U.S.-Cuba breakthrough is no slam dunk for Internet

As the U.S. frees its service providers to invest, Cuba may not play ball

Members of the Cuban Revolutionary Army

Members of the Cuban Revolutionary Army hold Cuban national flags during a march "For the Five and Against the Terrorism" in Havana Sept. 30, 2014. "The five" refer to the five Cuban intelligence officers, hailed by many in Cuba as national heroes, who were arrested in 1998 and convicted in Miami in 2001, of conspiracy to commit espionage, murder, and other crimes in the U.S. 

Credit: REUTERS/Alexandre Meneghini

The Obama administration's historic move to restore ties between the U.S. and Cuba may eventually put more Cubans online, but the future of the Internet there is likely to depend more on domestic policies than on imported goods and services.

As President Obama announced steps to lower barriers between the U.S. and Cuba after more than 50 years, he said the strict U.S. laws designed to isolate Cuba have contributed to the island's isolation from the Internet. The policy changes he ordered on Wednesday included allowing companies to export communications gear and set up infrastructure for networks in Cuba.

Anti-Castro activists protest in Little Havana in Miami REUTERS/Javier Galeano

Anti-Castro activists protest in Little Havana in Miami, Florida December 17, 2014. News on Wednesday that the United States will restore full diplomatic relations with Cuba and open an embassy in Havana for the first time in more than a half century rippled through the 1.5-million-strong exile community in the United States, many of them lifelong opponents of communist rule. 

The latest moves go beyond an earlier liberalization in 2009, which didn't include equipment exports and other items. But just because U.S. carriers and vendors are allowed to start wiring Cuba for Internet service doesn't mean they will. The island country's own government has strictly limited access to the Internet, and only about 5 percent of Cuba's population is connected to the global network, according to the White House.

In a speech on the policy changes on Wednesday, Obama said he welcomed "Cuba's decision to provide more access to the Internet for its citizens," without giving further details. Whatever Havana's decision entails, it will have to make the Cuba an attractive market for foreign service providers if it's to increase the country's domestic and international connections, according to Doug Madory, director of Internet analysis at Dyn Research.

Cuba could certainly use more Internet capacity. There's only one international submarine cable connected to the island, a link from Venezuela that seems to have been activated last year. Cuba has just 1.275Gbps (bits per second) of total bandwidth linking it to the outside world, according to the research firm TeleGeography. The island partly depends on slow, expensive satellite links.

But international connections aren't the only thing limiting Internet use in the country. Cuban citizens can only get online in a few places, such as government-run cafes that are too expensive for most average people, Madory said. In 2013, TeleGeography reported just 6,200 broadband subscribers in a nation of more than 11 million. In June of that year, the government opened up Web access in 118 outlets in addition to the hotels and select state institutions where it had been available before, TeleGeography reported.

That may be one reason why service providers outside the U.S. haven't piled on to the Cuban Internet opportunity even though they've never faced the U.S. government's restrictions on investment.

"The limiting factor is domestic policy in Cuba," Madory said. How and when that will change is anyone's guess.

The same goes for any type of business that the U.S. may want to promote in Cuba, said Jonathan Epstein, an international trade attorney at Holland & Knight, in Washington, D.C. "If it's something they don't want, it's going to be more difficult," Epstein said.

However, given the chance, U.S. carriers might invest in Cuba just to get their feet on the ground there in case the country becomes a fast-growing Internet market, he said.

If Cuba wants to foster a thriving Internet sector, it might do well to follow the example of Myanmar. The poor, historically isolated Southeast Asian country recently sold wireless network licenses to two foreign service providers, Norway's Telenor and Qatar's Ooderoo. They dramatically expanded Myanmar's mobile industry, which had been limited to a small state-owned operator, Madory at Dyn Research said.

"Mobile is the fastest way to come in somewhere," he said. Many developing countries have come online mostly through wireless networks, which are easier and cheaper to deploy than cables. Cuba hasn't even started to take advantage of mobile broadband: In 2013, the country had nearly 2.3 million mobile subscribers, but all were on narrowband 2G networks, according to TeleGeography.

Allowing broader Internet access might pose a dilemma for the Cuban government: Allow more free expression or try to keep tabs on a fast-growing industry, Madory said.

"As the Internet access grows and develops, so does the task of trying to censor things," he said. "Unless you're China, and you want to dump in a ton of resources to do it, it starts to get harder and harder."

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