South and North Korea have reached an agreement on communications at a pilot industrial complex in the communist North.

Under the deal signed Thursday, South Korean companies operating in the North's border down of Gaesong will be able to use phones and faxes to call South Korea for less than 50 U.S. cents per minute. The agreement removes one of the biggest hurdles in developing the industrial park, haggling over communications costs.

The North had previously demanded more than two dollars per minute for making phone calls to the South.

The two sides also agreed to jointly invest in the telecommunication equipment and materials for the industrial park and swiftly link communication networks and build related facilities to end all operations for setting up communications infrastructure by the middle of next month.

The South's Korea Land Corporation said in a news conference that the signing of the accord is significant in that it has opened direct phone conversations between the two Koreas for the first time in half a century.

The state-run firm also said that with the adoption of the deal, operations at the Gaesong industrial project are anticipated to become more stable and see further progress.