Rakuten takes first step towards a hybrid operator/vendor telco

Rakuten and NEC will develop a containerized standalone (SA) 5G core network, which will become one of the first products available on the Rakuten Communications Platform (RCP).

Although any news or developments coming out of Tokyo are of interest to the world nowadays, there are two very distinct elements to this announcement. Firstly, the creation of a containerized SA 5G core network, and secondly, the emergence of a hybrid telco model, where Rakuten is an operator but also a vendor, selling products to other telcos who want to embrace the open revolution.

“We are very excited to collaborate with NEC on the development of our standalone 5G core network,” said Tareq Amin, CTO of Rakuten Mobile.

“Our partnership with NEC represents a joint collaboration to build an open, secure and highly scalable 4G and 5G cloud native converged core, that will also become a key feature of the highly competitive services we will offer to global customers through the Rakuten Communications Platform.”

The containerised SA 5G network core will be built on software source code developed by NEC, powering the standalone network launch in 2021 (theoretically). Although the product itself is not exactly revolutionary, the concept has been discussed for years, the selection of NEC is a notable one.

NEC software will be the brain of Rakuten’s network, one which is build on OpenRAN technology and virtualised components. This is a vote of confidence in the Japanese vendor, a mark of credibility in an ecosystem which is still in its embryonic days. The inclusion in one of the industry’s most ground-breaking projects certainly gives it an advantage over rivals, many of whom are attempting to justify their existence in the Open ecosystem.

The Rakuten overarching mission is one which has captured the imagination and interest from telcos around the world; an attempt to build a network entirely with ‘open’, non-proprietary technologies. Should it work, it could be a gamechanger when it comes to the telco supply chain.

The promise from Rakuten is to deploy a network cheaper than via traditional means, but also to slash operational costs. The executive team has already said it envisions a network operations team of hundreds, as opposed to thousands as per normal, which could result in saving millions each year. If these savings are transferred through to lower data tariffs, there could be a disruptive force on the horizon.

Should this gamble pay off for Rakuten, there will be considerable interest in the ‘open’ ecosystem, with NEC collecting much of the plaudits but the likes of Mavenir, Parallel Wireless, Altiostar, Red Hat, Cisco, Innoeye and Netcracker all benefitting. These companies are of course very interesting, but it is the Rakuten Communications Platform (RCP) which is a more dramatic shift.

Rakuten has not been shy about his intentions to sell its ideas. It is an interesting move, as few telcos would want to sell their family jewels, and this is what the Rakuten ‘open’ network would be. This is the secret recipe, a competitive edge over rivals, but Rakuten wants to monetise this.

With all the innovation taking place in Rakuten’s network deployment strategy, the opportunity to monetize these ideas by selling to potential rivals is certainly a new approach. Few other telcos would want to take this approach, but few other telcos can implement this strategy in earnest, perhaps explaining why it is open to selling the secret recipe.

Rakuten’s network is greenfield, while most others are brownfield. Rakuten can implement these new ideas everywhere, whereas rivals can only consider elements here and there. Rakuten will always have an advantage taking a wholesale approach, whereas others can only take the bit-part route.

This is a new dynamic, a new business model for the telcos, creating a blended operator/vendor hybrid company. Should this work, it will be interesting to see how many other telcos embrace such a collaborative mindset, one which is very counterintuitive to attitudes today.

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