How the Internet's Just Starting to Transform Cuba

you did. You did. It's true. But it was on my very first day there that I found my story. Omero, my taxi driver was driving us around Havana in this beautiful pink convertible Cadillac. Okay, tell me. We passed by all these parks and public squares that were teeming with people, but they weren't really hanging out and socializing with each other. They were wheezed onto public benches as if they were

on the subway, like hunched over their smartphones. Is many people for gheefly phase will It turns out those crowds were enjoying a fairly new luxury in Cuba three or four year before it's impossible for internet for the people but is figure out before. It's a many change, and that change that Omero is referring to, that's when the state owned telecom company at Texas began rolling out the country's very first WiFi hotspots. That's when the Internet first

became available to the massive It's possible. The Internet is not limited. The bird is the corn is no good connection, his bird is low. But it's possible. It's through this very patchy network access from the crowded benches of Havana's parks that the Internet is just starting to change the way Cubans live and work, decades after it's transformed our

lives lives in the developed world. Hi am Akito, and I'm Pat Cary, and this week on Decrypted, we're going to be asking you to imagine a time before we hailed Uber's, before we asked Sirie for directions, before we got to watch our favorite movies with just a couple of taps or clicks. As I traveled around, I asked people to tell me their stories. I really wanted to understand what the internet could do for young people and especially for people trying to set up their own businesses Cuba.

Maybe just a short flight from the US, but it's actually really unlike anywhere I had been before. Okay, so I've heard that it's an idyllic island, vegetation long, pristine beaches. I've always wanted to visit. Yeah, Havana is like full of gritty charm. Um. It was a wonderful place to be. But actually, the thing that really struck me as soon as I arrived is how different the economy is from

what I'm used to in the US. A couple of examples, Um, government wages are really incredibly low, just twenty five dollars a month, and that's in the cities. In the countryside, it's only fourteen dollars a month. Another thing I noticed is that access to information is controlled in interesting ways, so it's not often as easy as you would think to access news, for example, about the rest of the world.

And before I arrived, I had heard about how there's a shortage of cars in Cuba, but I just didn't understand until I got there, really how limited access to a vehicle is is. In fact, in the countryside, most people move around by horse and cart because there's so few cars. Sophia, you getting driven around in that pink Cadillac by your very own driver, Romerrow. That's a pretty big luxury. Yeah, that's a treat. And it's not like

cars are technically banned in Cuba. It's just that they are so expensive to buy that most people can't afford them. One taxi driver told me those classic cars that you see in all the photos driving down the Malican, they can cost as much as fifty thousand U S. Dollars. And remember, most people are just earning twenty dollars a month. And he said that if you do manage to somehow save enough cash to buy one of these cars, then the authorities can often get suspicious about how you manage

to get so much money. And there's no such thing as getting a loan for a car if you want to buy one. In the airport in Mexico on our way to Cuba, we saw people checking in flat screen TVs, air conditioning units, and are the large home electronics. Big ticket items are still prohibitively expensive for most people in Cuba. So what about smartphones? Actually, interestingly a lot of young people do have smartphones, but again they are still really expensive.

A few people told me the latest models aren't easily available unless you buy them on the black market. This is something I asked Omero, our taxi driver about. Now. Remember, by Cuban standards, Omero is very well off. He owns five classic cars in a place where most people don't even have one. But still he had to depend on his relatives in Miami to send him a smartphone from the US. No, I my phone is and buy in Miami. Okay, every ELECTRONI is a spencer in Cuba. It's very spencive.

He's positive because my family living in Miami, Like, I'm gonna buy the phone and the TV for me. You know. The people is not possibly um Miami, because I know Miami. No resize there. They gone to Marino how the morning for goo. The made the flight and like a lot of other developing economies, I assume a desktop computer is completely out of the question. Yeah. I didn't see a single one while I was there. And actually until now, Cubans have not been able to access the Internet from

their homes. Interestingly, that may be about to change. I spoke to one Cuba trade expert. His name is Timothy Ashby. I'm the former senior Republican political appointee in the Commerce Department. Myself and two administrations. Timothy told me there are pilot programs underway in Havana to bring internet connections to at

least one neighborhood. The Cubans have just started experimenting with home internet access UM in Old Havada, which is the recently restored area of the five d year old General and they have a pilot puggle with two thousand homes that have been set up for home internet access, which is a quite revolutionary in Cuba, which because home internet access was prohibited until quite repas unless you were a government official or a teacher or a foreuner. So that's

that's quadramatic. Can they do plan to Experiand he also said there's a lot of interest inside the Cuban government in developing the country's infrastructure in the coming years, and a couple of American companies are definitely interested in helping build out that infrastructure. Google is one of them, and in December they reached a deal with Cuba. They're going to set up service locally on the island to store

content like popular YouTube videos for example. At the start of the show, we heard Omero talking about those frustratingly slow internet connections. Well, this deal with Google should speed things up. And you found the Airbnb is also growing in Cuba, and wireless carriers like Verizon in eighteen he are now offering roaming services for tourists visiting the island, and I'm told that US carriers are looking for ways to offer services not just to tourists but also to

local Cubans. Netflix is another US company that's technically available in Cuba, but they won't really see the benefits of being there until the Internet becomes more accessible to more people. And this is this is an interesting thing thinking about why US companies are even bothering to come here. Because Cuba is a tiny economy, the revenue that they generate can't really compare to the opportunity in other markets like

China or Greater Africa. Yeah. I wondered about this too, and I suspect part of it must be related to the fact that they are finally able to do business in this place that's been off limits for literally decades. But I discovered something else to Cuba actually trains a lot of world class computer scientists and programmers. That's because they have a few very respect table technical universities and

it's kind of a surprising detail. I think for a lot of our listeners, because so far we've been talking about Cuba, is this incredibly poor economy. Right, most people have very little disposable income. But the government has invested in good schools, good hospitals, and good universities. Sure, so they have all the raw ingredients for for good talent. But these people, they come out of these great educations

and they have nowhere to apply those skills. Right, And when I spoke to Timothy, he said that for American companies it may not be so much the market opportunity as the engineering talent that they're chasing in Cuba. The Cuban government is on board with this too. Their goal is not to be another India, but to be something closer to Israel, where they have highly trained innovative um software developers and other types of entrepreneurs. And the entrepreneurial

sector has actually been encouraged in Cuba. Yeah, Okay, so that's all on the pipeline. And yet right now most people still need to sit on a park bench to check their email. So let's walk everyone through it. How do people actually connect to the internet. So first you have to buy a scratch card to connect to the national WiFi network. You can buy the cards at state run general stores and in major hotels, so like phone

cards way back in the day. Yeah, no, exactly. And the going rate for an hour online is about two U S dollars. Now that's incredible. You know, earlier we talked about people's salaries being twenty five dollars a month, So an entire month's wages is equivalent to about ten to twelve hours of time on the internet. Yeah, Cuba's internet is one of the most expensive in the world. I talked to a woman called Laurie. She works as a guide in a national park in a town called Vignalis.

It's about three hours away from Havana. Here's how she explained it. But it's not easy. It's sometimes we don't have a connection and is just in the one blope of the town and in some hotels we have only to hold us. The early have senior too, but not in all Vignal. It's not in the house. It's impossible in the house, and even if we want the internet in the house is really expensive and they don't want

people with internet because we use internet. We have acted at all the information and they don't want that now. When she says they, Laurie is of course talking about the Cuban government. But it was almost as if Cuba's method of information control was to make it so expensive and so slow and in convenient to use the Internet. I checked it out while I was there, and interestingly,

you can access Western websites like Facebook and Twitter. They're not censored, so very different from a place like China. Exactly here's him again. Cubans also communicate now um by linked In. They are active Facebook subscribers. They also access international news, and this is something that's very intriguing to that they are not censored, that the government will close

down violently antique Castro government types of science. But I've actually tested, as you may well have too, such just like Google, see you and I can access news from anywhere in the world. That seems there's no independent media in Cuba, but there is an ability to access um foreign media, which I think is a very key differentiation. Did you get this sense of what people use the internet for? Yeah, Well, since it's so new, people are just getting used to it. They use mostly basic applications,

things like sending emails and video calling their relatives. Who live outside Cuba. Another thing people mentioned was social networks Google Facebook. Interestingly, I didn't hear anyone really talk about e commerce, so that there's no Amazon there, no no one recognized the name Amazon when I tried it out. The only person who said they occasionally buy things online was Omero, the taxi driver we mentioned before. He said

he uses eBay to get spare parts for his car. Okay, so, just until a few years ago, it was really hard for normal people to start a business. You either had a government job, you served in the military, or you worked the land as a farmer. There were some limited opportunities to run your own business. You could maybe be a hairdresser or rent a room to tourists, for example, But before Raoul Castro changed the rules, you couldn't have any employees unless they were related to you. And it's

really striking in Cuba how little industry there is. Towns have no shops, literally no shops, and almost everything is still run by the government, even restaurants and cinemas. But it has recently become possible for Cubans to set up small businesses, which usually have something to do with serving tourists. So if you have a car. You might become a taxi driver like a marrow, or you might make small craft objects like painted pictures or jewelry out of everyday materials.

Here's Laurie again. You can compare our business now then um some years ago, and now we have more opportunities and we have more money. And it's incribll because all the people are common before of the American people. So when they came, the hotel is full and they have to go at the houses with trendrom or sometimes they don't like the hotel because it is um a little bit um different in the house. They want came to know the real people. They want to came to see

our life and to know about our culture. So so it's Laurie said. Most towns just have one or two government hotels, and as a result, there's a real shortage of hotel rooms. Luckily, renting rooms to tourists is by far the most lucrative kind of business people could run in Cuba, but until now hosts have had to rely on word of mouth to attract guests. They depend on host families in other towns recommending them on to travelers,

or they hang signs in front of their doors. So this is one area where the Internet is totally transforming the way people do business. You know, it's really hard to imagine how businesses could manage without being able to do simple things like sending up a website. Yeah, I was very curious about this too, and some of the most interesting stories I heard came from the families that we stayed with that She and her husband, Yovanni, have

a home in the north of Cuba. Their cottage sits on a sandy spit of land poking out into the Gulf of Mexico, surrounded by warm turquoise water and narrow white beaches, and their home is idyllic. They have a small garden in the shade of an avocado tree. They grow fruit and salad. The chickens out back, and about eighteen months ago they started renting three extra rooms. They set up a website, and then about a month ago

they signed up with Airbnb. With Airbnb, it's only been twenty days more or less of them, it's going very well. They send us a lot of bookings. Basically, I'm booked for the whole year with them. It's not just Island. Everywhere we stayed our host families told us, Airbnb has had a big impact on their business. Your friend recommended Airbnb to me and I searched for it on the

internet and it looked good for growing my business. We got our first client through them under member nine that was great who hosted us in a little sky blue cavania in Vignalis. Now, before Airbnb, you would never know when a guest would come looking for a place to stay before your friends and neighbors would give you a call, ask if you were free or if you had guests right now, and then sometimes people would say they're coming and then not show up. On those days, hosts would

simply lose the income. And Ailem told me that knowing her security deposit is guaranteed is one of the best things about signing up with Airbnb. Well before, it was a bit difficult. My house was not very well known. A lot of clients would reserve, but without the security that they're definitely coming and if they don't show up, sometimes I would send away other guests and not get the money from any of them. So I started only

to accept day of booking. Another big bonus with Airbnb is that posts can take bookings far in advance on the night we stayed with Alem, we saw her actually take a reservation as far out as April, as she says that never used to happen before. Okay, so I lem not having easy access to the internet. How is

she maintaining her Airbnb account? Yeah, you're right. She doesn't have any internet signal at her house and she lives an hour away from the closest WiFi hotspot, which is in the town, so she can't manage her own Airbnb accounts. Someone actually called her that night to update her about the booking, and what she told me is that usually Airbnb will keep in touch with her by email, so a couple of times a week or whenever she goes into the town, she can get online and pick up

any updates that they've sent her. Here in Cuba, we are not free to connect to the internet from home as well. It's very difficult. I have an email account and that's how I keep in touch with Airbnb. This is the way I connect with Airbnb. They connect with every one this way and they do everything. They upload the photos of the house. When I have new photos, I send them to a representative who is based in Havana and he has to communicate with the guests because

I don't have access to the internet. That representative I LM is talking about. Those are people working for Airbnb and Havana. It's their job to basically manage the hosts accounts for them. Yeah, and I didn't really get it at the time, but now that I'm thinking back, when I was looking for places to stay in Cuba, almost

every listing offered instant booking. And you know, maybe that's the reason that because it's just too hard for hosts to get back to you quickly if you try and message them and asking questions before you make a reservation. So what do you think we can expect from Cuba in the next few years. I think everyone is waiting to see US companies, I mean international companies in general are all eager to get into the country. But so far, the pace of dealmaking, at least between US companies and

the Cuban government has been relatively slow. Um and there's a number of pending deals that haven't closed yet. One thing that we can count on is that the Cuban government is interested in expanding internet access within the country, so likely the first thing we'll see is more WiFi hotspots and hopefully something cheaper to something cheaper than two

dollars an hour. Yeah, well, I mean, O'Mara told me that it used to be ten a couple of years ago, ten dollars an hour, So it may come down further, and it'll be interesting to see what happens to the relationship that the US has with Cuba under our new president Donald Trump. I agree, I think that's a big

question mark right now. But I was interested while I was reporting out this story to hear that a lot of people are actually very hopeful the Cuban government um is not expecting any kind of rollback what I've heard, especially from Timothy, who is still very plugged in with policy officials in Washington. He said that there may be more scrutiny of deals, there may be more enforcement of existing regulations on the U S side, but he's not expecting to see a rollback. We'll just have to wait

and see. And that's it for this week's episode of Decrypted. Thanks for listening. Tell us what you thought of this episode. Send us a voice message. You can email me at p G A D K A r I at Bloomberg dot net, or write to me on Twitter. I'm at Pa Gadkari and I'm at aki Ito seven. You can subscribe to Decrypted on iTunes or wherever you get your podcasts, and leave us a rating and a review. It helps more listeners find your show. This episode was produced by

aki Ito, Magnus Henrickson, and Liz Smith. Alec McCabe is head of Bloomberg Podcasts. We'll see you next week as Radio Rubber Last. L