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US Carriers, You're Going to Cuba!

Mitch Wagner
12/18/2014
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Hope you like mojitos and fine cigars, because you're on your way to Cuba.

President Obama on Wednesday announced normalizing relations with Cuba. Among the provisions: US telcos will be able to do business in the island nation, according to a White House statement.

"Cuba has an internet penetration of about five percent -- one of the lowest rates in the world. The cost of telecommunications in Cuba is exorbitantly high, while the services offered are extremely limited," the statement reads.

The 5% of Cubans with access to the full global Internet connect through government institutions, high-end hotels and the black market, according to the pro-democracy group Freedom House. Around a quarter of Cubans can get on the national intranet, where they can use a national email system, view pro-government websites, and use few other services. A submarine high-speed cable linked Cuba and Venezuela went online in 2011, but a year later it was little used.


Find out more about broadband on Light Reading's broadband channel.


Internet access has been a hot-button issue in US-Cuban relations. As part of the normalization deal, Cuba is freeing Alan Gross, an American government contractor arrested in 2009 and sentenced to 15 years in a Cuban prison. He was in Cuba distributing Internet equipment, including laptops, WiFi routers and cell phones.

With a population of 11 million people, many of whom live in poverty, Cuba isn't going to be a transformational market for carriers. But 11 million isn't nothing either -- it's about the same population as Ohio, the seventh most populous US state. And there's a good chance that Cuban poverty won't last long, with Communism loosening its grip on a country that's a short hop from the second-biggest economy in the world.

— Mitch Wagner, Circle me on Google+ Follow me on TwitterVisit my LinkedIn profileFollow me on Facebook, West Coast Bureau Chief, Light Reading. Got a tip about SDN or NFV? Send it to [email protected]

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kq4ym
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kq4ym,
User Rank: Light Sabre
12/24/2014 | 6:35:03 PM
Re: Not so fast...
Llstening to Radio Havana Cuba (on shortwave radio and streaming internet) has been interesting this week. Cubans seem to be wildly optimisic about improving the internet situation there. Only a few months ago Google execs were visiting Havana and shortly thereafter, Cuba's official broadcasting station started using a gmail address for email comments to the station. I wonder how much a coincidence was this week's announcement and Google's visit there?
mhhf1ve
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mhhf1ve,
User Rank: Light Sabre
12/19/2014 | 3:41:53 PM
Not so fast...
It will certainly be interesting to see how IP services deploy in Cuba in the upcoming years, but I doubt it will be done too quickly. As others have noted, the Cuban govt needs to relax its chokehold on freedom before anything happens drastically different from how things have worked there over the last half century. 

But once there is some sense of established free market, it will be fascinating to see how Cubans leapfrog to an internet based economy. Perhaps they'll be able to create a thriving eBay market for 1960's era restored goods? 
KBode
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KBode,
User Rank: Light Sabre
12/19/2014 | 9:11:01 AM
Re: It won't be easy
"I'd expect Cuba will have to get some good free soft loans from big guys around the world before they can pay a dime for the first few feet of fiber connections."

I don't know. I'm not sure that component of it will be any worse than say -- Philadelphia. :)
noLandMan
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noLandMan,
User Rank: Lightning
12/19/2014 | 4:26:32 AM
It won't be easy
Making Cuba an appealing market for foreign investors won't be an easy task. Yes, you might say let's develop the infrastructure in the country but a lot will have to change before someone can actually pay for that. I'd expect Cuba will have to get some good free soft loans from big guys around the world before they can pay a dime for the first few feet of fiber connections.
noLandMan
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noLandMan,
User Rank: Lightning
12/19/2014 | 4:20:26 AM
Re: Cuba - Watch Out!
I'd expect some level of economic aperture in Cuba as part of the current negotiations. More or less what happened with the East Bloc countries back in the 90's after the Berlin Wall fell. Economies in Eastern Europe have shifted to true capitalism and state intervention is not as big as it is in Cuba today.

Yes, you'd have to watch out if it doesn't convert into a free market, but that should be the most natural consequences of these advances.
MordyK
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MordyK,
User Rank: Light Sabre
12/18/2014 | 8:50:49 PM
Immediate impact
If I had to guess, the immediate impact will be the connection of Cuba to to the various fiber betworks that are nearby but intentionally pass Cuba. The shift of reliance on the likes of V-Sat tp the far cheaper and more plentiful cable, will immediately impact prices as the deployments of undersea cables to Africa impacted the costs there.
Mitch Wagner
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Mitch Wagner,
User Rank: Lightning
12/18/2014 | 5:05:18 PM
Re: Cuba - Watch Out!
Confirming your friend's perspective: Cuba won't be a good business for American carriers unless the government there loosens up. Restrictive policies by the US government are a reason why non-US carriers aren't in Cuba in force already. 
Riverlight
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Riverlight,
User Rank: Light Beer
12/18/2014 | 5:01:14 PM
Cuba - Watch Out!
A local friend has an import-export business and I asked him about opening Cuba to international trade, and his reply was "No way, Jose!"    He has accounts in Central and South America, Europe and the Pacific Rim, and he has been warned that Cuba is a Win-Lose proposition.   They Win and You Lose.   All the commercial business is owned by the government; therefore, contracts do not mean anything.   You can sell them a $1MM of goods and they may pay you $200K as payment in full.   They don't care and they don't have to because they are the government.   He said that carriers wanting to make Cuban connection get ready to experience BOHICA in the first person.

He also said that Russia and Venezuela were jumping for joy that the U.S. has taken on this loser.   They are glad to get out of being Cuba's sugar daddy. 
Mitch Wagner
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Mitch Wagner,
User Rank: Lightning
12/18/2014 | 11:06:02 AM
On the other hand
On the other hand, proximity to the US hasn't been a ticket to prosperity for Cuba's Caribbean neighbors.
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