S.Korea eyes North's mobile market

By JONG-HEON LEE, UPI Business Correspondent  |  June 6, 2002 at 10:14 AM
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SEOUL, June 6 (UPI) -- South Korea is moving toward making inroads into a mobile phone market in North Korea, one of the world's most shut-off countries.

A delegation from the government and mobile carriers and electronics giants has traveled to the communist state this week to discuss establishing wireless services in the capital, Pyongyang.

The companies include South Korea's top mobile carrier SK Telecom, the largest fixed-line carrier KT Corp, the largest telecoms equipment manufacturer Samsung Electronics and LG Electronics Inc.

"North Korea has expressed its hope that the South would help launch mobile phone services in Pyongyang at an early time," a senior official at the Information and Communications Ministry told United Press International.

"Our talks with officials from the North's Post and Telecommunications Ministry would focus on inter-Korean cooperation in the information technology sector," Byun Jae-il, the assistant information minister, said before leaving for Pyongyang earlier this week.

"We will also discuss the mobile network business in the North," he said. The eight-member delegation would return home on Saturday after a five-day, path-breaking visit. The talks mark the first official telecommunications meeting between the two Koreas, Byun said.

South Korea's mobile operators, who are vigorously promoting booming wireless and broadband technologies, hope the trip would give them access to North Korea's closed market.

SK Telecom, KT Corp., Samsung Electronics, LG Electronics and Hyundai Syscomm have created a consortium to promote mobile services in the North on code division multiple access, or CDMA, technology.

"The five companies have agreed to jointly stage the mobile service project and prevent excessive or redundant investments in North Korea," a KT spokesman told UPI.

If the project goes ahead, KT will establish wire networks, SK Telecom will design and establish wireless networks, and three other companies will provide cellular phones and other communications equipment, he said.

Some 500 relay stations are needed to introduce the CDMA service throughout Pyongyang, industry analysts said, adding the setup of a station will cost 1.2 billion won ($1 million) on average.

Pyongyang's State Tourism Bureau has said North Korea would kick off mobile telecommunications services in Pyongyang and the free trade zone at its northern tip beginning October. Clients in those areas would be able to access the North's cellular phone services by pressing "193-0001" someday in October this year, the state-run agency said last week.

Northeast Asia Telephone and Telecommunications Co., a joint venture set up in 1995 between North Korea and Thailand's Loxley Group, will test runs of the cellular phone services in August. "If the test runs go smoothly, the cellular phone services will be available in Pyongyang and the Rajn-Sonbong Free Trade Zone in October," the agency said in a statement.

Loxley Pacific, a unit of the Thai company Loxley PCL, holds a license from the North Korean government to operate cellular services. In February, the company said it planned to introduce a mobile phone service in North Korea in July, aiming to sign up 5,000 subscribers in the first two months.

NEAT&T has adopted the global system for mobile communications, or GSM, which is popular in Europe, a system different from South Korea's CDMA technology, a standard devised by U.S.-based wireless technology firm Qualcomm Inc.

Officials and industry analysts say it remains to be seen whether North Korea will actually launch GSM-based service, since neighboring countries, including Japan and China, are taking steps to adopt CDMA technology.

"We do not know whether the North intends to adopt the European mode of GSM or our mainstream standard CDMA," a senior information ministry official said.

Government officials said they had little information about North Korea's telecommunication industry. But according to North Korean defectors, a very small number of the communist elite were allowed to use mobile phones.

North Korea has reportedly contacted South Korean companies behind the scenes since its leader Kim Jong Il instructed his Cabinet to begin mobile telecommunications service in Pyongyang before April 15 this year, the 90th birthday of his late father and national founder, Kim Il Sung.

Kim Jong Il gave the order after he visited China in January last year, which centered on Shanghai, China's financial capital which has been transformed by massive foreign investment under government-led market reforms.

North Korea has recently placed policy priority on the development of the high-tech information industry, while establishing computer communications networks.

Last month, an Internet café opened in Pyongyang as the first public computer room in the cloistered country, with the help of a South Korean software company. So far, foreigners in North Korea have depended on foreign e-mail servers via expensive international phone lines available only in a few hotels in Pyongyang.

The North has its own domestic computer network called Kwangmyung, meaning "light," but it is not linked to the Internet. Pyongyang's Choson Computer Center has agreed with a South Korean computer firm to jointly set up satellite Internet links between the country and the rest of the world.

North Korea's state-run institute said it would organize an international forum on information technology in Pyongyang on June 28-19. "The forum will discuss measures the (North Korean) government should take to develop software and hardware, build IT infrastructure and cooperate with the international community in the IT sector," the National Academy of Science said.

"The North's moves indicate its hope to acquire advanced information technology," said Oh Seung-ryol, a fellow at state-run Korea Institute for National Unification. But Oh and other analysts say North Korea would have to wait for many years before the use of mobile phones will become popular because the citizens remain under strict state control.

The North is expected to raise military and intelligence issues before installing the mobile network, they say. Except for emergency lines, South and North Korea do not share a fixed-line network for military and intelligence reasons.

"It remains uncertain whether the North will allow South Korean companies to set up the mobile network freely," a Unification Ministry official said, adding a worsening electricity shortage in the North would be another obstacle against launching mobile services.

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