Miami man skirts law with Cuban satellite business

Posted on Monday, 11.11.13

Miami man skirts law with Cuban satellite business
BY JUAN O. TAMAYO
JTAMAYO@ELNUEVOHERALD.COM

What U.S. government subcontractor Alan P. Gross could not do in Cuba is
being carried out by a Miami man who started out just wanting to cut the
price of his phone calls to his father and grandmother on the island.

Gross is serving a 15-year prison sentence in Havana for delivering
three satellite telephones, paid for by Washington, to Jewish groups on
the island so they could access the Internet directly and bypass
government controls.

The Miami man says he has sold at least 35 similar satellite systems in
Cuba, some to surf the Web but most for illegal phone operations — using
the systems to connect international calls at prices at least 50 percent
cheaper than legal rates.

But Ricardo Arevalo, general manager of a company that leases satellite
internet equipment, estimated the number of such systems in Cuba is
closer to 300 — even though sending them there is illegal in the United
States and on the island.

Whatever the numbers, the presence of such systems on the island
indicates that Cuba's communist government is losing its battle to
monitor and control the communications of its 11 million people.

The illegal phone operations also siphon millions of dollars from the
state-owned telecommunications monopoly, known as ETECSA, in a country
facing a desperately limp economy.

Cuba's Granma newspaper reported in December that 13 people were under
arrest for two phone operations, headed by Cubans in Canada and Spain,
that sold minutes at 50 cents and defrauded ETECSA of $3 million since 2009.

The three satellite phones delivered by Gross, a 64-year old Maryland
resident, were paid for by the U.S. Agency for International Development
as part of its campaign to provide Cubans with uncensored access to
information — a campaign that Havana alleges is a thinly veiled plot to
topple the communist system.

Yet the impetus behind the illegal phone systems operating in Cuba is
not politics but pure and simple capitalism — low rates for calls to the
island, high profits for those who run the businesses.

"I started this business in 2006 because I got tired of paying so much
to talk to my father and my grandmother in Cuba," said the Miami man,
who studied Internet networks at Miami Dade College.

Now 34, he runs the Web page www.internetsatelitalparacuba.com but asked
for anonymity to avoid possible problems arising out of the U.S. trade
embargo.

The business starts with a satellite Internet system, commonly used by
residents of areas with poor access like Alaska. The signals go from a
home or business to a satellite and then to a ground station in the
United States, and don't require land phone lines.

Arevalo said his company, Exede, charges $59 a month for up to 10
gigabytes of traffic on its leased modem and 26-inch satellite dish,
with free use between midnight and 7 a.m. Exede leases only in the
United State and not in Cuba, he stressed.

Other companies, such as HughesNet, sell the dish and modem for about
$300 but charge $40 per month for enough traffic to keep two telephone
lines to Cuba open for eight hours per day, said the Miami businessman.

Arevalo estimated that 300 to 400 units of an older Wildblue satellite
system were installed in Cuba for both phone and Internet use from 2003
to 2011. "That's what we have been hearing … maybe 50 to 60 per year,"
he told El Nuevo Herald.

The Miami businessman said he installs each system in Cuba for $3,500 to
$4,200 — cash paid in South Florida, with part of the mark up going to
bribes on the island. The costs are usually paid by U.S. relatives of
the recipients.

His operation delivered at least 35 satellite internet and phone systems
to the island since 2006, the businessman added. But he knows of 30 to
40 illegal phone connections in Havana and about 40 other systems used
only for personal Web access.

Satellite dishes are cut into piece for smuggling into Cuba, the
businessman said, and some have been disguised as fruit bowls or surf
boards. Others are hand made on the island with fiberglass and aluminum
foil.

Electronic components are disassembled and hidden in other items, such
as radios. And he has contacts at Cuban airports that accept his gifts
to ensure the items get past customs and security inspectors, the
businessman said.

Once on the island, transmissions are difficult to detect because they
ride a narrow beam up to the satellites. Downloads are sent down from
the satellite to a large footprint, making it impossible to locate the
receiver. Satellite traffic is almost always encrypted.

Operators of the illegal phone businesses only need to hook up the
satellite modem to a computer and the computer to a box that connects
into a telephone land line, and the system is ready to receive
international phone calls, the businessman said.

Callers from Miami, for instance, can buy a 30-minute block at 50 U.S.
cents per minute, compared to a legal tariff of at least 75 cents per
minute. They call a U.S. number and are relayed to anyone they want to
chat with in Cuba.

One Cuba-born Miami Beach resident said he has often used such a system
to pay much lower rates when calling his mother in Havana, but never
really understood how it was done. He also asked to remain anonymous.

Callers are carefully screened "to avoid a snitch" or ETECSA agents
trying to crack down on the scams, the businessman said. One too-public
Miami operation — a kiosk in a Sedano's supermarket — closed after three
of its operators were arrested in Havana.

When calls are forwarded to the provinces, the illegal phone centers use
prepaid phone cards to cover the long distance charges and hide the
location of the centers, according to the businessman. Calls from Cuba
to other countries are rare because the operators want to protect their
identities and locations.

A second type of phone scam requires operators to have two land lines
and Internet access, the businessman explained. The operator uses one
line to access any Skype-like system — Skype itself is blocked — and the
other, usually rented from a neighbor, to forward the incoming calls.
Operator can pay up to $350 a month for the Internet access and
neighbor's line, but can easily earn more than double in revenue.

The businessman said Cuban investigators may lack some of the very
latest technology needed to detect the illegal systems, but cautioned
that they have "all the time in the world to investigate."

Source: "Miami man skirts law with Cuban satellite business - Miami-Dade
- MiamiHerald.com" -
http://www.miamiherald.com/2013/11/11/v-fullstory/3746083/miami-man-skirts-law-with-cuban.html