Cuba USA
The Senate Finance Committee is researching the economic impact of U.S. embargo on trade with Cuba and I was asked to testify before the US International Trade Commission on the effects of the U.S. restrictions on our exports of telecommunication equipment and services to Cuba. I have a chance to revise the testimony, and would appreciate feedback.
Click to download Word or PDF versions of the draft.
Here is the testimony introduction:
The Commission has asked for testimony on the effects of the U.S. trade restrictions on our telecommunication exports to Cuba. Since there is a great deal of uncertainty about the Cuban plans and policies and U.S. policy is also in a state of flux, I will lay out a framework for discussing the issue rather than attempting specific predictions. This framework can be modified and fleshed out by future research. I will focus on Internet-based telecommunications, which are subsuming traditional telephony.
Potential U.S. exports to Cuba include:
Some of these markets, for example, providing Internet infrastructure and service, are more severely impacted by U.S. restrictions than others.
U.S. restrictions are only one impediment to the sale of these goods and services – there are others that are out of our control:
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Update 6/26/2015
An anonymous reader has the opinion that my testimony document underestimates the potential of the Cuban market. They listed the following examples:
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Update 1/16/2016
The FCC has removed Cuba from its exclusion list, opening the door for U.S. telecom carriers to provide facilities-based telephone and Internet service to Cuba without separate approval from the Commission. (Cuba was the last remaining country on the Commission’s
Exclusion List).
The ball is in Cuba's court, but I do not expect them to pick it up any time soon.
Dreaming -- this would be a good time for ETECSA to experiment with satellite Internet as an interim measure.
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Update 3/7/2016
The anti-Castro Internet advocacy group Foundation for Human Rights in Cuba has suggested that the choice of Huawei for the home-access pilot in Old Havana was motivated by Huawei's expertise in censorship and surveillance. (The Old Havana pilot deployment is quite limited, but Huawei is also the equipment vendor for forthcoming DSL home connectivity and Cuba's WiFi hotpots).
I mentioned the Foundation assertion to Doug Madory, Director of Internet Access at Dyn Research and he disagreed, saying:
This was an unintended side-effect of the embargo, and it remains to be seen to what extent the US can recover.
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Cuba USA
What is the effect U.S. trade restrictions on IT exports to Cuba?
Click to download Word or PDF versions of the draft.
Here is the testimony introduction:
The Commission has asked for testimony on the effects of the U.S. trade restrictions on our telecommunication exports to Cuba. Since there is a great deal of uncertainty about the Cuban plans and policies and U.S. policy is also in a state of flux, I will lay out a framework for discussing the issue rather than attempting specific predictions. This framework can be modified and fleshed out by future research. I will focus on Internet-based telecommunications, which are subsuming traditional telephony.
Potential U.S. exports to Cuba include:
- Personal Internet access devices
- Internet services for fees or advertising
- Internet infrastructure
- Internet service provision
- Digital entertainment and other content
- Sensor-based Internet access devices – “the Internet of things.”
Some of these markets, for example, providing Internet infrastructure and service, are more severely impacted by U.S. restrictions than others.
U.S. restrictions are only one impediment to the sale of these goods and services – there are others that are out of our control:
- Cuban government fear of free information exchange
- The Cuban economy
- The absence of domestic Internet infrastructure
- Socialist values and practices
- Foreign competition
- Domestic competition from state monopolies
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Update 6/26/2015
An anonymous reader has the opinion that my testimony document underestimates the potential of the Cuban market. They listed the following examples:
Web hosting service -- the reader is "middle man" for ten Web sites hosted in Canada and knows of many others.Note that the specialized software is pirated, as is much of the software and content distributed in the weekly "paquete." Copyright infringement will be an issue in any discussion of liberalization of US trade policy. Also note that the medical and audio/video equipment is sold primarily to government enterprises, not private individuals or cooperatives.
Specialized professional audio/video equipment that is only made in US, or were US products traditionally have much better quality. Examples include products from Avid, M-Audio and Alesis. Their products are sometimes bought by Cuban companies in third countries using a foreign nationals or foreign companies as middle man. Other times they have to settle for lower quality products from China or Europe.
Computer assisted Medical equipment -- this is a big opportunity because the Cuban government spends a lot on health care every year
Specialized Software -- for example Oracle databases, which are pervasive in Cuba.
The reader went on to say that some US companies refuse to sell their products to Cuban even in foreign countries. For example Dell dealers refuse to sell laptops to people with Cuban passports in Madrid and Barcelona.
-----
Update 1/16/2016
The FCC has removed Cuba from its exclusion list, opening the door for U.S. telecom carriers to provide facilities-based telephone and Internet service to Cuba without separate approval from the Commission. (Cuba was the last remaining country on the Commission’s
Exclusion List).
The ball is in Cuba's court, but I do not expect them to pick it up any time soon.
Dreaming -- this would be a good time for ETECSA to experiment with satellite Internet as an interim measure.
-----
Update 3/7/2016
The anti-Castro Internet advocacy group Foundation for Human Rights in Cuba has suggested that the choice of Huawei for the home-access pilot in Old Havana was motivated by Huawei's expertise in censorship and surveillance. (The Old Havana pilot deployment is quite limited, but Huawei is also the equipment vendor for forthcoming DSL home connectivity and Cuba's WiFi hotpots).
I mentioned the Foundation assertion to Doug Madory, Director of Internet Access at Dyn Research and he disagreed, saying:
No not really. There are plenty of companies that offer products that can be used for surveillance and censorship -- see the usage of Blue Coat of Canada in Syria. Huawei is both inexpensive and not western. Those are probably bigger reasons.Huawei opened a Cuban office and began replacing Cisco routers 16 years ago and they, and other Chinese companies, have established strong relationships with Cuba. The US may have been the dominant supplier of Internet infrastructure and other IT equipment and services at one time, but companies like Huawei are now effective competitors.
At The Economist event (last December) I spoke with the country manager (of a US firm) for Cuba and he said he was in the room for one of the main presentations from Huawei to ETECSA. He said Huawei had brought a dozen engineers and had put a lot of work into their proposal for a telecom build-out. Huawei wanted this deal very much.
This was an unintended side-effect of the embargo, and it remains to be seen to what extent the US can recover.
- Etecsa Will Sell -- And Service -- Huawei Phones.
ETECSA has agreed to sell and service Huawei phones. Since Cuban cell service is 2G, they will be used for voice calls and Internet access at WiFi hotspots and elsewhere. (I have heard that there is a little 3G coverage in Cuba -- is that the case)? Javier...
- Cuban Un Report Condemns The Embargo -- Their Telecommunication Claims Are Overstated..
The embargo is one obstacle faced by the Cuban Internet -- the claim overlooks the impact of the Cuban economy and the government's fear of information freedom On October 23th, the United Nations General Assembly is expected to vote on a resolution...
- Cuban Infrastructure Investment -- China Won The First Round
China won the first round, what about the future? In December 2014, the administration announced that we were taking "historic steps to chart a new course in our relations with Cuba and to further engage and empower the Cuban people." The following month,...
- Cuban International Traffic Shifts From Satellite To The Alba-1 Undersea Cable
Doug Madory, Director of Internet Analysis at Dyn Research, sent me a note on Cuba's international traffic. As you see here, on July 1, nearly all satellite traffic (blue and green) was re-routed to the ALBA-1 undersea cable: As a result, median...
- A Leaked Etecsa Presentation On Home Internet Connectivity In Cuba
I don't criticize to knock the system down. On the contrary, I criticize to perfect the system. Carlos Alberto Pérez This post has taken several twists and turns. I started out to write a post commenting on an ETECSA PowerPoint presentation on their...