Free Internet, free Cuba: how easing U.S. sanctions and a Havana Google Internet cafe may transform Cuba's telecommunications and Internet industries.

• Author: Hansson, Leigh T.

On March 15, 2016, President Obama embarked on a historic visit to Cuba, marking the first time that a U.S. president visited the country in 90 years. (1) In his Havana speech, the president stated, "The [i]nternet should be available across the island, so that Cubans can connect to the wider world and to one of the greatest engines of growth in human history." (2) This statement mirrors his earlier views when he first initiated major diplomatic and policy changes in U.S.-Cuba relations. In December 2014, President Obama stated, "I believe in the free flow of information. Unfortunately, our sanctions on Cuba have denied Cubans access to technology that has empowered individuals around the globe. So I've authorized increased telecommunications connections between the United States and Cuba." (3) In effecting the president's desire for the free flow of information to Cuba, the U.S. Department of Treasury, Office of Foreign Assets Control (OFAC), and the U.S. Department of Commerce, Bureau of Industry & Security (BIS) have recently made a number of amendments to their regulations, paving the way for U.S. telecommunications and internet service providers to enter the Cuban market.

Improving Access to Internet and Telecommunications Services in Cuba

Reports indicate that Google is setting the stage to enter the Cuban economy and be a major service provider on the island. (4) In March 2016, Google announced that it would open the "Google + Kcho.Mor" technological center in Havana to enable Cubans to familiarize themselves with Chromebook laptops and provide free internet access. (5) Currently, there is limited bandwidth and a significant cost associated with providing internet access. (6) Where internet connection is available, the connection is often very slow. (7) Previously, Cubans paid $4.50 an hour for web browsing, which was recently reduced to $2 an hour at public WiFi hotspots, a significant sum considering the population's low wages of $26 a month. (8) Internet access is only available in 35 public WiFi hotspots, which are operated by Cuba's state-owned telecommunications company, ETESCA. Internet content remains censored by the government. (9)

In 2014, a total of 12.9 percent of Cubans had computers at home, while 4.1 percent of households had access to dial-up internet. (10) The connection is slow compared to what most Americans and the western world have become accustomed to, and wireless internet is not yet available to the general population. (11) The regulatory changes, combined with consumer demand, have sparked interest among major U.S. telecommunications and internet service providers, such as Google, which seek to provide such services to well-educated but technologically disadvantaged Cubans. (12) In the past few months, Google has joined forces with artist Alexis Machado as part of a greater cooperative effort to establish the equivalent of an "internet cafe" in Havana and provide free internet access to the Cuban population. (13) In small steps, changes in the U.S. sanctions and export regulations seek to improve the "free flow of information" to the Cuban people. (14) This article provides an overview of the recent regulatory changes in the U.S.-Cuba sanctions regime and export laws specific to the telecommunications and internet industries.

OFAC Sanctions Regarding Cuba

U.S. trade and economic sanctions imposed against Cuba are primarily enforced by the Treasury Department's Office of Foreign Assets Control (OFAC) through the Cuban Assets Control Regulations (31 C.F.R. Part 515) (CACR), and the Commerce Department's Bureau of Industry and Security (BIS) through the Export Administration Regulations (15 C.F.R. Parts 730-774) (EAR). While there is some overlap, OFAC generally has jurisdiction to restrict the provision of services and funds to Cuba, while BIS has jurisdiction to license and/or prohibit the export or re-export of U.S.-origin items to Cuba. The agencies have worked together to implement regulatory changes reflecting the new U.S. policy and approach regarding diplomatic relations with Cuba.

OFAC Sanctions: Impact on Telecommunications in Cuba

The CACR now provides for a general license authorizing transactions, including payments, which are incident to the provision of telecommunications services related to the transmission or receipt of telecommunications involving Cuba. (15) The CACR defines "telecommunications services" to include data, telephone, telegraph, internet connectivity, radio, television, news wire feeds, satellite transmissions, and similar services. (16)

The telecommunications services general license currently allows for the following:

* U.S. persons may enter and perform roaming service agreements with telecommunications services providers in Cuba.

* U.S. persons may enter into contracts with telecommunications service providers or individuals in Cuba, provided they are not government officials or prohibited members of the Cuban Communist Party.

* U.S. persons may make payments under contracts with telecommunications service providers or Cuban nationals, provided they are not government officials or prohibited members of the Cuban Communist Party.

* Telecommunications companies may establish facilities to provide telecommunications services linking the U.S. or third countries and Cuba and pursue transactions incident to establishing such facilities, including fiber-optic and satellite facilities.

* U.S. persons can now enter into licensing agreements related to telecommunications services for roaming agreements.

* U.S. persons may also enter into licensing agreements related to contracts with telecommunications service providers or establishing a telecommunications facility in Cuba.

The normalization of U.S. relations with Cuba has led to increased business opportunities for both U.S. and Cuban parties, and U.S. companies already seem to be taking advantage...