NEC, until recently a nonentity in the RAN market outside its native Japan, is suddenly looking credible as a counterweight, along with Samsung, to the dominance of the largest suppliers – especially welcome to operators which are constrained from doing business with Huawei or ZTE.
The Japanese company has leapt up the RAN rankings largely because of its prominent role in the high profile Rakuten Mobile deployment, for which is supplying a 5G radio and Massive MIMO antenna array that can work with multiple vendors’ virtual network functions (VNFs). This complex piece of kit was codeveloped with the operator and helped assert NEC’s credentials both for 5G engineering and for openness.
Now, it is gaining new resources to develop its fledgling business, and potentially reach beyond its home borders as part of a new ‘Japan-first’ ecosystem growing up around Rakuten and NTT Docomo. Docomo’s parent, NTT, is to take a 4.8% stake, worth an estimated $560m, in NEC and work with it to develop and market new wireless and optical technologies. This makes NTT the third-largest shareholder and largest industry investor in NEC.
Specifically, they will first work on O-RAN-compliant 5G network equipment, as well as a high performance digital signal processing (DSP) chip. NEC will also contribute to NTT’s IOWN optical project, which aims to develop a photonic-based system with 100 times more capacity than today’s networks by 2030. This is an area where NEC will run up against Nokia, which it replaced as the main macro radio supplier to Rakuten at the 5G stage, and which is also investing in photonics technology, partly for the Rakuten deployment.
NEC is already part of Docomo’s long-established inner circle of largely Japanese vendors, and has sold O-RAN small cells to the market leading MNO. With other partners like Fujitsu, it has helped Docomo develop various technologies in the past, in the 3G, 4G and now 5G eras. Docomo has a history – now being emulated by Rakuten – of investing heavily in inhouse engineering and vendor cooperations in order to deploy advanced technology ahead of the general market.
This has helped NEC acquire significant expertise in the RAN, but it has never succeeded in leveraging this to any great extent outside Japan, by contrast with its successful backhaul business. And even with that portfolio, NEC’s carrier division reported 2019 revenue of just ¥510bn ($4.8bn) across product lines including small cells, packet optical transport, microwave backhaul and submarine cable.
The intensified alliance with NTT is not just about ensuring that the telco’s various subsidiaries have access to leading technology – the aim is to sell the O-RAN portfolio, in particular, to operators worldwide, and possibly to license them to other vendors. This could result in an interesting scenario in which both Rakuten and NTT are blurring the lines between operator and vendor courtesy of O-RAN. Rakuten aims to market its Rakuten Cloud Platform, including its NEC radio and many other partner products, worldwide too. Rakuten and NEC are also co-developing a cloud-native 5G core.
NEC’s growing web of alliances also shows how the 5G ecosystem is diversifying, and how a supplier can harness a variety of partners to increase its reach and impact. As well as the two Japanese operators, Toyota has announced a $1.8bn partnership with NEC to develop smart city platforms and projects, which involved share swaps. It also has partnerships with several other O-RAN players, such as Altiostar.
The NTT/NEC launch release said the companies want to “attain top global market shares under NEC’s leadership”, though the partners remain vague about timescales to ship their products.
“As part of the development, the companies will enable greater capacity, higher functionality and lower costing submarine cable systems, large capacity, low latency and automatic/autonomous space communication, and more sophisticated technologies to ensure infrastructure network security,” the statement said.
They referred to their cooperation as “Brand new made in Japan.” This echoed the tone of remarks made by Tareq Amin, CTO of Rakuten Mobile, when he first announced the deals with NEC, saying: “It is built, manufactured and engineered in Japan at a significant cost reduction to what you see with global partners. This is our massive MIMO antenna, this is our 5G antenna, this is our future built and manufactured in Japan.”