Despite opening up, Cuba looks tough for US telecoms

Americans may soon be able to use their cell phones in Cuba, but US telecommunications companies will find it tough to break into Cuba's largely untapped market under a new relaxation of the US embargo against the island, industry experts say.

They will face a tangle of political, legal and technical issues that reflect 50 years of bitterness between two countries that were closely allied before the 1959 Cuban revolution put Fidel Castro in power.

Chief among the hurdles is likely to be a cool reception from the Cuban government, which views American cell phones, satellite dishes and Internet service as a threat to its control over the flow of information to the island just 145 km from Florida.

Potentially big obstacles loom on the US side as well, despite enactment last week of regulations by President Barack Obama effectively granting US telecoms companies a loophole in the 47-year-old US trade embargo against communist-ruled Cuba.

Lawsuit judgments against Cuba have been stacking up for years in US courts, creating hundreds of millions of dollars in financial liability for the cash-strapped island in the midst of its worst economic crisis since the 1990s. US companies also could face stiff competition from Latin American and European rivals said to be eyeing the Cuban market. All potential entrants will have to market to a Cuban population that makes on average $20 a month and so for whom modern communications are often a luxury.

On the plus side, Cuba is a close and potentially lucrative market where there are only 12.6 phones per 100 people, the lowest ratio in the region, and only 13 per cent of the population has access to the Internet, or in most cases a local intranet restricted to Cuban sites.

Cuba has been mostly silent so far on the telecoms changes, which Obama originally announced in April along with the lifting of restrictions on family travel and remittances of money to Cuba by Cuban Americans.

But a high-ranking Cuban official, well-placed to know the government's telecoms policy, told Reuters last week Cuba was willing to meet with all US companies.

"We'd be happy to talk with them," he said when asked if Cuba would consider doing business with US telecommunications companies. "We're prepared to talk about everything."

John Kavulich, senior policy adviser at the US-Cuba Trade and Economic Council in New York, said Cuba's assurances should be taken with a grain of salt.

"The government of Cuba generally responds to overtures from the United States with a 'willingness to discuss anything.' When the 'anything' is defined as accountability and lessening of control, the willingness is likely to be minimal," he said