Monday, December 22, 2014

Who owns ETECSA and who runs the show?

The move toward normalization of relations between the US and Cuba has generated speculation that Internet access will improve markedly. I agree that that is a possibility, but it is far from assured. As a virtual Internet "greenfield," they have the possibility of building a uniquely Cuban Internet using current and future technologies.

But Internet policy and goals are a bigger question mark than technology and that brings us to Cuba's monopoly telecommunication service provider ETECSA (Empresa de Telecomunicaciones de Cuba S.A.).

The ITU describes ETECSA as "one of the last state telecommunication-sector monopolies" and Wikipedia says that 27% of ETECSA is owned by Rafin SA and the remainder is owned by the Ministry of Information and Communication (MIC).

Who owns ETECSA

But, is ETECSA state-owned? In 2011, Telecom Italia sold its 27% share of ETECSA to a company called Rafin, SA. The Central Bank of Cuba describes Rafin as a non-banking financial institution and lists the operations it is authorized to perform on their Web site.

If Rafin owns 27% of ETECSA, what about the other 73%. Wikipedia and the ITU report that that belongs to the the Cuban Government, but the Official Gazette of the Justice Minister cites the following equity shares: Telefónica Antillana SA, 51%, Universal Trade & Management Corporation SA (Utisa), 11%, Banco Financiero Internacional, 6.15%, Negocios en Telecomunicaciones, 3.8% and Banco Internacional de Comercio, 0.9%.

Are these the owners of ETECSA?

Who manages and determines ETECSA policy?

Rafin and several of the other organizations listed above are "anonymous societies," which I take to be something similar to "corporations" in the US. The others are banks and a corporation.

I am not an economist, but this leaves me wondering what the meaning of an SA or corporation is in a communist nation -- aren't these capitalist organizations? That leads to other questions like -- who put up the money for the purchase of Rafin's 27% share of ETECSA? (There is an unsubstantiated rumor that Rafin is owned by the Castro brothers).

What happens to ETECSA profits? Do the organizations that own it receive dividends? Are they re-invested? Who covers losses?

Who sets ETECSA policy? Is there the equivalent of a board of directors? Does the MCI have a voice?

Who makes operational decisions -- which services to offer, where to invest? Who sets prices for services?

This post asks several questions and provides no answers, but the answers to those questions will determine the future of the Internet in Cuba. I hope they do not squander the opportunity to create a uniquely Cuban internet (as they did in 1997) -- for the people of Cuba and as an example for the rest of us.

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Update 4/13/2015

I remain confused about the ownership of ETECSA and their relationship to the Cuban Government. LinkedIn classifies ETECSA as "privately held" and 481 of more than 10,000 employees have accounts.


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Update 11/29/2015

For some inexplicable reason, Google Alerts just alerted me to a two year old post on ETECSA the Growing Monopoly. It is clearly out of date, but it discusses a Havana Consulting Group study estimating ETECSA revenue from prepaid wireless services as $562 million for 2013. That has doubtless gone up and now they are getting revenue for very expensive WiFi and Internet access rooms. A lot of this is prepaid from outside of Cuba using services like Ding.com.

This leaves me wondering what ETECSA's income statement and balance sheet look like, but I doubt that anyone outside a few ETECSA executives and Cuban government officials has those statements. (Where is Wikileaks when you need them)?

Cuba has the opportunity to create a unique Internet -- using the policy experience of other nations and tomorrow's technology, but if the goal is to maximize ETECSA profit or government revenue, the Cuban Internet will remain in the 1990s.

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