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Telephone Business Picking Up
CubaNews / November 1995

By Larry Luxner

WASHINGTON -- Last Thanksgiving, the one million Cuban exiles who live in South Florida and elsewhere got a special holiday present: for the first time in 30 years, they could dial their families in Havana quickly and painlessly -- without the use of operators or expensive Canadian callback services.

Nearly a year later, the six long-distance carriers that provide US-Cuba service also have something to be thankful for. Revenues from the new service should hit $40 million this year, and could exceed $75 million in 1996. Paradoxically, supporters of a controversial bill in Congress that seeks to tighten Washington's trade embargo against Havana say telecom traffic will reach even higher levels if the bill passes.

"It'll be interesting to see how the U.S. government reacts to all this money going down there," observes Tom Cavanagh, a retired AT&T executive who now runs a Caribbean telecom consulting firm.

Although no company would divulge information on market share, call volumes or revenues, Cavanagh estimates that AT&T places around 70% of all calls going between the United States and Cuba -- about the same percentage it commands of the U.S. domestic long-distance market. MCI has another 20% of the market, says Cavanagh, with the remaining 10% shared by Sprint, WilTel, IDB Worldcom and LDDS Communications. A seventh company, Telefónica Larga Distancia, received FCC permission Sept. 27 to carry Cuba voice traffic to and from Puerto Rico and the U.S. Virgin Islands.

"There now appears to be an adequate number of circuits. You can get through with virtually no congestion compared to what it was before," said Cavanagh. "Except for short peak periods, it's pretty good. They have a new international switch in Havana, and that has helped."

Adds Enrique J. López, a Miami telecommunications consultant: "I would say AT&T has more than half the market, because of the Cuban perception that AT&T provides better and cheaper service."

Based on the 700 circuits now in use and an industry rule of thumb that estimates 10,000 to 20,000 minutes per circuit per month -- US-Cuban long-distance traffic is currently generating $6.3 million a month, or around $75 million a year. But Cavanagh said the total for 1995 will be around $40 million, since those 700 circuits were only turned up in August of this year.

On the other hand, some analysts say US-Cuban telephone revenues could hit $100 million within the next two or three years. Meanwhile, a $10 million fiberoptic cable proposed by WilTel of Tulsa, Okla., still awaits FCC approval. WilTel says the cable -- to stretch from Key West, Fla., to a point just east of Havana -- would allow US executives to do videoconferencing with their Cuban counterparts, enabling them to do business with Cuba without actually having to travel there, which would violate the travel ban on Cuba. Neither WilTel spokesman Linda Laughlin nor FCC official Rob Stevens could say why the federal agency hasn't approved the project yet.

Meanwhile, for conventional callers to Cuba, the ability to ring up loved ones on the Caribbean island just by calling 011 + 53 -- the country code for Cuba -- offers possibilities unheard of just a few years ago. Before, all calls had to be routed through an antiquated over-the-horizon microwave network, and only 500,000 of the estimated 60 million attempts to call Cuba every year were getting through.

"We're very pleased with the quality and the level of service so far," said Fernando Figueredo, a Miami-based AT&T official who oversees the company's relations with the South Florida Hispanic community. "Our customers are telling us service is very good."

Figueredo said more than half of all attempted calls are getting through, though he added that ""it's very difficult to project call volumes, given the limits on the number of circuits." He did say that calls from Miami to Havana cost as low as 90 cents a minute for customers who have AT&T True World Savings and Cuba as their special calling country. That compares to the regular rate of $1.49 a minute.

In 1993, according to FCC telecom analyst Jim Lande, there were 819,985 US-billed calls to Cuba (including collect calls from Cuba). Those calls lasted 8,339,313 minutes. US customers were billed $10,303,275, of which $6,223,376 were paid out to the Cuban telephone authority. Likewise, there were 408,262 calls billed in Cuba lasting a total of 3,335,928 minutes, and the Cuban telephone authorities paid US carriers $1,925,501.

In 1994, according to preliminary FCC statistics, the number of calls jumped to 1,795,797, and the total number of minutes, 20,075,201. US billings came to $27,281,852, with $12,071,153 in payouts to the Cuban government. There were 693,697 telephone calls billed from Cuba, lasting 5,438,639 minutes.

While the numbers show an increase, Cuba still represents a drop in the bucket as far as international telephone traffic. Last year, the FCC logged more than 2.3 billion calls lasting 13.6 billion minutes, for which US long-distance carriers billed $13.2 billion and paid out $7 billion to foreign carriers. Even calls to the Dominican Republic, Jamaica and Haiti far outweighed traffic to and from Cuba.

Ironically, traffic to Cuba would grow, say Cuban exile groups, if the controversial Helms-Burton bill now before Congress becomes law. This measure seeks to force a political opening in Cuba by denying the Castro government dollars, and by punishing third countries that trade with the Communist regime.

"Under the bill, TV Marti will be converted to UHF. That would greatly enhance its ability to be viewed in Cuba because of the types of TVs Cubans have," said Jerry Kloski, an official of the Cuban American National Foundation. "There's news bureaus as well. That would increase telephone traffic."

Asked how the CANF feels about Castro earning dollars every time a Cuban exile calls Havana, Kloski responded: "Communications is important. But the revenue is what keeps them going. I guess it's the lesser of two evils."

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