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  March 16th, 2015 | Written by

U.S.-Cuba Trade Relations Improve With Telecom Deal

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The normalization of relations between the U.S. and Cuba has taken a major step with a U.S.-based telecommunications company striking the first commercial agreement that allows a U.S. telecom firm to offer long-distance telephone service to Cuba. The deal between Newark, New Jersey-headquartered IDT Corp. and Cuba’s state-owned telecoms firm Empresa de Telecomunicaciones de Cuba S.A. (ETECSA) was reached under the terms of the revisions to the Cuban Assets Control Regulations announced by the U.S. government last month, which permit U.S. telecom firms to do business with the Caribbean island nation.

Since 1962, when the U.S. enacted an economic embargo on Cuba, communications between the two countries has been possible but only by taking a time-consuming, circuitous route through third-party countries like Spain and Italy. Telephone calls between the two countries are also extremely expensive, largely because Cuba use its monopoly on telecommunications to generate badly needed foreign exchange for its communist government, analysts say.

A large share of IDT’s current business is selling international calling cards to Cuban immigrant communities throughout the U.S. The company hopes that dealing directly with ETECSA will allow it to lower the price of calls to Cuba. It says that the agreement has been filed with the Federal Communications Commission (FCC) and is subject to FCC review for a period of 10 days.

IDT joins a list of U.S.-based companies looking to take advantage of thawing diplomatic relations between the U.S. and Cuba, including Netflix Inc., which recently launched its movie and TV streaming service in Cuba. Two international financal services companies are also moving on the Cuban front, with MasterCard Inc. now allowing its cards issued in the U.S. to be used in Cuba, and American Express Co. recently announcing that it would launch operations there.