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Hawaii Road Runner Customers:
Tax and franchise fees do not apply to Internet Access:

November 21: 3 Hawaii Road Runner customers and I today filed a letter of complaint with the Department of Commerce and Consumer Affairs. The complaint seeks a refund of State Cable Franchise Fees and Hawaii State General Excise Tax (GET) charged on Road Runner service.

We are asking to "change the rules" (to have the complaint handled by DCCA-OCP, not by DCCA-CATV). The complaint probably isn't officially considered as filed until November 21 when official DCCA-OCP and DCCA-CATV complaint forms were submitted; the official, signed and filled in forms refer to the following letter and exhibits:

19 November 2001

Kathryn S. Matayoshi, Director - DCCA
Stephen H. Levins, Acting Executive Director - DCCA-OCP
Clyde S. Sonobe, Aministrator - DCCA-CATV
Department of Commerce and Consumer Affairs
Princess Kamamalu
1010 Richards Street
Honolulu HI 96813


 Dear  Ms. Matayoshi, Mr. Levins and Mr. Sonobe:

 The 9th Circuit Court of Appeals ruled in June 2000 that cable modem service, such as Oceanic’s Road Runner, is not a Cable TV service. Currently, the DCCA requires customers of cable modem service to file any complaints regarding the service with the Cable TV division. The Cable TV Division lacks authority to regulate or enforce consumer protection laws with respect to this service, and we suggest that the State of Hawaii immediately change its website, instructions to consumers, and procedures such that any complaints regarding cable modem service be filed with and investigated by the Office of Consumer Protection.

 We request that this complaint against Oceanic Cable and its affiliates involving Road Runner, a cable modem service, be considered and acted upon by the Office of Consumer Protection. Each of the authors requests to formally participate and appear individually pro se in a formal complaint proceeding before the OCP that, among other things, seeks individual consumer redress that may also apply to other customers of Oceanic, its affiliates, as well as to other non-affiliated providers of Internet Access in Hawaii.

 It is unlawful for Oceanic and its affiliates to charge and collect State Cable Franchise Fees on Cable Modem Service.

 By e-mail to Kiman Wong, General Manager of Oceanic Cable Internet Services dated October 21, 2001, a request was made for refund of illegal State GET and Cable Franchise Fees being billed for Road Runner service; and, to cease billing these illegal charges.  A copy of the e-mail is attached as Exhibit ‘A’.

 On November 14, 2001, Kiman Wong responded by e-mail to the request. The response, attached as Exhibit ‘B’, includes a Microsoft Word document attachment that has no return address, no signature, and is dated November 1, 2001. This response indicates that Hawaiian Cablevision of Hilo, an Oceanic affiliate, intends to continue to charge and collect State Cable Franchise Fees, but will not remit these fees to the State of Hawaii.

  The undersigned complainants believe that as of the effective date of the 9th Circuit Court ruling referenced in attached exhibits, Oceanic and its affiliates have engaged in deceptive billing practices, and have charged each of us State Franchise Fees illegally. We request refund of these charges, and an order preventing continued billing of these illegal charges. Oceanic and its affiliates have also charged and collected General Excise Tax on amounts billed for State Franchise Fees, and we request refund of these charges as well.

 Oceanic’s November 14 response does not make clear when or if all Oceanic affiliates stopped remitting State Franchise Fees on cable modem service and began placing them in an interest-bearing account. There has been no public disclosure of this action, and it is unclear if DCCA-CATV is aware of Oceanic’s billing practices.

 While the Oceanic response states that it will not benefit from the ultimate resolution of monies placed in an interest-bearing account, consumers are clearly harmed by this apparent unilateral action of the Company. The Company will be collecting and holding funds it is in no way entitled to. Because people disconnect and move, any ultimate refund to consumers will prevent some customers from receiving their refund of these illegal charges. All customers apparently will be involuntarily contributing to this account.

 Because the 9th Circuit ruling was not appealed, any future decision by the FCC or Supreme Court that may change the classification of cable modem service so that State Franchise Fees may legally apply will not change the current illegality of collecting these fees.

  Internet Access in Hawaii is exempt from GET

 The undersigned complainants request that Hawaii General Excise Taxes billed for “Road Runner Service” be refunded; and, an order preventing Oceanic from continuing to bill these unlawful taxes.

 Oceanic’s November 14 response indicates that the reason GET has been charged is that the company is not charging for “Internet Access”. This is ludicrous. Please see the response of Marilyn to Mr. Wong’s November 14 e-mail. The response is attached as Exhibit ‘C’.

 General Excise Tax currently is not consistently charged by the various providers of Internet Access in Hawaii. Currently, a number of providers, including AOL-TimeWarner’s AOL dial-up service, do not charge (and presumably do not remit to the State) GET. A number of providers, including AOL-TimeWarner’s Road Runner service do charge (and presumably do remit to the State) GET. 


Marilyn Wells
Richard Gamberg
Aaron M. Stene
Patrick Balvin

 Enclosure - Exhibits

The enclosures are available on this website - Exhibit 'A', Marilyn's original letter is on Tax Page 1;
Exhibit 'B' and Exhibit 'C' are both on a single page of this site; Exhibit B consists of the e-mail and attached Word document sent to Marilyn by Kiman Wong on November 14; Exhibit C consists of the e-mail response of Marilyn to Mr. Wong sent on November 16.

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