Your browser is not supported. Please update it.

22 June 2021

Rakuten promises to end the secrecy surrounding RAN pricing

However open networks may be, one aspect tends to remain a closely guarded secret -the price.

The complexity and customization of RANs, in particular, has made it hard to achieve any meaningful ‘rate card’ pricing, which has made it challenging for smaller operators, especially, to understand what they should be paying. For large operators, by contrast, there have been some benefits to the time-honored system of secretive bilateral price negotiations with vendors, since they can leverage their scale and influence to get a good deal. But with a diminishing number of macro network vendors, it has become harder to play one supplier off against another for a more attractive price.

Rakuten Mobile, so often the operator that sounds the starting gun for a radical change of approach, is taking on the issue, insisting that there must be transparent, published pricing for the different elements of an Open RAN. Without that, the idea of the RAN evolving into a common platform, with consistent hardware and software elements that can be mixed and matched, would be fatally flawed, the operator argues.

As the company prepares to commercialize Rakuten Communications Platform (RCP) – which will provide pre-integrated blueprints and mix-and-match elements based on the operator’s own deployment – it is promising to publish the true costs of every application and piece of equipment that will be included in the ecosystem. The aim is to provide transparency on pricing and to prove the cost savings that are claimed for Open RAN.

CTO Tareq Amin told analysts: “Rakuten can participate and provide support and services. If you don’t want us to participate, not an issue, we could link you directly to the manufacturer. We want to change how the industry consumes products, and we want to be transparent about the prices. No longer we will hold this as a secret in the industry. Let everybody know exactly what is the cost of radio products.”

This will even apply to the most complex and non-uniform products, such as Massive MIMO antenna arrays and advanced vRAN distributed units (DUs). He claimed that Rakuten will soon announce “one of the most advanced DUs at a cost structure I am confident will shock the DNA of this industry”. This is likely to be based on a co-development with Intel, which aims to evolve towards integrating the central processor and hardware accelerators into a single, commoditized processor by 2022. That would go head-to-head with Qualcomm, which has unveiled highly integrated system-on-chip designs for DUs and radio units in open or closed vRAN environments.

Rakuten’s long-promised Open RAN ‘app store’ will also be opened up soon, probably in July, and this will set out the prices including build costs, shipping and any other mark-ups. Operators can buy the products via Rakuten, which would guarantee the lifecycle and handle software updates, or they can purchase the hardware directly from the manufacturers and then download the relevant software.

Amin added: “I think operators will save a minimum of 40% on the capex side compared to a traditional baseband”, claiming some European operator executives were “speechless” when he shared actual costs of hardware with them. “Why many companies don’t like to work with Rakuten, why many vendors have hesitation about working with us, is that I know the exact pricing, to plus or minus 5%, of manufacturing a remote radio head,” he said.

If operators choose the RCP as-a-service option, Amin claims the pricing will still be transparent from end to end. “When someone says I want to buy a remote radio head and here are the bands I need to support and the specifications, I will expose the line item material costs and non-recurring engineering fee and tell them here are the margins Rakuten needs to front the purchase,” he said.

But while this kind of pricing scheme would be very welcome in smaller or enterprise networks, where there is the potential to build a more WiFi-like ecosystem and business model, it is hard to see how it would be meaningful in larger macro network build-outs. Here, operators and vendors usually work closely together on configuring and optimizing the network and the cost of that crucial effort is accounted in different ways –  some as upfront services fees, some as shared cost, while some is included in the equipment price as a value-add.