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August 14, 2015

With diplomatic relations between the U.S. and Cuba improving this year, tech companies such as Google are attempting to break into the island's nascent internet market. Online access is currently limited to government officials and 35 wireless hotspots around the country that charge USD 4 (EUR 3.60) per hour. Google offered in June to help accelerate the rollout of available wireless access at little cost, yet in mid-July the Cuban government leaked plans for an asymmetric digital subscriber line (ADSL). The cable option would utilize telephone lines and equipment from Chinese companies such as Huawei and ZTE. The ADSL option would also allow the government to raise revenue from access fees and likely block content deemed inappropriate or dangerous. 

Analyst Comment: Pinkerton finds that either system would still allow for much greater penetration into Cuba's consumer market, even if the China model would likely extend the timeline for full implementation. The ultimate decision as to which type of telecommunications system Cuba puts in place will be telling, as far as how much the government will be willing to open up to public scrutiny and wider market forces. An ADSL telecommunications system will allow the government to more easily monitor user activity. Clients considering new operations in light of the improving relations between the U.S. and Cuba should keep this fact in mind if sensitive or proprietary information will need to be transmitted from offices based in Cuba. 

Prepared by: Clint Richards, the Netherlands  

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