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.

Russia, Japan and others want to do business in Cuba

The US is interested in doing business with Cuba, but we are far from alone and we are late to the party. Cuba has a history of trade with Vietnam, China, Spain, France, etc. and visits from trade delegations have picked up.

The Cuban and Soviet economies were deeply intertwined before the Soviet breakup and on April 22 Russia and Cuba signed a five year deal for trade in the aeronautics, metallurgy, medicine, railway transportation and other sectors.

Russian and Cuban delegations met in Moscow.

The emphasis in US-Cuba trade discussions seems to be on the sale of US goods and services to Cuba rather than the other way around, but the Russian agreement includes the sale of Cuba-made pharmaceuticals to Russia, if they are found to be satisfactory in testing. Note that Russia is willing to purchase goods and services from Cuban-state enterprises while the US allows the purchase of goods and services from private Cuban enterprises, but not state firms.

Japan is also interested in doing business in Cuba. Japanese Foreign Minister Fumio Kishida and on May 2 some thirty business people met with representatives of a dozen Cuban state firms to discuss possible business deals at The Cuba-Japan Business Forum.

Cuban and Japanese foreign ministers and their delegations met in Havana. Foto: ain.cu

Cuban debt came up as a possible barrier to trade. Forum President Tomoyoshi Kondo said that "once the issue of the Cuban debt is solved, the two countries will be able to discuss and talk about the future.” The issue of Cuban debt also arose around the financing of the ALBA undersea cable. I don't know the current situation, but a Wikileaked memo from 2010 stated that:

Payment problems continue for all countries. Despite once again restructuring all of its official debt in 2009, Japan has yet to see any payments.

Many nations are looking for business and trade opportunities with Cuba now that detente with the US appears likely. In the short run, Cuban debt and poverty may limit that trade, but improved relations with the US and Cuban economic reform will surely improve the Cuban economy.

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

A high-level US delegation is in Havana to discuss telecommunication and the Internet

I hope Cuba's policy is not shaped by political fear or the desire to protect government/ETECSA revenue and that the US delegation is not trying to influence Cuban politics or maximize the profit of US telecommunication companies.

Conrad Tribble, second ranking diplomat at the US Interests Section in Havana, posted a tweet this morning saying a US delegation is meeting with the Cuban government today to discuss telecommunication and the Internet.

Last month, Roberta Jacobson, who is heading our negotiations with Cuba, said the meeting would be to ascertain how we could "work with the Cuban Government on increasing its capacity for greater internet connectivity to better support access to information by the Cuban people."

The US has indicated that, in spite of the trade embargo, we are willing to offer Internet infrastructure and services to Cuba and I suspect that the purpose of this meeting is to begin to learn what the Cuban government and ETECSA are willing to allow.

I hope Cuba's policy is not shaped by political fear or the desire to protect government/ETECSA revenue and that the US delegation is not hoping to influence Cuban politics or maximize the profit of US telecommunication companies.

Cuba has little legacy Internet infrastructure to protect -- it is a "green field." I am not betting on it happening, but they have a chance to build a uniquely Cuban Internet to serve the Cuban people.

As Conrad Tribble says, this meeting should be interesting.

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Update 3/26/2015

The talks were completed this afternoon. Voice of America reported that the delegation, led by Daniel Sepulveda (@DSepDC), the U.S. State Department's coordinator for international communications met with Cuban officials led by deputy communications minister Jose Luis Perdomo. A statement by Havana says the Cuban side offered the U.S. delegation information about the country's computer systems and cybersecurity policy.

Mr. Perdomo headed the organizing committees for the 2011 and 2013 Informatica conferences and says the limitations on Cuban Internet access are technical, not political and has stressed the government's willingness to open Internet access to the general public. Let's hope he is sincere and represents current thinking of the Ministry of Communication.

Jose Luis Perdomo

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Update 3/26/2015

The US delegation visited the Ministries of Foreign Affairs, Trade and Foreign Investment plus ETECSA, UCI & ISPJAE.

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Update 3/31/2015

We are starting to see some reaction to the US delegation to Cuba. Reuters reports that Cuba said they are committed to getting "Web" access to 50% of the households by 2020 and a US representative said that "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." (Does that mean Cuba wants 50% international Internet access)?

A post on the Havana Times blog asserts that the fix was in from the start and Cuba will hand over telecommunication to the US.

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Update 6/10/2015

Roberta Jacobson, Undersecretary of State for the Western Hemisphere says that Cuba remains undecided on how to modernize their telecommunication infrastructure -- "I do not think they have taken a decision yet -- it's a fundamental dilemma for them. They will have to decide which route to take, what kind of system, how much to do and how fast."

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Update 6/14/2015

An article in Politico says another high level delegation is going to Cuba to meet with government officials to suggest ways to improve connectivity. Google is featured in the article and is said to have a specific proposal, but there will be around a dozen others. I know of one of the other companies and they also have a specific proposal.

I've given Google "advice" about things they might do in Cuba here, here and here -- I'll be curious to see what they propose and what the Cuban reaction is.

My guess is that Google's proposal will have to do with data center or connectivity infrastructure -- they are really good at both, have experience in developing nations and, as they state in their 10-K annual report for 2014 “in the long term as we invest heavily in our systems, data centers, real estate and facilities, and information technology infrastructure.”

Cuban apps in Google's (or anyone else's) online store?

A Google delegation, led by Scott Carpenter, Deputy Director of Google Ideas, and Brett Perlmutter, who had accompanied Eric Schmidt on his Cuban visit earlier this year, is in Cuba. They have visited two important technical universities and some of the Cuban Youth Computer Clubs.

At the University of Information Science, the Google representatives were asked about access to their developer's Web site. Evidently Google is required to block access to that site because the State Department lists Cuba as a sponsor of terrorism and the site contains encryption software. Hopefully Google will be able to open that site to Cuban programmers when the terrorist designation is reversed.

Students also asked whether games they had developed could be marketed through the Google Play store, and were told that was not possible at this time.

I find that a bit confusing, because it is my understanding that the US will now allow software imports from Cuba as long as the programs are produced by independent entrepreneurs and computer programmer is one of the jobs the Cuban government authorizes for self-employment.

There may be some problem with allowing Cubans to sell software through Google Play that I am not aware of, but, if that is not the case, this would seem like a quick, simple thing for Google to do. (I'll add it to my earlier posts on things Google might do in Cuba and things the Cuban government might do).

Netflix moved quickly to offer their service for sale in Cuba, and it seems that Google has an opportunity to kick off commerce in the other direction. While there is little chance of Netflix doing much business in Cuba at this time, Cuban Spanish language apps -- games or more serious things like medical or educational applications -- might sell well in the Play store.

Of course, the same applies to Apple, Amazon, Microsoft and any other company selling apps online.

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Update 4/14/2015

Secretary of State Kerry has formally recommended rescinding Cuba's status as a state sponsore of terrorism. The president says he will act soon.

Assuming he follows the State Department recommendation, will that allow Google and others to list Cuban software and other content in online stores?

Will Google be able to provide Cuban programmers access to their development tools?

What might Google do in Cuba? Content? Infrastructure?

Commercially, Cuba is small potatoes to Google -- a mere 11 million potential users. But what of potential creators? Google is recruiting in another small nation, Israel -- will they be recruiting in Cuba some day?

The other day, a journalist who was writing an article on Cuba contacted me to ask what Google might do there in the short run. I referred him to an earlier post in which I had listed some short term steps, but I will add some speculation on production and hosting of domestic content and infrastructure here.

Content

Cuba has a vibrant film-making community and revised relations with the US could lead to significant improvement. Netflix is open for business in Cuba. I don't think the current Cuban government would be willing to allow unfettered access to YouTube even if there were bandwidth to handle it, but I can see Google employing and supporting Cuban film makers.

YouTube has video production spaces in Los Angeles, London, Tokyo, New York, São Paulo, Berlin, Paris, Mumbai, and Toronto -- how about opening one in Havana?

I won't be surprised if I see Cuban content turning up on Netflix in the near future -- along with Cuban film and animation on YouTube.

Of course, Cuba is a largely untapped source of content beside cinematic video. For example, in an earlier post, I suggested that a free, well connected Cuba could be a rich source of online education and medical information.

Google has built a MOOC platform and offered MOOCS. In 2013, they announced a partnership called mooc.org with edX that promised an open platform for hosting courses, but, over a year later, the mooc.org Web site is unchanged. However, they have been contributors to open edX, the open source edX platform. Could Google host an open edX service for Spanish language courses developed by Cubans (and others)?

The same applies to medical information. Cuba has focused on medical research, training and practice since the time of the revolution and Infomed, their medical network, predates their connection to the Internet. Could Google provide hosting services or high speed connectivity to Infomed and Cuban universities or to Cuba's Latin American Medical School for remote training and course development?

On a recent trip to Cuba, Google executives told students at the University of Information Science that they could not sell applications they had developed in the Google Play store at this time.

I find that a bit confusing, because it is my understanding that the US will now allow software imports from Cuba as long as the programs are produced by independent entrepreneurs and computer programmer is one of the jobs the Cuban government authorizes for self-employment.

There may be some problem with allowing Cubans to sell software through Google Play that I am not aware of, but, if that is not the case, this would seem like a quick, simple thing for Google to do -- it would create a relationship between them and Cuban software developers.

Infrastructure

That is fine for Cuban-produced content for export, but what about domestic consumption? The Cuban economy and infrastructure can not support video distribution today -- might Google contribute to Cuban infrastructure?

Google has data centers in many cities around the world, but it is hard to imagine them building one in today's Cuba, which has little power and very few Internet users. However, for the short term, they could invest to improve ETECSA's data center.

Google also has an interest in last mile wireless and, since necessity is the mother of invention, Cubans have a lot of experience with mesh Wifi LANs. Google might hire and learn from those folks.

Could they help with Cuban backbone infrastructure? Satellite and terrestrial wireless might be used for interim connectivity in rural areas, but what about Havana? Could Havana become a Google Fiber city? Even if ETECSA were to allow it, it is hard to see Google becoming a retail ISP in Havana, but might they provide wholesale backbone infrastructure as they have with Project Link in Kampala, Uganda where they have installed over 800km of fiber.

Kampala is a smaller, more densely populated city than Havana, but the GDP per capita in Cuba is ten times that of Uganda and only about 5% of the Ugandan population lives in Kampala while around 20% of Cubans are in Havana. Considering these rough figures plus Havana's advantages in health and education, Havana seems as good a place to invest as Kampala.

Havana's demographics look good, but there is one large problem -- a lack of competition. In Kampala, Google is a wholesale service provider not a retail competitor. The Internet Society lists 13 retail ISPs in Uganda, while Cuba has one, ETECSA. If Cuba is unwilling to forego ETECSA's monopoly in the retail ISP market, neither Google nor anyone else will make the sorts of investments needed to build a modern Internet.

Early this month, a US delegation headed by Deputy Assistant Secretary of State and U.S. Coordinator for International Communications and Information Policy Daniel Sepulveda, will travel to Havana to work on greater Internet connectivity "to better support access to information for the Cuban people." While the ultimate goal is to better support the Cuban people (customers), the delegation will focus on finding out how and when the Cuban government/ETECSA wants to engage US companies interested in selling them equipment and services.

Charles Rivkin, assistant secretary of state says they have received comments from many US companies and the delegation's goal is to "see what is possible from the point of view of Cuba."

Josefina Vidal, who has been leading Cuban discussions with the US said they welcome US telecommunications companies to explore business opportunities, but there a lot questions. As I said in an earlier post, the ball is now in Cuba's court. Perhaps this delegation will learn what they plan to do with it.

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Update 3/8/2015

Last week, at the Mobile World Congress in Barcelona, Google Senior Vice President Sundar Pichai said they would be expanding Project Link, installing fiber backbones "many more" African cities this year.

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Update 3/16/2015

While Google has a vested interest in increasing the number of Internet users world wide, Cuba is not an easy place to do business -- The Heritage Foundation ranks their economy as one of the least free in the world, but they are taking steps to improve the business climate.

In March, 2014 the Cuban government formally acknowledged the importance of foreign investment to their economy and revised foreign investment regulations. Foreign investment is authorized in "all sectors except those dealing with the health and education of the population and the armed forces institutions, with the exception of their business systems."

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Update 5/19/2015

Cuba recently announced a plan to bring Internet connectivity to all schools at all levels within three years and I made several suggestions for doing so in an earlier post. (I am full of free advice for the government of Cuba :-). Google could contribute to this effort in several ways. One would be in helping with a backbone network to connect the schools. I also suggested that the Cubans take a decentralized approach to building LANs at the schools, and Google could help with that effort -- perhaps using the hi-frequency wireless equipment they have been testing. Finally, the Cubans are talking about tablets for students -- Chromebooks would be better. The One Laptop per Child project has distributed laptops to over 2.4 million children -- how about One Chromebook per Child in Cuba?

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Update 6/24/2015

Last week, representatives of companies in the food and beverage, infrastructure, vehicles, insurance and international corporate law sectors visited Cuba and met with government officials, private entrepreneurs, cooperatives, journalists, economists, artists and members of the diplomatic community.

Two of the visitors, Brett Perlmutter of Google Ideas and Brehanna Zwart of Google Access and Energy, were from Google, and they reportedly came with a proposal. I don't know what they proposed, but they indicated that it was for mobile infrastructure. I've been speculating about things Google might do in Cuba -- why stop now?

Brett Perlmutter and Brehanna Zwart at OnCuba Magazine

Google has experience with fiber installation, both in Google fiber cities in the US and in Kampala Uganda where they have installed a wholesale fiber ring. Might they do the same in Havana or elsewhere? Google's fiber could be used for mobile backhaul. (Cuba is already rolling out WiFi hot spots).

But what about linking that to the Internet? It will be some time before there is a fiber path between Havana and the undersea cable at the east end of the island, but they could use O3b Network's high speed satellites. (Some time ago, I suggested that ETECSA use home satellites to reach rural areas).

This is total speculation -- I have no idea what Google proposed or what ETECSA is willing to allow, but it is fun to speculate. Going further into the future, how about Google Fiber in Havana? And, when will we see those Google baloons over Cuba?

Google Fiber cities -- Havana someday?

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Update 6/7/2018

YouTube has video production spaces in Los Angeles, London, Tokyo, New York, São Paulo, Berlin, Paris, Mumbai, and Toronto -- how about opening one in Havana?

As I mentioned above, Cuba is well positioned to produce Spanish-language entertainment and education content and I suggested that Google open a YouTube production space in Havana.

The idea of opening a production space in Havana makes even more sense today than it did in 2015.

Google Global Cache (GGC) servers are now installed and operating on the Island. That means Google content can be viewed and uploaded faster than in 2015 and the result is that YouTube has made substantial gains since GCC went online last April:

YouTube gains since GCC went online (source)

There is also a growing, enthusiastic community of young Cuban YouTubers, several of whom are profiled in this YucaByte article and you can "meet" a few others in this short (5:36) video from Periodismo de Barrio:

(The YucaByte article also contains a short video sampler showing enthusiastic YouTubers).

Not exactly being a millennial myself, I am not likely to become a follower of these youthful YouTubers, but they are inheritors of a rich history of Cuban music, cinema and education.

Google executives and Senator Jeff Flake just met with Cuban president Diaz-Canel and former Google Chief Executive Eric Schmidt who said “We already have an agreement signed that allows easier access to data. We would like to do more.”

How about opening a YouTube video production space in Havana?

List of jobs that are eligible for self-employment in Cuba -- send in the clowns (and the programmers)

In a previous post I noted that the US will now allow imports of goods and services produced by Cuban entrepreneurs who are independent of the government. It turns out that the Cuban government has a list of 201 jobs that are authorized for self-employment and the list includes Computer Programmer -- leading me to wonder if we would be importing Cuban software and software services.

Another job that caught my eye was Retail Telecommunication Agent, which got be thinking about operators of local Internet-access businesses in rural areas -- perhaps using satellite links where terrestrial connectivity is not available.

But what of the other 199 jobs that are eligible for self-employment in Cuba -- might there be other exports? It turns out that the many of the jobs are providing local service -- small restaurant owner, nanny, barber etc. Others may produce small items which could be exported like ceramic pots or costume jewelry, but software was the only interesting exportable item I found.

But, the list is interesting in its own right, independent of tech or other exports. It is funny -- goofy. I got a kick out of reading it. On a more serious note, it says something about Cuban bureaucracy and the desire to micro-manage. It would have been fun to watch the process by which this list was defined.

We see frequent, optimistic reference to Cuba's desire to liberalize and move toward a market economy, but dealing with a government that would attempt to create such a list would be difficult.


For a little more insight into the frustration one experiences with bureaucracy in using the Internet in Havana, read this account by a visiting university student. It reminds me of the old Soviet Union saying "we pretend to work and they pretend to pay us." The Cuban Internet faces cultural as well as political and economic hurdles.

At any rate, although this is a little off-topic for this blog, here is the list of 201 jobs authorized for self-employment:*

Musical Instrument Tuning and Repair
Water Delivery
Construction Laborer
Animal Rental
Formal Wear Rental
Knife Grinder
Party Entertainer (clowns, magicians)
Mule Driver
Artisan (arts and crafts maker)
Mechanical Saw Operator (as in a sawmill)
Babysitter/Nanny
Barber
Embroiderer/Knitter
Wagon or Pushcart Operator (to help move things)
Flower Bed Arranger
Carpenter
Mobile Hand Cart Hawker of Agricultural Products
Locksmith
Furniture Repairman
Collector and Payer of Bills
Operator of Children’s Fun Wagon Pulled by Pony or Goat
Buyer and Seller of Records (including CDs)
Used Book Seller
Builder/Seller/Installer of Radio and TV Antennas
Craftsman/Seller/Repairman of Wicker Furniture
Breeder/Seller of Pets
Window Glass Repair
Animal Caretaker
Public Bathroom Attendant
Caretaker of Elderly/Handicapped
Public Park Caretaker
Leather Tanner (except cows and horses)
Decorator
Palm Tree Trimmer
Restaurant Owner (paladares)
Café Owner (cafetería)
Non-Alcoholic Beverage Seller (home delivery)
Café Owner (cafeteria, light snacks and beverages)
Street-based Seller of Food and Beverages
Charcoal Manufacturer/Seller
Wine Maker/Seller
Maker of Yokes, Harnesses and Rope for Oxen
Electrician
Automobile Electrician
Building Superintendent
Book Binding
Electric Motor Rewiring
Animal Trainer
Flower Wreath Arranger
Button Coverer (wraps buttons in cloth, popular in the 50’s and 60’s)
Photographer
Car washer/Oil Changer
Bus/Train/Taxi Stop Barker (calls out instructions to waiting passengers)
Engraver of Numbers
Blacksmith/Seller of Horseshoes and Nails
Trader of Scrap Metals
Driving Instructor
Sports Trainer (except martial arts and diving)
Gardener
Clothes Washing/Ironing
Woodsmen/Logger
Shining Shoes
Spark Plug Cleaner and Tester
Septic Tank Repairman and Cleaner
Manicurist
Make-up Artist
Masseuse
Plasterer
Refrigerator Mechanic
Typist and Copier
Messenger
Seamstress/Tailor
Miller of Grains
Audio Systems Installer/Operator
Tire Repair
Children’s Ride Operator
Parking Attendant (including for cars, bicycles)
Hairdresser
Animal Groomer
Cleaning/Household Help
Car Painter
Furniture Painter and Polisher
House Painter
Sign Painter
Ornamental Fish Farmer
Plastic Covering Maker for IDs
Plumber
Well Digger
Producer/Seller of Items Used in the Home (self-made or made by other selfemployed)
Producer/Seller of Rubber Accessories
Producer/Seller of Clay Goods (pots, planters, cookware)
Producer/Seller of Bricks and Tiles
Producer/Seller of Articles and Animals for Religious Use
Producer/Seller of Harnesses, Blankets, and Saddles
Producer/Seller of Costume Jewelry
Shoemaker/Shoe Salesman
Producer/Seller of Brooms and Brushes
Producer/Seller of Plaster Figurines
Grower/Seller of Ornamental Plants
Piñata Maker/Seller
Grower/Seller of Plants for Animal Feed and Medicinal Purposes
Music/Art Instructor
Shorthand, Typing, and Language Instructor
Computer Programmer
Metal Polisher
Collector/Seller of Natural Resources (i.e. sea shells)
Collector/Seller of Recyclables
Watch Repair
Leather Repair
Jewelry Repair
Bedframe Repair
Automobile Battery Repair
Bicycle Repair
Costume Jewelry Repair
Fence and Walkway Repair
Stove/Range Repair
Mattress Repair
Small Household Goods Repair
Office Equipment Repair
Electronic Equipment Repair
Mechanical and Combustion Equipment Repair
Eyeglass Repair
Sewing Machine Repair
Saddle and Harness Repair
Umbrella and Parasol Repair
Disposable Lighter Repair and Refill
Tutor (currently employed teachers not eligible)
Doll and Toy Repair
Art Restorer
Night Watchman or Building Doorman
Welder
Leather Craftsman
Upholsterer
Roofer
Accountant/Tax Preparation
Textile Dyer
Machinist
Roaster (i.e. of peanuts, coffee)
Part-time Farm Laborer
Document Translator
Shearer (as in sheep)
Thresher
Vegetable/Fruit Street Vendor (from fixed venues)
Shoe Repair
Contracted Employee of a Self-Employed
Event Planner (weddings, etc
Mason
Real Estate Broker
Repair of Measurement Instruments
Food Wholesaler
Food Retailer (in kiosks and farmers’ markets)
Room/Home Rental
Postal Agent
Telecommunications Agent (retail)
Building Construction Services
Car Body Remolding
Maker/Seller of Marble Objects
Maker/Seller of Soaps, Dyes
Welder
Iron Worker (grating for doors, windows)
Welder/Flamecutter (cutting with gas)
Maker/Seller of Aluminum Products
Maker/Seller of Non-Ferrous Metals
Floor Polisher
Repairer of Water Pumps
Space Rentals in One’s Home to Selfemployed
Insurance Agent
Maker/Seller of Food and Beverages in “China Town”
Private Construction Contractor (in the Havana “Old Town”)
Horse and Carriage Rides
Antique Dealer
Habaneras (women posing in colorful colonial attire)
Fortune Tellers
Folkloric Dancers
Mambises-style Musical Groups (traditional Cuban music)
Caricaturists
Artificial Flowers Seller
Painters (who sell pictures in the street)
Dandy (man dressed in Colonial garb)
Hair Braider
Fresh Fruit Peeler
Dance Duo “Amor” (traditional Cuban dances)
Benny Moré Dance Team
Trained Dog Exhibitor
Musical Duo “Los Amigos” (popular music)
Extras (people in period dress)
Traditional Barber
Truck Driver
Station Wagon Driver
Small-Truck Driver
Bus Driver
Mini-Bus Driver
Taxi Driver
Handcar Operator (on rails)
Jeep Driver
Passenger Boat Operator
Motorcycle Driver
Three-Wheeled Pedal Taxi Driver
Cart Operator
Horse-Drawn Carriage Operator
Pedal Taxi Driver

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* This list was taken from an appendix in a very interesting report -- "Soft Landing in Cuba? Emerging Entrepreneurs and Middle Classes" by Richard Feinberg. The list is dated September 26, 2013 and may have changed subsequently.

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Update 3/11/2015

Cuban self employment is rising, but, as we have seen, the job categories are mostly domestic service jobs.

The US will allow imports from Cuba's nascent private sector -- will Cuba allow software exports?

Will Cuban programmers be allowed to sell software and do offshore programming and localization in the US and online?

Many people have asked me whether I expect the Cuban Internet to thrive after the rapprochement with the US, and I tell them that is up to the Cubans -- the ball is in their court.

President Obama passed them another ball yesterday -- Cubans can now be paid for many goods and services exported to the US.

My first reaction was a big grin -- I am more interested in what Cuba can sell in the US than I am in what US and other companies can sell in Cuba -- and I imagined Cuban companies and professionals offering high margin goods and services in the US.

But, Obama's offer is limited to "independent Cuban entrepreneurs" -- who are those entrepreneurs and what do they do? This report by Richard E. Feinberg lists the 201 self-employment job categories that were open to Cubans as of September 26, 2013 and it is a goofy list with jobs like three-wheeled pedal taxi driver (not to be confused with pedal taxi driver or horse-drawn cart operator). I'd advise you to check the list for laughs and also a glimpse into the Cuban bureaucratic mind.

Well, that was discouraging, but then I looked more closely at Feinberg's table grouping the 201 jobs into eight categories and one jumped off the page -- computer programmers were included in the "other" category along with clowns and magicians!

How did programmers get on this goofy list? Was it an oversight or an intended loophole for would-be app developers, Web site designers and developers, offshore programmers, software localizers, etc.?

There were 476,000 self-employed Cubans in December 2014 -- I wonder how many were computer programmers and how many more would apply for a self-employment license if software and software service export is actually allowed.

If any readers know any of these self-employed programmers, I would love to hear from them -- to hear what they are currently doing and what they would do if allowed to export to the US.

Programmers are close to my heart, but the Cuban economy can export much more than software. If Cuba is to take advantage of the offer President Obama has made, they must drop what Ted Hencken and Arch Ritter call the "internal Cuban embargo." The Cubans would be wise to adopt the economic and Internet reforms suggested by Hencken and Ritter if they hope to export more than artisan crafts, pottery and religious articles.

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Update 2/19/2015

Official daily Juventud Rebelde said participants in the forum stressed the need to "promote exports of computer services and products, establish business models among telecommunications operators and providers, and foment the creation and development of state companies in harmony with non-state forms of management."

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Update 2/20/2015

If Americans can now purchase goods and services from Cuba, can Cubans crowd-fund projects in the US? Cuban drummer YISSY raised €5,000 on Verkami, a Spanish crowd-funding site. Why not Cuban software projects (and everything else) on kickstarter?

_____
Update 2/25/2015

I've posted the complete list of jobs eligible for self-employment -- it is goofy and funny, but it also says something about Cuban micro-management and bureaucracy.

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Update 2/27/2015

Two excellent articles on the:

• potential of the Cuban software industry
• Cuba's resourceful maker culture

More examples here

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Update 4/29/2015

Cuban software exports will come from the nascent developer/startup community. I will have more to say on this in a future post, but for now, check out this Meetup group. The meetup is being organized by several former members of the Merchise software group and they are interested in software development, entrepreneurship, networking, venture capital, etc. etc. -- the sort of thing you would expect.

Latin American Freeware Festival 2015

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.