Time is not on Rakuten Mobile’s side as it needs to garner more subscribers and move toward profitability as the new mobile operator in Japan.
The company, which reported its third-quarter 2020 earnings yesterday, currently has received about 1.6 million applications for its service, which isn’t great considering it is offering its LTE mobile service for free to the first three million subscribers.
It’s got a steep hill to climb in Japan. NTT Docomo has more than 75 million subs; KDDI has about 55 million subs and SoftBank has more than 23 million subs.
In order to accelerate its network build-out, it’s doubling the rate of new site deployments from 750 sites per month to 1,500 per month.
Speaking on a media roundtable after the company’s earnings presentation, Rakuten Mobile’s CTO Tareq Amin said, “On the deployment side, we have high confidence in our ability to deliver.” The company wants to move people from its roaming partner, KDDI, onto its own network as quickly as possible.
"We felt if you compare the cost of roaming and how much we pay for roaming, the acceleration of the build plan by five years has a significant return on investment to Rakuten," Amin said.
But he exhibited high confidence, stemming from some innovation at Rakuten Mobile, which results in the company requiring less base stations than its competitors.
He said some Japanese network operators have more than 100,000 base stations. “Our build plan revolves around 45,000 eNodeBs,” he said. “If you look at our base station and how we architected this remote radio head and antenna, we are one of the world’s first that took this idea to remove jumpers and connectors and combine passive and active elements, and you basically eliminate any of the losses that happen in the system.”
He said this innovation results in 30-40% better coverage per site. In addition Rakuten Mobile developed radio and antenna enhancements that improve its coverage footprint along with high-power amplifiers.
It’s interesting that Amin mentioned combining passive and active elements in its base stations. This week, CommScope and Nokia announced that they had done something similar for 5G New Radio
Rakuten is also moving from phase 1 of its network deployment, which focused on installing equipment on rooftops in Tokyo. For Phase 2, it’s installing 15-20-meter-tall concrete poles. Amin said this technique is much cheaper and faster. He said the company can build an entire macro base station with a foundation, construction, turn-up and integration all in one day. “About 65% of our phase 2 network is now being deployed with this concrete-poles architecture,” he said.
Finally, Rakuten Mobile has been working with a bare-bones collection of six server hardware types in its network. And for 5G, it’s paring that down further to only two types of hardware: the Rakuten Global Services (RGS) and RGSe, which are platforms designed by Rakuten to meet the use cases for all the 5G workloads. “The entire software of telco is being hosted in two hardware types,” said Amin, which further simplifies infrastructure deployment.
Rakuten has also ignited a world-wide conversation about open radio access network (RAN) equipment. Amin said the company's innovations in radio are saving it money because typically radio spend is anywhere between 60-70% of the total capex for a wireless operator. “For us, 60% of the savings comes from radio,” he said. “It is the one critical area I believe we needed to do more as an industry. I was pleasantly surprised and happy to see Vodafone say they want to commit to open RAN.”
Working with NEC in Japan, Rakuten Mobile has turned the vendor pricing model on its head. “The large vendors don’t necessarily enjoy talking to us because we know the exact cost structure of everything,” said Amin. “It’s really hard to negotiate with us when it comes to component, and pricing and product.”
It worked out a deal with NEC where the vendor tells Rakuten how much a radio will cost, and Rakuten Mobile pays it the margins it needs.
Amin said, “The only thing I lose sleep about is spectrum.” He said in the back of his mind he’s always thinking about spectrum management and “how do we optimize our capacity of spectrum in LTE by introducing smartly our 5G deployment?”
In LTE, Rakuten Mobile has 20 MHz of downlink and 20 MHz of uplink. The build plan it has in place delivers an excellent customer experience within this spectrum for up to 10 million customers. “We have 100 MHz of spectrum in 5G — 3.7 — and 400 MHz of mmwave that we need to deploy, and that’s why we’re aggressively accelerating the 5G buildout, specifically targeting the hotspot to areas to do this data offload from LTE to 5G.”