U.S. Telecom In Cuba Spurs Wide Interest

President Obama's decision to permit U.S. telecommunications firms to apply to provide communications to Cuba has caused a flurry of interest among telecom companies, even if the Cuban government hasn't signaled whether it will be receptive to the move.

One service provider -- Western Union -- immediately moved to take advantage of the Obama administration's loosening of restrictions by reporting it plans to expand its existing links between the two countries.

"We look to expand our network to better serve our consumers both in the U.S. and Cuba consistent with the administration's decision," said Steward Stockdale, executive VP and president of the Americas Western Union, in a statement.

Since the U.S. Treasury Department relaxed communications regulations slightly between the two countries in 1999, Western Union moved to establish a network of 3,000 Cuba-enabled Agent locations in the United States and 153 Agent locations in Cuba. U.S. citizens currently can send $300 every quarter to relatives in Cuba.

Telephone calls connecting the two countries are handled by third parties, generally working with Cuba's telephony monopoly Etecsa. Foreign visitors to Cuba can purchase a SIM card and use their cell phones on visits to Cuba.

A big potential problem for U.S. telecom carriers hoping to enter the Cuban market is represented by a 900-mile fiber-optic cable that's being built by Cuba's political ally, Venezuela, and is planned to be completed next year. A Cuba-U.S. cable, which could cover just 90 miles, would usurp business from the Venezuela-Cuban line. Cuban officials have estimated a Cuba-U.S. cable would cost about $500,000.

The Venezuela cable would connect Cuba as well as a few other Caribbean countries through La Guaira, Venezuela.

With the Obama administration and Cuba's Raul Castro administration gradually relaxing longstanding tight controls, both sides are hoping to develop new ways to loosen the expensive communications costs that exist between the two countries.

A year ago, the new Castro administration began allowing Cuban citizens to use cell phones -- if they could afford one. The move nevertheless was significant, because it opened the way for more widespread mobile phone use in Cuba. Cuba, which has a total population of about 11 million, now has about 500,000 cell phones in use, according to Cuban government statistics. With so few cell phone users, Cuba represents a rare growth area for international carriers, most of whom are experiencing a slowdown in growth.

By permitting U.S. telecommunications carriers to apply for licenses to supply communications links to Cuba, Obama administration officials said the measure should end up providing more information to Cuba, which has the Caribbean's most underdeveloped telecommunications infrastructure.

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