David C. Farmer, Trustee vs. Harmon - Witness Muriel Taira, Esq., Kessner Duca, et al

David C. Farmer, Successor-Trustee vs. Harmon

(Formerly Woo vs. Harmon & Nicholson vs. Harmon)

CV05-00030 DAE KSC

U.S. District Court For the District of Hawaii

Judges: David A. Ezra; Kevin S. Chang

—

DEFENDANT’S WITNESS

MURIEL TAIRA, Esq.

Kessner Duca Umebayashi Bain & Matsunaga, Attorneys At Law, A Law Corporation

19th Floor, Central Pacific Plaza
220 South King Street
Honolulu, HI 96813

Phone: (808) 536-1900
Fax: (808) 529-7177

Muriel Taira is an associate of the law firm of Kessner Duca, et al. Ms. Taira was a member of the Cable Advisory Committee of the State of Hawaii, and an associate of the law firm Gulosh & Riccio in Bridgeport, Connecticut.

~ ~ ~

April 16, 2003

Our Cable Monopoly

How the state's secret deal with AOL/Time Warner and Oceanic imperils the future of public access TV in Hawai‘i.

By Ian Lind

In a controversial move hidden from the public, and even from most insiders when it occurred in mid-2000, state cable regulators gave a multimillion dollar windfall to Oceanic Cable and its corporate parent, AOL-Time Warner. The windfall came in the form of lowered franchise fees to be paid by the cable company and a cut in the number of channels required to be set aside for future public, education and government use. Supporters of public-access television, which uses cable franchise fees to provide community programming, say the state’s action was just one example of political pressures that threaten to undermine the fragile arena of free speech carved out by local access providers.

The unexpected dose of corporate welfare was buried in the state’s lengthy review and approval of the $350 billion merger of Internet pioneer America Online with the entertainment and media conglomerate Time Warner, which could not be finalized until it got an official blessing in each community where the company owned cable systems, including Hawai‘i.

At that time, Oceanic was the sole cable provider on O‘ahu, the Big Island and Maui County. It established a statewide monopoly last year when, with little fanfare, it took over Garden Isle Telecommunications on Kaua‘i, the last independent cable provider in the state. Now if you want or need cable anywhere in the state, from Ka‘ü to Hanalei, Oceanic is your only option.

Regulators had only limited discretion in dealing with the AOL-Time Warner merger, but in some parts of the country the occasion was used to try to leverage additional public benefits from the cable company. Few succeeded, but here in Hawai‘i state regulators went in the opposite direction, apparently paying tribute to AOL-Time Warner’s political clout.

Decision and Order No. 261 was signed by then-director of the Department of Commerce and Consumer Affairs (DCCA), Kathryn Matayoshi, on Aug. 11, 2000. It slashed the number of cable channels Oceanic is required to set aside for future public, education and government use (known as PEG access channels), and at the same time changed a key formula that essentially lowered the rent Oceanic pays to string its cables along publicly owned rights-of-way....

In a world where global access to information and entertainment is controlled by fewer than 10 mega-corporations, the merged company took its place as the world’s largest media company, according to Advertising Age magazine.

Ethics concerns

Although cable regulators defend the changes in franchise terms, they have little comment on the secrecy with which the decisions were made, feeding the perception that state policies are unduly influenced by backroom deals between cable regulators and the industry they are supposed to regulate.

It wasn’t simply that the public didn’t figure out what was going on until it was too late. The record seems to show the issues were systematically hidden in order to eliminate any opportunity for public questioning or debate.

Adding to the perception of backroom deals was the disclosure that Pamela Sonobe, wife of Cable Division Administrator Clyde Sonobe, began working for another Time-Warner company in 2001, just a year after the merger was approved and as Oceanic was preparing to establish its statewide monopoly.

In September 2002, the Community Television Producers Association filed a complaint with the State Ethics Commission, alleging that Pamela Sonobe’s job with Time Warner Telecommunications in Honolulu created a conflict of interest for her husband in his oversight of Oceanic, another Time Warner company. The complaint cited an ethics provision that prohibits any state employee from taking any official action directly affecting a business “in which he has a substantial financial interest. …”

The Ethics Commission agreed that Sonobe’s employment gave her husband “a substantial financial interest” in Time Warner Telecommunications. But the commission concluded it was not a conflict of interest. The commission’s ruling is contained in a Nov. 20, 2002, letter, a copy of which was provided to the Weekly by current DCCA Director Mark Recktenwald.

According to the commission’s findings, the cable and telecommunications firms are separate and distinct subsidiaries of AOL-Time Warner with separate offices and no shared officers. Further, the commission determined Clyde Sonobe’s cable duties do not require him to take any action “directly” affecting his wife’s employer....

One group that should have had a hand in the process is the Cable Advisory Committee, established by state law to offer advice to cable regulators. In making decisions on cable franchise matters, the DCCA director is legally required to consider any objections raised by the advisory committee. But the committee was effectively eliminated by then-Gov. Ben Cayetano, who took office in 1994 and refused to appoint any members to the committee. As terms of existing members expired, they were not replaced....

Akakü’s McLaughlin was the last official member of the Cable Advisory Committee. His term expired on June 30, 1996.

“It was never formally disbanded,” McLaughlin says of the committee. “It just sort of faded away.”

McLaughlin said he occasionally contacted Cable Division staff before his term expired.
“I would call and ask, what’s going on? Any meetings?”

“They would tell me, ‘We don’t need your advice,’” McLaughlin said.

Access to free speech

The public access movement dates back to the 1970s and ’80s, when federal law recognized the importance of the public stake in alternatives to commercial television. As television became the dominant source of news and community understanding of public issues, lawmakers realized the public has to be provided a way to participate in what is otherwise a prohibitively expensive medium, just as leaflets and pamphlets gave individuals or groups a way to express themselves in print.

As a result, federal law gave communities the right to demand cable companies pay a fee and set aside channels for public, education and government programs. In order to avoid First Amendment issues that would quickly arise if local governments directly controlled these programs, they are administered by separate nonprofit organizations designed by cable regulators and funded by franchise fees.

‘Ölelo, O‘ahu’s access provider (broadcast on Oceanic Channels 52-56), was incorporated in 1989, and others followed — Akakü on Maui, Na Leo ‘O Hawai‘i on the Big Island, and Ho‘ike on Kaua‘i. All offer free or low-cost training in television production, support for individuals and groups that want to produce their own television programs, and several channels to reach the public.

In the midst of the increasingly vociferous national debate over the concentration of media ownership and control in fewer and fewer corporate hands, public access or community television has become a primary battleground where free speech advocates confront corporate domination of the airwaves.

“Public access cable is the only place where the average, ordinary person can take the podium and have a voice,” said Richard Turner, a longtime advocate for community media and state policy coordinator for the Washington, D.C.-based Alliance for Community Media.

“The whole principle underlying the First Amendment is that the people have a right to speak, but if it weren’t for public access, this would no longer be possible in this electronic age,” Turner said...

Pressure on providers

Public access television has grown in sophistication and influence since ‘Ölelo was formed in 1989, providing a way for groups outside of the political establishment to make their views known and to impact public policy. It is not a contribution that is universally appreciated.

Michael Edwards, an independent access producer on Kaua‘i, said he ran afoul of corporate interests when he began documenting the debate over the proposed sale of the island’s electric utility and creation of a utility co-op several years ago.
Edwards said Kauai Electric officials first tried to block him from videotaping public meetings where the utility discussed its plans. Later, after Edwards completed a show and scheduled it for showing on Ho‘ike’s public access channel, the program was suddenly pulled from the schedule in the face of pressure from the utility. Although the program was later rescheduled, it did not appear at the announced times, reducing its potential audience.

“It was a sad commentary for me that public access would just roll over and give into censorship like that without so much as a whimper,” Edwards said.

Sean McLaughlin on Maui tells a tale of arranging a lunch meeting with an island business leader who he hoped would help underwrite Akakü’s broadcast of a series of candidate forums during last year’s election campaign.

Before McLaughlin could make his pitch, the developer interrupted.

“He says, ‘Before we get started, let me just tell you I hate Akakü,’” McLaughlin recalled. “‘You guys use public funds to give a voice to people who misrepresent my projects. If I could, I would shut you down, I would put you out of business because you are giving a voice to irresponsible people.’”

McLaughlin said he offered a standard response — that the answer to irresponsible speech is even more responsible speech rather than censorship. But the businessman responded: “Sean, I can buy that [favorable programming]. I don’t need you for that. I need you to not let those people on your station.”

Akakü did not give in, and it isn’t clear from McLaughlin’s telling whether his developer friend ever seriously pushed his attempt to silence critics. But it’s a clear warning of the pressures facing access providers....

Public access advocacy

The three years since the merger have not been kind to AOL-Time Warner. The company’s total market value has plunged by more than 80 percent, falling from an estimated $350 billion at the time of the merger to just $55 billion today. Company Chair Steve Case, architect of the merger, was forced to resign.

Any hopes that reduced franchise fees might translate into lower consumer prices were quickly dashed when Oceanic raised its rates almost immediately, leaving consumers paying as much as before. And the company has continued to raise rates, with another round just announced for O‘ahu consumers....

Meanwhile, access advocates took their case to the Legislature again this year, with unsuccessful attempts to get a legislative audit of access providers and to require them to comply with state open meetings and records laws.

Cable watchers are waiting to see when Governor Linda Lingle will move to shake up the DCCA Cable Television Division. Both during the campaign and after the election, Lingle has publicly called for shifting power over cable issues to the counties.

An extreme move might be to transfer all regulatory powers to the local level, where cable decisions are made in many parts of the Mainland. A less ambitious plan might aim to spread PEG resources more evenly among the counties, although that would mean further reductions in funds available to ‘Ölelo.

An immediately useful step would be to simply appoint new members to the Cable Advisory Committee, which is still authorized by law, a quick way to reestablish a degree of public accountability to the cable regulation process.http://hpam.hi808.net/1RottenDeal/

~ ~ ~

Muriel Taira is expected to testify regarding her business, professional, political and personal relationships with Steven Guttman, David C. Farmer, James Duca, Aloha Airlines, Hawaiian Airlines, Lyn Anzai, Earl Anzai, Colbert Matsumoto, Joshua Gotbaum, Kamehameha Schools, Steve Case, Dan Case, Stephanie Case, Jeffrey Case, Robin Campaniano, AIG, Aon Insurance, AOL, Chubb Group, Hawaii Telcom; Carlyle Group; Walter Dods; Dee Jay Mailer; Donna Tanoue; Corbett Kalama; Robert Kihune, Gilbert Tam, Al Hee, Sandwich Isles Communications, Summit Communications, Judith Neustadter Fuqua, and others to be named upon discovery.