December 13, 2016
Google this week became the first US company to plant its data center flag on Cuba, announcing a pact with the Cuban government to locate Google servers on the island nation to enable faster delivery of its content, including YouTube videos.
Like virtually every other major Internet content provider, Google (Nasdaq: GOOG) has been pushing its servers as close to its customers as possible around the globe, except in places such as China, Iran and North Korea, where the practice is prohibited. That had been the case in Cuba as well, but the recent détente brought about by the Obama administration is enabling US businesses to work with the Cuban government.
The friendlier relations might be at risk under President-elect Trump, which has created a new sense of urgency for getting deals like this done, as the Wall Street Journal noted this morning.
The presence of Google servers on the island won't do anything to deliver other Internet content faster, nor will it aid Cuban residents with Internet connections. As the Guardian noted here, home Internet connections are still illegal for many Cubans and public WiFi is painfully slow and expensive, making it unlikely that local residents will be streaming videos on a regular basis anytime soon.
Because of the decades-old trade embargo, there has been no direct data traffic link between the US and Cuba. There is, however, an undersea fiber optic cable connecting the US to Cuba -- or more specifically to Guantanamo Bay, where the US operates a naval base and its infamous prison for foreign terrorists. Built by Xtera Communications Inc. (Nasdaq: XCOM) under a $31 million government contract, the cable is the only direct link between the countries, and was built for exclusive use by the US Defense Department. All other data traffic connects to Cuba through a Russian-built undersea fiber connecting Cuba to Venezuela, with a backup cable provided through Jamaica.
The Xtera-built cable was due to be completed earlier this year. During its construction there had been speculation that it could be extended to the Cuban mainland but DoD officials repeatedly shot that down. Xtera declared bankruptcy earlier this fall, and whatever operations rights it has to Cuban cable -- if any -- could attract the interest of companies willing to negotiate with the Cuban government on extending fiber to the mainland, assuming the US military or Trump administration would not block such a move. (See Xtera Slashes Headcount as Liquidity Crunch Intensifies, Say Sources.)
Tech companies had eagerly eyed Cuba as a new market when Obama first declared détente with the island nation in December 2014, but, as the Guardian article observes, private business deals have taken longer to complete than expected. So the agreement signed by Google Executive Chairman Eric Schmidt and Mayra Arevich, president of the Cuban national telecom provider, is notable on that front as well.
— Carol Wilson, Editor-at-Large, Light Reading
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