Netflix and ‘House of Cards’ could be the best thing ever to happen to Cuba’s Internet

Brian Fung, The Washington Post
Published: February 9, 2015

You may have heard: Netflix is coming to Cuba.

The service launched Monday to what's basically a tiny sliver of the population — those with credit cards and broadband access. But all this probably foretells a much bigger expansion in Internet access for Cuba, much sooner than anyone might have expected.

To understand why, we have to talk about something that, in the United States, has been called the "virtuous cycle" of Internet investment. The theory goes like this: When demand for services increases, Internet providers make the necessary investment in their infrastructure to meet that demand. That capacity, in turn, drives more appetite for Internet applications, which spurs more network upgrades, and so on.

It's a bit of a chicken-and-egg question. Which is more responsible for broadband adoption? If the cycle really begins with new consumer-facing services, then that bolsters the case for policies that help Internet businesses flourish (perhaps at the expense of the Internet providers, such as a ban on the prioritization of Web traffic).

It's important to stress that this is just a theory about how the Internet works. But Cuba is going to become a key test case for it, because the country has such limited existing infrastructure. Only 5 percent of the Cuban population currently has Internet, and users don't really have access to services like YouTube, Twitter or many of the services Americans take for granted on the global Internet.

This is why Netflix going to Cuba is such a big deal. At peak hours, the streaming video service accounts for a third of all U.S. Internet traffic. If "House of Cards" and "Orange is the New Black" are half as popular there as they are in the United States, demand for the Internet in Cuba is about to go through the roof. And that may mean a rapid expansion in the country's Internet infrastructure.

The one spoiler in this scenario? The Cuban government.

"Cuba is not a market economy," said Jonathan Nadler, a partner at Squire Patton Boggs who's worked on international broadband issues. "The state-owned telco, ETESCA, has a monopoly." Whether ETESCA cedes some control over the Cuban Internet — and investments to expand it — is ultimately up to Havana.

Still, with Cuba, we're about as close to a natural experiment on Internet adoption as we're likely to get, short of something like this happening in North Korea. And that makes Netflix's entry into Cuba incredibly exciting, because it suggests the country's Internet pipes may get much, much bigger.