North Korea has banned South Korean workers from carrying mobile phones into the Kaesong estate, an industrial area located in the North but funded by South Korean businesses.
Developed as a symbol of reconciliation between North and South, Kaesong houses 88 South Korean firms and employs some 37,000 North Koreans and a number of South Koreans.
But the North has responded to a stagnating relationship with the South by tightening controls on mobile phones, South Korea's unification ministry has told Reuters.
Relationships between the countries have become frosty following the election of South Korea's conservative president, Lee Myung-Bak.
Lee has linked economic assistance packages to North Korea's willingness to engage in nuclear disarmament. As a result, North Korea has suspended all diplomatic talks.