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6 March 2020

Rakuten shows what open RAN enables, halving the cost of unlimited data

Japan’s new MNO entrant, Rakuten Mobile, has maintained hugely high profile for the whole of the past year, as the poster child for how a greenfield operator can deploy new cloud-native architectures in order to transform the conventional cost base of the mobile network.

Excitement about what Rakuten is trying to do has almost overshadowed launch delays – themselves a sign of just how difficult this type of deployment is – and doubts thrown over its low-capex predictions by its rivals. Other operators, especially new entrants like Dish in the USA and Reliance Jio in India, have raced to pledge similar architectures and cost reductions.

Now, finally, Rakuten has given a date, April 8, and information about services and pricing, for its live commercial mobile services.

The highlight is that it will be leveraging its low cost architecture – and its ability to cross-subsidize with its ecommerce, content and banking services – to undercut the incumbent operators dramatically. In this, it is following in the disruptive footsteps of other new entrants before it, such as Free Mobile in France and Reliance Jio in India, both of which made a big splash, and made rapid market share gains, by launching with very low cost tariffs.

The headline tariff is the ‘Rakuten UN-LIMIT’ which will cost ¥2,980 ($27.50), less than half the cost of equivalent offers from the three existing MNOs – NTT Docomo, KDDI and Softbank. For instance, a one-person, two-year contract with NTT Docomo, under its Gigaho brand, includes 30GB of data and costs ¥6,980 per month. UN-LIMIT will be the only tariff on offer, and the first 3m people who sign up will get the first year of service for free (a tactic that has echoes of Jio).

CEO Mickey Mikitani was characteristically effusive in announcing the offers. “For around two years, the Rakuten Group and Rakuten Mobile have been building a new network unlike anything the world has ever seen,” he said “.Everyone at Rakuten is working together to democratize the mobile industry. Rakuten will become the only major carrier in the world to offer a single pricing plan. Currently, we aren’t looking to launch any other plans.”

Of course, there are limits to ‘unlimited’. If a user is out of range of a Rakuten base station – on a domestic or foreign roaming network – a limit of 2GB per month will kick in and data speeds will be throttled. This will be an issue in the early period when the company is relying heavily on its roaming deal with KDDI for coverage.

However, if most usage takes place within a Rakuten network – concentrated on the metro districts of Tokyo, Nagoya and Osaka at first – the price will be very attractive, and coverage will expand rapidly according to the operator, especially once it starts rolling out 5G from June.

CTO Tareq Amin argues that the use of a greenfield, cloud-native network based on open RAN architectures gives Rakuten a completely different cost base for its network, which enables it to undercut the other MNOs. He said: “We have deployed the world’s first Open RAN platform, not because the phrase ‘Open RAN’ sounds like good technology, but because there are cost reductions that we feel an obligation to pass on to consumers in Japan. We are one of the only telecommunications networks that can claim to have standardized, 100% open interfaces, and full control of our software and network framework.”

Right now Rakuten seems to only be covering a few major cities in Japan. While it has aggressive roll-out targets, subscribers outside of Tokyo, Nagoya and Osaka may be disappointed by how infrequently their connections are either free or unlimited. But this aggressive positioning is still bound to win over a lot of Japanese punters and put heavy price pressure on the incumbent MNOs.

Amin continued: “We believe telecommunication networks today are well overdue for transformation. In the age of Internet 2.0 and the age of hyperscale architecture, we felt that the current technology in the existing telecommunication networks do not scale and do not meet the demands of the future, especially in the 5G era.”

He said the migration to open platforms started in the RAN because this is the most costly and complex domain. “Radio architecture, as it exists today, is complex,” he told the launch event audience. “Have you ever wondered why it takes many, many months, if not years, to evolve from one technology generation to the other? That is today for Rakuten not acceptable and that’s why we have pushed this idea of an open RAN platform” – which he said will be 40% cheaper to deploy and run than conventional networks.

And even the prevailing concerns about personal privacy and national security are better addressed by open networks, he argued, because “there are no black boxes in the mobile network of Rakuten. We have the ability to put strong identity certificates in the network at every interface including radio access. We have validation of security configuration, segmentation of network services, visibility of end-to-end network activities, and limited access thanks to the automation that we have implemented.”

Rakuten Mobile has been operating its network on a trial basis for four months and is now open for customers’ pre-orders.

Its next step will be to expand in other countries, as its ecommerce and content businesses already have. It has hired Azita Arvani to be general manager of Rakuten Mobile in the Americas, to build a business initially in the USA. The company has already discussed sharing its open architecture with partners in other markets, starting with Singapore, and potentially using it as a spearhead to set up shop.