When The Carlyle Group announced its bid for Hawai'i's major telephone company, the suitors pledged not to raise local telephone rates.

The Carlyle Group went on to acquire the phone company from Verizon Communications Inc. in May 2005 in a deal valued at $1.6 billion. So far phone rates at Hawaiian Telcom have not gone up, but the bills have. That's because the company now charges the 4 percent state general excise tax on services that were not charged the tax under Verizon.

Hawaiian Telcom spokeswoman Ann Nishida said the changes were made after consultation with local tax experts and only affect a few of the company's several thousand products.

Among the changes is a new tax charge on a federal fee known as a "subscriber line charge." That amounts to an added 27 cents on phone bills of customers with one phone line. The company provides service to about 626,000 phone lines in Hawai'i, so the change is costing customers collectively at least $170,000 a month.

In addition, the company is assessing the general excise tax on other services such as voice mail, nonpublished listings and high-speed Internet service. That adds a minimum of 29 cents a month to accounts with voice mail service and $1.36 to accounts with high-speed Internet service. Hawaiian Telcom has about 80,000 high-speed Internet customers, which now collectively pay at least $109,000 more each month overall.

For some customers the changes feel like a rate hike.

"To me that's an increase," said North Shore resident Monica Lee. "There shouldn't be any increase at all.

"If you're paying $45 for telephone service and now you're paying $47, isn't that raising rates?"

Hawaiian Telcom said that money goes to the state and not into its coffers. However, the company does benefit by not absorbing the cost of the tax, as did its predecessor Verizon.

The decision to pass the tax to customers was weighed against a $100 million investment made in Hawai'i since the takeover, the company said. That includes money spent moving office functions from the Mainland to Hawai'i and on network upgrades in preparation for new services, such as Internet Protocol TV.

"Every business in Hawai'i has to make a decision about how to handle the general excise tax," the company said in a written statement. "In our case, the decision to pass GET along is balanced against significant infrastructure investments Hawaiian Telcom is making in the state.

"We're well under way spending tens of millions of dollars to bring next-generation network technology to Hawai'i."

In addition, Hawaiian Telcom has raised the monthly charge for its inside wire maintenance plan from $3.95 to $5.45 a month to account for higher costs. The last time that fee was raised was in 1999, Hawaiian Telcom's Nishida said.

The company said April and May bills did note that various federal and Hawai'i taxes and surcharges were included in accordance with applicable laws and tariffs. Information about taxes and surcharges also is posted on Hawaiian Telcom's Web site at hawaiiantel.com /CustomerService_Billing_ Taxes.htm.

In general, telecommunications services are subject to either the state GET or the Public Service Company tax. The public service tax is built into the rates for regulated intrastate phone services. The GET tax applies to unregulated and interstate services.

The state Public Utilities Commission, which has regulatory oversight of Hawaiian Telcom, has no position on whether the company can pass such taxes on to consumers, said Lisa Kikuta, a spokeswoman for the agency.

Kikuta said the PUC remains in close discussions with Hawaiian Telcom concerning customer service issues. In April, Hawaiian Telcom's new owners took over customer services functions from Verizon.

Since April, about 12,000 customers received inaccurate long-distance bills and about 9,000 customers with automatic bill payment plans were overcharged, company statistics show. Customers also complained about long waits for customer services.

Reach Sean Hao at shao@honoluluadvertiser.com.