May 15, 2020
Japan's Rakuten has been forced to delay its 5G launch by three months because of supply chain problems caused by the outbreak of coronavirus.
Often thought of as Japan's answer to Amazon, the e-commerce giant is taking advantage of the latest cloud and software technologies to build an entirely new "greenfield" network in Japan. It launched a 4G service on April 8 and had intended to follow up with a 5G launch in June.
That launch has now been postponed to September due to government restrictions that have interfered with testing activities, a spokesperson for Rakuten told Light Reading.
"The COVID-19 impact is mainly on 5G network software testing and validation in areas where there are restrictions on movement," he said.
The holdup is clearly a blow for Rakuten and may leave it trailing Japan's three older service providers, all of which have been moving ahead with 5G rollout.
NTT DoCoMo, the country's biggest operator, revealed in late April that 40,000 customers had already signed up to its 5G offer, although it also acknowledged supply chain problems and said it might have to revisit a target of capturing 2.5 million subscribers by the end of the year.
Rivals KDDI and SoftBank had also previously announced plans for a 5G launch in March.
Rakuten's spokesperson insisted the delay would have no impact on 5G basestation deployment plans for the current fiscal year, as communicated to Japan's Ministry of Internal Affairs and Communications.
The company is expected to meet a requirement of deploying 677 5G basestations by the end of March 2021, by which stage it plans to cover 70% of Japan's population with its mobile network. "We expect the impact on business performance to be minor," said the company's spokesperson.
Data published this week showed that Rakuten had deployed 4,738 4G basestations by the end of March, against an original target of 3,432. It has also signed contracts for another 4,555.
"We will work to minimize the impact of the pandemic and look forward to launching our services in the near future," said Tareq Amin, the chief technology officer of the Rakuten Mobile subsidiary.
Today's update comes in the same week that Rakuten posted an operating loss of 18.1 billion Japanese yen ($170 million) for its first quarter, blaming that mainly on mobile expenses related to the buildout of the new network.
Claiming that network will ultimately cost far less to construct than one based on traditional technology, it is pricing its 4G service at just half the rates charged by competitors and targeting 3 million customers by the end of the year.
Rakuten CEO Hiroshi Mikitani declined to provide an update on subscriber numbers during a call with analysts but said growth was currently "in line with expectations."
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Analysts are looking for any sign of problems after criticism that Rakuten's use of open source technology and general-purpose processors could backfire.
Detractors have long argued this will not measure up to the customized gear developed by mobile hardware giants such as Ericsson, Huawei and Nokia, but Amin this week said his network is already supporting 2.5 times more traffic than any other Japanese operator on a per-subscriber basis. "This is exactly what we desired," he said during a briefing.
Rakuten's main 5G partners include Japan's NEC, which is manufacturing 5G radio units for the macro network, and Airspan, a US firm developing units for deployment in the most densely populated communities.
US semiconductor giant Intel is supplying chips for NEC products, while Qualcomm, another US chipmaker better known for its expertise in mobile devices, is supplying baseband components for the Airspan equipment, Amin previously told Light Reading.
Using a technology called open RAN (radio access network), Rakuten plans to use that hardware in conjunction with software developed by Altiostar, a US firm in which it holds a majority stake. In a conventional mobile network, operators usually take the different RAN components from the same supplier to avoid interoperability problems.
Operators outside Japan see open RAN as an opportunity to wean themselves off dependence on Ericsson, Huawei and Nokia and bring more competition into the mobile infrastructure market.
But many are waiting to see the results of Rakuten's project before making investments in what is still an unproven technology.
Rakuten, meanwhile, has now set its sights on the international market, this week announcing plans to market its telco cloud expertise and applications to operators in other countries. The scheme could pit Rakuten against some of the world's biggest technology firms that have also identified the telco cloud as a potential sales opportunity.
— Iain Morris, International Editor, Light Reading
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