Egyptian provider wins North Korean 3G license

TOKYO – To the surprise of the communications industry, an Egyptian company says it has won the right to provide 3G cellular service in North Korea.

North Korea is one of the most tightly controlled countries in the world and most citizens don’t even have access to a fixed line phone. Those that do are restricted in the numbers they can dial and all calls are open to government monitoring. Communications is routinely monitored and transgressions are severely punished, according to humanitarian aid groups that monitor North Korea.

But a 3G license has been awarded to CHEO Technology, a joint venture in which Egypt’s Orascom Telecom holds a 75 percent stake and Korea Post and Telecommunications holds the remaining 25 percent, Orascom said in a statement. The network will be based on WCDMA (Wideband Code Division Multiple Access) technology, it said. WCDMA is used in neighboring South Korea and nearby Japan. Across the northern border, China hasn’t yet selected a 3G technology.

Orascom said the terms of the 25-year license give it four years of exclusivity. It intends to invest up to US$400 million to pay for the license and network that will cover the capital city of Pyongyang and all other major cities within a year. The company said it intends to offer “a high quality network and offer voice, data and value added services at accessible prices to the Korean people.”

Setting aside the government’s tight control of access to telecoms, for CHEO Technology to offer services that are affordable to citizens would likely mean it offering some of the cheapest 3G calling rates in the world. North Korea is one of Asia’s poorest countries.

At least one cell phone network exists in North Korea. It was launched in the capital city of Pyongyang in 2003 but 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 assassin attempt with the bomb triggered by a cell phone.

Cell phones smuggled from China are popular among North Koreans living near the border, according to numerous reports from the region. The Chinese cellular network signals penetrate several kilometers inland and within this zone the phones are used to communicate and exchange information with family and aid groups based in China. However the phones are prohibited so must be used in strict secrecy.

North Korea has a history of offering wide-reaching telecom contracts. In 1995 it gave Northeast Asia Telephone and Telecommunications (NEAT&T) a 30-year contract to offer telecom services in the Rajin-Sonbong free trade zone that sits at the point where North Korea borders China and Russia.

A similar contract running for 30 years and covering the international telephone gateway and mobile network was awarded to a Bermuda-registered company that was subsequently bought by an unknown private investor from Hong Kong’s Sun’s Group.

As with many things in North Korea, the current status of these contracts is unknown and the companies involved don’t want to talk about the deals.