AT&T seeks other routes for Cuba calls

By JUAN O. TAMAYO
Herald Staff Writer

As tonight's deadline neared for the threatened disruption of direct-dial U.S. telephone calls to Cuba, the major American carrier said Tuesday that it was seeking ``alternative routes in case of a shutdown and counseled callers to continue dialing as before.

AT&T warned customers, however, to be ready for ``delays and slight disruptions of service.

Cuba has vowed to halt direct-dial calls by AT&T and four other U.S. phone firms holding $19 million owed to Havana at midnight tonight because of a suit by relatives of three Brothers to the Rescue pilots killed three years ago today.

U.S. District Court Judge James Lawrence King fined Cuba's government $187.6 million, and relatives have tried to collect ever since. The trial has exposed significant information on a vital link between Cubans on the island and Cubans in the United States, placing a spotlight on a business warped by decades of political enmity and the ambition for huge profits, as well as intelligence concerns.

Even as the threatened deadline loomed, no one on this side of the Florida Straits was willing to predict whether Havana would carry out its threat to close down service by companies that provide most of the direct telephone service from the United States. It was also unclear how overall service might be affected, how long the crisis might last and whether a last-minute compromise might be possible.

Cuban Americans account for 90 percent of U.S.-Cuba telephone traffic that totaled about 2.16 million hours and generated $80 million in gross income for Havana's ETECSA phone company last year, industry experts said. Islanders initiate only 8 percent of the calls.

U.S. Treasury Department officials say the direct calls generated $250 million in income for U.S. telephone firms and $212.5 million for ETECSA from the time the service began in 1994 to mid-1998.

Cuba's government owns 51 percent of ETECSA through the Communications Ministry, according to reports presented to King. Another 29 percent is owned by the Italian STET telephone company through a Dutch subsidiary.

About 8 percent is owned by the Cuban government's Banco Financiero, and the remaining 12 percent is owned by UTISA, a Panamanian-registered firm alleged by lawyers for the relatives to be a front for the Cuban government.

Foreign influence

Eric Lieberman, a New York lawyer who represented ETECSA at a hearing before King last week, said STET's contract gives it the right to appoint ETECSA's deputy administrator and half-plus-one of its board of directors.

Lieberman argued ETECSA was not part of the Cuban government and therefore should not be affected by King's ruling. Lawyers for the relatives submitted copies of past Treasury Department licenses to the U.S. phone firms, mentioning only payments to the Cuban government, never ETECSA.

Lieberman later declined to answer journalists' questions about ETECSA finances and said only that the firm's profits are not paid to the Cuban government but ``to its shareholders, as in any normal company.

Industry experts said ETECSA's profits, if any, would be impossible to determine because of the unique nature of the agreements between Cuba and the U.S. telephone firms because of the U.S. embargo against the island.

Expensive calls

U.S. calls to Cuba now cost between 60 cents and $1.99 per minute, expensive compared to calls to other places in the region like the Bahamas, which cost 20 to 30 cents.

U.S. regulations limit Cuba's share of the U.S.-originated calls to 60 cents per minute -- in an effort to prevent the calls from becoming a cash cow for Cuba.

U.S. firms normally offer poor nations like Cuba up to 75 percent of the income so they can upgrade service -- usually by buying hardware from the U.S. firms -- and generate even more business, industry experts said. In Cuba's case, however, U.S. regulations limit its share to a maximum of 50 percent.

``So that's our way of dealing with the politically sensitive issue of Cuba -- allowing high per-minute payments for calls but mandating a 50-50 split only, telecommunications consultant Enrique Lopez said.

U.S. firms cannot sell hardware to ETECSA because of the embargo, and various proposals to install new underwater fiber-optic telephone cables to Cuba have long been blocked by the U.S. government.

Espionage reasons

The veto was the work of U.S. intelligence agencies, trying to force Cuba to make more extensive use of satellite lines more easily intercepted by U.S. eavesdroppers, a retired U.S. government official said.

Industry officials said a Cuban cutoff of direct dialing services by AT&T, MCI, LDDS, IDB and WILTEL would affect 80 percent of the 1,020 phone circuits linking the United States and Cuba. AT&T has 533 circuits, they said.

Havana said it would allow continued service by Sprint, which has 120 circuits, and the Puerto Rico-based TLDI because they had not withheld payments like the others. TLDI has no working circuits to Cuba.

Sprint and TLDI appear to have made their payments to Cuba before the writs of garnishment filed by family lawyers reached them, lawyers in the case said. But Sprint could face trouble if it makes the next payment, due March 30.

U.S. officials in Washington monitoring the potential crisis said they were surprised that Cuba, which calls its threat ``strictly a matter of business, appears to be violating a provision in ETECSA's contract with all of the U.S. firms that requires 30 days' notice of any cuts in service.

Legislative business

``They keep saying it's just business, but then it's the president of the Cuban legislature who first threatened to cut off the service last month. [Ricardo] Alarcon never spoke of ETECSA. He said `we,'  said an American lawyer close to the case.

If Cuba cuts off AT&T, MCI and the others, Sprint and TLDI could lease all of their unused circuits to Cuba and maintain relatively stable service, several industry experts said.

But AT&T and MCI would be unlikely to lease their circuits to Sprint for competitive reasons, an industry consultant said.

``You have to remember this is not a fight about $19 million or even $80 million, she said. ``This is about Cuba's very profitable future as a hub for telecommunications between the U.S. and Latin America and the Caribbean, and Latin America and Europe.

If Cuba cuts off all direct dialing, it could bring a return to the way Cuba-U.S. telephone links worked from 1964 to 1994, when the Torricelli Law opened the door to direct dialing.

During that period, calls to Cuba often had to be reserved weeks in advance, and AT&T's debts to Havana all went into a Cuban bank account in the United States frozen by the embargo. That account now holds about $113 million, knowledgeable officials said.