Rakuten’s 5G launch in Japan proves that SDN and NFV are not pipe dreams, but that it is both the present and the future of wireless networking.
The number of distinctly different physical network elements drops from around 50,000 in a wireless network today to a scant handful: The antennas, the remote radio head, and the servers.
This focus to limit the number of hardware elements allows for a significant reduction of head count to run the network, from a historical many thousands to a few hundred. With this reduction also comes a significant diminution of hardware providers and corresponding with it a greater importance for each of them.
The Rakuten example also demonstrates that American companies play an integral, but often ignored, part of this burgeoning landscape. Below is a chart describing Rakuten’s 4G SDN network highlighting where the different components of its network are coming from:
- Airspan is one of the two physical RAN providers to Rakuten for 4G and 5G – the other being Japan’s NEC. The Florida-based company that provides both software and hardware RAN solutions was largely “under the radar” as the focus has been on more software centric companies. The fact that Dish Networks has to wait until third quarter of 2021 to get radio equipment to launch its virtualized 5G network in the U.S. shows how important physical equipment is to this day. Nokia is a RAN provider for 4G but was not selected for 5G.
- Maryland-based Ciena provides the fault and performance management software and in partnership with Oki optical switch hardware.
- Massachusetts-based Altiostar is providing the Open RAN management software that allows to control the different antennas in a centralized and virtualized basis and Texas-based Mavenir provides IMS services.
- Washington-based F5 provides the network security software. These companies are all sub-$1 billion revenue companies.
These companies are fast and nimble with a clear entrepreneurial spirit. If these companies are suffering from anything then it is the ailment of the lack of proper recognition from the overall public and policy makers in Washington, D.C., who are lamenting the fact that they are unaware of American 5G infrastructure providers. The list of American companies goes on with much larger companies such as Qualcomm, Cisco and IBM.
But it’s not all winning for American companies. Cisco provides the 4G core to Rakuten, but the 5G core is being provided by NEC. The mobile core, the brains of the network, is a very competitive space with a number of high profile American companies competing. Google is actively trying to sell or lease its mobile core which powers Google Fi, Microsoft has recently purchased a mobile core provider, Massachusetts-based Casa Systems and Mavenir are also competing in 5G mobile core space. This highlights the dynamic and competitive situation at the beginning of the Open RAN and NFV era.
We are still early in the 5G SDN race and have a lot of different vendors in this space with active consolidation going on. In late September, Mavenir acquired a small radio vendor from the U.K. called ip.access to better combine its software with radio hardware. The move highlights also the difference between the hype of SDN of virtualizing everything and the reality that some things cannot be virtualized.
Companies like Airspan and now Mavenir have the core capabilities in house to marry software and hardware when they need to be combined and to be fully virtualized, cloud native when appropriate. Other companies like Altiostar are cooperating with outside companies to fill this gap. A logical next step for someone like Altiostar would be either to acquire an physical RAN company or to be acquired by one.
The other interesting development from Rakuten is its plan to not just be a mobile network operator, but also to be the lead in selling the Rakuten solution to other operators. This is an interesting departure from the typical role of a mobile operator. On one hand, Rakuten gained a significant amount of expertise and understanding of how to build an NFV 5G network with Open RAN. On the other hand, it creates an increasing tension between vendors and Rakuten as Rakuten blurs the line between customer, partner and competitor.
Rakuten’s bargaining power over vendors would increase the more often Rakuten would win a 5G contract from other operators turning its vendors into de-facto subcontractors. Furthermore, while non-competitive operators are frequently cooperating around the world, ONAP and the ORAN Alliance being a prime examples, it is not clear what carriers would take the next step and buy a “5G out of the box” from Rakuten.
The most logical candidates would be green field operators, but there are not too many around, with Dish Network in the U.S. and Drillisch in Germany the two most well known examples. For large operators it would be a significant cultural shift as they either have significant engineering resources in house, work closely with their vendors or would have trouble publicly accepting help from a new operator with a small fraction of their size. Small operators typically rely heavily on vendor resources, often including vendor financing, which would be something difficult for Rakuten to replicate.
Stay tuned, this is going to be an extremely interesting market to watch.
Roger Entner is the founder and analyst at Recon Analytics. He received an honorary doctor of science degree from Heriot-Watt University. Recon Analytics specializes in fact-based research and the analysis of disparate data sources to provide unprecedented insights into the world of telecommunications. Follow Roger on Twitter @rogerentner.
"Industry Voices" are opinion columns written by outside contributors—often industry experts or analysts—who are invited to the conversation by FierceWireless staff. They do not represent the opinions of FierceWireless.