Despite U.S. efforts to ease entry into the Cuba market, no telecom gold rush has materialized – Por qué no?

It’s no secret that the Obama Administration would like to “reach out” to Cuba in the hope of bringing that island nation and the U.S. closer on a number of levels. One component of that effort involves increased telecommunications links between the two countries, as we reported last December. While it took the FCC a bit longer than other agencies to get with the program, by January the Commission had finally jumped on the bandwagon: as we reported then, the FCC eventually got around to relaxing its longstanding, restrictive policy on telecommunications to Cuba. Having discharged its duty, the Commission sat back and waited for a flood of international 214 applications which would lead to telecom rapprochement with the Cuban people.

This has manifestly failed to happen. Por qué?

A number of theories and observations were tossed around by a panel of experts at a recent brown bag lunch presented by the Federal Communications Bar Association. Here, we summarize some of the major factors that, according to the panelists, are affecting and will likely continue to affect U.S.-Cuba telecommunications ventures.

Clearly, companies are having a tough time making out a business case for Cuban projects. One factor: the grim market realities at the other end. The Cuban population is poor and its domestic infrastructure lacking. Critically, current U.S. law still forbids selling equipment or otherwise investing in Cuba’s domestic telecommunications infrastructure. So while the relaxation of U.S. policies may enable U.S. businesses to reach the island, those businesses are still prohibited from taking steps to improve their opportunities on the island itself.  For example, building a submarine cable route could turn out to be an expensive bridge to nowhere.

Moreover, any such project must deal with the vagaries of the Castro government, which has been known to pull the plug on communications projects without explanation or, more importantly, compensation.  Unfortunately, reestablishment of international relations is a two-way street. So the fact that the U.S. may be enthusiastic about getting closer to Cuba does not necessarily mean that the feeling is mutual.  Relations between the nations remain distant, despite the Obama Administrations relaxed policies. The U.S. embargo is still in place, and long memories on the island recall the disbursement of Cuban monies from U.S. bank accounts to satisfy what many Cubans perceive as dubious legal claims. And let’s not forget that the stated goal of the Administration’s policies is to “support the Cuban people’s desire for freedom and self-determination” – not exactly a goal designed to warm the cockles of Castro’s heart. There remain, as one expert on Cuba puts it, “sensitivities”.

And there’s another complication working against any re-kindling of the U.S.-Cuba affair:  a rival for Cuba’s affections has appeared on the scene. Earlier this year, a survey vessel sailed from Cuba to Venezuela, mapping the route for a new submarine cable – dubbed the “Gran Caribe” – which would eventually link Cuba to Venezuela, with spurs to Jamaica and perhaps Haiti and other islands. This project is apparently designed to bypass Miami and obviate any need for Cuba to look northward for global connectivity. According to the, the “Gran Caribe” cable is to be built by Alcatel Shanghai Bell and operated by Telecomunicaciones Gran Caribe SA, a Venezuelan-Cuban state joint venture.

Despite these obstacles, at least some U.S. companies may be able to take advantage of newly-permitted roaming agreements with Cuban providers right away. Others without an immediate hook into existing opportunities may still be inclined to invest in a plane ticket in order to engage in a little brand prepositioning. And still others lacking any particular business plan but nonetheless up for a good time might choose to head on down to research the potential demand for telecom service on, say, a Hemingway-esque fishing boat, or at the Edificio Bacardi, or maybe, mojito in hand, down on the Playas de Este. ¿Puedes oírme ahora?