Miami man skirts law with Cuban satellite business

Unidentified Cuban orients a clandestine Satellite dish on May 7,2004 in Havana, Cuba .Dishes served entire families and extension lines sometimes connect them to neighboring houses. Taped programs renting for about seven pesos (25 U.S. cents) reach a still larger audience. California Direct TV center changed its decoder cards to halt widespread piracy. (AP Photo/Jose Goitia)
Unidentified Cuban orients a clandestine Satellite dish on May 7,2004 in Havana, Cuba .Dishes served entire families and extension lines sometimes connect them to neighboring houses. Taped programs renting for about seven pesos (25 U.S. cents) reach a still larger audience. California Direct TV center changed its decoder cards to halt widespread piracy. (AP Photo/Jose Goitia)

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 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.”

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