A bidder for Hawaiian Telcom Inc. said it could face financial difficulties if it doesn't obtain funding for a new, state-of-the-art undersea fiber-optic cable.

Sandwich Isles Communications Inc. is seeking to tap into a special fund paid for by consumers around the country to finance the lease of a 358-mile cable connecting O'ahu and the Neighbor Islands.

But the fund's administrator, the National Exchange Carrier Association, recently rejected Sandwich Isle's request as too costly.

Sandwich Isles is asking the Federal Communications Commission to overturn NECA's decision.

"NECA's action leaves Sandwich Isles no practical means of recovering the ... lease cost in the near term, and puts in jeopardy its ability to make scheduled lease payments, ultimately undermining the bank financing," the company said.

In its filings with the FCC, NECA said it "has serious concerns" about the size of the cable project.

It also questioned the relationship between Sandwich Isles and the cable's owner, Paniolo Cable Co.

According to NECA, Paniolo Cable is owned by Blue Ivory LLC, which in turn "is held by" trusts set up in the names of the children of Sandwich Isles founder and President Albert Hee.

"Under Sandwich Isles' proposal, today's ratepayers would essentially be paying for a level of service that might never be provided during the length of the lease," NECA said.

Founded in 1995, Sandwich Isles provides heavily subsidized phone lines to about 2,000 Hawaiian homesteaders.

The federal government pays Sandwich Isles about $13,000 per customer for providing the service, which is 100 times higher than the average subsidy for rural telephone service on the Mainland.

Under a 20-year lease, Sandwich Isles has exclusive rights to use the fiber-optic cable network, dubbed the Paniolo Cable.

The construction costs and lease terms for the cable network, which was completed in June, were not disclosed.

Sandwich Isles also is one of two bidders for Hawaiian Telcom, which filed for Chapter 11 bankruptcy in December.

The company is offering $400 million for the local phone company in competition with a stand-alone, $460 million reorganization plan that's being pursued by Hawaiian Telcom.

NECA, which was founded in 1983, is a nonprofit organization whose members include more than 1,000 carriers.

The group administers the FCC's access charge pooling system, which collects money from consumers to help pay for infrastructure costs in rural areas.

Besides the pool funding, Sandwich Isles is also seeking more than $200 million in federal broadband stimulus money from the Obama administration.