FCC Lifts Ban for U.S. Telecom Firms to Operate in Cuba

Not only can firms now offer service in Cuba, but they can also establish interconnection agreements with ETECSA, Cuba's main telecom operator.

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The Federal Communications Commission (FCC) that regulates the U.S telecom industry has lifted its ban preventing American firms from offering telecom service in Cuba. The announcement means that U.S. telecom companies will no longer need to seek regulator’s permission for launching operations in the Caribbean island.

Cuba was the last country on FCC’s so-called “exclusion list” that was established under Section 214 of the Communications Act of 1934. A few months ago, Sprint Corp. and IDT Domestic Telecom, Inc., a prepaid calling company, had sought the FCC’s approval to offer services to the island. Verizon is already offering “Pay-As-You-Go” roaming service.

Removing Cuba from the exclusion list fuels more competition in a Cuban telecom market currently dominated by the state-owned Empresa de Telecomunicaciones de Cuba S.A. (ETECSA). Not only can the companies now offer service in Cuba, but operators can also establish interconnection agreements with ETECSA.

The move from the FCC has been anticipated by the industry ever since the Obama administration’s December 2014 decision to reopen diplomatic relations with the island nation. Ever since the United States began thawing relations with Havana, American telecom providers, equipment manufacturers, and infrastructure vendors have been trying to get into the Cuban market and help build it out.

It is not clear, however, why the regulator took so long to lift the ban, since helping Cuba improve its telecom infrastructure was one of the key stated intentions for re-establishing relations with the island.

But there are many obstacles for them to overcome. “Cuba is a tantalizing, complex, and ultimately slow-building market that has significant upside despite the presence of a political and governance obstacle that has so far suppressed swelling demand for better Internet facilities within the country,” writes Sean Goforth, Nearshore Americas’ research analyst who conducted a study on Cuba’s ICT readiness.

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Over the past year, the Obama administration has removed a series of restrictions. So much so that U.S. businesses can now establish a physical presence in Cuba and hire Cubans to work in their offices.

But the United States has not yet lifted the economic embargo in instituted in 1960 on the communist country. Telecom service is still expensive and hard to access in Cuba. Reports say many people visit “cyber points” set up across major cities to browse the internet.