Cuban Telecommunication Infrastructure and Investment

Larry Press
California State University, Dominguez Hills
lpress@isi.edu
310-475-6515

Presented at the Conference of the Association for the Study of the Cuban Economy, Miami, FL, August, 1996.

The economic embargo has been the centerpiece of U.S. policy and strategy toward Cuba, but information and communications issues and measures have not been ignored. For example, after the embargo began, AT&T was allowed to maintain pre-embargo links through their existing undersea cable to Cuba. The power of information is also recognized in the Radio Broadcasting to Cuba Act of 1983, which established Radio Marti, Public Law 101-246 of 1990 on TV Marti, the Cuban Democracy Act of 1992, which called for improving telecommunications connections and information exchanges in order to increase the potential for change in Cuba, and the Cuban Liberty and Democratic Solidarity Act of 1996 which amends the Cuban Democracy Act in restricting communication investment.

Communication technology and policy have increased in importance in recent years because of rapid technical progress and massive global investment in telecommunication infrastructure. Emerging computer networks are one, important manifestation of the growing importance of communication. Networks can improve the economic productivity, education, health, democracy and human rights, and quality of life of a developing nation such as Cuba [16].

With this background in mind, we conducted a study of Cuban networks and related issues and policy implications [17]. As background for that study, we investigated Cuban telecommunication infrastructure, which is described in this paper. We found that Cuba's international links and capacity are sufficient for today's demands, though more will be needed in the future, but that the internal Cuban infrastructure was poor and a bottleneck even today. The following sections discuss international and domestic telecommunication infrastructure and investment.

International Telephone Links

Phone service between the U.S. and Cuba began in 1921 with AT&T's installing an undersea cable between Florida and Cuba. (The timeline in Figure 1 summarizes the history of U.S.-Cuba telephony). After the embargo, AT&T was allowed to continue serving Cuba with the proviso that existing service continue, but new capacity not be added. AT&T deposited Cuban long-distance revenues in an escrow account. Calls from the U.S. were routed through an operator, and the FCC estimated that less than 1% of the 60 million annual call attempts were completed [6]. Cuban pressure and the rapid growth of Canadian companies providing call-back service in the U.S., led the State Department to issue guidelines calling for increased service in compliance with the 1992 Cuban Democracy Act [2], which allows an embargo exemption in support of "efficient and adequate telecommunication services between the United States and Cuba." Today we have direct dialing to Cuba and 953 authorized voice-grade (64kbps) circuits. Of these 504 are in use. (See Table 1).

WilTel has applied for permission to construct a 210 kilometer, 2.5 gigabit fiber optic cable that would have roughly 41 times todayís combined authorized capacity. (John Williams, a founder of WilTelís parent company, was born in Cuba, and his family had business there until 1956). While this is clearly excessive capacity today, video traffic and an evolved Internet could absorb that and more.

While motivated to some extent by current demand for calls (perhaps $250 million per year [8]) between U.S. family members and Cuba, WilTel is clearly looking forward to post-embargo expansion. Haines [8] writes:

WilTel Technology Ventures president, Jerry Seller, feels Cuba could play a key role in the development of communications in the Caribbean, emerging as a "very interesting hub to tie in the United States." Some U.S. analysts have gone further, suggesting that "Cuba could become a center for cable Communications between the U.S. and the Caribbean, later becoming the hub of a U.S./Caribbean/Central America/South America loop."

The WilTel application was made to the Commerce Department, which referred it to the State Department for an opinion. A positive opinion was given in November, 1994, and the application is back in Commerce. [10] WilTel says the cable can be in operation a year after they receive approval [8], but in the current political climate they do not expect rapid approval [3].

Sprint also confirmed that they plan to offer leased, private-line service. Though they would not comment on price at this time, this would support full Internet connectivity if it could be afforded. [18]

There is also a $41 million joint venture between Cuba (51%) and Italcable (49%) which provides long distance and international service through five portable earth stations in major tourist areas [8, 9]. I was unable to ascertain the capacity, but according to the Cuban Communications Ministry there are 1,109 total circuits. Italcable may account for the difference between this and the U.S. circuit count. Regardless, the majority of voice traffic is to the U.S.

While there is unused capacity for todayís voice traffic, demand would increase dramatically if the trade embargo were revoked. Furthermore, today we have predominantly voice traffic, with a little data and fax. A fiber cable would allow for video and other high-bandwidth data types and services. Still, for now, the internal Cuban infrastructure is a greater constraint on Cuban telecommunications than international connectivity.

Internal Telecommunication Infrastructure

Cuban telecommunication infrastructure lags behind much of the world and the Caribbean region. Tables 2 and 3 compare the number of main lines in Cuba with larger Caribbean nations and with nations in various income groups and geographic regions. Cuba has fewer main telephone lines as a proportion of population and GDP than any Caribbean nation but Haiti, and is closer to the low-income nations than the lower-middle group in which it falls.

Armando Coro, a telecommunications expert and University of Havana professor states that "The U. S. embargo has had a devastating effect on Cuba's telecommunications." [21] The interruption of supplies of spare parts from Eastern Europe after the Soviet dissolution and a lack of hard currency has exacerbated the problems. Table 3 shows that Cuba has added some main lines since 1992, but that growth is much slower than in other developing nations or the world.

Enrique Lopez, a principal of the AKL Group, a telecommunications consulting firm with wide experience in Cuba, reported that central office equipment dates back as far as the 1930s, and calls are very difficult to make. The poor infrastructure causes echo and disconnects and hinders both voice and fax calls [11]. Haines [8] estimates that 40% of the Cuban telephone systems was installed in the 1930s and 1940s. Professor Coro confirms this, and states that Cuban equipment comes from Alcatel and Thomson-CSF (France), Western Electric and GTE (U.S.), Northern Telcom and Mitel (Canada), and L. M. Ericsson (Scandinavia), East Germany, and Hungary [19, 21]. This mix, the embargo, and a lack of hard currency make interoperability and maintenance difficult.

There is a digital central office in Havana, identifiable by the "33" phone number prefix. These 33 numbers are available for dollars, and are used by phone company officials, foreign business people, diplomats, and so forth. Cubans can theoretically have phones installed for 6.25 pesos, but in practice, they are not affordable by most. Those with 33 numbers can directly dial international calls, but others must request a call from an operator who places the call and calls them back when the connection is established. CIGBnet, and presumably other computer networks, pay for their domestic lines in pesos, but, Technical Director Carlos Armas fears that may change.

Some developing nations have been installing cellular systems as a substitute for decrepit landline systems. Cubacel is a joint venture partner with Iusacell ($8 million investment [5, 8]), owner of the Mexico City cellular franchise. (Iusacell is a publicly-traded subsidiary of Industrias Unidas, S. A.). Calls are routed via satellite through Italy. Demand is low, and thus far there are only 1,152 cellular subscribers in Cuba (Table 4). Cellular charges are also in dollars. Table 5 shows overall Cuban telecommunication in a global context.

The major hope for improving the Cuban telephone infrastructure rides on a joint venture between the Monterey, Mexico holding company Grupo Domos Internacional (Domos) and the Empresa de Telecomunicaciones del Cuba, S. A. (ETECSA). In June, 1993, Cuba decided to privatize telecommunication, and invited proposals for joint venture partners. Iusacell was selected first, but withdrew to concentrate resources for competition in Mexico when the Telmex monopoly ends in 1997. (Dolan [5] speculates that there may also have been fear of interference by the Cuban bureaucracy).

In June, 1994 Domos, through their subsidiary CITEL (Corporacion Interamericana de Telecomunicaciones), agreed to purchase a 49% interest in the Cuban phone system for a reported $1.5 billion [1]. ETECSA was separated from the Ministry of Telecommunications, and established as a private joint venture. The Ministry regulates the phone system and sets rates, so one can assume there are close ties between them and ETECSA.

Billed as the first large scale privatization in Cuba since the revolution, the agreement was announced during a one-day trip to Cuba by then Mexican President Salinas, who also took the opportunity to speak against the U.S. embargo. (Subsequent to his presidency, Salinas spent two months in Cuba). In April, 1995, Domos announced "completion" of the purchase, and the sale of 25% of their interest to STET International Netherlands, N. V., a wholly-owned subsidiary of the Italian State Telecommunication Company for $291.2 million. ETECSA is jointly managed with 4 Cuban Vice Presidents, 3 Mexican, and one Italian. It will be interesting to see how the management of the operation and its relationship to the state evolves. Dolan [5] states that Domos is seeking further equity investment to reduce their share of ETECSA to 25%.

According to Domos spokesman Hector Cuellar [4], ETECSA has a concession for 25 years (the first 12 on an exclusive basis) with two possible 12-year extensions to provide basic national, domestic long distance, and international telecommunication services, data transmission, telex, public telephone, trunked radio communication, subscription TV, paging, and other value-added services (all but cellular telephony). The agreement "valued" ETECSA at $1.442 billion, but promised investment "on the order of" $1.5 billion, including cancellation of Cuban debt to Mexico of $300 million. Domos says they will invest an additional $700 million in the next 7 years for expansion and modernization of telecommunications, like the digitization of the network, refurbishing 200,000 existing lines, and expanding the network to a total of a million lines. The goal is to have 11 lines per 100 people (20 in Havana) in 7 years. Dolan [5] estimates that ETECSA already handles 20,000 international calls averaging 12 minutes daily.

The Domos plans sound optimistic, but I was unable to determine anything specific about their long and short term plans or actual improvements currently under way. I had many questions on the technology, money flow, and actual financial terms and commitments. When I asked, Cuellar referred me to a contact at ETECSA, and I also contacted the Cuban Interest Section in Washington. Both invited me to submit follow-up questions (see Figure 2) via fax, but neither has answered despite several follow-up calls. One cannot infer from this that there are no concrete plans, but it is not encouraging. Moreover, The Mexico Report [20] recently characterized Domos as being "in default on a $350 million payment due Cuba for the purchase of that country's phone company."

I made informal contact with an ETECSA employee who does not wish to be identified. He said there were plans for some renovation with digital switches in Havana, and that $3 million had been allocated for a 64kbps X.25 network. The choice of X.25 instead of frame relay was the result of a lack of technical expertise. He also stated that generally nothing had changed within the company. There is still a lack of funds for investment in modern technical infrastructure, and no competitive approach. Top management is not market oriented. They are conservative, and trying to maintain the current voice infrastructure, rather than starting over from scratch in the data communication business with a market orientation. He also mentioned reports of a plan for a national satellite network in support of tourism, though he had no details. This would be designed for telephony, not data.

At a Havana networking conference in May, 1996, it was announced that the X.25 network would have a 2mbps data rate in Havana (connecting each Ministry), and that Domos would be building fast microwave links to four provinces. This is a bit more than my anonymous reporter indicated, but substantially the same.

Perez-Lopez [13] argues that while investments are important to Cuba, they may be of less than face value for a number of reasons. Several of these -- multi-year disbursement, contingency of the investment upon future events, use of existing assets (in Mexico and Cuba) rather than fresh investment, payment for management of existing facilities rather than new construction, debt for equity swapping (2-300 million in this case), supplier credits rather than equity investments, and business delays -- might apply in the case of this joint venture.

An additional cloud hangs over the Domos investment. ETECSA has inherited assets of the nationalized Cuban Telephone Company, an ITT subsidiary, and ITT has an outstanding claim for $131 million against the Cuban Government [13]. Domos received a warning from the U. S. shortly after the passing of the Cuban Liberty and Democratic Solidarity Act, and this may give them second thoughts and further hamper their effort to raise capital or find other equity investors.

To summarize, the internal Cuban telephone infrastructure is obsolete and deteriorating. While investment has been promised, the details -- questions such as those raised in Figure 2 -- are not specified, and Domos appears to be having difficulty making good on their promises. For some time, voice and data communication within Cuba will continue to be poor, and there may be opportunity for further investment.

Conclusion

We have seen that Cuba's international telecommunication infrastructure is in better condition and better able to meet current and future demand than their internal infrastructure. The U. S. has been a major investor in international connectivity, and plans more as the political situation allows.

Demand for telecommunication is rising in spite of the economic effects of the loss of Eastern Europe and the embargo. Key industries which generate hard currency, for example, tourism and biotechnology, require communication, and their requirements are being slowly funded. Four Cuban networks have international Internet connectivity. They grew substantially during 1992-5, are significant by Caribbean standards [14, 15], and are working to connect their networks internally creating a Cuban "intranet," which will eventually be permanently connected to the Internet (current links are dial-up only. A committee "regulating the policy on global information networks" has been formed, and an Internet plan formulated. [12]

We can expect gradual investment in Cuban telecommunication. In spite of the political risks, Castro sees that modern communication and computer networks are necessary for the economy. (This "dictator's dilemma" is being faced in many nations).

U. S. companies have invested in international telecommunication links. It was arguable that U. S. investment in internal telecommunication infrastructure was allowed under the terms of the Cuban Democracy Act, since that is where the major communication bottleneck is, and communication was to be encouraged. (Encouraging political communication without strengthening the economy and internal security is the "democrat's dilemma"). However, the Cuban Liberty and Democratic Solidarity Act seems to have closed that option. It allows the "delivery of telecommunication signals to Cuba," but amends the Cuban Democracy Act with a prohibition of investment in "the domestic telecommunications network within Cuba."

If the investment by Domos materializes, ETECSA will make significant equipment purchases. They may also find new equity partners who will supply equipment and service. In addition to basic communication equipment, networking equipment like routers will be needed, and could possibly be supplied by U.S. firms. At the very least, we should allow direct investment in the equipment needed to support the services we offer. For example, Alan Garatt, an MCI spokesman, reported that problems with Cuban infrastructure caused difficulty and a four month delay in establishing their current service. [7]

REFERENCES

1. Bardacke, Ted, "Mexicans to Buy 49% of Cuban Phone System," Washington Post, June 14, 1994.

2. Beird, Richard C., letter from Beird, Senior Deputy U. S. Coordinator, Bureau of International Communications and Information Policy, U. S. Department of State to FCC Chairman Reed Hundt, October 3, 1994.

3. Broyles, Gil, interview, July, 1996.

4. Cuellar, Hector, telephone and fax interview.

5. Dolan, Kerry A., "Their Man in Havana," Forbes, September 11, 1995, pp 60-68.

6. FCC, Common Carrier Action, Report No. CC-588, October 5, 1994. (1%)

7. Garatt, Alan, telephone interview, August, 1995.

8. Haines, Lila, "Cubaís Telecommunications Market," Columbia Journal of World Business," 30:1, Spring, 1995, pp 50-57.

9. International Technology Associates, "Market Trends," Latin American Telecom Report, vol 3, no 1, January 1, 1994.

10. Lockman, Laura, State Department Desk Officer, telephone interview, August, 1995.

11. Lopez, Enrique, telephone interview, August, 1995.

12. Martinez, Jesus, "Profile of the Cuban Scientific Network Project," email document received, February, 1995.

13. Perez-Lopez, Jorge F., "A Critical Look at Cubaís Foreign Investment Program," Meeting of the Latin American Studies Association, Washington, D. C., September 28-30, 1995.

14. Press, L. and Snyder, J., "A Look at Cuban Networks," Matrix News, 2(6), Matrix Information and Directory Services, Austin, June, 1992.

15. Press, L., and Aramas, C., "Cuban Network Update," OnTheInternet, pp 46-49, Jan/Feb, 1996.

16. Press, L., "The Role of Computer Networks in Development," Communications of the ACM, Vol. 39, No. 2, pp 23-30, February, 1996.

17. Press, L., "Cuban Telecommunications, Computer Networking, and U. S. Policy Implications," DRR-1330-OSD, RAND Corp., Santa Monica, CA, February, 1996.

18. Savageau, John, R., email interview, October, 1995.

19. Scaefelen, Steve, "A Different Kind of Revolution," In Perspective, Summer, 1994.

20. The Mexico Report, Vol. 5, No. 10, June 3, 1996, http://l-r-i.com/mexrpt.html, info@l-r-i.com, (202) 363-8168.

21. Wallace, David, "Rebuilding Cubaís Network," Telephone Communication, Vol 98, No 20, pg. 28, October 15, 1994.


Table 1: Voice Channels from U.S. to Cuba (64 kbps)
Authorized
Carrier
Link
by the FCC
In Use
AT&T
undersea cable
143
114
AT&T P. R.
Intelsat
150
150
MCI
Intelsat
150
120
Sprint
Intelsat
120
30
Worldcom
Intersputnik
390
90
Intelsat
Columbia
Totals
953
504

The Worldcom figure is the sum of the authorizations of WilTel (120), LDDS (150), and IDB (120), which were merged. Further compression can increase these figures. WilTel (WorldCom) also has permission for occasional use of 2 satellite video links via Intelsat.

Source: Troy Tanner, Attorney-Advisor, FCC, Report No. CC-588, Memorandum Opinion, Order, Authorization & Certification DA 94-1098, and a letter from the State Department to AT&T dated June 19, 1995.


Table 2: Caribbean and World Main Lines
Pop
GDP '93
Mains
Mains/
Mains/
(mil)
($ bil)
(000)
1000 Cap
mil GDP
Cuba
11.0 
12.9 
349.5 
31.8 
27.2 
Bahamas
0.3 
3.1 
76.2 
282.2 
24.6 
Dominican Republic
7.5 
7.3 
474.4 
63.3 
65.0 
Jamaica
2.4 
3.8 
250.5 
103.1 
65.9 
Puerto Rico
3.7 
35.8 
1,314.8 
360.2 
36.7 
Haiti
7.0 
2.6 
45.0 
6.4 
17.3 
Low income nations
3,147.2 
1,276.0 
46,522.2 
14.8 
36.5 
Lower middle
1,110.6 
1,616.6 
93,189.7
83.9 
57.6 
Upper middle
508.4 
2,242.8 
 71,893.4
141.4 
32.1 
High income 
838.9 
18,850.2
435,521.7
519.2 
23.1 
Africa
700.62 
422.2 
11496.6 
16.4 
27.2 
Americas
764.96 
8422.2 
213495.1 
279.1 
25.3 
Oceania
27.97 
341.5 
10810.9 
386.5 
31.7 
World
5605.01 
23985.6 
647127 
115.5 
27.0 

Source: "World Telecommunication Development Report," International Telecommunication Union, March, 1994. The Cuban figures were supplied by the Cuban Ministry of Communications after publication, and vary slightly from the published version.


Table 3: Change, 1992-1994
Pop
GDP '91
Mains
Mains/
Mains/
(mil)
($ bil)
(000)
1000 Cap
mil GDP
Cuba
1.89%
-14.27%
4.03%
2.10%
21.34%
Bahamas
-10.00%
-6.06%
-4.15%
6.50%
2.03%
Dominican Republic
0.00%
0.00%
0.00%
0.00%
0.00%
Jamaica
-2.80%
-2.56%
49.02%
53.31%
52.94%
Puerto Rico
1.39%
59.11%
29.52%
27.75%
-18.60%
Haiti
3.53%
0.00%
0.00%
-3.41%
0.00%
Low income nations
-2.18%
28.22%
80.36%
84.39%
40.67%
Lower middle
40.62%
39.04%
67.27%
18.95%
20.31%
Upper middle
-20.36%
-0.24%
-16.51%
4.83%
-16.31%
High income 
1.45%
8.52%
7.19%
5.66%
-1.22%
Africa
2.38%
1.81%
14.10%
11.44%
12.07%
Americas
2.91%
13.65%
10.36%
7.23%
-2.90%
Oceania
2.45%
-1.56%
7.81%
5.23%
9.52%
World
2.42%
10.14%
12.75%
10.09%
2.37%

Source: "World Telecommunication Development Report," International Telecommunication Union, March, 1994. The Cuban figures were supplied by the Cuban Ministry of Communications after publication, and vary slightly from the published version.


Table 4: Cuban Telecommunication Indicators
Indicator
1992
1993
1994
Population
10,785,800
10,855,700
10,989,400
Havana population
2,142,100 
2,158,800 
2,175,200 
Homes
3,031,000 
3,120,000 
3,146,681 
Gross Domestic Product
15,009.9 
12,776.7 
12,868.3 
Main telephone lines
336,945 
349,000 
349,471 
Main lines Havana
153,287 
155,100 
156,937 
In Havana
45%
44%
45%
Installed capacity
447,340 
455,708 
459,168 
Capacity used
75%
77%
76%
Lines to automated COs
99.0%
99.0%
99.2%
Lines to digital COs
1.0%
1.0%
1.0%
Residential lines
63.0%
63.5%
64.8%
Public telephones
10,003 
7,508 
5,814 
International circuits
262 
442 
1,019 
Telex subscribers
4,728 
4,523 
4,337 
Fax machines
392 
na
na
Cellular subscribers
234 
600 
1,152 
Radio paging subscribers
632 
734 
859 
Private leased lines
1,006 
na
na
X.25, 28 subscribers
na
na
266 
Faults/year/100 lines
14.9 
25.1 
29.2 
Internt'l. calls (mil. min.)
7.5 
7.5 
11.2 
Residential installation
$100.00 
$100.00 
$100.00 
Residential installation
$100.00 
$100.00 
$100.00 
Monthly residential charge
$6.25 
$6.25 
$6.25 
Monthly commercial charge
$9.25 
$9.25 
$9.25 
Charge per 3 min
none
none
none
Cellular installation
$120.00 
$120.00 
$120.00 
Monthly cellular charge
$40.00 
$40.00 
$40.00 
Cellular charge/3 min.
$0.40 
$0.40 
$0.40 
Full-time employees
16,900 
17,363 
15,686 
Total revenue, $ million
221.5 
241.4 
283.8 
Annual investment, $million
26.7 
na
na
TV sets
1,918,000 
2,061,000 
na
Satellite antennae
na
na
260 

Note that prices shown assume 1 dollar per peso, but this is unrealistic. Cuban residential service is paid in pesos, but lines to the digital office (33 prefix), and cellular fees are paid in dollars.

Source: Minister of Communications, Havana Cuba, provided by the ITU, September, 1995.


Table 5: Cuban Telecommunications in a Global Context
Lower
Upper
Indicator
Low
Middle
Middle
High
World
Cuba
Income
Income
Income
Income
Average
Basic Indicators
Population (m) 94
11 
3,506 
956 
496 
839 
5,606 
Density (per km2)
96 
86 
23 
22 
25 
41 
GDP (bil. $US)  93
13 
1,400 
1,535 
2,210 
18,850 
23,994 
GDP per capita
1,331 
433 
1,619 
4,555 
22,617 
4,360 
Main telephone lines
Lines, 1984
257 
8,947 
43,485 
31,619 
304,793 
388,844 
Lines, 1993
349 
47,205 
92,590 
70,084 
424,141 
634,019 
CAGR (%) 84-94
3.5 
18.1 
7.9 
8.3 
3.4 
5.0 
Lines/100 inhab. 84
2.6 
0.3 
5.3 
7.6 
39.6 
8.2 
Lines/100 inhab. 93
3.2 
1.4 
9.6 
14.1 
50.8 
11.4 
CAGR (%) 84-94
2.5 
15.9 
6.2 
6.4 
2.5 
3.3 
Local telephone network
Capacity used (%) 92
75.1 
65.2 
84.9 
84.8 
89.6 
85.5 
Automatic (%) 92
99.0 
97.5 
97.6 
99.8 
100.0 
99.5 
Digital (%) 92
1.0 
75.0 
29.7 
55.3 
67.4 
61.6 
Residential (%) 92
63.0 
55.6 
73.9 
74.3 
73.3 
72.7 
Faults/100 lines/yr. 92
14.9 
170.6 
50.0 
33.3 
10.1 
23.8 
Tele-accessibility
Residential lines (k) 92
217 
13,315 
62,154 
48,320 
276,868 
400,657 
Households (k) 92
3,031 
382,798 
174,162 
97,332 
277,539 
931,831 
Lines/100 househlds 94
7.2 
2.9 
28.5 
41.8 
98.9 
37.5 
Pay phones total (k) 92 
10 
317 
676 
1,109 
4,479 
6,581 
Pay phones/1000 pop. 94
0.9 
0.1 
0.7 
2.3 
5.4 
1.2 
Urban concentration
Pop. in capital (%) 94
19.8 
4.7 
11.6 
16.8 
7.8 
8.2 
Lines in capital (k) 94
157 
4,517 
21,673 
18,336 
30,150 
74,677 
Lines in capital (%) 92
45.0 
29.7 
25.8 
31.2 
8.9 
15.0 
Capital teledensity 94
7.2 
4.8 
20.2 
23.3 
56.1 
22.4 
Rest of nation 94
2.2 
0.6 
7.6 
10.4 
48.4 
11.2 
National teledensity 94
3.2 
0.8 
9.0 
12.5 
49.0 
12.1 
Text communications
Telex subscribers (k) 88
4.3 
109.7 
167.1 
317.1 
959.7 
1,553.5 
Telex subscribers (k) 92
4.7 
129.4 
185.5 
246.4 
457.2 
1,018.6 
Telex CAGR 88-94
2.3%
4.2%
2.7%
-4.9%
-16.9%
(10.0)
Fax machines (k) 92
0.4 
284.5 
512.5 
1,641
23,439
25,877
Data communications
Leased circuits (k) 92 
1.0 
39.9 
80.4 
591.5 
19,540
20,252
Mobile subscribers
Cellular phone (k) 92 
0.2 
1,756.2 
1,913.3 
3,339
42,243
49,252
Cellular as % phones 94
0.1 
4.3 
2.1 
4.7 
13.3 
9.5 
Radio paging (k) 90 
0.6 
481.0 
39.9 
516.1 
18,771
19,808
Radio paging (k) 92 
0.6 
1,742.5 
1,832.1 
2,750
44,239
50,564
Radio paging CAGR 90-94
6.5%
38.0%
160.3%
51.9%
23.9%
26.4 
International traffic
Million minutes 92
5.3 
1,880 
3,588
4,032
38,402
47,872
Minutes per capita 94
0.5 
0.6 
4.2 
8.5 
46.0 
9.1 
Minutes per line 94
32.1 
54.1 
44.5 
61.6 
90.8 
79.5 
Intn't circuits (k) 92 
0.3 
30.5 
103.7 
75.5 
413.2 
623.1 
Telecommunication staff
Staff (k) 92
16.9 
1,293 
1,327 
511 
2,080 
5,212 
Lines/employee 92
19.9 
28.0 
66.0 
135.0 
203.0 
118.0 
Telecommunications revenue
Total revenue (m$) 94
284 
14,091 
18,895 
42,262 
400,388 
475,635 
Revenue/cap. ($) 94
25.8 
4.3 
20.7 
87.0 
479.6 
86.7 
Revenue/line ($) 94
812.1 
304.0 
233.0 
620.0 
946.0 
764.0 
Revenue/employee (k$) 94
18.1 
11.4 
14.7 
81.8 
195.6 
100.9 
Telecommunications investment
Investment (m$) 94
27 
11,138 
6,621 
17,473 
93,449 
128,681 
Investment/capita ($) 94
3.5 
3.6 
7.3 
36.0 
112.7 
24.2 
Lines added (k) 93-94 
0.5 
14,407 
6,772 
4,525 
12,170 
37,874 
Invest. as % revenue 94
0.1 
0.8 
0.4 
0.4 
0.3 
0.3 

Television
Total sets (m) 93 
2 
371 
175 
116 
500 
1,161 
Sets/100 inhab 94
18.9 
11.4 
18.3 
23.9 
59.9 
21.0 
Sets CAGR (%) 84-94
1.1 
21.8 
2.9 
5.7 
2.6 
6.2 

Source, non-Cuban data: International Telecommunication Union, World Telecommunication Development Report, October, 1995.

Source, Cuban data: Cuban Ministry of Communication, September, 1995.


Figure 1: US-Cuban Telecommunication Timeline

April, 1921: Long distance service established through a submarine cable between Florida and Cuba.

July, 1950: AT&T replaces original cable.

August, 1957: Service enhanced by addition of over-the-horizon radio between Cuba and Florida.

October, 1966: AT&T is exempted from the 1962 trade embargo for humanitarian reasons.

April, 1987: Cable system fails, and service is diverted to radio relay towers.

April, 1989: AT&T replaces failed cable system, but differences between Cuba and U.S. terms of agreement keep it inactive.

August, 1992: Hurricane Andrew incapacitates radio system in Florida City, and calls are routed through Italy.

July, 1992: The Cuban Democracy Act authorizes telecommunication facilities "in such quantity and of such quality as may be necessary to provide efficient and adequate telecommunications services between the United States and Cuba."

July, 1993: Cuban government cuts calls from the U.S. from approximately 20,000 minutes/day to 20,000 minutes/month.

July 22, 1993: U.S. State Department issues guidelines for long-distance companies doing business with Cuba.

July 27, 1993: The FCC issues notice of acceptance of applications for Cuban service. (Report No. I-6831).

March 9, 1994: WilTel agrees to construct an undersea fiber cable.

October 4, 1994: The FCC authorizes five carriers to provide switched voice and leased private-line services to Cuba: WilTel, MCI, LDDS, Sprint, and IDB. (WilTel, IDB, and LDDS subsequently merged to form WorldCom), and AT&T service is improved. (Report No. CC-588, Memorandum Opinion, Order, Authorization & Certification DA 94-1098)

December 7, 1994: The FCC authorizes the resale of switched services to Cuba. (Report No. I-7079)

March 10, 1995: A State Department letter states they have no objection to Sprint offering direct packet data service via Canada or to GTE's Dominican Republic subsidiary CODETEL acting as a transit point for US-Cuban telecommunications traffic.

June 19, 1995: An FCC letter authorizes AT&T Puerto Rico to temporarily operate 150 voice grade circuits pending approval of their permanent request.


Figure 2: Questions Regarding Grupo Domosí Investment Plan

1. Will competition be allowed after their 12 year exclusive arrangement expires?

2. You state you will invest $700 million over the next 7 years, but did not provide details on how it would be used, for example:

3. Has there been any joint planning with CENIAI or other Cuban Internet organizations?

4. Has there been planning with key industries like tourism or biotechnology?

5. Are there plans for services such as ISDN, frame relay or ATM?

6. Is there an overall communication infrastructure plan?

These questions were posed to representatives of ETECSA in Havana and the Cuban Interest Section in Washington, who were asked that their answers be faxed. Answers were not received.