ArrowArtboardCreated with Sketch.Title ChevronTitle ChevronEye IconIcon FacebookIcon LinkedinIcon Mail ContactPath LayerIcon MailMenu BurgerPositive ArrowIcon PrintIcon SearchSite TitleTitle ChevronIcon Twitter
Companies

Rakuten slashes mobile network costs with cloud tech

Reliability questions remain as Japan's new carrier readies service

Chairman and CEO Hiroshi Mikitani unveiled Rakuten's base station equipment Wednesday.(Photo by Kaisuke Ota)

TOKYO -- As Rakuten prepares to debut in Japan as a fourth major mobile carrier, it is tapping a new technology to reduce its network investment to just a fraction of conventional levels and offer competitive pricing.

The Japanese internet service company on Wednesday unveiled equipment to be used for its mobile service launching in October. The hardware, from American startup Altiostar Networks, comprises just servers stacked up on refrigerator-size racks in a Tokyo office building. It includes no switchboards, often seen in mobile service base stations.

Rakuten is the first mobile carrier to employ software for radio base stations, said Rakuten Mobile Network Chief Technology Officer Tareq Amin.

Mobile carriers typically spend nearly 80% of their capital investment on base stations. Top carriers NTT Docomo and KDDI have invested 3 trillion to 4 trillion yen ($27 billion to $36 billion) in their 4G networks currently in use. Rakuten plans to spend only about 600 billion yen.

Rakuten also aims to beat the competition in next-generation 5G service. The software-based system will work with 5G by simply switching the antenna, says Amin. This will help Rakuten avoid a hefty investment in the shift to 5G, which is expected to cost carriers around 1 trillion yen.

For a newcomer to the market, the ability to offer competitive pricing will be vital to winning subscribers. Rakuten Chairman and CEO Hiroshi Mikitani made no mention of pricing at the unveiling event, but the partnership with the U.S. startup is a step toward offering competitive pricing.

Amin worked at T-Mobile US, the third-largest carrier in the country, as well as Huawei Technologies before he joined India's Reliance Jio Infocomm in September 2016, when the company made a foray into the mobile market. Under his  leadership, Reliance Jio employed a cloud wireless access network (C-RAN) that uses simplified equipment and thereby saves costs. It has become the No. 3 carrier in India in just a year and a half, with a market share of 15%.

Mikitani took notice of Altiostar owing to its use of the C-RAN technology. "With capital investment lighter, there is a great chance that Rakuten's mobile service rates will be cheaper," said Taro Daimon of Tokyo-based research company MCA.

With Rakuten and Altiostar both being newcomers, however, their partnership has potential risks. Altiostar has worked with investors like Cisco Systems, Intel and Nokia to resolve system issues. And Rakuten is building its own network for large cities like Tokyo, but in smaller localities it will use KDDI's network. Connection disruption between the two networks could be a problem.

As much as adopting the latest technology is a newcomer's advantage, frequent service interruptions or slow data speeds would quickly drive customers away.

Sponsored Content

About Sponsored Content This content was commissioned by Nikkei's Global Business Bureau.

You have {{numberArticlesLeft}} free article{{numberArticlesLeft-plural}} left this monthThis is your last free article this month

Stay ahead with our exclusives on Asia;
the most dynamic market in the world.

Stay ahead with our exclusives on Asia

Get trusted insights from experts within Asia itself.

Get trusted insights from experts
within Asia itself.

Get Unlimited access

You have {{numberArticlesLeft}} free article{{numberArticlesLeft-plural}} left this month

This is your last free article this month

Stay ahead with our exclusives on Asia; the most
dynamic market in the world
.

Get trusted insights from experts
within Asia itself.

Try 3 months for $9

Offer ends June 30th

Your trial period has expired

You need a subscription to...

  • Read all stories with unlimited access
  • Use our mobile and tablet apps
See all offers and subscribe

Your full access to the Nikkei Asian Review has expired

You need a subscription to:

  • Read all stories with unlimited access
  • Use our mobile and tablet apps
See all offers
NAR on print phone, device, and tablet media