Rakuten still sailing smoothly on its disruptive mission

Japanese internet giant Rakuten is continuing to push into new ground with its disruptive mobile mission, promising the first 5G OpenRAN deployments next month.

Although the mission is several months behind the original timetable, it is still impressive progress. Few operators are brave enough to experiment with OpenRAN, electing for the fast follower approach, and an even smaller number have actually launched live trials. If Rakuten can launch a 5G OpenRAN network in 2020, that would be very admirable accomplishment.

So far, the Rakuten Mobile team have deployed 5,739 4G base stations, while there are 7,487 sites with contracts signed. There are still considerable holes in the service, but the team hope to have 70% population coverage in Japan by 2021.

“We’re about where we want to be,” said CEO Hiroshi Mikitani. “We’re using new technology, so needed additional time to check the quality.”

With the population coverage not at 100% it will be a while before Rakuten will be a direct challenger to the status quo in Japan, but let’s not forget this is not the only way the company will aim to make money. If the theory of ‘open’ network deployment can be proven in reality, it can be sold to interested parties around the world.

The Rakuten Communications Platform (RCP) is a very interesting idea; selling the components of the network and deployment know-how to governments and operators who want to introduce a new dynamic. Rakuten has opened two international offices over the last few weeks, and now claims to be in discussions with more than 70 governments and operators. If the numbers are to be believed, you can start to see why there are so many interested parties.

Rakuten believes CAPEX can be reduced by as much as 40% due to the reduced cost of sourcing RAN products, while there is also reduced equipment on these sites thanks to virtualisation and pooling of resources.

On the OPEX side, below, there are savings to be made though there are also additional expenses to account for. The data centre and transmission increased expenditure does allow for the delivery of low-latency products and services, but thanks to automation and reduced equipment in the field, staff cost can be reduced as well as becoming more operationally efficient.

The deployment of this network is a very interesting story on its own, but when you tie that into the creation of a new business model it evolves into something new.

With the Rakuten Communications Platform, the company becomes a hybrid telco/vendor, selling connectivity services to Japanese customers but then also the underlying network design to other telecoms operators. However, it all depends on the delivery of this network in Japan.

Should Rakuten deploy the network and emerge as a sustainable telecoms operator in Japan, this company could become one of the most important in the telecoms industry.