North Korean Economy Watch

…from the Korea IT Times:

Back in 2008, North Korean mobile operator Koryolink entered the mobile communications business to serve 126,000 subscribers, but demand far exceeded the company’s expectations. Therefore, Koryolink plans to secure enough mobile phone circuits so as to serve all the people who wish to use mobile communications services.

In addition, the Choson Sinbo, a newspaper based in Japan, reported that the number of North Korean mobile subscribers would break the 600,000 mark by the end of this year. That means just one year and four months after 3G mobile carrier Koryolink started its business in December of 2008, the number of mobile subscribers topped 120,000 as of April of this year. The mobile communications bureau of the Chosen Post said, “In 2009, base stations were put up throughout Pyongyang and communications networks have been complemented. And major highways leading to Pyongyang (e.g. Pyongyang-Hyangsan, Pyongyang-Nampo highways), major railways sections, and each province have been equipped with communications networks.

“In the future, more than half of the counties and towns will have networks with the rest scheduled to be equipped within this year” said the Chosen Post. North Korea is planning to expand mobile connectivity to the entire nation by 2012. Those who wish to use 3G services can go to mobile service centers called “Bongsaso”, pick up an application form and submit it with a payment (the price of the mobile phone plus a 50 euro subscription fee). The prices of terminals range from 110 euro to 240 euro and some mobile devices have built-in cameras. The basic mobile device is supplied by China’s Huawei Technologies.

In the future, the 3G mobile communications service will go beyond simple voice calls: Multimedia services such as TV phones and high-volume, high-speed communications will be made possible. The subscription fees, call charges and the prices of mobile phones will go down. On the hardware front, North Korea aims to develop and manufacture its own hand-held mobile phones, but at the moment, mobile phones will be imported from foreign nations, primarily from China. For now, a new production line is planned to be built by a joint venture company, which was formed by foreign capital and the Chosen Post, to assemble imported parts into finished goods.

North Korea said it would set up a nation-wide mobile communications system in order to modernize its communication system. Building an upgraded mobile communication system has been of great interest to North Korean leader Kim Jong-il, so this project is expected to gain momentum quickly. According to South Korean mobile carriers and South Korea’s Korea Communications Commission (KCC), only senior government figures are using mobile phones right now in the North. Yet the general public will soon get their hands on mobile devices.

As for the North Korean mobile communications industry, getting foreign investors can be a problem. But the real issue lies with North Korea’s poor electricity grids, which are so insufficient that anticipated high electricity demand from maintaining network facilities and charging mobile phones may not be met. Regardless, it is indeed very encouraging that the North offers 3G mobile communication services to the public. I believe that the commercialization of 3G mobile communication services would serve as a stepping stone to North Korea’s gradual reform and market opening, which are deemed to be inevitable in the end.

Read the full story below:
North Korea’s Mobile Communications Service
Korea IT Times
Choi Sung
9/30/2010

The German version of the Financial Times has published an interview (of sorts) with Volker Eloesser and his DPRK JV technology firm, Nosotek. Below I have posted an English translation of the article.

FT: You think the economy in North Korea is starving. That is right! Nevertheless, it attracts entrepreneurs there like Eloesser Volker from Germany. He tells Anna Lu the story of his life in the land of Kim Jong-il.

North Korea is one of the most isolated and inaccessible countries in the world. Nevertheless, there are millions of university trained Koreans and entrepreneurs living in the country. Volker Eloesser is one of the entrepreneurs. Eloesser runs a company in Pyongyang. The IT company is known as Nosotek and is a joint venture with the North Korean state. It is not very simple to talk to Eloesser about his life and work in North Korea. The lines are too unstable to North Korea, with numerous eavesdroppers. Not everything can be talked about openly. The following article is the outcome of countless emails between Pyongyang and Hamburg.

VE: “Why do we work in North Korea? There are signs that the country can develop into a booming region. Recently, a short report about the iPad was broadcast. Videos from South Korea are widely circulated amongst students. The policy change may not be imminent, but it is unstoppable. Once that happens, property prices will increase.

This is the strategy of most foreign companies here: Real estate speculation, even if the permits for foreigners are only granted in a joint venture status. Many of the companies produce products as a matter of form and do not make any significant profits. Other opportunities include buying up restaurants, shop buildings and swimming pools. Just imagine if someone would have built a restaurant in China in 1985 in Tiananmen Square. Or at Alexander Platz in East Berlin. Opportunities like these do not happen often in the world.

FT: Volker Eloesser operates an IT company in Pyongyang, North Korea and hopes the country develops into a booming region.

VE: Naturally, we only invest very little into production. Nosotek develops software and apps for the iPhone. We are quite successful. One time, we were even in the top ten in the App Store. Our customers do not want us to mention the name of our company or our employees’ names on the product. Although it is going well, we do not generate profits yet. Our headquarters is located in one of the most sought after residential areas in Pyongyang, not far from the center. The area boasts multi-story, stucco houses and easy metro access. These are some of the best conditions possible, so we are optimistic.

Unfortunately, many things are expensive here. The bulk of the goods are imported and therefore, cost twice as much as they would in China. Power, logistics and communications are almost prohibitive. However, wages are way below Chinese standards, which is a key benefit if you get good people. There are plenty here, all with a university degree in computer science or mathematics, some have doctorates. They seem to wait for an announcement of a job opening. I only have to ask my Korean partner and 14 days later new people are coming in for a trial. I can say nothing about the wages.

FT: In fact, the average salary in Pyongyang is around 3,000 Won a month. After a devastating currency reform and crop failures in recent years, this affords an employee about three kilos of rice. Eloesser does not say it, but we hear such things from aid workers in the region. The aid workers do not wish to be identified. Eloesser further:

Eating together in the common area.

VE: “In total we have 45 Korean employees, including five women. I, am the only European. We all eat in the company common area every single day. I particularly like the octopus salad and will miss it if I relocate. After work, colleagues remain a little longer and often sing songs to the guitar. The atmosphere is friendly. Nevertheless, it is not always easy. Koreans are very proud people who love their country and their culture and know nothing else.

It is not easy to convince them to do something differently. For many it is difficult to recognize a foreigner as an authority, and if they do not understand the meaning of a statement it is often not performed. However, the biggest difficulty is much different: We have an IT company without access to the internet. We solve this problem by delegating the development of online components to partner companies in China. Here in North Korea you can only do things offline. At home I have true internet access, but it is very slow and rather expensive.”

FT: In fact, one can only get on the internet via a satellite dish in North Korea. The acquisition cost to use the internet according to a local charity is the equivalent of 11,000 euros. The monthly expense may be up to 700 euros, depending on how many users share the connection.

VE: “Pyongyang itself has changed in the last few years. Since 2005, the first time I was here, the traffic has doubled. The days of empty roads are long gone, such images only haunt the internet. Instead of old taxis or Ladas, North Korean Pyonghwas and Malaysian Proton sedans are on the road now. Bicycles are hardly center. They may only drive on the sidewalks. There are lots of military jeeps or SUVs from Russian, Chinese and local manufacturers.

You meet uniformed people everywhere in North Korea, but not all are military. Civilians bear just as many olive green suits with no weapons or rank insignias. The rest are soldiers. Soldiers are often used to harvest and help with road and house construction. I never feel threatened by the military presence as a foreigner. I feel I am treated with respect. People think; if he was not important for our country, he would not be here. Nevertheless, I am of course aware that somebody writes reports about me. Wherever I go, if I am at a restaurant or at work, somebody knows me. He notes when and where I parked my car and statements like this interview will be read by the authorities. At first I thought they listened to me at my apartment. However, even if they have actually done this, I think it has become boring for them.

Sometimes I can understand their suspicions; the reports by many Western media outlets are biased. Recently, the North Korean government printed a picture of children splashing around in Wonsan. People abroad believed the picture was staged, but this type of activity is common in the summertime heat.

FT: Sense of unwritten prohibitions

VE: The authorities are particularly suspicious of journalists and tourists because they do not know their true intentions. We are entrepreneurs and largely left alone. We are not required to go to political events or memorials. As a business man you have one clear goal, business. It is understood and supported. Life would be easier if we knew what we can and cannot do. Unfortunately, this is not written anywhere. It is better to hold back. Over time, you develop a sense of unwritten prohibitions. I have my own opinion about the policy, but I will keep it to myself. I make sure I never have a camera with me, not even on my phone. I do this so no one thinks I want to photograph something without permission. I live in the Bulgarian Embassy because there are no mixed residences. I never visit North Koreans at home and do not talk to them on the street. I do talk to children occasionally. They are not afraid of foreigners and like to try out their English vocabulary. They will say things like; “How old are you?” Where do you come from? Bye-bye.” Then they run away giggling.

Basically, I lead a fairly normal life here. I can move around in my free time and go to the mountains and play golf or tennis. There is a night life in Pyongyang with bars and karaoke. More precisely, there are two types of night life, one for locals and one for foreigners. For example, I do not get tickets to the local cinema. Today I went to an amusement park that many North Koreans visit. The park was built in 2010 and is equipped with fair attractions like the kind they have once a year in small German towns.

Shopping is not a problem. There are no signs of a food shortage as the shops are packed. Curiously, a kilo of chicken on the market is often cheaper than a kilo of vegetables. This may be because chickens can live in backyards and on balconies. Vegetables cannot, that would require offseason greenhouses, which are not found in North Korea. Imported goods usually have astronomical prices. For example; a Hungarian salami costs the equivalent of 42 euros. Other products like yogurt cannot be found in the summer because the refrigeration is inadequate. Sometimes I shop at the diplomatic supermarket and buy things like Haribo, Mosel wine and milk chocolate.”

FT: Of course, the well-equipped shops have a catch; purchases must be paid for in euros.

VE: “By the way, last Saturday night something strange happened. I had an accident. A man ran out in front of my car. He was in dark clothing and came out of nowhere across the eight-lane main road. I slammed on the brakes, but the car hit him, and he fell onto the road. When someone came to help him up, he quickly departed from the scene of the accident. You call that a victim’s escape?

A short time later, three police officers arrived on motorcycles. They were friendly and professional, and they even offered me a cigarette. In some other countries, I would have been imprisoned or would have been asked to pay an exorbitant bribe. Here I was only given a warning, because I had forgotten my passport and driver’s license and the technical inspection (also here) was outdated by nine months. That was all. There was not a victim. Only screeching tires in the night.”

The original German verison can be found here:
Unser Mann in Pjöngjang
Financial Times (German edition)
9/12/2010

Below is an interesting photo of a North Korean girl in pants speaking on her Koryolink mobile phone. The photo is from this Russian language web page.

Click image for larger version

Her outfit is pretty trendy: Pink-rimmed square glasses, Chinese-style purse, pants, and apparently two mobile phones (one in each hand). Not the typical scene in Pyongyang.

Previous posts about women’s fashion can be seen here, and here.

Other posts about clothing in the DPRK can be seen here.

According to the Washington Post:

Almost every night, seeking to gather opinion from a country where opinion is often punishable, Kim Eun Ho calls North Korea. He talks mostly to people in Hoeryong city in Hamgyong-bukto province, and the conversations never last long. Hoeryong city employs 14 men who monitor the region’s phone conversations, Kim believes, and typically they can tap a call within two or three minutes. Kim says he knows this because, as a North Korean police officer before he defected in December 2008, he sometimes monitored the conversations.

But these days, with Pyongyang preparing for a Workers’ Party convention that could trumpet the rise of leader Kim Jong Il’s youngest son, Kim Eun Ho and other defectors who speak regularly to North Koreans hear plenty of opinions reflecting what he described as a broad sentiment against hereditary succession.

“Of 10 people I talk to,” he said, “all 10 have a problem with Kim Jong Eun taking over.”

Just as North Koreans know little about their potential future leader, the rest of the world knows almost nothing about North Korean opinions. Recent academic research, based on surveys with defectors, suggests that North Koreans are growing frustrated with a government that allowed widespread starvation in the early 1990s and orchestrated brutal currency reform in 2009 that was designed to wipe out the private markets that enable most residents to feed themselves.

The defectors are motivated to emphasize the worst-case scenario in their homeland. There are some who think that Kim Jong Eun will take power and gradually lead North Korea to Soviet-style reforms. Some defectors say that even though the younger Kim is largely unknown, they hope he’ll allow for a free economy after his father dies.

Still, in South Korea, an emerging patchwork of mini-samples suggests that many North Koreans view their government as a failed anachronism, and they see the young general, as he’s called, as a sign of the status quo. They associate Kim Jong Eun with the December 2009 currency revaluation. They don’t know his age – he’s thought to be in his late 20s – but they think he’s too young to be anything more than a figurehead.

Sohn Kwang Joo, chief editor of the Daily NK, a Seoul-based publication focusing on North Korea, receives frequent reports from stringers in four North Korean provinces. Those ground-level reporters, gathering information mostly from intellectuals, farmers and laborers, suggest to Sohn that “eight or nine out of every 10 people are critical of Kim Jong Eun.”A recent report from PSCORE, a Seoul-based nongovernmental organization promoting harmony on the Korean Peninsula, suggested that two party officials were sent to a gulag last month for slandering the chosen heir. Kim Young Il, a PSCORE director who was in China during Kim Jong Il’s recent trip, said: “Criticism of Kim Jong Eun is very strong. . . . What you see now is face-level loyalty, but it’s not genuine.”

Kim Eun Ho, the former North Korean police officer, works as a reporter for Seoul-based Free North Korea Radio. The nightly routine testifies to the difficulty of gathering information from within the world’s most reclusive state.

Kim first calls a friend who lives close to the Chinese border, where a smuggled foreign cellphone receives a clear signal. When Kim reaches his friend, the friend uses a second phone – a North Korean line – to call one of Kim’s police sources in Pyongyang. The friend then places the North Korean phone and the Chinese phone side-by-side, volume raised on the receivers, allowing Kim an indirect, muffled connection.

For extra caution, the conversations rely on code words.

“For general citizens, Kim Jong Eun is vastly unpopular,” Kim says. “People cannot take him seriously, in reality. He just suddenly appeared, and he’s too young.”

A defector-based survey released in March, co-written by North Korea experts Marcus Noland and Stephan Haggard, provided the first sharp indication of growing discontent with Kim Jong Il’s regime, linked in large part to an information seal that no longer keeps everything out. North Koreans have access to South Korean television shows. Some travel to China for business.

For now, though, experts and U.S. officials see little likelihood that North Koreans’ closely guarded skepticism about their government will pose a threat to the government. Without churches and social clubs, North Koreans have few places where opinion can harden into resistance.

“They’ve almost perfected the system of social control,” says Katy Oh Hassig, an expert on North Korea at the Institute for Defense Analyses, which does research for the Pentagon.

Like Kim Eun Ho, Jin Sun Rak, director of Free North Korea Radio, calls his old country almost every night. His wife and 14-year-old daughter live in North Korea. He decided to defect – telling nobody but his brother – in 2008, after traveling to China and seeing the relative wealth. The first time he went, hoping to sell 80 grams of unrefined gold, he bribed a border guard and carried a dagger, tucked near the lower part of a leg. His first night in China was “beyond imagination.” He said he went to a restaurant, had some drinks and ended up at a karaoke bar where he knew none of the songs. Days later, he returned to North Korea with some money and a new frame of reference.

“Whenever they say something,” Jin said of the government, “they’re lying. They’re as worthless as barking dogs.” As for a greater cynicism about the government, Jin said: “I think it’s something unstoppable now. People’s minds have been changed. Young people know the value of money. They don’t want to be party members anymore. They’ve been exposed to the private markets.”

Jin, who lives in Seoul, rarely talks to his wife and daughter. He doesn’t think it’s safe to tell them his opinion.

Read the full story here:
N. Koreans may be frustrated with government and likely rise of Kim Jong Eun
New York Times
Chico Harlan
9/8/2010

According to the Korea Times:

The number of North Koreans with a state-approved cell phone topped 185,000 as of the end of June, operator Orascom Telecom said Thursday, as more citizens have mobile access after a recent government expansion of services.

Egypt’s Orascom, which operates the mobile operator Koryolink in partnership with the North Korean regime, said in a first-half report that services have expanded to several cities other than Pyongyang and that 184,531 subscribers had signed up as of June 30.

Sixty percent of citizens now technically have access to the services, the firm said. But the network reportedly excludes cities near the border with South Korea as authorities fear the proximity could allow cross-border communication.

The number of subscribers has increased by some 60,000 since March and almost quadrupled from the same month last year, the report said, making a significant contribution to Orascom’s first half customer base growth.

It also showed an increase in usage, with the average mobile phone user spending 16 more minutes on the phone per month in the second quarter of the year than the first.

According to the Egyptian firm, foreigners, middle-class citizens and young people are all taking advantage of the new services.

But Radio Free Asia said Wednesday that North Koreans have to pay a steep price to go mobile. Customers must pay up to the equivalent of $250 for a phone in addition to high-priced prepaid minutes, it reported, citing sources in the North.

Still, Orascom’s numbers suggest that legal cell phone use could be gaining its strongest foothold yet.

In late 2002, a limited mobile service was launched, but citizens were banned from using them again just eighteen months later.

But in a major industry surprise, Orascom was awarded a 3G license in 2008 and started commercial operations in 2009.

The firm is also completing the construction of a towering hotel in the North ahead of the 100th anniversary of the birth of the country’s late founder, Kim Il-sung, through its construction arm.

Read the full story here:
Cell phones become more popular in N. Korea
Korea Times
Kim Young-jin
8/13/2010

Martyn Williams releases three DPRK stories this week all covering interesting issues…

North Korea Moves Quietly onto the Internet

North Korea, one of the world’s few remaining information black holes, has taken the first step toward a fully fledged connection to the Internet. But a connection, if it comes, is unlikely to mean freedom of information for North Korea’s citizens.

In the past few months, a block of 1,024 Internet addresses, reserved for many years for North Korea but never touched, has been registered to a company with links to the government in Pyongyang.

The numeric IP addresses lie at the heart of communication on the Internet. Every computer connected to the network needs its own address so that data can be sent and received by the correct servers and computers. Without them, communication would fall apart.

It is unclear how the country’s secretive leadership plans to make use of the addresses. It seems likely they will be assigned for military or government use, but experts say it is impossible to know for sure.

North Korea’s move toward the Internet comes as it finds itself increasingly isolated on the world stage. The recent sinking of a South Korean warship has been blamed on the insular country. As a result, there are calls for tougher sanctions that would isolate North Korea further.

“There is no place for the Internet in contemporary DPRK,” said Leonid A. Petrov, a lecturer in Korean studies at The University of Sydney, referring to the Democratic People’s Republic of Korea. “If the people of North Korea were to have open access to the World Wide Web, they would start learning the truth that has been concealed from them for the last six decades.”

“Unless Kim Jong-Il or his successors feel suicidal, the Internet, like any other free media, will never be allowed in North Korea,” he said.

The North Korean addresses were recently put under the control of Star Joint Venture, a Pyongyang-based company that is partly controlled by Thailand’s Loxley Pacific. The Thai company has experience working with North Korea on high-tech projects, having built North Korea’s first cellular telephone network, Sunnet, in 2002.

Loxley acknowledged that it is working on a project with Pyongyang, but Sahayod Chiradejsakulwong, a manager at the company, wouldn’t elaborate on plans for the addresses.

“This is a part of our business that we do no want to provide information about at the moment,” he said.

A connection to the Internet would represent a significant upgrade of the North’s place in cyberspace, but it’s starting from a very low base.

At present the country relies on servers in other countries to disseminate information. The Web site of the Korea Central News Agency, the North’s official mouthpiece, runs on a server in Japan, while Uriminzokkiri, the closest thing the country has to an official Web site, runs from a server in China.

North Korean citizens have access to a nationwide intranet system called Kwangmyong, which was established around 2000 by the Pyongyang-based Korea Computer Center. It connects universities, libraries, cybercafes and other institutions with Web sites and e-mail, but offers no links to the outside world.

Connections to the actual Internet are severely limited to the most elite members of society. Estimates suggest no more than a few thousand North Koreans have access to the Internet, via a cross-border hook-up to China Netcom. A second connection exists, via satellite to Germany, and is used by diplomats and companies.

For normal citizens of North Korea, the idea of an Internet hook-up is unimaginable, Petrov said.

Kim Jong-Il, the de-facto leader of the country, appears all too aware of the destructive power that freedom of information would have to his regime.

While boasting of his own prowess online at an inter-Korean summit meeting in 2007, he reportedly rejected an Internet connection to the Kaesong Industrial Park, the jointly run complex that sits just north of the border, and said that “many problems would arise if the Internet at the Kaesong Park is connected to other parts of North Korea.”

Kim himself has made no secret of the Internet access that he enjoys, and famously asked then-U.S. Secretary of State Madeleine Albright for her e-mail address during a meeting in 2000.

The government’s total control over information extends even as far as requiring radios be fixed on domestic stations so foreign voices cannot be heard.

The policy shows no signs of changing, so any expansion of the Internet into North Korea would likely be used by the government, military or major corporations.

The World’s Most Unusual Outsourcing Destination

Think of North Korea, and repression, starvation and military provocation are probably the first things that come to mind. But beyond the geopolitical posturing, North Korea has also been quietly building up its IT industry.

Universities have been graduating computer engineers and scientists for several years, and companies have recently sprung up to pair the local talent with foreign needs, making the country perhaps the world’s most unusual place for IT outsourcing.

With a few exceptions, such as in India, outsourcing companies in developing nations tend to be small, with fewer than 100 employees, said Paul Tija, a Rotterdam-based consultant on offshoring and outsourcing. But North Korea already has several outsourcers with more then 1,000 employees.

“The government is putting an emphasis on building the IT industry,” he said. “The availability of staff is quite large.”

At present, the country’s outsourcers appear to be targeting several niche areas, including computer animation, data input and software design for mobile phones. U.S. government restrictions prevent American companies from working with North Korean companies, but most other nations don’t have such restrictions.

The path to IT modernization began in the 1990s but was cemented in the early 2000s when Kim Jong Il, the de-facto leader of the country, declared people who couldn’t use computers to be one of the three fools of the 21st century. (The others, he said, are smokers and those ignorant of music.)

But outsourcing in North Korea isn’t always easy.

Language can be a problem, and a lack of experience dealing with foreign companies can sometimes slow business dealings, said Tija. But the country has one big advantage.

“It is one of the most competitive places in the world. There are not many other countries where you can find the same level of knowledge for the price,” said Tija.

The outsourcer with the highest profile is probably Nosotek. The company, established in 2007, is also one of the few Western IT ventures in Pyongyang, the North Korean capital.

“I understood that the North Korean IT industry had good potential because of their skilled software engineers, but due to the lack of communication it was almost impossible to work with them productively from outside,” said Volker Eloesser, president of Nosotek. “So I took the next logical step and started a company here.”

Nosotek uses foreign expats as project managers to provide an interface between customers and local workers. In doing so it can deliver the level of communication and service its customers expect, Eloesser said.

On its Web site the company boasts access to the best programmers in Pyongyang.

“You find experts in all major programming languages, 3D software development, 3D modelling and design, various kind of server technologies, Linux, Windows and Mac,” he said.

Nosotek’s main work revolves around development of Flash games and games for mobile phones. It’s had some success and claims that one iPhone title made the Apple Store Germany’s top 10 for at least a week, though it wouldn’t say which one.

Several Nosotek-developed games are distributed by Germany’s Exonet Games, including one block-based game called “Bobby’s Blocks.”

“They did a great job with their latest games and the communication was always smooth,” said Marc Busse, manager of digital distribution at the Leipzig-based company. “There’s no doubt I would recommend Nosotek if someone wants to outsource their game development to them.”

Eloesser admits there are some challenges to doing business from North Korea.

“The normal engineer has no direct access to the Internet due to government restrictions. This is one of the main obstacles when doing IT business here,” he said. Development work that requires an Internet connection is transferred across the border to China.

But perhaps the biggest problem faced by North Korea’s nascent outsourcing industry is politics.

Sanctions imposed on the country by the United States make it all but impossible for American companies to trade with North Korea.

“I know several American companies that would love to start doing IT outsourcing in North Korea, but because of political reasons and trade embargoes they can’t,” Tija said.

Things aren’t so strict for companies based elsewhere, including those in the European Union, but the possible stigma of being linked to North Korea and its ruling regime is enough to make some companies think twice.

The North Korean government routinely practices arbitrary arrest, detention, torture and ill treatment of detainees, and allows no political opposition, free media or religious freedom, according to the most recent annual report from Human Rights Watch. Hundreds of thousands of citizens are kept in political prison camps, and the country carries out public executions, the organization said.

With this reputation some companies might shy away from doing business with the country, but Exonet Games didn’t have any such qualms, said Busse.

“It’s not like we worked with the government,” he said. “We just worked with great people who have nothing to do with the dictatorship.”

Radio Wars Between North and South Korea (YouTube Video)

Martyn Williams provides an update on the growing use of mobile phones in the DPRK.  According to his article in PC World:

Koryolink, North Korea’s only 3G cellular operator, saw sales more than double in the first three months of this year as it expanded its network coverage and enjoyed continued demand for its service.

At the end of March the company had 125,661 subscribers, a gain just under 34,000 subscribers over the quarter, according to majority-shareholder Orascom Telecom. The Egyptian company, which invests in cellular operators in developing nations, owns 75 percent of Koryolink.

“Contrary to initial speculations that the mobile service will be only available to the government officials and elite, the fact is that currently mobiles are used by different segments and levels of society,” Orascom said of the customer base.

The network achieved a profit of US$5.8 million in the quarter, before accounting for interest payments, taxes, depreciation and amortization. Orascom did not disclose whether it made a net profit or a loss for the period. The figure is a vast improvement on the US$312,000 EBITDA profit recorded in the first three months of last year.

Quarterly revenues were US$9 million, a jump of 102.5 percent.

Sales were hit by North Korea’s revaluation of its currency.

The move, which saw 100 North Korean won devalued to 1 won, caused social unrest, according to reports from the country. Koryolink said sales activity was “practically at a standstill due to uncertainty factors resulting from the currency revaluation,” and that it closed its sales outlets for about three weeks.

The North Korean network was launched in late 2008 using WCDMA (wideband code division multiple access) technology and is only the second cellular network in the country. The other, Sunnet, uses older GSM technology and suffers from poor call quality and disconnections, according to users in the capital city of Pyongyang.

At launch the Koryolink network covered Pyongyang but has since been expanded to five additional cities and eight highways and railways.

North Korea is one of the world’s most tightly controlled societies. Subscribers to the network are divided by class or type of customer with some unable to place calls to others. Most calls are subject to monitoring by the state’s security services as part of an extensive domestic intelligence gathering program.

According to Telegeography:

Tokyo-based newspaper Chosun Sinbo has reported that mobile subscriptions in the DPRK are continuing to rise steadily and could reach 600,000 by the end of the year. The pro-North Korea newspaper added that the number of cellular customers in the communist state currently stands at over 120,000, with wireless infrastructure reportedly present in more than half of the country’s cities and counties that is expected to accommodate 600,000 subscribers by year-end. The DPRK’s only mobile operator is CHEO Technology, which offers services under the Koryolink brand. Citing the head of North Korea’s mobile telecoms department, Choe Un, the report also added that the state plans to produce its own handsets – currently manufactured in China – within the next six months.

According to TeleGeography’s GlobalComms Database, CHEO was awarded a 25-year licence to operate a 3G network in January 2008, with the first four years on an exclusive basis. It is owned by Orascom Telecom Holding of Egypt (75%) and state-owned Korea Post and Telecoms Corporation (25%). Services were launched in December 2008 in the capital Pyongyang, but the network has since been expanded to include the main road running up to the northern city of Hyangsan, with the company currently working on expanding services nationwide.

Yonhap asserts that the Choson Sinbo piece claims the DPRK will start manufacturing mobile phones:

“Within half a year, handphone terminals will begin to be produced,” the paper said. “For a certain time, parts will be imported from overseas and assembled, but eventually the prospect is that development will be self-sufficient.”

The report said equipment for mobile service has been set up in more than half of the cities and counties in the country, adding the service will also be used on major roads and railways.

If a reader can send me a link to the original Choson Sinbo artilce I would appreciate it.  I have troubles navigating that site.

Here are previous posts about North Korea’s mobile phone networks and Orascom.

According to Business Week:

As many as 1,000 North Koreans use handsets that connect to Chinese networks to tell people in the South about subjects ranging from food shortages to leader Kim Jong Il’s health, said Ha Tae Keung, a South Korean who runs a Seoul-based radio station that broadcasts daily to the North.

Ha’s Open Radio for North Korea is one of several groups gathering information from people on phones that only work near the 1,400-kilometer (870-mile) border with China. The risks are absolute: One caller was executed, Ha’s employees heard, leading Open Radio to curb contact with informants.

“To us, it’s about breaking news,” said Ha, who receives U.S. congressional funding through the National Endowment for Democracy. “To them, it’s a matter of life and death.”

North Korea accuses the U.S. and South Korea of financing such organizations to conduct “a black propaganda campaign,” the Korean Central News Agency said last month. Kim’s government glorifies his achievements as “the great sun of the nation,” who repels “U.S. warmongers and South Korean puppet forces.”

…

Defection and disclosing “national secrets” are deemed treason under North Korea’s criminal code and are punishable by death, according to a copy posted on the Web site of South Korea’s Unification Ministry. Listening to “anti-state radio” is punishable by up to five years in a labor camp.

Radios are pre-tuned to government programs and owning computers without permission is forbidden, according to the Feb. 17 UN report. Security squads raid homes looking for contraband, it said.

While mobile phones are allowed in and around the capital of Pyongyang, their use is forbidden near the border, the UN said. Legal cell phones in North Korea, many operated by Cairo- based Orascom Telecom Holding SAE, can’t be used for international calls, a U.S. State Department human-rights report released in March said.

SIM Cards
More than 10 North Korean informants for Open Radio use phones with pre-paid SIM cards bought in China that work as far as 10 kilometers across the border, Ha said. Pre-paid cards accounted for 82 percent of all users at Beijing-based China Mobile Ltd., that country’s biggest operator, in 2007.

Illegal phones started appearing as early as 2000, when defectors living in China and South Korea had them smuggled across the border to relatives, said Sohn Kwang Joo, chief editor at Seoul-based Daily NK.

Read the full story here:
North Korea Open Radio Prompts Wonder About Riches Over Border
Business Week
Bomi Lim
3/31/2010

UPDATE 2 (2011-9-8): According to the Donga Ilbo:

Hyundai Group Chairwoman Hyun Jeong-eun, who met North Korean leader Kim Jong Il in Pyongyang in 2007, is known to have said Kim believes the 2004 train station explosion in the North Korean town of Ryongchon was an attempt to assassinate him.

According to a diplomatic report released recently by WikiLeaks, Hyun told U.S. Ambassador to South Korea Kathleen Stephens in 2009, “Kim believed that the explosion at Ryongchon Station was a failed attempt to assassinate him, and the (North Korean) People’s Army became his most trusted group after the incident.”

Hyun was quoted as saying, “After the time when his train was to pass Ryongchon Station was revealed through mobile phones, North Korean leader Kim Jong Il believed that the explosion occurred when his train almost reached the station, and after the incident, the introduction of mobile phones in the North was markedly delayed.”

According to the report, the chairman said, “Kim Jong Il fears assassination and a coup the most. He was not an irrational person in the past, but I feel he has changed recently in certain aspects.”

UPDATE 1 (2010-3-23): Adam Cathcart tracks down the original Chinese source and offers a translation:

Curtis, I believe the original source is an article in the Chongqing (Sichuan, PRC) Evening News.  I’ll include the relevant Chinese text in two separate blocks and then translate it:

2004年4月22日中午时分，朝鲜平安北道龙川郡发生了一起严重的火车爆炸事故，导致近200人死亡，1500多人受伤，另有8000多幢房屋被毁。有分析认为，这次造成灾难性后果的朝鲜火车爆炸案，是一次针对朝鲜领导人金正日的暗杀企图。4月22日龙川爆炸事故时，有线索表明不良分子使用了手机，唯恐内部情报外泄，所以手机业务被停了。

On April 22, 2004, around noon, the story is that in North Korea’s North Pyong’an Province, Ryongchon County, a serious train explosion caused the deaths of nearly 200 people and injured more than 1,500 people, while more than 8000 homes were destroyed.

Some analysts believe that the catastrophic consequences of this North Korean train explosion followed from a attempted plan to target North Korean leader Kim Jong-Il for assassination.

At the time of the April 22 Ryongchon explosion, clues collected along the tracks indicated that unhealthy elements had used mobile phones. For fear that internal information would leak [to the outside], the mobile phone business would be stopped.

[Note: The last sentence is pretty interesting; the phrase used is “唯恐” which means “for fear that,” but it can also lead into the idiomatic expression 唯恐天下不乱 which means “in order that all under Heaven remain unchaotic,” which seems to be a tactful dynastic-type allusion to the idea that the DPRK could ignite whenever.]

停止移动电话服务举措的命令由朝鲜国防委员会直接下达，特别是在权力机关或特殊行业就职的人员使用手机受到了严格的限制，原先持有的手机也被没收。朝鲜在境内全面禁止使用手机之后，花大笔钱购置手机的居民大为不满，因为1台手机机身和入网费共约1300美元，在一夜之间就成了废品。

The order to stop mobile phone services came down directly from the [North] Korean National Defense Committee, particularly [stating] that the authority/rights of those in special business sectors to use mobile phones was [henceforth] strictly limited and that previously held mobile phones [should be] confiscated.

After North Korea totally banned mobile phone use within its borders, many residents/citizens, having spent big money (about 1300 USD for everything including accessories and network access fees) to purchase mobile phones, became dissatisfied due to the fact that their cell phones had been rendered into scrap overnight.

[As a side note, I wonder why this news is leaking out of the PRC at a time when Kim Jong Il is said to be mulling over a return trip to China, which would almost certainly be taken by train (through the same station?). It’s a bit mystifying. But then again, Chinese readers probably have more sympathy for North Korea’s striving elites than is often acknowledged and Xinhua, perhaps, puts this story out as a gentle reminder (at a time when people are getting arrested for downloading “unharmonious content” onto their mobile phones) that life in the PRC could be much, much worse. Just my two cents — hope this helps, and thanks for the post.]

ORIGINAL POST (3/22/2010): According to the Donga Ilbo:

A 2004 explosion at a railway station in North Korea was an attempt to assassinate leader Kim Jong Il, China’s state-run Xinhua News Agency quoted an analysis as saying yesterday.

“The train explosion at Ryongchon Station in North Pyongan Province on April 22 that year killed nearly 200 people, injured more than 1,500, and destroyed more than 8,000 homes. The explosion is believed to have been an attempt to assassinate Kim,” Xinhua said.

Though Xinhua quoted an analysis, it is quite unusual for the news agency to say the explosion was an assassination attempt on Kim. Xinhua mentioned the incident while reporting on mobile phone use in North Korea.

The report said the number of mobile phone users in North Korea surged to 20,000 a year after mobile telecom service was launched in November 2002. Pyongyang, however, banned the use of mobile phones following the explosion.

Xinhua said the ban was imposed directly by the National Defense Commission, North Korea’s highest-ranking body, due to fears over the leak of news on the explosion outside of the communist country.

In the early days of mobile phone use, only officials at the people’s committee of the ruling Workers’ Party and the ministries of public safety, national security and defense could use them. After the explosion, however, as many as 10,000 mobile handsets were seized by authorities.

The cost of a mobile handset and registration was as high as 1,300 U.S. dollars when the greenback was traded at 1,200 to 1,300 North Korean won, equal to more than 600 months of monthly wages for the average North Korean worker (2.20 dollars).

In the face of mounting complaints over the ban, North Korean authorities re-allowed the use of mobile phones in March last year.

An estimated 120,000 North Koreans use mobile telecom service. Considering North Korea’s population of an estimated 24 million as of 2008, this translates into one handset per 200 people.

Xinhua added that mobile phones have brought about many changes in the lives of North Koreans.

I am taking this with a grain of salt until I find the source.  I post it here so you can judge for yourself.

Here are before/after images of the Ryongchon explosion.

Read the full srticle here:
“2004 Explosion Was Attempt on Kim Jong Il`s Life”
Donga Ilbo
3/22/2010