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9 August 2021

Rakuten to manage 1&1’s network, the first full-scale Open RAN in Europe

Germany’s new mobile operator, 1&1, which is owned by broadband operator Drillisch, is to deploy Europe’s first large-scale Open RAN, working with Rakuten. This will be a significant proof point for the Rakuten Communications Platform (RCP), which is now the foundation of a new commercial business for Rakuten, called Symphony (see separate item).

There is much at stake. For 1&1, the aim is to minimize the cost and time to deploy the network and become competitive with the three established operators – Deutsche Telekom, Vodafone and Telefónica O2 – as quickly as possible. That will entail deploying a cloud-based network that should enable a new player to be more agile and cost-efficient than its rivals, and so steal a march in certain new applications, and/or in elastic pricing.

As Rakuten itself knows, there is a big gap between an agile platform and commercial success, especially in a mature market with strong existing operators. But no doubt the three German telcos will be watching their new rival keenly, for its architecture as well as its commercial choices. All three German MNOs have parent companies that are very supportive of Open RAN, though not specifically of the Rakuten platform, and they are all part of the ‘Gang of Five’ of large European telco groups (Orange and Telecom Italia are the other two), which signed a memorandum of understanding to stimulate Open RAN adoption and a local ecosystem in Europe.

It is possible that the use of RCP in Germany will encourage common cause between the G5 and Rakuten, but it is also possible that two rival ecosystems will emerge, with varying degrees of overlap between the supplier members. The challenge for the goal of maintaining European influence in the Open RAN industry is that most of the new RAN suppliers are not from the region. Nokia has embraced Open RAN to a far greater extent than Ericsson but does not help operators achieve their goal of diversifying their supply chains.

However, if they look for alternatives, most of the frontrunners are US- or Japan-based – Rakuten’s key partners such as NEC and Altiostar (which it has just acquired), for instance; or US challengers like Parallel Wireless and Mavenir. RCP will be hoping to use the relative maturity of its supplier partners to attract strong support from companies that want to start implementing Open RAN in the near future (before 2025). For Europe, that risks missing the boat for the first wave of Open RANs, and having to strive to leapfrog RCP and the US and Indian companies, when it comes to a future round of deployments, or even 6G.

It remains to be seen whether the Open RAN deployments of greenfield national MNOs – Rakuten, the USA’s Dish and now 1&1 – spur the more established operators, with their more complicated migration paths and legacy networks, into faster action around Open RAN, or whether it encourages them to stick to their trusted platforms and vendors for now, in order to mount the strongest defence against the new competitors, and meanwhile drive forward a new ecosystem for a future Open RAN phase in the later 2020s.

Whatever the bigger picture, 1&1 Drillisch, which acquired 5G spectrum in 2019, is showcasing the new approach to running a mobile network, that Open RAN supporters believe will enable many new entrants in future, many in non-traditional cellular markets such as enterprise. Not only will 1&1 build an Open RAN with the help of Rakuten, but the Japanese operator’s new Symphony business unit will run it on a managed services, or network-as-a-service, basis.

The new German entrant is part of the United Internet AG group and already provides mobile services to more than 10m customers as an MVNO. The construction of the new network will start before the end of this year, using RCP elements and 1&1’s spectrum. In 2019 it paid about €1bn for two blocks of 2 x 5 MHz in the 2 GHz band and five blocks of 10 MHz in the 3.6 GHz band. In May 2021, 1&1 signed a national roaming agreement with Telefónica O2, so that it can provide national coverage even while it is building out its network.

According to 1&1, “Rakuten will take over the installation of the active network equipment and will also be responsible for the overall performance of the 1&1 mobile network. 1&1 will have access to the Rakuten Communications Platform (RCP) with its access, core, cloud and operational solutions as well as to the Rakuten partner network [Telefónica Deutschland]. In this context, Rakuten will also provide its specially developed orchestration software so that the 1&1 network can be operated in a highly automated manner.”

1&1’s CEO Ralph Dommermuth said in a stock exchange filing: “Rakuten optimally complements our knowhow in telecommunications networks, data centers and cloud applications. Together we will build a high performance mobile network that has extensive automation and agility to fully exploit the potential of 5G. Thanks to complete virtualization and the use of standard hardware, we can flexibly combine the best products. This is how we become a manufacturer-independent innovation driver in the German and European mobile communications market.”

The new network will run on COTS servers, said 1&1, though as with any macro vRAN project, those servers are unlikely to be commoditized. Assuming 1&1 builds a distributed, edge-oriented RAN, it will need very high performance cloud hardware for its open distributed units (DUs), with high end acceleration. Even Rakuten itself is open that about 50% of its RAN units are still appliances rather than cloud-based.

1&1 will run its centralized units (CUs) in four large regional data centers and its DUs in “hundreds of decentralized data centers throughout Germany… which in turn are connected to thousands of antenna locations via fiber optics”, said the firm. At least its parentage means it does not have to worry too much about the key virtualized RAN challenge, sufficient high quality fiber to support fronthaul and midhaul links between the disaggregated elements. The data centers and fibre optic cables will be provided by 1&1’s sister company 1&1 Versatel, also part of United Internet.

Network functions, other software and antennas will come from a variety of unnamed suppliers, although it can be assumed that the existing RCP partners will have a headstart. These include Altiostar, recently acquired by Rakuten, and NEC. “All network functions are in the cloud and are controlled by software. Complex conversions or maintenance work on the antenna base stations are therefore obsolete and can be carried out efficiently and cost-effectively through software updates,” said 1&1, in a statement that even Rakuten itself might find over-optimistic.