamela Kane at Pamela.Kane@fcc.gov, and Mindy
       Littell at Mindy.Littell@fcc.gov.

   15. The Commission will not consider reducing or canceling a forfeiture in
       response to a claim of inability to pay unless the petitioner submits:
       (1) federal tax returns for the most recent three-year period; (2)
       financial statements prepared according to generally accepted
       accounting practices (GAAP); or (3) some other reliable and objective
       documentation that accurately reflects the petitioner's current
       financial status. Any claim of inability to pay must specifically
       identify the basis for the claim by reference to the financial
       documentation submitted.

   16. Requests for payment of the full amount of this Notice of Apparent
       Liability for Forfeiture under an installment plan should be sent to:
       Chief Financial Officer - Financial Operations, Federal Communications
       Commission, 445 12th Street, S.W., Room 1-A625, Washington, D.C.
       20554.  For answers to questions regarding payment procedures, contact
       the Financial Operations Group Help Desk at 1-877-480-3201 or email:
       ARINQUIRIES@fcc.gov.

   17. IT IS FURTHER ORDERED that a copy of this Notice of Apparent Liability
       for Forfeiture shall be sent by certified mail, return receipt
       requested, to Gregory J. Vogt, Counsel for Hawaiian Telecom, Inc.,
       2121 Eisenhower Avenue, Suite 200, Alexandria, VA 22314.

   FEDERAL COMMUNICATIONS COMMISSION

   P. Michele Ellison

   Chief, Enforcement Bureau

   GTE Hawaiian Telephone Company Applications for a License to Land and
   Operate a High Capacity Digital Submarine Cable System Wholly Within the
   State of Hawaii, Linking the Islands of Kauai, Oahu, Maui and Hawaii,
   Cable Landing License, DA 93-1274, 8 FCC Rcd 7065 (CCB 1993) (Cable
   Landing License Order).

   See 47 U.S.C. S: 503(b).

   47 U.S.C. S: 34. The Commission has been delegated the President's
   authority under the Cable Landing License Act. See Exec. Ord. No. 10530 S:
   5(a) (May 10, 1954), reprinted as amended in 3 U.S.C. S: 301.

   Cable Landing License Order, 8 FCC Rcd at 7606, para. 6(4) (CCB 1993)
   (specifying that "[n]either this license, nor the rights granted herein,
   shall be transferred, assigned, or in any manner either voluntarily or
   involuntarily disposed of or disposed of indirectly by transfer of control
   of the Licensee to any persons, unless the Federal Communications
   Commission shall give prior consent in writing"). This condition, which
   was included in all cable landing licenses prior to 2001, was codified as
   a routine condition in Section 1.767(g)(6) of the Commission's rules in
   2002. See Review of Commission Consideration of Applications Under the
   Cable Landing License Act, IB Docket No. 00-106, Report and Order, 16 FCC
   Rcd 22167, 22201-02, paras. 66-68 (2001).

   HTCI was formerly named Paradise MergerSub, Inc., which was ultimately
   owned and controlled by the Carlyle Group. See ITC-ASG-20040630-00255 and
   ITC-ASG-20040630-00256.

   See International Authorizations Granted, Public Notice, Report No.
   TEL-00821, DA 04-2520, IBFS File Nos. ITC-ASG-20040630-00255 and
   ITC-ASG-20040630-00256, 19 FCC Rcd 15469 (IB 2004); Streamlined Domestic
   Section 214 Application Granted, Public Notice, DA 04-2451, WC Docket No.
   04-234, 19FCC Rcd 14831 (WCB 2004); Wireless Telecommunications Bureau
   Assignment of License Authorization Applications, Transfer of Control
   Licensee Applications, De Facto Transfer Lease Applications and Spectrum
   Manager Lease Notifications, Public Notice, Report No. 1924 (rel. Aug. 25,
   2004).

   See Letter from Gregory J. Vogt, Esq., Counsel to Hawaiian Telcom, Inc.,
   to Kathy Berthot, Attorney Advisor, Investigations & Hearings Division,
   Enforcement Bureau, Federal Communications Commission (dated Sept. 8,
   2011) (LOI Response).

   In re Hawaiian Telecom Communications, Inc., et al.,  Ch. 11, Case No.
   08-02005 (Bankr. D. Haw. Dec. 30, 2009).

   Domestic Section 214 Authorization Granted; Domestic Section 214
   Application Filed for the Transfer of Control of Hawaiian Telecom, Inc.,
   and Hawaiian Telecom Services Company, Inc., Debtors-in-Possession, WC
   Docket No. 10-41, DA 10-1746, 25 FCC Rcd 13149 (WCB 2010); International
   Authorizations Granted, Public Notice, Report No. TEL-01457, DA 10-1798,
   IBFS File No. ITC-ASG-20100122-00038, 25 FCC Rcd 13369 (IB2010); Wireless
   Telecommunications Bureau Assignment of License Authorization
   Applications, Transfer of Control of Licensee Applications, De Facto
   Transfer Lease Applications and Spectrum Manager Lease Notifications,
   Designated Entity Reportable Eligibility Event Applications, and
   Designated Entity Annual Reports Action, Public Notice, Report No. 6390
   (rel. Nov. 17, 2010).

   See Application for Authority to Transfer Control of Submarine Cable
   Landing License, File No. SCL-LIC-19921015-0008 (filed Jan. 12, 2011);
   Application for Authority to Transfer Control of Submarine Cable Landing
   License, File No. SCL-LIC-19921015-0008 (filed Jan. 12, 2011). See also
   Streamlined Submarine Cable Landing License Applications Accepted for
   Filing, Public Notice, Report No. SCL-00114S (rel. Feb. 18, 2011).

   See id.

   Actions Taken Under Cable Landing License Act, Public Notice, Report No.
   SCL-00115, IBFS File Nos. SCL-ASG-20110112-0002 and SCL-T/C-20110112-0003,
   DA 11-565, 26 FCC Rcd 4923 (IB 2011).

   See Letter from Theresa Z. Cavanaugh, Acting Chief, Investigation &
   Hearings Division, Enforcement Bureau, Federal Communications Commission,
   to John T. Komeiji, Senior Vice President and General Counsel, Hawaiian
   Telcom, Inc. (dated Aug. 9, 2011) (LOI).

   See LOI Response, supra n.7.

   Id. at 3-8.

   47 U.S.C. S: 503(b)(1); see also 47 C.F.R. S: 1.80(a)(1).

   47 U.S.C. S: 312(f)(1).

   H.R. Rep. No. 97-765, 97th Cong. 2d Sess. 51 (1982).

   See, e.g., Southern California Broadcasting Co., Memorandum Opinion and
   Order, 6 FCC Rcd 4387, 4388, para. 5 (1991).

   Id. at 4388, para. 5; Callais Cablevision, Inc.,  16 FCC Rcd 1359, 1362,
   para. 9 (2001).

   47 U.S.C. S: 503(b); 47 C.F.R. S: 1.80(f).

   47 C.F.R. S: 1.80(a)(1) (stating that "[a] forfeiture penalty may be
   assessed against any person found to have: (1) Willfully or repeatedly
   failed to comply substantially with the terms and conditions of any
   license, permit, certificate, or other instrument of authorization issued
   by the Commission"). See also SBC Communications, Inc., Forfeiture Order,
   17 FCC Rcd 7589, 7591, para. 4 (2002) (affirming forfeiture penalty issued
   for violation of a Commission order).

   See Cable Landing License Order, 8 FCC Rcd at 7606, para. 6(4).

   See LOI Response, Answers to Inquiries 4 and 5.

   See Review of Commission Consideration of Applications Under the Cable
   Landing License Act, Report and Order, 16 FCC Rcd 22167, 22184 (2001)
   (adopting streamlined procedures for cable landing licensing, while
   ensuring careful Commission review of certain applications to guard
   against anti-competitive behavior).

   47 U.S.C. S: 503(b)(2)(E); 47 C.F.R. S: 1.80(b)(6).

   See 47 C.F.R. S: 1.80(b)(6); Forfeiture Policy Statement, 12 FCC Rcd
   17087, 17113 (1997).

   We note that the Companies made good faith efforts to comply with the
   obligation to seek prior Commission approval before consummating the
   transactions that transferred control of the authorizations held by HTI.
   Under these circumstances, we do not believe an upward adjustment of the
   proposed forfeiture is warranted.

   47 U.S.C. S: 503(b).

   47 C.F.R. S:S: 0.111, 0.311, 0.314, 1.80.

   47 U.S.C. S: 1; Cable Landing License Order, 8 FCC Rcd at 7606, para.
   6(4).

   See 47 C.F.R.  S:S: 1.80(f)(3), 1.16.

   See 47 C.F.R.  S: 1.1914.

   Federal Communications Commission DA 12-211

   6

   Federal Communications Commission DA 12-211