North Korean 3G service attracts 6,000 in 2 weeks

Koryolink, the North Korean 3G cellular network established in mid-December by Egypt's Orascom Telecom, has attracted several thousand subscribers in the first two weeks since it began accepting applications in January.

"We didn't start sales until about two weeks ago," said Naguib Sawiris, chairman of Orascom Telecom in a telephone interview. "So far we have about 6,000 applications. The important point is that they are normal citizens, not the privileged or miliary generals or party higher-ups. For the first time they have been able to go to a shop and get a mobile phone."

Orascom has a single shop in Pyongyang and is in the process of expanding its sales network, he said.

But while Koryolink's first customers might not have high-profile official jobs, they are among the more wealthy in society and price, particularly of the handsets, stands as an obstacle to greater penetration.

"The price is quite high," said Sawiris. "The government has put a big tax on handsets and it's making it difficult for everyone to participate but we are having negotiations with the government to reduce that."

The handsets Koryolink is offering, localized Korean versions of phones from China's Huawei, cost between US$400 and $600 after the government levy has been added and there's also calling charges.

The cheapest subscription costs 850 North Korean won per month. That's about $6 at the official exchange rate but only 24 cents at the current black market rate used by many citizens and traders. Calls on this tariff are charged at 10.2 won per minute. The highest package costs 2,550 won per month and call rates are 6.8 won per minute.

When Orascom announced its plans to launch 3G service in North Korea it raised eyebrows among Korea watchers around the world. The country is one of the most authoritarian in the world and keeps a tight hand on its citizens and their access to information, particularly over the country's borders. Almost no one has access to the Internet and home telephone penetration is low so the prospect of citizens e-mailing and calling each other on phones more advanced than those used by average subscribers in many European countries was intriguing.

With the launch of the Koryolink network the state continues to have the ability to monitor what its citizens are saying and can eavesdrop on calls if it wants, said Sawiris.

"That's the right of the government," he said.

Sawiris said the network came about from Orascom's interest in underdeveloped cellular markets. The company's networks currently cover a combined population of 453 million subscribers in the Middle East, Africa and Asia but average penetration of only 46%. Its operations include Algeria, Pakistan, Egypt, Tunisia, Bangladesh and Zimbabwe. It also works through subsidiaries in Burundi, the Central African Republic and Namibia.

"We are always examining the countries that don't have service and always pushing to get in," he said. "This was one that didn't have coverage and we met the embassy here, got in touch with authorities and here we are."

It took about a year from that initial contact to reach an agreement and another nine months to get the network installed.

"We were quite worried about two things: the time it would take and the fact that they would really let normal citizens purchase lines."

North Korea has flirted with cell phones before.

In 2003 a GSM network was established in Pyongyang and other major cities and was generally available to elite members of society. Access was restricted in 2004, shortly after a massive explosion ripped through a train depot in the north of the country within hours of the passage of a train carrying leader Kim Jong Il. North Korea-watchers suspect the train-yard explosion was an assassination attempt with the bomb triggered by a cell phone.

The phone network plan also brought Orascom into other projects in the country. For example, it is helping to finish a stalled hotel construction project that has left a unique pyramid-shaped skyscraper hotel in the center of Pyongyang unfinished for 16 years.

"We are doing some of the infrastructure, some social work and other good deeds," said Sawiris. "We don't want to appear that we are there only for the mobile. North Korea has been closed for a long time but we think by helping them they will be open to more foreign investment."

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