Free Cuba Phone Market Urged on Obama by AT&T, Nokia, Verizon

Nokia Oyj, AT&T Inc. and Verizon Communications Inc. are urging the U.S. government to ease rules that keep them from operating in Cuba even after President Barack Obama loosened telecommunications regulations last year to promote democracy on the communist island.

Nokia, the world’s biggest mobile-phone maker, is urging the U.S. to ease its 47-year-old trade embargo so it can sell handsets to Cuba. AT&T and Verizon, the largest U.S. wireless providers, urged regulators to make it easier for U.S. companies to directly connect calls to and from Cuba.

The companies’ pleas come after Obama said in April 2009 that greater contact with the outside world would reduce Cubans’ dependency on President Raul Castro’s regime. Still, other regulations prevent companies with U.S. operations from entering the market, according to a July report by the Washington-based Cuba Study Group, which advocates for an open economy.

“We don’t understand why the regulations stopped where they did,” Jose Martinez, head of government relations for Latin America at Nokia, said in an Aug. 20 interview from Miami. “There doesn’t seem to be a desire at the bureaucratic level to change the rules to allow cell phones.”

Cuba has the lowest mobile-phone penetration in Latin America. As recently as 2008, about 20,000 to 30,000 people, mostly foreign diplomats and senior officials, owned mobile devices. That number has grown to 800,000 since Castro lifted a ban on most people owning them, the Cuba Study Group says.

AT&T and Verizon may be interested in setting up roaming service for U.S. customers who visit the island as a first step into Cuba, said Jose Magana, a senior analyst at Pyramid Research in Cambridge, Massachusetts.

Largest in Caribbean

The country of 11.4 million people could become the largest telecom market in the Caribbean, topping Puerto Rico’s $1.6 billion market, Magana said. If the market remains mostly closed, annual revenue could still reach $400 million by 2013 from the current $80 million, he said.

Magana said roaming service in Cuba wouldn’t have a measurable effect on earnings for AT&T or Verizon.

Obama, in an April 13, 2009, memorandum lifting travel restrictions to Cuba for Cuban-Americans, directed the U.S. government to allow companies to provide communications services to the island, saying it would “decrease dependency of the Cuban people on the Castro regime.”

In practice, little has changed, as companies wishing to operate in Cuba risk violating sanctions still in place, said Christopher Sabatini, policy director of the New York-based Council of the Americas business group. These include the 1992 Cuban Democracy Act that prohibits investment in Cuba’s telecommunications network — including donations of anything of value.


“It’s so self-defeating,” said Sabatini, who helped prepare the Cuba Study Group report. “It’s like we just sent them a toy cell phone and said, ‘This will be great. Use this.’”

Cuba’s Foreign Ministry didn’t respond to a request for comment.

AT&T and New York-based Verizon wrote to the Federal Communications Commission this year urging it to grant an April request by TeleCuba, a Miami-based company that sells calling cards, for the FCC to waive rules that fix a maximum rate a U.S. provider can pay the Cuban government for connecting calls.

The wireless providers’ letters may be aimed at supporting their interest in setting up roaming service in Cuba without taking sides in a politically delicate issue, said Christopher King, an analyst at Stifel Nicolaus & Co. in Baltimore who covers Verizon and Dallas-based AT&T.

Market Foothold

Establishing a foothold in Cuba could be lucrative because mobile phone penetration may increase to 80 percent of the population in four years, from 10 percent to 25 percent now, should providers be allowed to invest in the market, King said.

AT&T has no specific commercial plan associated with the letter, spokesman Michael Balmoris said. Verizon spokesman Jeffrey Nelson, and John Taylor, a spokesman for Overland Park, Kansas-based Sprint Nextel Corp., declined to comment on whether their companies were seeking a roaming agreement for Cuba.

The branch of the U.S. Treasury Department that enforces trade sanctions allows U.S. providers to pay Cuba for services including roaming, said a Treasury official who declined to be identified, citing agency policy.

Still, under current FCC rules, U.S. providers can only offer direct calls to Cuba and roaming service if they pay the Castro government a fee no higher than 19 cents per call, said an FCC official. That prevents U.S. operators from offering these services because Cuba demands 84 cents a call, according to the official, who declined to be identified because of the sensitivity of the issue.

FCC Rate Cap

The FCC is considering whether to waive the rate cap, the FCC official said.

U.S. rules also keep Nokia from selling handsets in Cuba, even though it is based in Espoo, Finland, because the unit that exports to Latin America is based in Miami, Martinez said.

“There is an enormous amount of frustration that the rules weren’t clear enough,” said Judith O’Neill, a telecom lawyer at Nakhota LLC consulting firm in New York.

Tommy Vietor, a spokesman for the Obama administration, declined to comment, as did State Department spokesman Philip Crowley.

While the entry of U.S. companies also hinges on the willingness of Castro’s government to let them in, the Cubans would probably be open to the idea because they want the inflow of cash amid an economic slump, Sabatini said.

Cuban state phone company Etesca, based in Havana, has a monopoly on all fixed-line and mobile services. Milan-based Telecom Italia SpA has a 27 percent stake in the company.

“The rules are so unclear,” Ralph de la Vega, AT&T’s chief of wireless, said in an Aug. 20 interview. ‘Until there’s real change there’s not much we can do about it.’’


Despite opening, Cuba looks tough for U.S. telecoms

HAVANA (Reuters) – Americans may soon be able to use their cell phones in Cuba, but U.S. telecommunications companies will find it tough to break into Cuba’s largely untapped market under a new relaxation of the U.S. embargo against the island, industry experts say.

They will face a tangle of political, legal and technical issues that reflect 50 years of bitterness between two countries that were closely allied before the 1959 Cuban revolution put Fidel Castro in power.

Chief among the hurdles is likely to be a cool reception from the Cuban government, which views American cell phones, satellite dishes and Internet service as a threat to its control over the flow of information to the island just 90 miles from Florida.

Potentially big obstacles loom on the U.S. side as well, despite enactment last week of regulations by President Barack Obama effectively granting U.S. telecoms companies a loophole in the 47-year-old U.S. trade embargo against communist-ruled Cuba.

Lawsuit judgments against Cuba have been stacking up for years in U.S. courts, creating hundreds of millions of dollars in financial liability for the cash-strapped island in the midst of its worst economic crisis since the 1990s.

U.S. companies also could face stiff competition from Latin American and European rivals said to be eyeing the Cuban market. All potential entrants will have to market to a Cuban population that makes on average $20 a month and so for whom modern communications are often a luxury.

On the plus side, Cuba is a close and potentially lucrative market where there are only 12.6 phones per 100 people, the lowest ratio in the region, and only 13 percent of the population has access to the Internet, or in most cases a local intranet restricted to Cuban sites.

Cuba has been mostly silent so far on the telecoms changes, which Obama originally announced in April along with the lifting of restrictions on family travel and remittances of money to Cuba by Cuban Americans.

But a high-ranking Cuban official, well placed to know the government’s telecoms policy, told Reuters last week Cuba was willing to meet with all U.S. companies.


“We’d be happy to talk with them,” he said when asked if Cuba would consider doing business with U.S. telecommunications companies. “We’re prepared to talk about everything.”

John Kavulich, senior policy adviser at the U.S.-Cuba Trade and Economic Council in New York, said Cuba’s assurances should be taken with a grain of salt.

“The government of Cuba generally responds to overtures from the United States with a ‘willingness to discuss anything.’ When the ‘anything’ is defined as accountability and lessening of control, the willingness is likely to be minimal,” he said.

Most experts think Cuba will seriously consider any telecom proposal that holds the promise of rich revenues.

But security concerns will take precedence, and so they doubt the Cuban government will want anything to do with U.S. satellite television or Internet services.

Many households in Havana already tune in to private anti-Castro Miami TV stations using clandestine antennas, despite periodic government crackdowns, and Cuba has for years asked Washington to halt broadcasts by U.S. government-funded TV and Radio Marti, which are critical of communist rule.

Deals involving U.S. telecoms companies “are very unlikely considering the Castro government’s tight control on the flow of information through those sources,” said post-doctoral fellow Paolo Spadoni at Tulane University’s Center for Inter-American Policy and Research.

What is more likely, he said, are roaming agreements with U.S. cell phone providers that would finally allow most people with U.S.-based mobile phones to use them in Cuba, as many with phones from other countries already do.

Spadoni points out Cuba and U.S. phone companies already mutually handle land-line calls between their countries, which resulted in the U.S. firms paying Cuba $150 million for services in 2007, the last year for which data is available.

With a rising number of Cuban Americans coming to visit and the possibility, under pending legislation in Washington, that all Americans will soon be able to travel to Cuba, cell phone roaming charges could generate serious cash, Spadoni said.

But the numerous lawsuit awards against Cuba in U.S. courts is a worrisome problem because any money to be paid to Cuba could be diverted by judicial order to someone who has won a judgment against the island, experts say.

In the past two weeks alone, judges in Maine and Miami have awarded a combined total of $48 million in damages against Cuba in lawsuits charging that family members had been killed or wrongly imprisoned in Cuba.

To avoid payment, any U.S.-Cuba agreements likely will include a stipulation that funds owed the island are kept outside the United States, but that will not prevent court judgments from coming down, said Kavulich.

“The only means of protecting any funds is through legislation, which is unlikely,” he said.

The high-ranking Cuban official said the government had had no contact with U.S. telecom executives. A spokesman for Empresa de Telecomunicaciones de Cuba SA (ETECSA), the mostly state-owned phone company, said “we have not received any expression of interest from any telecommunications company in the United States.”

“These new measures allowing U.S. companies to do business in Cuba, lifting a lot of restrictions … have been perceived in the market as huge opportunity for U.S. companies, (but) right now it’s just empty talk,” said Jose Otero, president of Signals Telecom Consulting. – Travel to Cuba

Cuba cuts international rates to $1 per minute

AVANA (AP) — Cuba says it’s reducing international calling rates for residents with land lines to $1 a minute.

Cuba’s telecommunications monopoly, Etecsa, says the discount applies to all international calls through Dec. 15. Details of the promotion appeared on its Web site and were confirmed Monday by a company representative who did not provide his name.

Residential calls from Cuba had cost $2.45 a minute to the United States and Canada, $3.45 to Central America and $5.85 to Europe. Most Cubans don’t have Internet access and cannot afford cell phones or computers.

Despite the cuts, international dialing remains a costly proposition for most Cubans whose average state wages are $20 a month.

News of the offer hadn’t been published by state media as of Monday. Etecsa said details about the plan will appear on residents’ telephone bills. Residents wanting to call abroad must first request activation of international calling service, the company said.

No reason was given for the discount. But Cuba is dealing with a severe economic crisis that has affected islanders and prompted the government to announce spending cuts for education and health care, two pillars of its communist system.

Three hurricanes last year caused more than $10 billion in damage. The global recession has cut export earnings and caused budget deficits to soar, leaving Cuba short of cash. The government’s most recent forecast puts 2009 economic growth at 1.7 percent, compared to a 6 percent forecast made in December.

Etecsa said it will announce new international rates for cell phone users but provided no details. The government made private service available to all islanders in 2008. Cell phones previously were restricted to foreigners and Cubans with key state jobs. – Cuba travel services

Cellphones, pirated signals spread in Cuba

HAVANA (Miami Herald) — Before leaving home for work, Aurelio makes sure he carries the touch-screen cellphone with music player and camera that he bought from a Spanish tourist. In today’s Havana, a phone like that is a symbol of power.

Aurelio (who asked that his surname not be published) is a privileged member of a class of Cubans who try to maintain an above-average standard of living without running into a system that not only discourages individual initiative but often punishes it.

”In my opinion, people who work in the hotel, tourism and transportation industries have a greater purchasing power and use cellphones more frequently,” Aurelio said. “And I believe that will continue until the day some things change.”

Cubacel, a company operated by the Cuban Telecommunications Company (ETECSA), has a monopoly on mobile telephones on the island. The connection fee is as high as $65. A charge is made for both reception and transmission that vary from between 45 and 60 cents per minutes. That’s steep in a country where the average monthly salary is about 400 Cuban pesos (about $18).


When it comes to mobile phone access, Cuba holds the last place (behind Haiti) on the list of Latin American and Caribbean countries — 0.2 phones per inhabitant or less than 5 percent of the population. First on the list is Argentina.

Cuban authorities estimate that by the year 2013 there will be 1.4 million lines available, including regular users and prepaid-card users.

For the Cuban government, communications are a vital frontline. The traditional and inflexible control of information for the past half century has been challenged in recent years by new technologies. There are about 20 independent blogs, such as Generation Y, where dissident voices freely express their vision of reality. On occasion, personalities in the opposition have participated in video-conferences with exiles in Miami.

Despite the official restrictions and the slowness of the connections, the Internet and the boom in cellphone use have been very useful to human-rights activists, who transmit their denunciations abroad with a speed that was unthinkable years ago.

Since the 1990s, television has been the censors’ Achilles heel. Thousands of Cubans, mostly in Havana, watch Spanish-language telecasts from Miami. U.S. State Department officials estimate that 10,000 to 15,000 parabolic antennas are in use in Cuba.

Amaury, a Havana resident who rents rooms to foreign tourists for about $30 per night, pays about $10 a month to receive a pirated TV signal. That expense does not dramatically dent his monthly family budget — about $450.

”Here, we pick up Miami channels such as Univisión and Channel 41 [America TeVé],” said Amaury, who also asked that his surname not be published. “The only problem is that you can only watch the channel selected by the owner of the parabolic antenna.”


The pirated signal is distributed by a neighbor through coaxial cables, amplifiers and frequency boosters that normally blend with the ordinary electric lines.

According to Amaury, the capricious limitation of the TV service is not objectionable because — he and his girlfriend agree — Cuban television is “boring.”

Cuba has five television channels, at least two of which offer only educational programming. One of them, Multivisión, began to broadcast round the clock nine months ago. It was a desperate effort by the Cuban Institute of Radio and Television to provide more attractive programming and to slow the increase of pirated subscriptions.

Recently, the government announced that it will initiate a study to launch digital TV 15 years from now, increasing the number of channels and improving the signal in remote areas. Meanwhile, operations are underway to dismantle illegal connections and break up a business that, so far, has defied the authorities’ strict vigilance.

In March, the Cuban press reported the arrest of several citizens for illegal economic activities that included the dissemination of television signals broadcast by the U.S. company DirecTV. Darris Gringeri, a spokesman for DirecTV in New York, refused to comment on the issue.

During the investigation, the Provincial Tribunal of Havana concluded that the accused had contacts in the United States. Allegedly, accomplices of the accused across the United States opened DirecTV accounts for the sole purpose of furnishing the codes and installation devices needed to capture the international signal in Cuba.


Punishment for illegal possession and installation of parabolic antennas ranges from 3 to 5 years’ imprisonment, fines and confiscation of goods, according to each case.

Amaury, 41, does not know for sure how his neighbor obtained the antennas and repeaters, but said that neither the fines nor the confiscation of the equipment used for the distribution of satellite signals “will make clients forget cable television.”

According to him, every so often a van from the Ministry of Computer Sciences and Communications drives through the neighborhood detecting unauthorized frequencies.

”That happened in the Vedado neighborhood, but two or three days after the police came and cut the special cables, the neighbors reinstalled the connections,” he said.

The authorities have been particularly watchful of citizens’ access to the Internet. There is still no official response from Cuba to the suspension of a series of restrictions on communications and TV linkage to the island announced recently by President Obama.


In fact, U.S. firms can already establish fiber-optic and satellite connections and offer portable-telephony services. However, Cuba insists on having access to a network of underwater Internet cables that would provide faster connections, in violation of the rules of the trade embargo imposed in 1962.

Price is one of the main obstacles to widespread Internet use. The connection from hotels and ETECSA branches costs as much as 10 CUC per hour. Recently, some hotels have denied the use of computers to Cuban citizens, claiming the existence of a joint regulation by the Ministry of Tourism and ETECSA, although its contents has not been published.

To the government, the usual explanation for the lack of a Web infrastructure that satisfies the population’s demands blames the economic crisis and the U.S. embargo. ”It sounds good but it doesn’t compute,” said Xiomara, 21, a student of engineering.

The government restrictions ”are economic, not political,” she added.

Xiomara stood on line for more than 30 minutes, one day in May, to use a computer in an ETECSA office at Obispo Blvd. in Old Havana. The government, she said, has no idea as to what ”dissatisfied” young people can do.

”They want to wear us out, but I think that things are going to be difficult for them,” she said. “Young people in Cuba are more restless than ever.”

Cuba and Internet: Critical bloggers spark new government restrictions to Internet access

Chicago Tribune:

HAVANA — Cuba is further limiting access to the World Wide Web for its citizens, in what many believe is an effort to rein in a small but increasingly popular group of bloggers who are critical of the government.

Only government employees, academics and researchers are allowed their own Internet accounts, which are provided by the state, but they have limited access to sites outside the island. Ordinary Cubans may open e-mail accounts accessible at many post offices but do not have access to the Web. Many got around the restrictions by using hotel Internet services.

But a new resolution barring ordinary Cubans from using hotel Internet services quietly went into place in recent weeks, according to an official with Cuba’s telecommunications monopoly, hotel workers and bloggers. There was no official announcement of the change. Cuba has the lowest rate of Internet access in Latin America.

“Internet use is only for foreigners for the time being,” said a worker at the Hotel Nacional’s business center. “According to a new order from ETECSA [Cuba’s telecommunications monopoly], only foreigners can surf the Web at hotels.”

An ETECSA official confirmed the change but said he was not authorized to comment.

Internet access is a delicate issue for the communist state; about 200,000 Cubans, or less than 2 percent of the population, have access to the Web. Cuban officials say the U.S. trade embargo and economic limitations prevent the majority of Cubans from accessing the Internet.

For Cubans, who only last year were granted the right to stay at tourist hotels and obtain cell phone contracts in their own names, the ban is one of many frustrations of life on the island.

Reinaldo Escobar, the husband of popular Cuban blogger Yoani Sanchez and a blogger himself, said he was recently denied use of wireless Internet service at the Melia Cohiba hotel.

“The government did not expect that the blogosphere would make use of the Internet the way it has in Cuba,” Escobar said. “They thought the costs would be prohibitive and few would use it. But a group of Cubans is using the Internet to project their opinions, and now they are reacting.”

Internet use at hotels is pricey by Cuban standards: $5 for a half-hour. The average monthly salary for many state workers is about $20. Escobar believes authorities hope that bloggers turn to the free Internet services offered by the U.S. Interest Section or other embassies in order to later accuse them of being financed by foreign powers.

Dagoberto Valdes, the editor of an online magazine in western Pinar del Rio province, said he and his son also were turned away at the Melia Cohiba.

“It is a new form of Cuban apartheid for surfers of the Web,” Valdes said. – Wedding in Cuba

Cuba’s Cell Phone Lines Drop in Price

HAVANA TIMES, Dec. 11.- The price of a cell phone line for Cubans was lowered by nearly half to 60 CUC (US $75), according to an official announcement on Thursday from the Cuban Telecommunications Enterprise (ETECSA). The company said that a greater capacity to offer the service had made it possible to drop the price.