Text messaging service launched as telecom in Cuba grows

By Doreen Hemlock Sun Sentinelcontact the reporter

New service allows two-way, US-Cuba texting from existing cellphones

Spurred by thaw in US-Cuba ties, South Florida startup offers new US-Cuba texting service

Calling and text messaging between the U.S. and Cuba can be expensive and cumbersome, but a new Fort Lauderdale company is working to make communications cheaper and simpler.

SMS Cuba is the latest venture of telecom entrepreneur Frank S. Caruso, 49, who also runs a data center in West Palm Beach called Cloud South. His new text-messaging service uses his data center as a base, slashing costs for start-up and operations of his new business.

Caruso has been following telecom in Cuba since the fall of the Soviet Union in 1991 and began pushing the island to start opening its state-controlled economy. He had seen telecom markets boom in eastern Germany after the Berlin Wall fell in 1989 and saw business potential in Cuba.

But it was only after the Obama administration in December announced plans to restore diplomatic ties with Cuba that Caruso decided to travel to the communist-led nation to check out opportunities for himself. His visit to Havana in February was the spark for SMS Cuba.

"Now's the time to do this, if I am ever going to do this," Caruso said he decided earlier this year.

Starting small, Caruso in May launched what he calls "the first two-way text-messaging service" that lets users easily send and receive texts between the U.S. and Cuba using their existing cellphones.

Other texting services between the U.S. and Cuba are one way or spotty, confirmed Matthew D. Aho, a consultant in the Cuba practice of law firm Akerman LLP, who specializes in telecom and business. In some cases, Cubans send messages to the U.S. through e-mail, not to a U.S. cellphone number.

"To my knowledge, SMS is the only company that allows inbound text messages from Cuba" through all U.S. cellphone providers, Aho said in an interview.

Leveraging his international data center, Caruso now routes the texts through third countries but aims to offer direct U.S.-Cuba links one day.

His service works like this: U.S. customers subscribe and then pay the same to text Cuba as they would to text a U.S. phone under their existing U.S. cellphone plans — often nothing extra. Texting to a Cuban phone otherwise might cost $2 per text — if you could do it, Caruso said.

Subscribers pay $2.95 per month for 30 texts to one contact in Cuba or $9.95 monthly for unlimited texts to five Cuban contacts. Numbes for those Cuban contacts must be specified for routing.

The Cuban side, meanwhile, pays the same to send a text as always — about 60 cents per text under the pre-paid cellphones rates set by Cuba's phone company. "We have no control over that," Caruso said.

For many Cuban-American families separated by the Florida Straits, the SMS Cuba service offers a chance to stay in touch for less — to afford to say "Good morning" or "Papi, I love you," Caruso said.

Some 2 million Cuban-Americans live in the U.S., with the biggest concentration in Florida.

But residents in Cuba have cheaper options to keep in touch than cellphone texts, said Emilio Morales, a market researcher who left Cuba in 2007 and now runs Havana Consulting Group in Miami.

"Put yourself in a Cuban's shoes: Why would you spend 60 cents to send a text when you can message or chat on Facebook from work or school for free?" Morales asked.

Costs weigh heavily, because wages in Cuba average about $20 per month. And while Cuba has the lowest cellphone and Internet penetration in the Americas, many islanders have access to partial Internet on the job, at universities or though neighbors with limited links at home, telecom analysts said.

As relations thaw, SMS Cuba is not the only U.S. telecom venture eager to tap the Cuban-American market and other U.S.-Cuba links.

Telecom giant Sprint this week launched a new service that offers calls to Cuba at 50 cents per call for the first 20 minutes and 70 cents thereafter. That's cheaper than typical rates to the island.

Sprint's affiliate Boost Mobile in April started a pre-paid wireless service for U.S. calls and texts to Cuba. That plan kicked off in Miami for $50 per month, including 15 minutes of calls to Cuba and unlimited texts to the island. Calls to the island after that cost 99 cents per minute.

In addition, IDT Corp of Newark, N.J., in February announced an agreement with Cuban phone company ETECSA to provide direct international long-distance service between the two countries.

Next up for U.S.-Cuba links, Aho forecasts: international roaming services, so that U.S. travelers can use their cellphones on the island, much as Canadians and others who travel to Cuba already do.

While Cuba could use major investment to modernize its telecom system, Aho said, "it will take a while for some of the large telecom projects to receive approval on both the U.S. and Cuban sides."

dhemlock@sunsentinel.com, 305-810-5009, @dhemlock on Twitter