Current Development and Potential of Cuba's Telecommunications Sector

Paolo Spadoni, ABD and Terry L. Maris, PhD

The development of the telecommunications sector has been a high priority for the Cuban government since the early 1990s. The telecom industry, which had received only minimal investment since 1959, was in need of modern digital technology and foreign capital as the island's entire phone network still operated on analog systems. During the last decade, this sector of the Cuban economy has been the target of some of the biggest investments by foreign companies. However, it must be noted that telecommunications services remain state monopolies. Cuba simply allowed foreign investors to participate in those monopolies.

Available figures on telephone main lines and density, cellular phone subscribers, personal computers penetration, Internet sites, and e-mail accounts show that Cuba's telecommunications indicators have improved significantly in recent years. But these indicators are still among the lowest in Latin America. The development of Cuba's telecommunications sector is limited by a relatively poor infrastructure, access restrictions, and excessive costs. A major problem is the lack of competition and efficiency in this sector, as the Castro government remains unwilling to create the conditions for attracting direct foreign investment in the amount and in such quality as required by the island's economy. In addition, during the last decade, Cuban authorities have given priority to technological facilities that generate hard currency revenues rather than increase universal service. The long-term development of the island's telecommunications sector will depend on Cuba's willingness to promote a gradual decentralization of its state-dominated economy, introduce profound internal reforms, and attract substantial amounts of foreign capital by taking steps to relax existing regulations on the activities of foreign and state enterprises.