Will Rakuten Deservedly Become the King of Mobile Network Technology?

Rakuten, the Japanese e-commerce giant announced its intent to deploy a mobile network in 2018 and formalized its plan at MWC 2019, when it announced its technology suppliers: Altiostar, Cisco, Intel, Mavenir, NEC, Nokia, Qualcomm, and Quanta. A vital difference from traditional radio networks is that Altiostar will be providing virtualized Cloud RAN elements while radio heads will be supplied by Nokia. This is the first large-scale, nationwide contract where a mobile service provider has selected a small vendor to provide radio infrastructure. Moreover, Rakuten placed a strategic investment on Altiostar, who reports that it will use this new round of investment to develop 5G infrastructure. Rakuten’s network plans are indeed impressive: it is building a fully virtualized, cutting-edge-technology network that will surely be envied by all mobile service providers around the world.

All mobile service providers have a long legacy in terms of network technology, some of which date back to the 1980s, with analog communications, and evolving into 2G, 3G, and 4G. Several of these systems have been decommissioned today, but all telecom networks consist of legacy components, myriad interfaces, proprietary hardware and software and, often, thousands of OSS tools that are managing them. The existence of this complexity is the reason telecom operators cannot “innovate” and create services rapidly. However, this complexity has been necessary to guarantee the carrier-grade nature of telecom networks, which have often carried emergency calls and enhanced 911 (E911) services. In order to remain competitive, mobile service providers have typically rushed to deploy new technology through technology overlays, rather than rip and replace legacy systems. Only in advanced stages of 4G did the industry choose to deploy SingleRAN platforms that consolidated 2G, 3G, and 4G into a single radio infrastructure platform, with several layers remaining in the core network and throughout the end to end system.

Rakuten, on the other hand, can afford to select the best of breed components and deploy cutting edge technology because it’s starting from scratch. It does not have any legacy network to maintain and can also apply its cloud expertise from the Web world to the telecom’s virtualized domain. In fact, one could say that Rakuten will surely utilize its public cloud capabilities for telco cloud and also create shared Web-telco edge computing platforms. This will surely create ripples in the Japanese market and throughout the world.

Rakuten has announced it will launch its 4G network in October 2019 and will follow with a 5G network in 2020. The software-based, virtualized nature of its network means Rakuten will surely incur lower operational costs and will likely require significantly less human resources compared to its incumbent competitors to run a nationwide Japanese network. Rakuten will likely compete on price for 4G services, too, putting more pressure on NTT Docomo, Softbank, and KDDI in an already saturated, highly-developed mobile market. This will be the first disruption Rakuten will create that will likely remain within the bounds of the Japanese market. This disruption will accentuate Rakuten’s competitiveness with 5G enhanced mobile broadband, where Rakuten will surely be able to provide 5G service pricing in parity with 4G and arguably setting the competitive landscape in the Japanese market.

However, the biggest disruption will be when Release 16 is finalized and Ultra-Reliable Low-Latency Communication (URLLC) and network slicing are fully specified. Rakuten will then be able to deploy them much faster than its telecom’s competition in Japan and will be able to combine its Web-based services with its telecoms capabilities to create unmatched enterprise vertical services. This disruption will likely permeate well beyond the Japanese market and may set the scene for the next evolution of the telecoms market, where mobile service providers realize that they will need much more than incremental upgrades to become more than connectivity enablers. For this reason, all mobile service providers are anxiously waiting to see how Rakuten fares with its 4G and 5G network, treating its deployment as a proof of concept for all these advanced technologies that they have been struggling to deploy. Rakuten will surely succeed and drag the rest of the telecoms market into a new era.