Thursday, April 2, 2015

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.”
  • "[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."
  • "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.

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:

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