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Posted January 15, 2004 by publisher in Business In Cuba

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BY TRACEY EATON | The Dallas Morning News

HAVANA, Cuba - (KRT) - Cubans wear them like fine jewelry, but they don’t glitter. They ring. They chime. They even vibrate.

Cell phones, old news in most of the Americas, are the latest rage in this socialist nation. They’re a symbol of status and power, a way to slip into the wireless world, if only for a moment.

But they’re hard to get in a place where the telecommunications industry is so tightly regulated. And they’re expensive to operate, as much as $5.85 per minute. Still, many Cubans are dying to be connected.

“I got a cell phone to be in fashion,” says Yoel, 21, a Havana market worker. “I want to be in on the party.”

But it’s not always easy to reach out and touch someone.

Technically, Cuba’s state-run cell phone companies can offer service only to foreigners or to Cubans who are authorized to go wireless. Thousands now have service. But some ordinary Cubans find ways around the rules, usually by persuading a visitor or tourist to help them.

Julio, 30, a university student, bought a phone on the street for $60. A foreigner leaving the country sold him his contract for another $60, and he was in business.

“It’s great because I can be located anywhere,” said Julio, who asked that his last name not be used for fear of reprisals. “But it’s also really expensive, so I only use it when necessary.”

Cuba’s leading cell phone company is government-run Cubacel. Its local rates range from 30 to 70 cents per minute. Callers are also charged 30 to 66 cents for incoming calls.

Long distance is pricier, from $2.45 to $5.85 per minute - serious money in a place where most people earn just $10 or $12 per month.

The high rates and strict regulations have prevented Cuba’s cell phone industry from growing more rapidly, some telecommunications experts say.

Mobile phones remain scarce on the island, despite their allure.

Only 22 countries, including Liberia and the Central African Republic, have fewer wireless phones per capita than Cuba, according to NationMaster.com, a Web site listing thousands of statistics.

That ranking is improving as Cuba expands service, but the country is still about as wired as such far-flung spots as Algeria, Pakistan and the Republic of the Congo, statistics show.

“When it comes to telecommunications, Cuba remains stuck in the Dark Ages,” Larry Luxner wrote in Cuba News, a monthly newsletter covering business and politics. “Fidel Castro isn’t eager to have wireless technology fall into the hands of dissidents or counter-revolutionaries.”

Many Cubans don’t have home phones.

Citizens’ commissions decide who gets land phones, taking into account an applicant’s work history, revolutionary loyalty and activity in neighborhood block committees formed to detect traitors and other undesirables. They also give priority to special cases - the disabled and the sick, including those with cancer or AIDS.

Antonio Hernandez, 48, a quality control worker, has been waiting to get a phone line for years, but he’s not complaining.

“You have to have patience. Not everyone can have a phone from one day to the next,” he said.

Castro loyalists say they’re working to narrow the so-called digital divide between their nation and its richer neighbors.

The country had just 352,451 fixed lines in 1995, but that has since doubled, Ignacio Gonzalez, Cuba’s communications minister, told state-run media in March.

China is helping out, giving Cuba $200 million in financing to buy Chinese telecommunications equipment. And Cuba is installing thousands of new public phones.

Still, the country has only half the phone lines per capita as the average Latin American nation, World Bank figures show.

As for the cell phone industry elsewhere in Latin America, business is thriving. The number of users jumped from 3.6 million in 1995 to 60.6 million in 2000. And by 2005, it’s expected to hit 138 million, experts say.

Cuba’s wireless industry could also take off, reaching as many as 3.5 million users in just three years, said Manuel Cereijo, a Florida International University professor and communications specialist. But that won’t happen, he contends, unless the country adopts “a democratic and free market economy.”

Cuban officials say they have no interest in capitalism, nor do they want wild, uncontrolled growth in technology.

Instead, they say, they’re trying to provide phone lines, Internet service and other forms of electronic communication to people in a fair and equitable way.

U.S.-Cuban politics and the longtime American ban on trade with the island often get in the way, said Luis Manuel Diaz, Cubacel’s general manager.

Still, revenues at Cubacel grew from $5.5 million in 1987 to $13.1 million last year. Profits would have been higher if not for the trade embargo, Diaz said.

The sanctions and other restrictions have made it impossible for Cuba to establish roaming agreements with the United States, for instance. So the 200,000 Cuban-Americans and Americans who journey to the island every year must activate their phones in Cuba before using them, unlike visitors from Mexico, Canada and other nations. That discourages many clients and cuts into potential profits, Diaz said.

Cubacel had 17,851 customers at last year’s end, up from 2,900 in 1997. Most of the clients are Cubans who work for state-run enterprises, ranging from hotels and travel agencies to government ministries. Other customers include foreign business managers, diplomats and journalists.

Neither Cubacel nor C-Com, Cuba’s only other state-run wireless phone company, were able to offer statistics on how many ordinary Cubans have managed to evade the rules and get phones.

But more cell phones are turning up on the streets. Users range from prostitutes and pimps to cigar vendors and taxi drivers.

Sellers of contraband and stolen phones sometimes linger outside mobile phone offices in Havana, quietly offering their wares.

“I have a Motorola,” one bootlegger whispered recently. “There’s no charger, but the phone works.”

Phones with built-in cameras fetch $250; those with color screens go for $180. “But if the phone is big and ugly,” one customer said, “the cost drops to between $40 and $60.”

Raul Llanez, a Havana taxi driver, would like to get one.

“Having a cell phone is a privilege,” he said. “More and more drivers have them. But I don’t - and I lose clients because of it.”

Jorge, a taxi driver who has gone mobile, said he tries to use his phone for business only. Just then, it rang. He answered, fired off a few sentences, then hung up.

It went clang-clang again, a few seconds of talk followed and he hung up.

This went on for several minutes.

“My wife called,” he explained later. “We try to keep our calls to less than seven seconds each. That’s when the phone company starts charging you.”

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