Buy local, a refrain typically heard by consumers in the grocery market, is becoming the mantra for some telcos. Rakuten is one of the most prominent. An e-commerce giant now building a Japanese mobile network from scratch, it has used a multinational gang of suppliers to get its 4G service off the ground. But it looks determined to rely more heavily on Japanese firms in the 5G era.
Step up, NEC: Sayonara, Nokia.
The shift does not stem from any obvious disappointment with the Finnish vendor. After running into some 5G-related product difficulties, Nokia needs all the marketing praise it can get, and plaudits this week from Rakuten will have carried extra value. As a network new entrant in such an advanced mobile market, Rakuten is arguably the world's most exciting service provider right now. It is also firmly committed to the use of open technologies, which are not typically associated with the equipment-making leviathans.
Indeed, the update provided by Tareq Amin, Rakuten Mobile's chief technology officer, will burnish the Finnish vendor's credentials as a more open company than Ericsson or Huawei, its two big rivals. "I want to acknowledge and thank even Nokia for taking the right step forward and opening the remote radio head to enable this architecture," Amin told reporters during a press conference about his firm's upcoming launch of mobile network services. "It is completely cloud native."
Rakuten's roll call of vendors is longer than a shopping list for the most extravagant meal, but Nokia figures prominently on the radio side, where its equipment runs software provided by Altiostar, a US firm. Used to support Rakuten's soon-to-launch 4G service, the setup is revolutionary because the radio heads and the radio access network (RAN) software would normally come from the same vendor's ecosystem. "We have deployed the world's first open RAN," boasted Amin this week.
Ericsson and Huawei have certainly appeared more resistant to this concept than Nokia. Both have insisted open RAN technologies perform more poorly than their traditional gear. While Ericsson has joined the O-RAN Alliance, a group working on new network interfaces, it has avoided the Facebook-led Telecom Infra Project, which is developing products based on the O-RAN specifications. Huawei sits outside both associations. Critics say the companies fear open RAN as a threat to their business.
But even Nokia could miss out on the big 5G prize at Rakuten. Last June, the operator revealed that Japan's own NEC would be the main equipment provider for its forthcoming 5G service, due to launch in the summer. Since then, it has been working on a 5G antenna based on massive MIMO, a high-performance 5G technology, and compatible with Rakuten's 3.7GHz spectrum. According to other press reports, Rakuten's plan is to roll out 16,000 5G basestations by 2024. For comparison, it expects to have around 4,400 4G basestations deployed when it launches its 4G service in April and is targeting 8,600 by March next year.
Amin's update this week offered little 5G hope to the main kit vendors. "The partnership we are doing today with NEC for a product for 5G technology is something we should all be very proud about," he said. "It is built, manufactured and engineered in Japan at a significant cost reduction to what you see with global partners. This is our massive MIMO antenna, this is our 5G antenna, this is our future built and manufactured in Japan."
The extent of these cost savings is still unclear, partly because basestation prices are a closely guarded vendor secret. Amin, however, claims the entire open RAN network is about 40% cheaper than traditional infrastructure, and his firm's aggressive pricing moves back up the boast. Yesterday, Rakuten said an unlimited voice and data service would be available for just 2,980 Japanese yen ($27.60) per month, about half as much as the existing operators charge.
Just as unclear is what the introduction of NEC means for Altiostar and any 5G opportunities it might see with Rakuten. Neither Nokia nor the US software company are to be phased out of 4G simply because NEC is the main 5G vendor, of course. And Rakuten has a vested interest in continuing to support Altiostar: After participating in a $114 million funding round for the business last year, it is now the majority owner, according to Amin. "We took a challenge that you can enable highly disruptive startups to build this platform, and Altiostar was one of those companies," he said. "Today, Rakuten proudly owns a large majority share in Altiostar."
Netcracker is another firm that can probably count on continued support. A provider of telco IT systems, it has been working with Rakuten on the development of business and operational support systems. "Netcracker didn't have all the right technology but was committed to work on massive internal changes to achieve results," said Amin during an industry conference last year. Its mission was to "understand the context in Japan," he made clear. It would be a surprise if Netcracker did not. While headquartered in the US, it remains a wholly owned subsidiary of NEC.
The preference for local suppliers and homegrown technology is now growing fast in the telecom industry. Preliminary data from China supports recent speculation that Huawei and ZTE, the domestic firms, will increase their RAN share in the 5G era, says Stefan Pongratz, an analyst at market research firm Dell'Oro. Reliance Jio, one of India's biggest operators, wants to use its own 5G technology in forthcoming trials. Vietnam's Viettel has promised to launch a 5G service in June based on its own equipment and software. For the global equipment-making incumbents, the world may be getting smaller.
- Japan's Rakuten gives new meaning to 'bill shock'
- A year later, Rakuten's mobile optimism remains undimmed
- Nokia lands core role at Rakuten Mobile
- Rakuten Delays Launch of Cloud-Native Network
- Japan's Rakuten Mobile to avoid grand entrance in October
- Rakuten Mobile CTO: We're Stronger, Faster & Cheaper Than You
- India's RJio wants to develop its own 5G
- Vietnam Makes Big Bet on Homegrown 5G
— Iain Morris, International Editor, Light Reading