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US telecoms regulator permits American companies to provide telecoms services to Cuba

cuba

via Flickr © Schwarzkaefer (CC BY 2.0)

  • Cuba's name erased from FFC's 'exclusion list'. Well, it was the last and only country left on it.
  • US companies can now provide telecoms services to Cuba without the need to seek individual special approval from the authorities.
  • Can now also have a "physical presence" in Cuba, invest in and partner with Cuban enterprises.
  • However the old overarching trade embargo remains. It can be lifted only by an Act of Congress.

America's cautious rapprochement with Cuba continues along its tentative way as the US regulator, the Federal Communications Commission, (FCC) announces that it has scrubbed the Caribbean island state from its 'exclusion list'.  American companies are now allowed to provide telecoms services to Cuba without the need to go through the byzantine and bureaucratic process of obtaining individual and separate approvals from the agency before each and any commercial engagement with the Cuban authorities or comms businesses. And so the dreaded 'exclusion list' is now a blank page - Cuba was the last remaining country on it.

In a statement the FFC said, "Removing Cuba from the Exclusion List benefits the public interest as it will likely alleviate administrative and cost burdens on both telecom companies and the FCC and fuel more competition among telecom carriers interested in the market." Yup, there's money to be made.

On July 20 last year the Obama administration re-opened diplomatic relations with Cuba. They had been in the deep-freeze since 1961. In the months immediately following the Cuban Revolution of 1959, when the Fidel Castro-led rebels ousted the corrupt Batista regime, relations with the US were good but deteriorated rapidly in 1960 following a meeting between Castro and then US Vice-President Richard Nixon, at which Castro explained his plans to reform Cuba's society and economy.

His ideas did not find favour with the US authorities who, after expressing “serious concern at the treatment being given to American private interests in Cuba, both agricultural and the utilities", began gradually to impose trade restrictions on the island.

That spurred the Castro government into further acts of state intervention and the nationalisation and take-over of US privately-owned businesses and in retaliation the US trade restrictions on Cuba were tightened. Then the US stopped buying Cuban sugar, the island's main export crop, and imposed an oil embargo which soon so devastated the Cuban economy that Castro turned to trading with the Soviet Union to get petrol and oil.

This worsening tit-for-tat cycle continued until October 19, 1960 when the US passed legislation prohibiting of all exports to Cuba. That commercial, economic and financial embargo, which makes it illegal for US corporations to do any business whatsoever with Cuba, remains in place to this very day. President Obama has called for its ending but US law dictates that it can be lifted only by an act of Congress - and that won't happen any time soon, it's presidential election year in the US.

However, as relations between the two countries slowly improve some industries are being allowed to do business with Cuba and telecoms companies are at the top of that list. They are now able to have a "physical presence" in Cuba, invest in the country and become partners in joint ventures with Cuban enterprises as well as getting involved in major infrastructure projects and being allowed to supply equipment that will lead to the introduction of new telecoms services between Cuba, the US and the rest of the world.

Al futuro por un camino de telecomunicaciones

The above is my approximate updating of one of Cuba's many revolutionary slogans that are plastered on walls and billboards across the country. The original said "To the future on a road of sugar", but that didn't work out when things got a bit sticky on the economic front but perhaps the relaxing of the telecoms prohibitions will help foment economic and social change for the better.

And it needs it because the Cuban telecoms sector is in an incredible mess. I was there in the 1990s during the so-called "Special Period in Time of Peace", a state euphemism for the protracted economic crisis that hit Cuba when the Soviet Union fell apart in 1989. Prior to that the USSR had been subsidising Cuba to the tune of US$14,000 per head of population per annum and when the bank of the Big Red Bear suddenly stopped paying out, the Cuban economy went into total freefall.

Imports fell by 85 per cent as did exports and the country's GDP fell by 34 per cent. Food and medicines became very scarce, severe rationing was introduced on food and just about everything else and the availability of oil fell to just 9 per cent of its pre-1990 levels. Mass starvation was - just- avoided but over the worst of the the period, which lasted several long, hard years, the weight of the average Cuban fell by 9 kilos. Being there as a journalist I got more (but not better) food than the average Cuban but I was hungry all the time I was there and lived on a diet of black beans, a small amount of rice, bread that tasted of industrial disinfectant, a few boiled eggs and lots of very good and very cheap rum. (50 US cents a  bottle - you couldn't spend Cuban pesos on anything at all.)  It was a salutary experience. There was one upside though, the incidence of diabetes, coronary heart disease and strokes amongst the Cuban population fell by upwards of 80 per cent.

I wrote several articles about Cuban telecoms and as part of research for them I visited antiquated and barely-functioning telephone exchanges that had been built in the 1910s and 1920s and also a police headquarters where although the the commanding officer had two old bakelite telephone sets on his desk, one red, one green, he couldn't get dial-tone except for certain set and short periods of the day. Good job there was no crime, - allegedly. (In fact there were muggings and street theft in Havana at night during the frequent power outages but they went unreported in "Granma", the official daily newspaper named after the little boat that carried Fidel Castro and his fellow revolutionaries to Cuba in 1956).

So, these days Cuba is basically an untapped market crying out for nationwide mobile phone services and Internet access. It is calculated that only about 5 per cent of ordinary Cuban citizens have access to a seriously policed and censored sub-set of a sub-set of the Internet, and they have to pay through the nose even for that at specially designated and regulated 'cybersites'. Favoured party apparatchiks do have better access to fast broadband and wider content but they are a tiny minority of the population.

A recent report from Freedom House, the US-headquartered right-of-centre organisation "dedicated to the expansion of freedom and democracy around the world" concluded,"Cuba has long ranked as one of the world’s most repressive environments for information and communication technologies. High prices, exceptionally slow connectivity, and extensive government regulation have resulted in a pronounced lack of access to applications and services other than email. Most users can access only a government-controlled intranet rather than the global internet, with hourly connection costs amounting to 20 per cent of the minimum monthly wage."

That could be about to change. The US comms industry, manufacturers and telcos alike, are very much in favour of relaxing trade restrictions with Cuba and last September Verizon Wireless was the first US cellular operator  to offer roaming in Cuba through its "Pay-As-You-Go International Travel" service. It costs $2.99 per minute for voice calls calls and $2.05 per megabyte for data. That's still very expensive for the average Cuban but it is a step in the right direction and it is expected that prices will fall as more companies start to provide services and proper competition begins to emerge.

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