U.S. Telecoms Eager to Build a Business Presence in Cuba
Wednesday, April 15, 2009
U.S. telecommunication firms could open up investment in Cuba now that the Obama administration will allow companies to operate there, a final global frontier for the Internet age.
But before cellphone and Internet providers rush in, they will closely study potential pitfalls in setting up shop in the Communist nation with one of the poorest populations in the region, analysts said.
The Cuban government has not been helpful in allowing its citizens access to communications technology, said David Gross, who was U.S. ambassador and coordinator for International Information and Communications Policy during the Bush administration. Now that the United States has opened the door, he said, "the question is whether the Cuban government will allow people to come inside."
Cuba has the lowest percentage of telephone, Internet and cellphone subscribers in Latin America, according to Manuel Cereijo, a professor of electrical engineering at the University of Miami. About 11 percent of residents subscribe to land-line telephone service, and 2 percent have cellphone service.
Under President Obama's plan, U.S. telecom companies would be able to build undersea cable networks that connect the two nations. Cellphone carriers would be able to contract with Cuba's government-run wireless operator to provide service to its residents and offer roaming services to Americans visiting the island.
U.S. satellite operators such as Sirius XM Radio and Dish Network could beam Martha Stewart and MTV programs to the nation. Cubans could also receive cellphones and computers donated from overseas.
But with average monthly salaries of about $15, many citizens might not be able to afford service fees, according to experts on Cuban policy and telecommunications infrastructure. Others question whether residents would spend money on BlackBerrys and services such as video on demand, especially if the government restricts Web content.
"The infrastructure that exists there today is lousy, and the Cuban people are paid in pesos, which is worth nothing," Cereijo said. "They are thinking about buying food first."
Most telecom companies declined to comment yesterday about the administration's announcement because they are waiting for more details on how such business relationships would be implemented.
The Cuban government also has not yet responded to Obama's pledge to relax trade and travel barriers between the nations. But analysts and trade experts say President Raúl Castro, brother of longtime dictator Fidel Castro, has loosened the government's grip its people. Last year, he allowed Cubans to buy cellphones, computers and microwaves, in what appeared at the time to be a major step in allowing them to freely access information.
Currently, a government-run company provides all telecom services to Cuban citizens.
Gross, now a partner at Wiley Rein, said U.S. cellphone carriers will balk if the Cuban government tries to charge high fees for roaming contracts. He and others say that consortiums that build undersea cable networks in the Caribbean may see business opportunities in connecting to the island, but they will avoid any conditions that prevent them from offering video and other Internet content, for example.
"Everyone in the region has been wondering when Cuba might open up, and I think Cuba is trying to figure out ways to attract investment in a way that works with its political situation," said Michael Prior, chief executive of Atlantic Tele-Network, a wireless and Internet network carrier in the Caribbean.
Prior said the best return on investment would be for wireless services, which do not come with the hefty capital costs of laying cable and fiber-optic lines undersea.
Cereijo estimates it would cost $2.5 billion to upgrade the island's telecom infrastructure for basic high-speed Internet as well as more reliable land-line and cellphone service.
Some U.S. firms already have licenses with the Cuban government that allow calls from America to connect through the island's carrier.