Verizon's direct-connection agreement is nice, but it's not the Internet

Verizon and Sprint both offer mobile roaming in Cuba, and Verizon has just signed a direct-connection agreement.

I am frankly not sure what the difference is between a "direct-connection" and their earlier "roaming" agreement, but it sounds like simpler routing, eliminating middle-man networks.

That should lead to better sound quality and lower prices. Verizon has not announced their prices, but we can get a clue by looking at today's roaming prices. Sprint charges $2.49 per minute for voice calls, $1.99 per megabyte of data and 50 cents to send SMS text messages. (Receiving SMS messages is free). Verizon’s current roaming rates are $2.99 per minute for voice calls and $2.05 per megabyte of data.

IDT, which established a direct connection with Cuba last year, claims "crystal clear conversations, low rates and no hidden fees." Their rates for calling Cuba from the US are shown below, but I cannot find their rates from Cuba and I don't understand the difference between the 65 cents a minute and 83 cents for three minutes services.

It is also rumored that AT&T will announce some sort of deal before President Obama's trip to Cuba, so we may soon have cheaper phone calls between the US and Cuba.

That is good, but, to paraphrase Bill Clinton -- "It's the Internet, stupid."

As shown below, mobile traffic is increasingly data, not phone calls. We called them "phones" till about 2011, but now they are "computers."

Source: Akamai

ETECSA said the service agreement will "initially allow the offering of voice services," which perhaps implies that they will eventually offer data services, but nearly all of Cuban mobile connectivity is 2G.

These deals demonstrate that Cuba is willing to let a state enterprise deal with US companies and they may be feet in the door leading to eventual domestic infrastructure agreements, but that remains to be seen. In the meantime, direct or indirect roaming may be mostly for tourists and Cubans will still crowd around ETECSA hotspots.

-----
Update 3/18/2016

If you are serious about the question of telephone regulation between the United States and Cuba, you need to follow the writing of Eduardo Guzman. For a detailed history up to last year, see his article Telecommunications in Cuba and the U.S. Embargo: History, Opportunities, and Challenges

There have been many regulatory changes since that time, leading up to the establishing of direct telephone connections by IDT, Sprint and Verizon. Guzman surveys the history then brings us up to the present in a long blog post "U.S.-Cuba Telecommunications: Turning the Corner."

Direct telecommunication service between the United States and Cuba essentially ended after the imposition of the embargo in the early 1960s. The Cuban Democracy act of 1992 allowed US carriers to provide telecommunications services between the U.S and Cuba, but there were so many strings attached -- including a $.60 per minute cap on settlement rates -- that nothing happened.

The deadlock was broken by the Obama Administration and Guzman imagines that we will see "increased use of cellphones to make direct calls to Cuba from the U.S., more options for traditional wireline long distance service to Cuba from the U.S., and new products sold to U.S. consumers to allow their relatives and friends in Cuba to make cheaper calls to the U.S." as well as services aimed at U. S. tourists roaming in Cuba.

That will enable families to talk with each other and tourists to call home, but it does nothing for broadband connectivity, which would require further negotiation and, more important, upgraded Cuban infrastructure. We've "turned a corner," but the road ahead is long and full of obstacles.

-----
Update 5/11/2016

T-Mobile now offers roaming in Cuba. Sprint and Verizon already offer Cuban roaming and AT&T is negotiating a roaming agreement with ETECSA. But, roaming is not the Internet.

Sprint connected Cuba in 1996, how about 2016?

Does Sprint have an advantage over other US companies?

Journalist Mark Walsh (@markfwal) sent me an interesting conjecture -- perhaps Sprint is well positioned to play a role in Cuba's mobile connectivity. He pointed out that Sprint already offers cell phone roaming in Cuba and their CEO, Marcelo Claure, seems like he might be a natural for dealing with Cuba. (Verizon also offers roaming in Cuba).

Claure was born in Bolivia and founded Brightstar, a Miami-based distributor of wireless devices in 1997. Today Brightstar designs, manufactures and distributes wireless equipment and offers services to 200 mobile network operators, 40,000 retailers, and 15,000 enterprise customers in over 50 nations, 20 of which are in Latin America and the Caribbean.

Birghtstar was bought by SoftBank, which also owns 80% of Sprint, and Claure became CEO of Sprint in 2014.

So Claure is from Latin America, has done business in Cuba and other Latin American nations and has ties to Miami and, doubtless, the Cuban community there. On top of all of that, he is active in promoting professional soccer.

The final hint is historical. In the 1990s, the United States National Science Foundation (NSF) had an International Connectivity Program (ICP), which connected research and education networks in many developing nations.

The ICP provided access to the Internet by linking foreign networks to NSFNET, the NSF backbone network in the US. The ICP funded Cuba's first Internet connection, providing a link from the US to Cuba's National Center for Automated Information Exchange (CENIAI), which also had non-Internet links to Russia and Canada.

You may have guessed by now -- that link was provided by Sprint, under contract to the NSF. As Jesus Martinez, the head of CENIAI at the time, put it:

After so many days, years of sacrifice and vigilance, I have great satisfaction to announce that our beloved Cuba, our "caiman of the Indies," has been connected to the Internet as we had desired. We have a 64 Kbps link to Sprint in the U.S.

You might be surprised to read that Cuba was allowed to connect to a US network over a link provided by a US company -- what about the embargo? Steve Goldstein, who headed the ICP, says the program was authorized by the government:

In the case of Cuba, we applied for a license to route its traffic on the NSFNET backbone and in the (NSF regional networks) from the Department of the Treasury, which administers the Trading with the Enemy Act. Treasury coordinated it with State and other government agencies, as did Commerce when we asked for advisory opinions about Russia, for example.

Well, what do you think? Does Sprint have an advantage over other US companies? Would they be able to compete successfully against Chinese companies that are already in Cuba?

Sprint CEO Marcelo Claure signing a roaming agreement with ETECSA

-----
Update 2/27/2016

Armando Camacho has translated this post into Spanish on his blog Carpe Diem.

Verizon roaming in Cuba -- much ado about not much

While Verizon customers may be able to make $2.99 per minute 2G calls, it seems their $2.05 per megabyte data service will be limited to few locations.

President Obama is continuing to use executive powers to nibble away at the embargo. Some US companies will be allowed to establish Cuban offices and Verizon has announced that they will offer roaming in Cuba.

Verizon's roaming rates will be steep -- $2.99 per minute for calls and $2.05 per megabyte for data. Most of Verizon's roving customers will be non-Cubans, so we should not read to much into the prices, but one wonders what Verizon's split with ETECSA is and whether this foreshadows ETECSA's strategy.

ETECSA's policy is a key unknown in predicting the future of the Internet in Cuba. If their goal is to maximize profit, their monopoly position will inevitably lead to high prices, conservative infrastructure investment and poor service. A goal of maximizing government revenue would do the same.

Reader Ray Rodriquez has raised another interesting question -- how does ETECSA plan to handle the data? At those prices and with relatively few users, I doubt that the volume of data will be a problem, but what about connectivity and coverage?

We have been speculating on the Cuban backbone, and have concluded that there must be connectivity from each city with a WiFi access point to the cable landing at the east end of the island since almost 100% of Cuba's international traffic is now routed over the cable.

But how many of ETECSA's cell towers are able to reach the backbone? How many are able to handle even 3G data? Looking at Cuba's annual ICT statistical report, we see that the percent of the population with (predominantly 2G) cell phone coverage has barely increased since 2010 and it has been flat at 85.3 percent since 2012.

While Verizon customers may be able to make $2.99 per minute 2G calls, it seems their $2.05 per megabyte data service will be limited to few locations.

Like the Netflix offering, this is a symbolic start, but, as we have seen -- in a nation with nearly no Internet access, a little bit gets a lot of hype.

-----
Update 9/19/2015

More on the executive easing of embargo restrictions.

-----
Update 2/13/2016

Experience getting online in Cuba for Americans and Europeans

Bloomberg editor David Rocks reports that Americans can use Verizon Wireless roaming at a cost of $2.99 per minute for phone calls and $2.05 per megabyte of data. Sprint roaming is $2.49 a minute and $1.99 per megabyte of data. AT&T or T-Mobile users are out of luck.

For people with European cell service, the situation is better. The author was able to use his Vodafone account, The author was able to use voice and data, making voice calls using WhatsApp. He was even able to use his phone as a mobile hotspot and stream YouTube video to his laptop, although most of the time it was too slow for streaming.

-----
Update 2/19/2016

Journalist Mark Walsh (@markfwal) pointed out that Sprint also claimed to be the first U.S. Carrier to sign a direct roaming agreement with Cuba. The Sprint claim came a month or so after the Verizon claim -- is the Sprint service different than what Verizon offers? Has anyone tried either?

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.

-----
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