US Communications Companies Eyeing Cuba Face Hurdles, Speakers Say
U.S. telecom and tech firms seeking to take advantage of the trade opening to Cuba face many challenges in navigating that country's structures, policies and pride, speakers said at an FCBA panel Thursday. Cuba isn't interested in stimulating U.S. competition to its state-owned telecom monopoly, particularly given historical tensions and continued suspicions about American motives, they said. But Cubans are interested in targeted business partnerships that meet their needs, and the younger generation's interest in U.S. contact and modern technology creates the potential for longer-term change, they said.
Sign up for a free preview to unlock the rest of this article
Timely, relevant coverage of court proceedings and agency rulings involving tariffs, classification, valuation, origin and antidumping and countervailing duties. Each day, Trade Law Daily subscribers receive a daily headline email, in-depth PDF edition and access to all relevant documents via our trade law source document library and website.
Cuban telecommunications is "back to the future," resembling state-run Latin American telecom markets from the 1990s, said Drinker Biddle attorney Eduardo Guzman, who works with U.S. companies looking to do business in the region. It's hard to move from a state-owned monopoly -- with the ministry of communications at the center of power -- to "anything resembling" a competitive market, he said. But it's a relatively "virgin market" of 12 million people, where communications could drive much commerce, employment, jobs and investment, he said, and "different voices" could emerge within Cuba over time.
U.S. communications companies should focus on addressing Cuban needs, not on selling products and services, said Timothy Finton, State Department senior counselor-international communications and information policy. He said the Cuban authorities aren't interested in pursuing "technology for technology's sake," but in addressing specific needs, including in the medical sector and educational system, which are sources of national pride.
Although Empresa de Telecomunicaciones de Cuba S.A. (ETECSA) is a state monopoly that's shielded from competition, the Cuban government is interested in "collaboration," said Olga Madruga-Forti, head of the FCC International Bureau Global Strategy and Negotiation Division. She outlined FCC actions to take Cuba off an "exclusion list" for U.S. global authorizations, and agency proposals in a Further NPRM to eliminate nondiscrimination requirements for U.S. telecom carriers connecting with Cuba. The Department of Commerce relaxed trade restrictions with Cuba, creating certain exceptions to the embargo, including for telecom equipment exports, said Linda Kinney, NTIA senior adviser-Internet policy.
Guzman said there are two very different Cuban market segments. He said U.S.-Cuban communications arrangements have actually been allowed under U.S. statutes for some time but were complicated by various "practical" hurdles. The Obama administration and the FCC have facilitated the efforts of American companies to negotiate new transmission links on the U.S.-Cuba route, he said. U.S. companies face much bigger obstacles entering the Cuban domestic market because of both the U.S. trade embargo and Cuban restrictions, he said.
Cuba has a "revolutionary heritage" and views the U.S. as "the evil empire" of imperialism, said Madruga-Forti, calling that a major challenge for U.S. companies because they need to build trust to win government approvals and strike business deals. Kinney noted the Cuban military has some control over ETECSA, making it harder for Cuban authorities to believe private U.S. companies looking to install network systems in Cuba wouldn't be collaborating with the CIA to facilitate spying. Madruga-Forti said a developing generational divide offers promise, with younger Cubans much more interested in using smartphones and Internet applications.
A U.S. carrier with "lofty" visions of building a wireless network in Cuba should realize that is a long-term proposition and should focus on shorter-term pragmatic steps that address Cuban needs and build relationships, Guzman said, noting with approval Google's "baby steps" on the island. American companies should be meticulous in respecting Cuban law and practices, he said. "Urge them to follow the rules," he told lawyers in the audience, if they have U.S. company clients looking to do business in Cuba.