A thesis on El Paquete -- a step toward quasi capitalism?

I skimmed the contents of a single edition of El Paquete recently but Dennisse Calle, a sociology student at Princeton University, looked at multiple Paquetes and interviewed distributors and users in researching her senior thesis El Paquete, A Qualitative Study of Cuba’s Transition from Socialism to Quasi-Capitalism.

After a literature review and description of her interview-focused research methodology, the thesis has chapters on the content, distribution/business organization and consumers of El Paquete. She began by classifying the content by type, as shown here.

Most of the content is entertainment -- television, movies and music. The users Calle interviewed "rarely referred to" the items in the "other" category, things like The Bible in audio, software, magazines, music videos, movie trailers, karaoke and (surprisingly) Cuban Music. The one exception was the weekly download of the Revolico want-ad site.

This led her to conclude that El Paquete functions primarily as a diverse alternative to Cuban television, so she drilled down on the television content, looking at its source and category. As shown here, over half of the content is from the U. S., exposing Cubans to U. S. culture and society.

Calle also looked at the genres of the 305 television shows. Soap operas and animations each accounted for 20% of the content and comedy and sitcoms each accounted for 13%. Educational programming accounts for 9% and drama 5%, leaving 20% for "other." The "other" shows included news, reality shows, competition shows, exercise shows, food shows, and talk shows. You can draw your own conclusions as to how these allocations reflect Cuban taste and influence their view of the outside world.

She also investigated the distribution organization. The top level consists of unknown compilers who collect the content. Below them are packagers who put the weekly distribution together, inserting local content, including ads, that varies around the country. At the bottom of the organization are distributors who sell it to everyday Cubans -- from store fronts or door to door.

From the compilers to the distributors, this is a capitalist business, but the distributors blend capitalism and sharing. Calle interviewed five distributors -- three with storefronts and two who went to customer's homes. Some transactions were done at "list" price, but not all. For example, a distributor might offer a low price or free content to someone who could not afford to pay more or to family and friends.

Of the 45 people Calle interviewed, 17 paid for or at some point had paid for El Paquete and 28 did not pay for it. Those who paid were distributors, self-employed cuentapropistas, workers for state enterprises, a student, an artist and one person with family abroad. The 28 who did not pay got their content from a friend, neighbor or family member.

While not profit maximizing, this sharing and discretionary pricing builds social capital, which one day may yield monetary returns and is valuable as an end it itself. As Richard Feinberg points out, Cubans have been brought up to believe that equity and social solidarity are important goals.

Calle sees El Paquete as one factor (along with remittances, tourism, self-employment, etc.) contributing to the transformation of Cubans' sense of self -- seeing Cuba in a global perspective and seeing themselves as consumers with discretionary, luxury spending power:

In a country where materials, shopping, and consumption are limited to food and maybe clothing, El Paquete becomes a luxury, a form of asserting one’s independence from the state’s attempts to suppress individuality.

Consumer choice is not the only element of capitalism surrounding El Paquete. Advertising is another -- El Paquete provides businesses with a means of mass-market advertising. Cubans are also aware of copyright, and Calle reports that many consumers would prefer to obtain the content legally.

Competition is essential for successful capitalism and, in some cases, the retail distributors have a choice of packager and the end users have a choice of retail vendor. This leads to capital investment (perhaps a fast PC for duplicating files), good customer service and the emergence of entrepreneurship. (It is said that El Paquete is the largest private employer in Cuba).

If Cuba can exploit positive aspects of capitalism within a society that continues to value equity and social solidarity, we may see a uniquely Cuban capitalism from which we can all learn.

The thesis is not online, but you can request a copy from the author, dcapupp at princeton.edu.

Inside an edition of El Paquete

I've been writing about El Paquete for some time, but had never seen a copy. This week, someone who will remain annonymous, gave me a copy of the Paquete from the week of March 16, 2016 and I've had a chance to poke around it a bit.

As you see, it is not, as is usually claimed, a terabypte, but is only 760 gigabytes. Regardless, it took around three hours to copy from one USB hard drive to another -- I hope the professionals working with El Paquete in Cuba have devices for more rapid duplication than my laptop. While it is less than a terabyte, it is huge with nearly 13,000 files and 1,400 folders.

The copy I received did not have any sort of user interface software. Perhaps that is good enough for the El Paquete distributors, who are familiar with file structure and content, but end users deserve something better than a Windows Explorer view of the file system, as shown below. If it does not already exist, someone should write a user interface program that lets users search for and select, copy and view content.

As you see there is a variety of content -- in English and Spanish -- and I poked around a bit. The following are a few things I noticed.

I wonder who decides what to include and what criteria they use. For example, I found two old Hollywood cowboy movies, four US spring traing baseball games and an Australian formula 1 car race. Why those movies? Why those games? Why that race?

Someone at Netflix told me that I would find their content, but I did not find any. There was a House of Cards video subtitle (.srt) file, but no video episode. This is 100% speculation, but I wonder if the absence of Netflix content is tied to the possibility of their investing in infrastructure or producing content in Cuba.

There are directories of Android, IOS and Windows software. I wonder if the programs are free of malware.

The quality of a lot of the video I saw was poor, making me wonder how it is captured -- perhaps it is compressed and downloaded over slow connections. Another possibility is that it was not copied from a digital version, but recorded through the so called "analog hole" during playback. The commercials had been cut out of some of the foreign video, but others included the original commercials, again suggesting that they had been recorded during playback. There were also current Cuban ads like the one shown here.

There is a lot of text as well as audio and video material -- for example scanned copies of popular magazines. While the commercial magazines are sometimes out of date and difficult to read, government publications like Granma and official documents like the text of laws are perfect, legible PDFs. It would seem that the government is providing this content directly. Some have gone as far as asserting that the government actively supports El Paquete, and they surely do not discourage it.

Whether or not the government supports El Paquete, they allow it to exist, subject to an informal agreement to remove violent, pornographic or Cuban political content, but I found one delightful example of political content, an episode of Samantha Bee's "Full Frontal." As a cord cutter, I had never seen the program, but the episode was 100% political -- making fun of the U. S. right wing politicians. Evidently U. S. politics are not a taboo subject.

In the past, I have suggested that Cuba could use the Internet to export Spanish-language entertainment and educational content and I found quite a bit of Cuban video on El Paquete. I did not screen all of it, but every program I did look at was offered by a Cuban company, LAY Agencia Publicitaria, which has the slogan "Made in Cuba and for the world." I wonder if the folks who run El Paquete own that agency and see pivoting to Cuban content export as their "exit strategy" in a post-piracy Cuba. (A legitimized Paquete is another possiblity).

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Update 8/20/2016

I made a copy of the March 16 edition of El Paquete for John Graham-Cumming and he has taken a deeper dive into the contents of "The Cuban CDN" than I have. He summarizes what he sees in four categories:

+ The week's English and Spanish Magazines
+ Android Apps
+ TV, Films, Music and "Best Of"
+ Web Sites.

He also scanned for viruses and found a couple, but they would have been detected by the four-day old antivirus updates that were also in the distribution. I am surprised that the producers of El Paquete had not run the same scan, but am impressed by the currency of their updates.

One of the comments on his post also caught my eye. The commenter said each edition of El Paquete contains many files from the previous weeks and there is "only" about 200 GB of new material in each distribution. That's still a lot of work and bandwidth -- I wonder if they are able to do incremental updates when producing the master drives for each week.

Check out Graham-Cumming's post.

John Graham-Cumming

Paquete Semanal, S. A.

A legitimatized "Paquete Semanal, S. A." could distribute Netflix content in Cuba today.

To the extent that we are allowed to see it, Cuba's plan for the Internet focuses on connectivity in homes and public places and support of areas that are considered socially important like education and health care. Even if Cuba is patient and leapfrogs current technology, a large investment will be required in service of those goals.

What about digital entertainment?

As shown below, real-time entertainment (audio and video traffic) accounts for over 70% of North American, fixed access, downstream traffic during peak hours. Netflix is the individual leader with 37.1% of downstream traffic.

The infrastructure investment needed to support digital entertainment is beyond Cuba's means, but, necessity being the mother of invention, Cuba has outsourced digital entertainment to El Paquete Semanal. The organization supporting El Paquete has grown organically and efficiently distributes content in a timely manner. There is demand for their product and El Paquete may be Cuba's largest private employer.

That is the good news, but is El Paquete officially legal? And isn't it's viability dependent upon copyright piracy?

Ironically, El Paquete must also suffer from piracy by end users. I don't know if they worry about that today or just tolerate it and rely on fresh weekly material for their revenue. Regardless, if prices rise after the removal of the wholesale piracy subsidy, there would be a greater incentive for end-user piracy.

Normalization of relations between the US and Cuba will eventually require elimination of the piracy subsidy that makes El Paquete viable. When the negotiations on digital piracy take place, Cuba should consider the strategic role El Paquete plays and find a settlement that allows it to remain a part of the Cuban digital infrastructure.

(There might even be competing "paquetes semanales" -- with the government acting as a wholesaler that negotiates deals with content owners).

Netflix entered the Cuban market shortly after December 17, but that seemed to be a symbolic step, with no prospect of profit. It will be many years before Cuba is able to support the streaming of Netflix content, but a legitimatized "Paquete Semanal, S. A." could distribute Netflix content in Cuba today.

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Update 1/7/2016

In this post, I have focused on content distribution, but the Cuban film and creative communities could be a source of Spanish language content for Netflix and others to distribute in other nations, including the US. I had suggested earlier that Cuba could be a source of content for Google and it's been reported that Cuba is being considered as a location for "Fast and Furious 8" -- might we see Google, Amazon, Netflix and other production centers in Cuba one day?

El paquete update -- Cuba's largest private employer?

For several years, I've been tracking Cuba's "paquete semanal," a weekly distribution of entertainment, software, games, news, etc. on portable hard disks and flash drives.

I've noted that the compilation and distribution of the material is well organized and complete, leading to speculation that it is run by the Cuban government -- it generates revenue, provides jobs and acts as an "opiate of the masses" -- who needs the Internet when you have el paquete? (There is precedent -- there used to be a government storefront in Havana where one could bring floppy disks and get copies of the latest software releases).

Even if the government does not run el paquete, they turn a blind eye to its very visible advertising and distribution. In return, the package (like the illegal local area networks) does not include any politically sensitive material.

ABC News reports that el paquete is Cuba's number one private employer, bringing in $4 million a month:

They do not cite their sources, but it is not an outlandish claim. I don't know how many people are employed in the private sector, but, considering the goofy list of jobs that are eligible for self-employment, it is believable that this popular, ubiquitous service could be the leading private employer.

And $4 million a month does not sound like a lot of revenue for such a widespread operation. According to the ABC report, terabyte hard drives with the week's material are delivered to customer's homes for 5 CUC (about $6.50). The subscriber copies as much as he or she wants and the drive is picked up the next day. That subscriber may, in turn, distribute material to others on flash drives or their own portable hard disks.

Elio Hector Lopez, who claims to be the head of el paquete, described a different price structure in a Forbes interview:

Most customers get the drive at home, where they exchange it for last week’s drive and the equivalent of $1.10 to $2.20. (Distributors selling to other distributors charge ten times as much.)

Regardless, $4 million seems plausible. Lopez went on to say that the original founding group had broken up, but evaded the interviewer's questions about operational details.

The following video gives a view of the distribution of el paquete:



It includes an interview of "Dany Paquete" (shown above), a 26-year old "who looks more like a lazy college sophomore than a kingpin of a national blackmarket of pirated media." He is one of two competing national distributors in Havana.

The documentary does not disclose details on the gathering of information, but suggests that editors in Miami and Havana select movies, music, etc. each week.

Dany sounds more like an MBA business man than a drug dealer and is unafraid to appear on camera. The Cuban government clearly tolerates el paquete. Even if officials are not being paid off, it satisfies many consumers, making them less likely to press for open Internet access. Had he been writing today, Karl Marx would have said "el paquete is the opium of the masses."

I recently had an opportunity to ask a senior State Department spokesman whether el paquete copyright violation had come up during discussions with the Cubans and he said "no," but the agenda of Bilateral Commission includes discussion of claims for damages. The focus will no doubt be on Cuban claims for damages resulting from the embargo and US claims for nationalized property -- might that be stretched to include "Orange is the New Black?"

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Update 11/25/2015

A recent news report sheds light on the economics of el paquete distribution. It features the video shown below -- an interview of an anonymous distributor of el paquete to end users. He pays $2 a week for the paquete and the price he charges his customers is a function of the amount of data they copy. For example, eight Gbytes costs 10 Cuban pesos, about 50 cents. To become a distributor, he had to invest in a computer -- an old tower PC -- and portable external hard drives.

Distributing el paquete is a side job. He earns about $32 a month, which he uses to buy extra food -- and he sees the latest episode of his favorite TV shows.

What is the effect U.S. trade restrictions on IT exports to Cuba?

The Senate Finance Committee is researching the economic impact of U.S. embargo on trade with Cuba and I was asked to testify before the US International Trade Commission on the effects of the U.S. restrictions on our exports of telecommunication equipment and services to Cuba. I have a chance to revise the testimony, and would appreciate feedback.

Click to download Word or PDF versions of the draft.

Here is the testimony introduction:

The Commission has asked for testimony on the effects of the U.S. trade restrictions on our telecommunication exports to Cuba. Since there is a great deal of uncertainty about the Cuban plans and policies and U.S. policy is also in a state of flux, I will lay out a framework for discussing the issue rather than attempting specific predictions. This framework can be modified and fleshed out by future research. I will focus on Internet-based telecommunications, which are subsuming traditional telephony.

Potential U.S. exports to Cuba include:

• Personal Internet access devices
• Internet services for fees or advertising
• Internet infrastructure
• Internet service provision
• Digital entertainment and other content
• Sensor-based Internet access devices – “the Internet of things.”

Some of these markets, for example, providing Internet infrastructure and service, are more severely impacted by U.S. restrictions than others.

U.S. restrictions are only one impediment to the sale of these goods and services – there are others that are out of our control:

• Cuban government fear of free information exchange
• The Cuban economy
• The absence of domestic Internet infrastructure
• Socialist values and practices
• Foreign competition
• Domestic competition from state monopolies

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Update 6/26/2015

An anonymous reader has the opinion that my testimony document underestimates the potential of the Cuban market. They listed the following examples:

Web hosting service -- the reader is "middle man" for ten Web sites hosted in Canada and knows of many others.

Specialized professional audio/video equipment that is only made in US, or were US products traditionally have much better quality. Examples include products from Avid, M-Audio and Alesis. Their products are sometimes bought by Cuban companies in third countries using a foreign nationals or foreign companies as middle man. Other times they have to settle for lower quality products from China or Europe.

Computer assisted Medical equipment -- this is a big opportunity because the Cuban government spends a lot on health care every year

Specialized Software -- for example Oracle databases, which are pervasive in Cuba.

The reader went on to say that some US companies refuse to sell their products to Cuban even in foreign countries. For example Dell dealers refuse to sell laptops to people with Cuban passports in Madrid and Barcelona.

Note that the specialized software is pirated, as is much of the software and content distributed in the weekly "paquete." Copyright infringement will be an issue in any discussion of liberalization of US trade policy. Also note that the medical and audio/video equipment is sold primarily to government enterprises, not private individuals or cooperatives.

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Update 1/16/2016

The FCC has removed Cuba from its exclusion list, opening the door for U.S. telecom carriers to provide facilities-based telephone and Internet service to Cuba without separate approval from the Commission. (Cuba was the last remaining country on the Commission’s
Exclusion List).

The ball is in Cuba's court, but I do not expect them to pick it up any time soon.

Dreaming -- this would be a good time for ETECSA to experiment with satellite Internet as an interim measure.

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Update 3/7/2016

The anti-Castro Internet advocacy group Foundation for Human Rights in Cuba has suggested that the choice of Huawei for the home-access pilot in Old Havana was motivated by Huawei's expertise in censorship and surveillance. (The Old Havana pilot deployment is quite limited, but Huawei is also the equipment vendor for forthcoming DSL home connectivity and Cuba's WiFi hotpots).

I mentioned the Foundation assertion to Doug Madory, Director of Internet Access at Dyn Research and he disagreed, saying:

No not really. There are plenty of companies that offer products that can be used for surveillance and censorship -- see the usage of Blue Coat of Canada in Syria. Huawei is both inexpensive and not western. Those are probably bigger reasons.

At The Economist event (last December) I spoke with the country manager (of a US firm) for Cuba and he said he was in the room for one of the main presentations from Huawei to ETECSA. He said Huawei had brought a dozen engineers and had put a lot of work into their proposal for a telecom build-out. Huawei wanted this deal very much.

Huawei opened a Cuban office and began replacing Cisco routers 16 years ago and they, and other Chinese companies, have established strong relationships with Cuba. The US may have been the dominant supplier of Internet infrastructure and other IT equipment and services at one time, but companies like Huawei are now effective competitors.

This was an unintended side-effect of the embargo, and it remains to be seen to what extent the US can recover.

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Update 4/22/2016

Last summer, I was invited by the US International Trade Commission (ITC) to testify on the likely impact of dropping US trade restrictions on the export of telecommunication equipment and services to Cuba. Others were invited to testify on other industries.

I was unable to make it on the day of the hearings, but submitted written testimony and met with the ITC staff a couple weeks later when I was in Washington.

The full ITC report has now been published. The report goes into considerable detail on a number of industries and their analysis suggests opportunities for increased U. S. exports of agricultural and manufactured goods:

They also looked at travel, financial and telecommunication services. The summary of their telecommunication services finding is:

Despite the underdeveloped nature of the Cuban telecommunication services market, and Cuba’s reported new receptiveness to investment in the sector, it is unlikely that U.S. carriers will enter the Cuban market for services beyond mobile roaming agreements and/or direct telephone services. The primary reasons for this reluctance include concerns that payments to the Cuban telecommunications provider (for connecting telephone calls in Cuba) will be garnished to satisfy judgments by winning plaintiffs in U.S. civil lawsuits against the Cuban government; Cuba’s longstanding ambivalence towards foreign investment in the telecom sector; and the small, low-income nature of the market.

The entire report is 437 pages, including the executive summary. The one-sentence takeaway is that "U. S. exports of agricultural, manufactured goods to Cuba could increase if U.S. trade restrictions were lifted, but significant Cuban barriers to foreign trade and investment would remain."

This rings true when we consider the minimal progress that has been made during the 16 months since the start of US-Cuba rapprochement and the recent Communist party congress.

US-Cuba talks on telecommunication and the Internet

Both sides moving slowly

Last week, a US government delegation visited Cuba to discuss telecommunication and the Internet. I've not seen any official release on the meetings, but a few "off the record" quotes by US attendees have been reported in the press:

Latin American Herald Tribune:

• "The United States has identified 'real potential' for faster and more accessible internet and mobile phone services in Cuba, a 'big' trade opportunity for U.S. telecommunications firms in coming years."
  
• “There has already been an express wish by the U.S. private sector to invest in this."
  
• “Cubans create an attractive environment for investment and the provision of services.”
  

Phys.org:

• "[The Cubans] are looking for mechanisms by which, in the first instance, they can expand connectivity while at the same time retaining their mechanism for market management, which is obviously vastly different than ours."
  

Reuters:

• "I believe they are extremely eager to [modernize] ... They are falling behind, and that's denying their people access to knowledge and to the opportunity to grow as an economy and as a people, and they're aware of that,"
  
• "There's real potential here if there's a real will on the Cuban side ... as long as the Cubans create an environment that's attractive to investment ... and attractive to the delivery of services, I believe those services will reach the island."

In general, the US seemed to reiterate the position that our Internet infrastructure and service firms are now authorized to do do business in Cuba and the ball is now in Cuba's court -- what will they allow, what do they want and what can they afford?

I've also had a chance to speak off the record with folks with knowledge of the meeting, so can add a little to these quotes.

The meetings were "constructive" and relatively informal. Previously, US government contact had only been with and through the Ministry of Foreign Affairs, but this delegation also met with representatives of the Ministry of Communication, the Ministry of Foreign Trade and Investment and ETECSA, the monopoly Internet and telecommunication service provider.

Hearing this, I recalled the early days of the Internet in Cuba, when academics and technical people met freely and informally with members of the Cuban networking community and people from different ministries -- Science Technology and the Environment, Public Health and Higher Education. In those days, the topic was the Internet; today it is business and politics.

The discussions focused on domestic infrastructure, not undersea cables. I asked whether the Cubans had shared specific information on their current domestic
infrastructure. They had not, but the folks I spoke with have gathered a rough picture over time. They think there is a fiber backbone connecting each province (including Isla de la Juventud?) with more fiber in Havana and the tourist areas. There is a mix of equipment from China, France and Vietnam -- the US has competitors.

I asked about the undersea cable being installed between Florida and Guantanamo and was told that it was not mentioned and that Guantanamo is for future discussion -- perhaps in five years.

The delegation met with people from ETECSA as well as the government and I asked about the structure of ETECSA and its relationship to the Ministry of Communication. I was assured that although it is owned by various organizations, ETECSA is definitely a government run operation with revenue of about $1 billion per year.

I also asked about possible legal roadblocks -- civil damage claims by Americans and Cubans. They said that there is precedent for settling such claims and some funds will change hands, but this will not be a deal-killer. Cuba being taken off the list of state sponsors of terrorism will also ease these problems. (Stefan M. Selig, the Commerce Department’s undersecretary for international trade has said Cuba will be removed soon).

I asked whether they had discussed copyright violations, for example, in el Paquete, the weekly distributions of software, entertainment, news and other content on flash drives. This was not discussed, but it too will be the subject of negotiation.

I don't know how these things go, but I imagine the government representatives who traveled to Cuba will now meet with and inform US businesses that might are interested in offering things like satellite connectivity, terrestrial wireless equipment, fiber, networking equipment, service, etc. -- giving them some insight into what to expect in terms of regulation and demand. Presumably they are also in touch with companies like Google, IDT and Netflix that have begun investigating and offering service on their own.

The emphasis of these talks was on Cuba as a customer rather than a vendor, and I hope future talks and policy changes facilitate bi-directional business.

One thing is for sure -- these talks were only a small first step. US companies are interested in Cuba, but will move cautiously, realizing that Cuba is poor, has only 11 million people and, more important, they remain a dictatorship with over 50 years of a bureaucratic, socialist economy. That will change, but not over night.

If I were running the show in Cuba, I would also go slowly -- adopting some short term measures, while planning for the long term. I would talk more with equipment vendors than service providers and look to the example of Stockholm instead of Miami. Most important, I would be thinking about the role of ETECSA -- the Cuban Internet should serve the people, not increase government/ETECSA revenue.

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Update 4/6/2015

I speculated that the government officials associated with the delegation to Cuba on telecommunication and the Internet would be letting US companies that were interested in doing business in Cuba know what they learned and on April 1, three officials gave keynote presentations at the Wharton School's sold out Cuba Opportunity Summit attended by 200 executives, investors and analysts at the NASDAQ in NY.

The keynote speakers were Roberta S. Jacobson, Assistant Secretary of State for Western Hemisphere Affairs, Stefan M. Selig, Under Secretary of Commerce for International Trade and Maria Contreras-Sweet, Administrator, Small Business Administration.

The rest of the summit consisted of panels of expert investors, academics, government officials, etc., including one on opportunities in technology, media & telecom. (Two other industry-specific panel sessions were on opportunities in tourism, payments and retail banking and pharmaceuticals and biotechnology -- immediately "hot" industries). You can see the see the entire agenda here.

As far as I can determine, the sessions were not archived -- the main purpose of a meeting like this is to allow people to meet and network -- but several short interviews were published on the Wharton Web site:

• Hugo Cancio on Cuba's Entrepreneurial Environment (interview summary and 16 minute podcast)
  
• Mark Entwistle on on Opportunities for Business in Cuba (interview summary and 17 minute podcast)
  
• A post on U.S.-Cuba Relations: What ‘Big Steps’ in Diplomacy Mean for Business summarizing remarks of Roberta Jacobson and Stefan M. Selig

El Paquete and Mi Mochila -- sneakernet competitors

I would be curious to know how one submits and ad or music video for distribution in El Paquete and who and how much they pay to have their material included.

Michael Voss (@mvosscuba) of CCTV just did a news segment on El Paquete, a weekly distribution of entertainment and information on flash drives. Voss says El Paquete, which sells for about $2 per week and is available throughout Cuba, has has increasing amounts of advertising, like this ad for a local restaurant:

and videos of Cuban talent like Joel La J, lead singer for the band Los Metalicos.

El paquete is a cool response to a lack of connectivity, but I am left wondering who is assembling this material. Voss says "there's no single person or organization putting the weekly package together; rather it’s a loose knit grouping (sic) across the country." That does not answer my question though -- there are many neighborhood distributors, but who compiles the material?

Cuban blogger Isbel Diaz Torres (@Isbel_oc) has suggested that El Paquete might be produced by the government. I would be curious to know how one submits and ad or music video for distribution and who and how much they pay to have their material included.

El Paquete seems to have a sanctioned competitor in Mi Mochila, a collection of material curated and distributed by the Joven Clubs. Unlike El Paquete, the source of Mi Mochila is known and, as a Joven Club project, it is sanctioned by the government.

Is this inter-government competition? Regardless, I expect that the issue of government sanctioned copyright violation will have to be addressed during the negotiations leading to the US and Cuba establishing diplomatic relations.

The CCTV segment:



Update 8/11/2015

The BBC reports that "the advertising firm ETres offers Cuban businesses such as restaurants, photographers and beauty salons the opportunity to reach their prospective clients for a fee via the Paquete."

The Miami Herald also has an article on the return of advertising to Cuba.

Please, Cuba -- no billboards!

At most, allow murals and street art like "Wrinkles of the City:"

The possibility of a uniquely Cuban Internet

This post is not about what I think will happen, but to begin discussion of what the Cuban government could do if the goal were to provide a modern, open Internet with affordable (free in some cases?) access.

The Cuban Internet is in a sorry state. Freedom House ranks Cuban Internet freedom 62nd among the 65 nations they survey and the UN International Telecommunications Union ranks Cuban information and communication technology development last among 32 nations in Latin America and the Caribbean.

Historically, there are three primary causes for the sad state of the Cuban Internet -- the US trade embargo, Cuban poverty at the time of their connection to the Internet and the government's fear of information. (We'll discuss a possible new constraint, ETECSA, later).

President Obama has lifted the first barrier and, when we look at other poor Latin America and Caribbean nations, we see that Cuba could afford a better Internet than it currently has.

That leaves fear of an open Internet. The government says the Internet is a priority and they want to expand access as quickly as financially feasible. I am skeptical, but let’s assume they are sincere – what might they do in the short term and the long term?

In the short term

Cuba cannot afford ubiquitous, modern Internet infrastructure today – they need low-cost interim action while planning for the long term. Here are some low-cost ways they could improve the Internet in the short run:

• Run a pilot study using the same sort of satellite equipment that Alan Gross was arrested for bringing into the country and, If successful, follow with  a national roll out – with access points marketed and supported by Cuba’s recently-legal small business people.
• Equip central offices with equipment to upgrade dial-up to DSL accounts.
• Use terrestrial wireless links to establish points of presence in rural locations.
• Legitimatize and support local area streetnets.
• Legitimatize and support the weekly “packages” of movies, TV series episodes, magazines and software that are distributed by independent vendors on flash drives. (This would requires some kind of copyright agreement).
• Provide high-speed connectivity to universities and the medical network over the ALBA-1 undersea cable.
• Begin networking of Cuban schools and improve connectivity at the Youth Computer Clubs
• Legitimatize and support the development and export of Cuban software and software services.
• Encourage and support the establishment of a vital startup community.

What about the long term?

Long range planning, addressing technology and, more important, infrastructure ownership and regulation policy, should begin immediately.

Cuba has little Internet infrastructure. There is an undersea cable to Venezuela, but little fiber on the island. (Eventually, Cuba might take control of the cable being installed between Guantánamo and Florida). Nearly all home connections are dial-up and the cell network is obsolete 2G technology. There are 573 public access computers in 155 locations, but they are slow and an hour online costs nearly a week’s pay for many workers.

Cuba should leapfrog today’s technology, looking toward developments that are five or more years out – 5G  mobile communication, high frequency wireless by Google and others, the satellite constellation projects from SpaceX and OneWeb, connectivity using an undersea cable from Havana and perhaps the one at Guantánamo, etc. Routing traffic using version 6 of the Internet protocol will prepare them for the “Internet of things.”

The long range planning of technology is necessary, but formulating policies for ownership of infrastructure and regulation is more important -- not only for Cubans, but for the rest of the world as well if the Cuban experience leads to innovative policies.

The conventional wisdom is that Cuba should invite foreign companies to install infrastructure – a path many developing nations have followed with marginal success. It is not certain that Cuba, with its current government and weak economy, could attract foreign investment, but even if could, I would hate to see Cuba's Internet future in the hands of companies like AT&T or Orange.

If they do go with foreign investment, I would not be surprised to see them partnering with Google rather than a traditional ISP – Google executives have visited Cuba and Google is clearly interested in global connectivity. My experience in the US leads me to trust Google to do a better job than the incumbent ISPs, but, I would still have to ask -- in the long run, why should we expect Google to be better for the Cuban people than a traditional ISP? (I'd ask the same question of aspiring global satellite ISPs SpaceX and OneWeb).

Cuba should go slowly and consider a broad range of infrastructure ownership policies like municipal ownership in Stockholm, government as a venture capitalist in Singapore, government as rural wholesale backbone provider as in India, individual ownership of final links, etc. Cuban policy makers should consider a broad range of policy models -- Chile, Iceland, Vietnam, Estonia, etc. etc.

In 1997, fear of free speech led the government to squelch the Internet, but today there is another potential stumbling block – ETECSA, Cuba’s monopoly Internet service provider. ETECSA is usually described as a state-owned monopoly, but it’s privately owned by a murky collection of investors (rumored to include Fidel and Raúl Castro) and regulated by the Ministry of Communication.

The relationship between ETECSA and the Ministry is unclear – which organization makes investment decisions, sets prices, gets the profits or absorbs the losses, etc.?

Cynics predict the Cuban Internet will undergo a Soviet-style sell-off to foreign investors who will run it for their profit. But, if the Cuban government sincerely embraces its socialist goals, it has a chance to create a uniquely Cuban Internet with the goal of providing universal, affordable access to its citizens rather than making profit for private ISPs, ETECSA or the government. I’m skeptical, but hope I’m wrong.

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Update 3/18/2015

One of my long-term suggestions was that Cuba keep an eye on OneWeb, which hopes to provide global satellite connectivity. CEO Greg Wyler, speaking at the Satellite 2015 Conference yesterday, said they hope to be offering service by 2019 -- providing $250 ground stations that require no setup and establish a 50 mbps connection to the Internet and a WiFi, LTE, 3G and 2G local area network.

One of my short-term suggestions was that Cuba deploy geostationary satellite ground stations. They could do that today, but, if OneWeb is successful, their satellite links will be cheaper and superior to today's satellite offerings in every way.

Grag Wyler speaking:

A OneWeb ground station -- no setup required:

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Update 3/22/2015

It seems that Internet access at the University of Santiago de Cuba has been significantly improved. I am being a vague because the post I read has been translated into English and is hard to follow. It sounds like the university now has a fiber link and speed and data caps have improved significantly.

Can someone fill me in on the details of this upgrade and on the general state of connectivity at Cuban universities?

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Update 3/28/2015

Ricardo Alarcon, head of the Ministry of Higher Education announced a deal with ETECSA to substantially improve university Internet access. It sounds like every university will have both domestic and international links. The article is vague and inconsistent on technical details, but it also says students will have access to 40,000 digital magazines -- double the previous amount.

The article also refers to an upgrade to the university network, REDUNIV. The figure below was taken from a PowerPoint presentation last updated in 2005. I am saddened to see a frame relay backbone, but I am sure it has been upgraded since that time. Does anyone have information about the current network?

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Update 5/11/2015

I suggested that Cuba would be better off owning and controlling their telecommunication infrastructure rather than turning it over to foreign investors and they may be heading in that direction.

Lina Pedraza Rodríguez, Cuban Minister of Finance and Prices, said that Cuba is in "very advanced" negotiations with Huawei at the World Economic Forum on Latin America last week.

Pedraza also said the Cuban telecoms sector would be open to all foreign companies but also noted that the country wanted to avoid the "negative parts of the Internet."

Pedreza also feels that things are moving slowly with the US and called for the elimination of our trade embargo.

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Update 5/28/2015

One of my short-run suggestions was to legitimatize and support shared WiFi hotspots. Raymond J. Delgado Sutil has written a post that elaborates on that suggestion. He estimates that ETECSA's revenue from Internet access "navigation rooms" is around 907,000 CUC per year and the cost of installing WiFi access points at each navigation room and Youth Computer Club location would be about $200,000. Users would use their own computers and phones, eliminating the need for more computers in the navigation rooms. He says ETECSA should "just do it" rather than conducting a "study."

Unfortunately, Delgado does not mention backhaul speed at the navigation rooms or whether they connect to the undersea cable for international traffic. The backhaul speed is only 2 mb/s at the ballyhooed free hotspot of the artist Kcho. At that speed, performance would be very poor whether access was over WiFi or using one of the original hard-wired computers. Similarly, if international access were routed over satellite, response would be very slow.

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Update 7/16/2015

Raul Castro has reported that Cuba's economy is growing at a 4.7 percent annual rate (due to increased tourism?) and Cuba is "strictly meeting its debt obligations with foreign creditors and suppliers." A stronger economy will enable Cuba to pursue a relatively independent Internet strategy, without excessive reliance on foreign investment.

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Update 7/18/2015

Speaking at the 10th Congress of the Young Communist League of Cuba, Deputy Minister of Communications Jose Luis Perdomo said they were working on connectivity from homes, lower costs, access from educational, health, scientific, cultural and sport centers as well as industrial, business and service centers.

More concretely, he said they planned provide Internet service to 3G cellular users and deploy WiFi in Havana and provincial capitals. There is little 3G cellular today -- does that mean they plan to extend it? He also said they were deploying IPv6.

Deputy Minister of Communications Jose Luis Perdomo

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Update 11/19/2015

We suggested that Cuba shift to IPv6 and, as the following figure shows, they are routing IPv6 traffic over Tata and Newcomm (satellite) networks, but not Telefonica. I believe the "other" traffic is internal to Cuba -- peering with CENIAI Internet (AS10569).

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Update 1/17/2016

In considering future technology, infrastructure ownership and policy options, Cuba should look at the experience of others. Steve Song has just posted his annual Africa Telecoms Infrastructure review. The review might provide some insights for Cuban policy makers and they should be consulting with folks like Steve Song.

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Update 9/29/2016

Hybrid fiber-wireless is another future technology Cuba should track. Google, cell phone companies and others are experimenting with a number of options for "last kilometer" technology. One in particular, PCell wireless, might turn out to be appropriate in Cuba if it proves to be practical.

Demonstrations of PCells in labs are impressive, allowing full speed wireless connections to computers or mobile devices that are inches apart. One would expect closely situated radios operating in the same frequency band to interfere with each other, but PCells capitalize upon interference, analyzing it to create very small zones of clear reception.

It remains to be seen how this technology works on the street as opposed to the lab and Webpass, a boutique high speed Internet service provider that was recently acquired by Google, and Nokia are both evaluating PCell technology. If it turns out to be effective, PCell might be particularly appropriate in Cuba with its penchant for do-it yourself improvisation.

PCell access points are small and distributed compared to conventional cell towers and, if they turn out to be effective, they could be installed by the people -- like a "street net." They remind me of the home-made dishes people used to pirate TV signals broadcast from the Havana Libre hotel back in the day and the installation of local area network wiring in California schools by students and staff during "Net Days."

PCell access points

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Update 10/5/2016

In this post, I have suggested several short-run, interim steps Cuba could take while evaluating and planning for leapfrogging to next-generation infrastructure when they are financially and politically ready to create a modern Internet. I wrote the post about a year and a half ago, and started by saying that it was what I hoped would happen, not what I expected to happen.

There have been some short-run improvements during the last 18 months, but not all that I had hoped for. I have no idea what, if any, plans have been made for leapfrogging to next-generation infrastructure -- the planning process is not open or transparent.

One thing is for sure -- there will be no leapfrogging on infrastructure without leapfrogging to next-generation policy on infrastructure ownership and regulation. Next generation policy should be geared toward meeting economic and social goals, not to maintaining telecommunication bureaucracy and revenue or on politics. As we see below, the world is trending in that direction.

Global trend toward 4th generation regulation, based on social and economic goals

And, fourth generation regulation is correlated with broadband connectivity:

Netflix comes to Cuba -- only Fidel and Raúl can afford it for now *

What about YouTube?

Netflix has joined Google as one of the first US companies to offer an Internet service in Cuba, but few Cubans can afford the $7.99 monthly Netflix subscription and home access is nearly all over dial up connections. DSL bandwidth at public access points, hotels and some work places can only support low quality Netflix streams and Cuba's second generation cell network will not support mobile viewing.

Forgetting access, how about Copyright? Netflix cannot afford to violate copyright deals with its suppliers and in Cuba they have to compete with Cuba's weekly pirate distributions of movies, TV episodes, magazine, software, Web sites, etc. and similar material delivered over local WiFi networks.

It would be interesting to know what sorts of royalty rates Netflix is paying for the material they plan to stream in Cuba and what content will be available.

Given the economic, copyright and infrastructure constraints, I suspect that, for now, Fidel and Raúl Castro will be the only Netflix customers in Cuba and they will only be able to watch old Cantinflas movies and Netflix productions like House of Cards and Orange is the New Black.

What about YouTube?

Google executives recently visited Cuba -- did they talk about YouTube? I imagine a much higher percent of YouTube content can legally be distributed in Cuba than is the case for Netflix, but the vast collection of YouTube video would cause problems for Cuban censors. Which Cubans would be allowed to access YouTube?

Google does not block YouTube, so it is available to the few people with an international Internet connection, but I have not been able to find anyone who has seen YouTube in Cuba. It is not available in Universities, and, even if it were, student bandwidth caps would limit or eliminate viewing. Does anyone reading this in Cuba have access to YouTube video?

(I am guessing that Netflix video is streamed from inside Cuba, perhaps from this ETECSA data center, but YouTube is not).

I joked about the Castro brothers being the only Netflix customers in Cuba, but hotels and other senior government officials probably also have access. While that is not enough to justify going into Cuba, Netflix had gotten valuable publicity and demonstrated that they are a global company.

Finally, everyone is focusing on Netflix, YouTube and other companies selling goods and services to Cuba. My focus is on the goods and services Cuba can sell to the US and the rest of the world. (We took a giant step in that direction with the announcement that many types of "goods and services produced by independent Cuban entrepreneurs" could now be imported into the United States).

How long will it be before there are Cuban channels on YouTube and Netflix is commissioning videos made by Cubans? Maybe Google should open their next YouTube production center in Havana.

*Note -- I revised this post after communicating with people in Cuba and at Google and Netflix.

Cuban government support of the weekly "packages"

Cuban blogger Isbel Diaz Torres has written a two part post on the information "packages" that are distributed each week in Cuba.

In part one, he lists 12 factors that lead him to believe that the Cuban government may be behind these weekly packages. I will not list the 12 factors here -- you can see them in his post -- but he makes a compelling case that the package service could not run as smoothly as it does without government participation or approval.

In part 2 he discusses the motive the government might have for supporting the service. Since the weekly packages include current television program episodes, movies, magazines, etc., they supply weekly entertainment, eliminating what may be the key factor behind people's desire for Internet access. He also lists other, very limited, services that the government argues substitute for Internet services. He speculates that the government wants to be able to claim that Internet access is not needed because Cubans have everything they want without it.

One cannot know whether Torres' hypothesis is true. The weekly packages are surrounded in mystery. I have asked many people who distributes them and how they get the material into Cuba and no one seems to know.

If the government is behind the weekly packages, I would suggest a simpler motive than trying to rationalize a lack of Internet access -- money. The packages are a going business with an established curating and distribution organization. Someone is making money and it might be the government or a friend of the government.

The Cuban government says information technology is now a priority, but they are limited in what it can afford.

They could surely afford to institutionalize and upgrade the weekly "sneaker net" if they were sincere. The people curating and distributing the material could be recognized as small businesses and new types of material -- like news and education -- could be included.

The big stumbling block would be copyright. The government might not want to acknowledge copyright violation. If they chose to worry about copyright, they could negotiate block licenses with the owners of the material. Since they not getting any royalties for Cuban distribution today, low royalties, perhaps with a promise of increases over time, could be negotiated.

I've made a couple of other low cost proposals the Cuban government could implement in the short run -- a satellite pilot trial leading, if successful, to a broader roll out.

If they are sincere in the desire to prioritize information technology, they could also get behind and extend the weekly packages.

Cuba's sneaker net

Yaima Pardo, 34, in her home in Cuba as she describes her project PaSA
(Paquete Semanal Autnomo), an independent weekly digital-media package for Cuba

A recent article (English or Spanish) describes the black market distribution of music, soap operas, TV programs, movies, magazines, Web sites, etc. on flash drives.

There is a tiered distribution system. A terabyte drive arrives each week in Havana and is replicated for distributors and eventually sold to end users on the street or delivered to homes. While the material is generally sold to the end user, ads are starting to pop up on distributions. The article does not say whether there are competing distribution networks or how material is selected for inclusion. A detailed description of the process would be most interesting.

The distributions contain no political messages or pornography. The article quotes one person as speculating that Cuban authorities might tolerate the weekly “packages.” It is not clear to me whether the master packages are downloaded or brought in on portable drives, but the authorities turning a blind eye would facilitate either means.

The article also describes PaSA (Paquete Semanal Autonomo) a project of film maker Yaima Pardo. Pardo and her colleagues hope to produce an independent, weekly digital-media package that will be open to more controversial content and distributed for free.

How does one post material on the Cuban "sneaker net?"

Warhol P has written a Havana Times post on the Cuban "sneaker net" -- the circulation of movies, TV shows, software, etc. on flash and hard disk drives.

He reports prices of 50 Cuban Pesos (around $2) for 80 to 500 gigabytes of material and 10 Cuban Pesos for 8 to 16 gigabytes. (These days one can get 64GB USB-2 flash drives for under $30 and 128 GB drives for under $50).

Warhol P says home delivery service is available and some consumers go to the home of the supplier to put together a package in accordance with their preferences. Other suppliers rent out hard drives for three to four days for a little over 4.00 Cuban Convertible Pesos (around $4).

But I have a question -- how does one gain access to the sneaker net? For example, I have developed some Spanish language tech teaching material for young people. It is under Creative Commons license and I'd be happy to see it distributed in Cuba. I'd also like to see the Khan Academy teaching material distributed in Cuba using KA Lite, a packaging of the Khan Academy content for use off line.

Are the sneaker net distributions put together in the US? Are they pretty much only entertainment and software or are they open to other types of material? Is there a way to submit material for inclusion?

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Update 12/16/2014

I have asked how one gets information into the weekly "paquetes" -- who compiles and organizes the material and gets it to Cuba for distribution. People have offered speculation, but no answers. Isbel Diaz Torres of Havana Times has published a comprehensive description of the weekly paquetes along with the theory that they are so well organized, regular and done without interference, that their distribution must be "a Cuban government project, possibly developed in one of those mysterious agencies in the Ministry of the Interior, hidden from the public."

There is precedent for this theory. Years ago, I visited a government storefront office in Havana where one could get copies of any current PC software. You had to bring your own floppy disks for the copies and printer paper if you wanted documentation.

This post was Part one of two. I'm looking forward to Part two.

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Update 2/8/2015

In part two, Torres restates his hypotheses that the weekly packages of digital material are delivered by or in cooperation with the Cuban government and speculates that they are doing so in order to placate the Cuban people by giving them entertainment, saying

It’s a question of keeping the “masses” entertained, docile, isolated from true consumption, in other words, the well-known social control strategy used by States to guarantee governability and that Cuba is setting in motion at a time when less and less can be justified on the basis of Cuba-US conflicts.

He speculates that the government is counting on this affordable entertainment plus access to a few second-rate services on the Cuban intranet to satisfy the Cuban people. If that is the case, they are surely wrong.

Cuba's answer to bit torrent

Yoani Sanchez posted an anecdote about her 20-year old neighbor who exchanges and sells foreign television programs, music and films in a "dizzying variety and quantity" on flash drives.

Her post reminded me of the early days, when you could walk into a government storefront in Havana and get the latest software from the US copied onto floppy disks. You had to bring your own floppies and, if you wanted a copy of the manual, your own copier paper. I was surprised at how current the software was.

Do others have anecdotes or data on the traffic in flash-drive content -- cultural or political?