Rakuten signs utilities to reduce cost of entering Japan’s 4G market

The idea of operators turning to industrial partners to co-invest in new networks is still embryonic, but may be essential to 5G economics (see Wireless Watch April 3 2018). China has blazed the trail with its scheme to save China Unicom – which involves a range of web and industrial companies investing in the operator in return for a say in how its 5G networks are rolled out.

Now Japan – whose operators have closer ties to players in non-telecoms sectors than many others – is the location for another interesting twist on the idea that telcos cannot bear all the burden of rolling out networks, and that other sectors need to put their money where their mouth is, if they want connectivity that is optimized for their needs.

Rakuten, Japan’s ecommerce and web services provider, has enlisted a group of utilities to support its bid to become the country’s fourth mobile operator. It has signed an agreement with several companies to use their infrastructure to reduce the cost of building its own 4G mobile network.

It has signed up Kansai Electric Power, Chubu Electric and TEPCO Group, and may seek other local utility partnerships. The deals allow it to use its allies’ infrastructure and facilities (including towers, fiber and utility poles) to support 4G build-out, and future 5G, while the utilities will get priority access to a network to support their smart grid and other connected activities.

Rakuten already operates as an MVNO on NTT Docomo’s network but said last December that it planned to assert greater control over its costs, quality and service models by building its own 4G. It has applied to Japan’s Ministry of Internal Affairs and Communications for a mobile licence to build in the 1.7 GHz and 3.4 GHz bands.

It plans to invest up to ¥600bn ($5.6bn) to build the network. It has over 1.5m subscribers to its MVNO-based Rakuten Mobile service.