It looks like Venezuela has beat out U.S.-based service providers AT&T (NYSE: T) and Verizon Communications (NYSE: VZ) in finding a passage into the recently opened Cuban telecom market.
Touted by Venezuelan President Hugo Chavez as means to unlock the U.S. "blockade" of Cuba, Alcatel-Lucent (NYSE: ALU) began building out the $70 million, 1,600-km (mile) submarine cable network linking Venezuela and Siboney, a city on the southeast coast of Cuba.
However, Venezuela's new network is a bit of a blow to the U.S. government, which had granted a license to Miami-based TeleCuba Communications to build a 110-mile, $18 million submarine cable between Key West and Havana, Cuba.
Although President Barack Obama in 2009 lifted many of the embargo constraints on Cuba for American companies providing telecommunications and broadcast services, TeleCuba's proposed network has been held in limbo due to the FCC's dispute with Raul Castro over call routing prices.
TeleCuba petitioned the FCC to raise the current call routing rate with Cuba from 60 cents per minute to 84 cents per minute.
"This is a huge missed opportunity," Chris Sabatini, senior policy director at the New York-based Council of the Americas, a business group told Bloomberg. "If you can get into a market early on, you can control it all along the value chain."
So what's so attractive about the Cuban telecom market? Although still dominated by state-run service provider monopoly Etecsa, which has a monopoly on all wireline and wireless services, Pyramid Research argues that annual revenue of Cuba's telecom market could rise from $80 million today to about $400 million by 2013.
- Bloomberg has this article
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