Hawaiian Telcom said it will eliminate three dozen operator positions and contract for directory assistance with a Mainland company that has a Honolulu call center to reduce costs and invest in other areas of the company.

The company said the exact number of people who will be laid off is yet to be determined as it first looks for people among its 55-employee operator staff to take a voluntary separation package and offers them jobs elsewhere in the company.

People who don't accept the severance pay or find other positions within Hawaiian Telcom will be eligible to apply for jobs with Metro One Telecommunications, which will take over the telephone company's 411 calls in mid- to late April. Metro One Telecommunications, a Portland, Ore.-based company, already provides directory assistance and other information services locally, including those for Mobi PCS.

"These are hard decisions to make," said Michael Ruley, Hawaiian Telcom chief executive officer, in an interview. But "we need to balance the costs with the revenue of the company."

He said the change to Metro One should be transparent to Hawaiian Telcom customers but that additional services would be available to them. These could include driving directions, restaurant information, sports scores and reverse directory requests.

Hawaiian Telcom hopes to cut its operator costs by 20 percent, Ruley said. Additionally, the company will be able to use money it would have needed to invest to upgrade its directory assistance services for other projects, including a new high-speed Internet product and television service it hopes to start rolling out this year. Operators will still be employed by the company to handle customer requests for help with collect calls and other operator assistance.

The company said it notified affected employees yesterday morning and that it was still negotiating with the union for a possible early retirement package for some of the workers. Officials with the International Brotherhood of Electrical Workers Local 1357 who represent the workers couldn't be reached for comment.

Hawaiian Telcom bought the company in May 2005 from Verizon Communications Inc. with the pledge of bringing back to Hawai'i the finance, human resources, information technology, marketing and executive staff jobs the previous owner had located on the Mainland. The company said it had 1,508 employees when it took over from Verizon and that its employee count is currently 1,709.

Hawaiian Telcom, owned by Washington, D.C.-based firm The Carlyle Group and a small group of local investors, has experienced a number of problems with the ownership change, including billing glitches and longer customer service call answering times. BearingPoint Inc., a consulting firm hired to help build back-office systems, ultimately agreed to pay Hawaiian Telcom $52 million and waive $29.6 million invoices to the Hawai'i-based companies in settling claims.

Ruley said most of the problems have been resolved but that Hawaiian Telcom still has to do a better job in bringing its costs in line with revenues. Through the first nine months of 2006 it had a net loss of $114.8 million. It is scheduled to release its fourth-quarter earnings on April 2.

The company invested $85 million in upgrading its network last year as it converts from a circuit-switched network to a network that makes use of software and routers in directing calls. Ruley said Hawaiian Telcom studied what it would cost to upgrade its directory services and decided the money would be better spent in equipment that allowed it to go after opportunities in telephone, wireless, broadband Internet and business services.

He said Verizon hadn't invested enough in improving the Hawai'i network and that services available on the Mainland weren't available here.

"It's a very competitive world and if you don't invest in new services, you don't compete," Ruley said, noting Oceanic Time Warner Cable now offers telephone service. "We've been a little like a sitting duck."

Reach Greg Wiles at gwiles@honoluluadvertiser.com.