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2008/12/18 11:23 KST
NORTH KOREA NEWSLETTER NO. 34 (December 18, 2008)

   *** TOPIC OF THE WEEK (Part 2)

North Korea Takes Risk to Enter Information Age

SEOUL (Yonhap) -- The launch of a third-generation mobile phone service in North Korea this week by an Egypt-based firm highlights the reclusive socialist regime's desire to enter the information age even at the risk of any potential attendant threat to its survival.

   "The first 3G mobile network was kicked off with due ceremony in Pyongyang on Dec. 15," the North's state-run Korean Central News Agency (KCNA) said on the same day.

   Indicating the importance of the ceremony, Vice Premier Ro Tu-chol and Ryu Yong-sop, minister of Post and Telecommunication and related officials were all in attendance.

   North Korea has typically maintained tight control over the flow of information within its borders. Foreign visitors are required to relinquish their mobile phones upon arrival, and must fill out forms to request Internet access.

   While its most recent move may suggest a more progressive tack, analysts have cautioned against attaching too much meaning to the deal. They note that the service will still likely be limited only to those among the upper echelons of society.

   Pak Myong-chol, director of the North's Post and Telecommucation Company, said in his speech at a ceremony marking the launch of the new mobile service that it is an "important occasion in developing the post and telecommunication of the country as required by the age of information industry," according to the KCNA.

   Orascom Telecom, the largest Arab mobile operator by subscribers, has reportedly promised to invest US$400 million in network infrastructure over the next three years under a deal reached in January. It will develop an advanced cellular phone network first in North Korea's capital and then in other major cities around the country.

   The Egyptian firm's chief executive, Naguib Sawiris, also attended the ceremony, the KCNA said. He was quoted by the Associated Press as saying that the company's aim was to build a "network that will accommodate the 22 million people" of North Korea.

   If the mobile phone service develops as planned, it would bring important momentum to the development of the North's moribund economy and could lure much needed foreign investment.

   The scope of Orascom's planned investment is almost equal to what has been invested in the South Korea-run joint industrial complex in the North Korean border town of Kaesong. A successful mobile phone business in North Korea would also help offset the high uncertainty of operating in one of the world's most tightly controlled countries.

   The deal may also lend weight to the North's most recent threat to shut down the Kaesong industrial complex -- where about 88 South Korean plants employ more than 37,000 North Koreans.

   Uncertainty has always been the biggest risk faced by investors in North Korea, which is famous for its brinkmanship and slippery deal-making. Experts note that North Korea has prioritized the survival of its one-party system when an earlier experiment in opening its market clashed with that broader goal.

   The opening of an advanced mobile telecoms network may help speed up the nation's economic reconstruction, but it could also become a conduit for an unwelcome influx of information.

   North Korea had allowed the use of cell phones before for a short period between 2002 and 2004 through a joint venture with Thailand, but abruptly cut off the service without explanation.

   The measure came after a mysterious train explosion in April 2004 that killed an estimated 160 people. Some experts believe the blast was an unsuccessful attempt to assassinate North Korean leader Kim Jong-il. They suggest the incident -- whatever its cause -- may have awakened Pyongyang to the reality that mobile phones can be used to organized subversive rallies or plots, as they remain outside of government's ability to listen in.

   Media reports have said North Koreans still can make illicit phone calls using networks in neighboring China. North Korean defectors in South Korea have said they could make regular phone calls to their relatives in the North.

   Choi Su-yeong, a senior fellow at the Korea Institute for National Unification in Seoul, predicted that Pyongyang would not lose its hold over the masses despite the opening of the mobile phone network.

   "Like in other countries, the demand for mobile phone use has been on the rise in North Korea," Choi said. "The authorities probably concluded that the difficulty in controlling the people would be offset by the benefits of using the service since it would be limited to senior officials or those with money."

   He also said it is difficult to tell whether the opening reflects a greater intent to open itself to the outside world.

   "The North, on the contrary, is intensifying its control of people in the border areas as well as elsewhere in the country to preserve its socialist system," he added.