Rakuten launches its cheap and cheerful 5G service

Disruptive Japanese telco Rakuten Mobile has unveiled its 5G offering and, as expected, its significantly undercuts the competition.

There is no price premium being put on the 5G tariff compared to the 4G launch earlier this year. As you can see from the first slide below, this means Rakuten reckons that makes it 71% cheaper than the competition.

“Less than six months since full-scale commercial launch of the world’s first fully virtualized mobile network, today Rakuten Mobile takes another step forward to transform the mobile industry,” said Mickey Mikitani, Chairman and CEO of Rakuten. “We’re offering customers 4G and 5G combined in one simple plan – Rakuten UN-LIMIT V – at the same low price as 4G.

“Our network technology is built to meet the ever-evolving needs of our customers – and with transformational innovation, we are passing on significant savings to our customers. As we move forward to expand 4G and 5G coverage, we aim to reduce the household cost of mobile services. This is also about encouraging consumer spending across other services and goods, contributing to the sustainable health of Japan’s national economy.”

The bit about expanding coverage is crucial because, cheap as it is, Rakuten 5G isn’t available in many places yet. The next two slides from its presentation show where it’s available now and what the plans are to improve that situation. Additionally, the current maximum download speed is 870Mbps which, while fast, falls short of the promises made on behalf of 5G. Having said that Rakuten expects that speed to more than triple within a month or so. Let’s see.

There was a fair bit of talk about all the clever tech that has gone into the greenfield Rakuten network, but that has already been exhaustively covered. The purpose of it in this context was to explain how Rakuten is able to undercut its competitors so outrageously, but the truth is probably closer to mobile being a loss-leader to entice new customers to subscribe to the full Rakuten service package.

Rakuten can be confident that the pricing will steal the headlines, and that’s fine, but this has the feel of a launch that was rushed out to meet previous timing promises. If the speed is going to be so much better in a month, why not wait until then? The same could be said for the coverage although, to be fair, not many operators are doing too well on that front.

As Analyst Dean Bubley reflects in the insightful twitter thread below, the broader significance of this launch may be to alarm the incumbents in other markets, since Rakuten is threatening to license its tech to other operators. Rakuten continues to be the most disruptive force in the 5G era, but it’s not yet certain that will translate to commercial success at home.