$10-Million AT&T; Project to Improve U.S.-Cuba Phone Connections

American Telephone & Telegraph will soon make it easier to reach out and touch residents on this Caribbean island following U.S. and Cuban government approval of improved telephone connections between the two countries.

AT&T; will substitute a larger-capacity telephone cable for an over-taxed, 31-year-old radio transmitter, which has relayed calls over the airwaves between Cuba and the United States since April, 1987. The original underwater cable between the United States and Cuba wore out 14 months ago after nearly 40 years of use.

“The sound quality will improve substantially . . . (and) the system should eventually handle more calls,” said Tom Cavanaugh, AT&T;’s managing district director of the Caribbean.

The project, which will cost AT&T; about $10 million, could produce a financial bonanza for the New York-based telecommunications giant. Though Cavanaugh said the project was designed to reduce the radio transmitter’s interference with U.S. cellular telephones, other AT&T; officials in Havana last week said the company expects to recoup its $10-million investment in less than a year due to the capacity of the cable to carry more long-distance calls.

Still, William McKeever, an AT&T; analyst with First Boston in New York, said the project would have little financial impact on AT&T;, which had revenues of $34 billion in 1987.

“The normal period for recouping an investment (on phone cable) is 25 years,” Cavanaugh said. “We are shooting for a shorter period of time here since the cable is old. We are a private company and we expect to make some profit from this operation,” Cavanaugh said.

No Softening in Relations

Cavanaugh headed a team of about a half-dozen AT&T; managers and engineers who visited Havana last week for meetings with Cuban government officials aimed at planning the cable swap. AT&T; had earlier sought State Department approval of the project, said Jay Taylor, chief of the U.S. intersection at the Swiss Embassy in Havana.

Cuban government officials would not speak for attribution about the significance of the AT&T; venture. However, the project apparently does not represent a softening in the chilly U.S.-Cuban relations, Western trade representatives and Cuban officials agree.

Long-distance phone service between the United States and Cuba has remained so primitive because of a trade embargo imposed by the Eisenhower Administration in October, 1960, after months of wrangling with Fidel Castro’s fledgling Cuban government.

Although most U.S. companies are barred from doing business with Cuba, telecommunications outfits are exempt from the ban, “in order to facilitate telephone communications between families,” a State Department spokeswoman said.

Yet even the AT&T; project, which is expected to be completed by the end of the year, will be limited in scope by the trade embargo’s prohibition against the transfer of new technology to Cuba.

Instead of using new cable that might provide even greater improvement in service, AT&T; is pulling out of storage a 400-mile section of old cable that once linked the United States and Great Britain.

“We’re limited to the use of the technology of the 1960s,” said Cavanaugh.

More Calls to Cuba

In the last 20 years, the number of telephone lines in service in Cuba has more than doubled to 300,456. There were 53.3 telephones per 1,000 Cuban residents in 1986, according to the latest official Cuban government statistics.

The increase in Cuban telephones has been accompanied by a big increase in calls placed to the island, mostly by the large Cuban community living in the Miami area, AT&T; officials say. The congestion has meant only one out of every 10 calls attempted from the United States reaches Cuba. Still, that amounted to some 1.5 million completed calls in 1987--about 90% of them from the Miami area to Cuba, AT&T; officials said.

Though the replacement cable will relieve congestion by about 50% there will still not be enough capacity to meet all the demand for long-distance calls. What’s more, the revamped system still won’t allow direct dial. Callers will have to place their calls through an international operator.