How to Get a Cell Phone in North Korea

November 10, 2013 7:00 AM

Perusing through articles from our friends at Sino NK, I found an oldy but a goody on North Korean bureaucratic inefficiency at its most groan-inducing. Late last year, Christopher Green wrote on the process required for North Korean citizens to procure a private cell phone. Not surprisingly, it’s a doozy: multiple trips to the provincial Communications Technology Management Office, flurries of rubber stamps, months of waiting, and rent extraction along every excruciating step.

Besides time commitment, Green picks up on some of the more insidious barriers to entry that this process poses for a North Korean citizen. It requires one to be able to travel freely (provincial offices can be far away), possess rolls of hard foreign currency, and distribute enough cigarettes along the way to give Don Draper a nicotine headache. Cleary, such a process still favors the upper echelons of society with time and cash to spare.

Yet a lot can change within a year, especially when we are talking disruptive technology. Despite the expensive bureaucratic slog described above, Koryolink, the DPRK’s sole 3G provider 75% owned by Egypt’s Orascom Telecom Media & Technology (OTMT), reported surpassing 2 million subscribers in late May 2013. Only fifteen months prior it was at a million members, translating to a 4% gain of the total population at an average of almost 67 thousand new subscriptions per month. As far as I know this claim has not been audited, but there is no denying the writing on the wall.

This is a transformation -- about as rapid as things get in North Korea -- currently dominated by three primary stakeholders:

  • Orascom. Since 2008, the telecom company has enjoyed monopolistic market control completely sheltered from foreign competition, a sweet deal which has been extended into at least 2015. In a 2012 Economist article, Orescom claims to have earned an 80% gross margin on operations in the DPRK, making it by far the most profitable market for the company.
  • Chinese handset makers. While you can occasionally see a traitorous Samsung Galaxy on the streets, the majority of phones flooding North Korea are ZTE and Huawei. The Global Times (in Chinese) estimates that China will export five-hundred thousand handsets to North Korea in 2013 alone, 100,000 of which will be smartphones. And yes, while North Korea now does have their very own Arirang, numerous reports suggest part—or all—of the phone is made in China too.

Despite what sounds like a nice little set up for all parties involved (well, except consumers) it’s easy to see this as the fancy pewter tableware that slowly poisons the royalty. The regime must play a dangerous game, balancing the temptations from rent extraction and international suitors looking to get in on the action with the explosive change widespread cellphone use could bring. If there’s anything more lucrative -- and dangerous – than a battle for North Korea’s cellular market share, I don’t know what it is.

Comments

Matthew

This little tidbit on North Korean cell phones is quite misleading. First of all "multiple trips to the provincial Communications Technology Management Office, flurries of rubber stamps, months of waiting, and rent extraction along every excruciating step" is a huge exaggeration. The process is quite streamlined, not that involved, and it does not take long to procure a SIM card for DPRK citizens. Why you may ask in a police state as regulated as the DPRK is is this the case? Simple, people sold and changed SIM cards quite early on after getting them when phones were first made available. A black market for SIM cards quickly formed in the jangmadang, and people were trading numbers, selling and buying SIM cards, and the registration system basically fell apart. Cell phones barely favour the "upper echelons of society" now, and are omnipresent in a city like Pyongyang, especially among younger people. What percentage of Pyongyangers between the ages of 20 and 30 own a cell phone: easily 95%, maybe more. This article makes it seem like the things are reserved for the elite when that cannot be further from reality in a city like Pyongyang. Also Orascom Telecommunications and Orascom Construction Industries are not the same company - same family, different siblings - your "state" argument is also misleading, by saying they "had to pour" cash into the Ryugyong Hotel construction project. Orascom Construction has backed out of the project and for all I know left the DPRK. You can still see plenty of Orascom Telecommunications people at the Potonggang Hotel. Additionally, the cost to operate a domestic cell phone is very cheap, not like us foreigners in Pyongyang burning through 10 Euro charge cards. This is hardly able to allow the "government suck back [much] forex." That argument does not hold much ground when it comes to domestic cell phone usage - and there are not enough of us foreigners on the international system to lead to any substantial profits. Orascom is slowly trying to recoup investment costs if anything. Mobile phones have expanded North Korean people's networks, made transactions easier, increased and complicated information flows, and continue to encourage entrepreneurship and wider social integration and information sharing amongst people, especially young people, throughout the urban areas of the country. This article also makes it look like Orascom is profitable in the DPRK - they have invested tons of money and are far from being profitable (yet at least). They made a gamble on the DPRK opening up significantly in the next decade or so. By the way, this article could have been written three years ago with the majority of information presented - minus the increase in subscriber numbers.

Donald Kirk

Just one small comment re the above -- Though Orascom Telecom and Orascom Construction are separate companies, they're all part of the same mighty empire. My understanding in a visit to Pyongyang in 2008 was that the latter had to do its best on the hotel before the former got in. Was back in 2012 after influx of a few million phones. Not sure of the status of the Construction hotel deal, but they're separate but not separate from Telecom as blood ties show. (Also Construction may be working on other stuff, again not sure.)

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