Congress, Castro Reactions Seen Key to Obama's Cuba Plan On Communications Sector Expansion
Congress and Cuba will need to make their intentions clear before it will be evident how much of an effect President Barack Obama’s plan to restore diplomatic ties and some commercial ties with Cuba (see 1412170053) will have on the U.S. communications sector’s presence in that island nation, telecom industry lawyers told us. The White House partially focused Obama’s announcement of the plan on how it could increase Cubans’ access to telecom and the Internet, but Wednesday’s announcement alone does little to advance beyond previously announced changes in U.S. telcos’ ability to connect with Cuba, the lawyers said.
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Obama’s announcement is “certainly positive in terms of potentially opening up other opportunities” in Cuba because he wants to remove licensing requirements that communications companies need to comply with as a condition for linking with Cuba, said Harris Wiltshire partner Kent Bressie, who heads the law firm’s international practice and has worked with federal agencies on Cuba-related telecom regulations. But the “big changes” in U.S. telecom policy on Cuba occurred in 2009, Bressie said. Obama signed an executive order in April 2009 that allowed U.S. communications companies to establish cable and satellite links with Cuba, and license wireless roaming agreements in that nation. Industry experts said then that the order would open the Cuban market up for U.S. telcos (see our report in the April 15, 2009, issue).
Obama’s 2009 order has only somewhat increased U.S. telcos’ presence in Cuba, with the most noticeable changes coming via increases in satellite connectivity and indirect connectivity via submarine cable, Bressie said. No direct U.S.-Cuba submarine cable exists, he said. Cuba has direct submarine cable connectivity only with Jamaica and Venezuela, according to data from TeleGeography. “It has not been anything dramatic,” Bressie said. “I think the Obama administration has been disappointed that there haven’t been more prominent announcements about new service and infrastructure between the U.S. and Cuba.”
TIA CEO Scott Belcher told us he agrees U.S. telcos weren’t as active in investing in telecom infrastructure in Cuba following Obama’s 2009 order as was generally expected, but said he believes Obama’s new plan presents an “attractive opportunity” to expand their investment in the future. “We know the telecom infrastructure in Cuba is antiquated,” Belcher said, saying a 2014 ITU study said mobile phone penetration in Cuba stood at only 18 percent, while only 3 percent of Cuban households have Internet access. “If we want to advance Cuba’s economic capability and make them a serious trading partner, we have got to build a modern infrastructure to expand commerce and economic opportunity,” he said. “Realistically, it’s one of the few remaining greenfields in the world.”
U.S. industry’s incentives for expanding in Cuba will highly depend on whether the Cuban government changes course from its existing record on accommodating U.S. communications companies in Cuba, said former Ambassador David Gross, chair of Wiley Rein’s international telecom practice. “I think we will know more within the next six months or so about what the Cuban government is going to allow,” he said. The Cuban government was not helpful in changing its own policies following the 2009 order to reflect the U.S.’s liberalization on bilateral telecom, Gross said. “They have found many excuses to continue to restrict the ability of U.S. companies and others to play in that space,” he said. “Cuba has made clear that it continues to want to restrict the ability of the Cuban people to communicate with the outside world and to have access to the Internet.” Obama’s new plan requires bilateral action with Cuba, a contrast from his unilateral 2009 executive order, Bressie said.
U.S. telcos have also been reluctant to increase their presence in Cuba out of concern over the potential for backlash from U.S. politicians critical of lifting the Cuba embargo, Bressie said. Several members of Congress have publicly criticized Obama’s plan to restore diplomatic relations with Cuba's communist government, including Cuban-American Sens. Bob Menendez, D-N.J., and Marco Rubio, R-Fla.
Politicians’ objections to Obama’s plan may be less of an obstacle to removing remaining statutory restrictions that have “hamstrung” a U.S. telecom presence in Cuba than lifting restrictions on other sectors, but some of those restrictions are likely to “remain in place for quite some time,” Bressie said. The Cuban Democracy Act prohibits U.S. telcos from investing in domestic telecom infrastructure and services in Cuba, a restriction that Congress would have to repeal, he said. The Cuban Liberty and Democratic Solidarity Act, more commonly known as the Helms-Burton Act, allows the president to suspend some sanctions if there’s a transitional government in Cuba but allows the embargo to be lifted only if there’s a democratically elected government in the country, Bressie said. “It remains to be seen how the administration might try to justify its actions” in claiming Cuban President Raúl Castro represents a transition from former President Fidel Castro, who transferred power in 2008.