North Korea's telecom sector has been expanding and developing with the launch of the Koryolink 3G mobile service. The service is proving a surprise success story to observers of the country's media and telecoms scene. Here is a report from the BBC Monitoring on the Koryolink 3G mobile service.
Take-up of the service has proved popular among ordinary, albeit wealthier, Koreans living in Pyongyang despite the cost of handsets and a government levy on them. Expectations that the mobile phone service would be available only to political, military, administrative and business elites in North Korea have not been confirmed, according to figures from Egyptian telecom giant Orascom Telecom Holding, whose joint venture operation with state-owned Korea Posts and Telecom Corp (KPTC) was launched in December 2008.
The joint venture licence granted to CHEO Technology JV Co says that Orascom has a 75 per cent stake with initial capitalization of 400m dollars and KPTC will have a 25 per cent interest. The licence allows Orascom to offer mobile services over a 25-year period, with exclusive rights for four years.
Orascom - Egypt telecom giant
Orascom is the "leading regional telecom player and among the best regarded emerging market players in the world," its website says. It operates GSM (Global System for Mobile Communications) networks in seven different countries in the Middle East, Africa, and South Asia (Egypt, Bangladesh, Pakistan, Algeria, Tunisia, Zimbabwe and North Korea) with 78 million subscribers. In addition, it operates a number of leading internet service providers, as well as value-added services and handset distribution companies. The parent group also has extensive interests in the construction and hotel sectors. Orascom is currently involved in completing construction of Pyongyang's 105-storey Ryugyong Hotel, a project that had been delayed for 16 years.
Koryolink was launched amid much fanfare in the North Korean media. The official Korean Central News Agency (KCNA) said that "the first 3G mobile network was kicked off with due ceremony in Pyongyang on 15 December." Indicating the importance of the occasion, Vice-Premier Ro Tu-chol and Ryu Yong-sop, minister of posts and telecommunications and many other officials were in attendance, KCNA said.
North Korean TV showed clips of the launch ceremony and the subsequent news conference. Footage was later posted on YouTube.
Chairman and CEO of Orasco Naguib Sawiris attended both events. He was shown cutting a ribbon to open a Koryolink building, walking around the spacious premises of the Koryolink sales and service centre in central Pyongyang and giving a speech praising North Korea-Egypt relations. Koryolink currently has two large retail shops in central Pyongyang with an after-sales service centre planned to open by the end of the year. Scratch card sales outlets are located within KPTC post offices.
Orascom has brushed aside fears that the authoritarian nature of the North Korean state would severely restrict the number of people allowed to access mobile services and devices.
"This is not just about providing 3G mobile services; we are making history in a country that is developing and opening up in a remarkable way," Sawiris said.
Normal citizens sign up
Within two weeks of starting operations Koryolink had signed up thousands of subscribers, Wireless Mobile Telecom news reported. Registration began in January 2009.
Sawiris told PC World in February: "So far we have about 6,000 applications. The important point is that they are normal citizens, not the privileged or military generals or party higher-ups. For the first time they have been able to go to a shop and get a mobile phone."
The government levies heavy taxes on mobile handsets, taking the cost up to 600 dollars, making it unaffordable for the majority of people in North Korea. Sawiris agreed that the price was high, but Orascom was in talks with the government to reduce taxes, he said.
He admitted that the state continued to have the ability to monitor what its citizens were saying and can eavesdrop on calls if it wants. "That is the right of government," he said.
Koryolink offers local Korean versions of phones from China's Huawei and the cheapest subscription is around 850 North Korean won per month, or about 6 dollars at the official exchange rate, plus call charges. The black market rate used by many citizens and traders would be around 24 cents a month, but is unlikely to be used for transactions with a company in which the state holds a 25 per cent interest. Calls are charged at 10.2 won per minute. A premium package costs 2,550 won per month and call rates are 6.8 won per minute.
User base grows
In April, Choson Sinbo, a Tokyo-based newspaper, reported that the number of mobile phone users had reached 20,000, including some foreigners, by the end of March. Choson Sinbo is published by the General Association of Korean Residents, a pro-North Korea representative body. The report cited Yun Kwang-chun, an official at CHEO/Koryolink, as saying that Pyongyang intended to expand the 3G network to the whole of the country by 2012. At present, Koryolink is available in Pyongyang and on the highway linking it to the northern city of Hyangsan.
In August, Orascom said that the number of Koryolink subscribers had grown to 47,863 at end-June and that it was planning to cut prices to expand the user base, South Korea's Yonhap news agency reported. Operating profit reached 2.49m dollars in the April-June period, up from 312,00 dollars in the previous quarter. Second-quarter sales reached 8.01m dollars, with a profit margin of 31 per cent, up from 7 per cent in the first quarter. During the second quarter, minutes of use (MOU) rose to 199 per month, but average revenue per user (ARPU) fell to 22.8 dollars, compared with 24.7 dollars in the first quarter, Orascom reported. To capitalize on its subscriber growth momentum, Koryolink also introduced free text messages and further reduced connection fees.
Access
North Korea has also begun a limited internet service for mobile phone users, the government-run website Uriminzokkiri reported on 21 May. The TeleGeography website, a research division of the California-based PriMedia company, said the service allows North Koreans to access a website through their phones to see news reports carried by KCNA news agency as well as news about the capital Pyongyang. The Korean-language KCNA website as seen on an ordinary computer screen also allows users to listen to North Korean music and read information about books, art and investment opportunities in the country. But observers say it still unclear whether other services will be available when accessed via a mobile handset. The application seems only to allow access to a very limited official portal.
In July, South Korea's Choson Ilbo newspaper cited a Voice of America report that officials of the North Korean Workers' Party or the government are banned from using mobile phones for security reasons, but some observers have expressed scepticism. "We understand that mobile phones are used chiefly by foreigners, wealthy people, and trade functionaries," a South Korean government official said.
Volte face
North Korea banned mobile phones until November 2002 when it announced a limited European-style GSM service for elite North Koreans in Pyongyang and other major cities. But the network was largely taken down and handsets recalled following a massive explosion in April 2004 at Ryongchon railway station in the north of the country where leader Kim Jong-il had passed through shortly before. Suspicions of an assassination attempt triggered by a mobile phone, combined with a desire to limit the spread of the news, were said to be behind the decision. The authorities have also staged periodic crackdowns on residents in northern border areas who illegally use mobile phones through relay stations in China.
Meanwhile, the North's official Korean Central Broadcasting Station reported on 26 August that mobile communication networks were "being established on a national scale". It added that fibre-optic cables had been laid in all provinces to "upgrade communication capability and quality" and enhance the flow of information throughout the country". The report said that automation and digital capacity had increased seven-fold from 16 years ago, and the "realization of fibre-optic technology" was proceeding in provinces and towns.
Kim's Jong-il's volte face on allowing mobile phones is therefore all the more surprising in a country where information is strictly controlled and restricted and could signal a wish to catch up digitally with the rest of the world, especially with China. The decision represents a "hugely significant turning-point in the state's attitude towards telecommunications," the TeleGeography website commented.
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