Rakuten will postpone the commercial launch of its mobile service in Japan by six months because of delays in building the network, Nikkei reported.
Rakuten started building the innovative and low-cost telecom network as part of the plan to become the fourth operator in Japan by offering the services in October. SoftBank, NTT Docomo and KDDI are the top three telecom operators in Japan.
Nokia, Intel and Cisco Systems, are some of the network partners for building the nationwide 4G network of Rakuten. Rakuten Mobile Network earlier hired Tareq Amin as the company’s chief technology officer from Reliance Jio, India’s #1 telecom operator based on subscribers.
Cisco CEO Chuck Robbins in June 2019 said Rakuten Mobile has built a network that can bring a new radio site online in 10 minutes, via automation, compared with the three weeks required in a conventional mobile network. Investment in automation promises to transform the economics of mobile connectivity and enable Rakuten’s customers to benefit from low cost 4G and 5G services, Cisco said.
Latest media reports did not reveal the reasons for the delay in building the network. The Internet company has run into delays constructing the network’s base stations and has been told by Japan’s telecoms ministry to accelerate the build-out.
Jefferies analyst Atul Goyal, in a note ahead of the reports on the wireless network delay, said Rakuten lacks the financial, technical, manpower resources to compete with the big three incumbents in Japan.
Rakuten at the Mobile World Congress 2019 in Barcelona said it is building an end-to-end virtualized cloud-native network. Rakuten’s new network consists entirely of software running on standardized low cost hardware, rather than the expensive proprietary hardware that most cellular networks depend upon.
Rakuten, according to the media reports, will offer services to just 5,000 customers without charge from October, the original date for the full rollout. The reports said the commercial launch would take place next spring.
The new network, if successful, could lower barriers for new entrants in other markets.
Rakuten says it has radically cut the cost of building a new network by using cloud-based software and commoditized hardware instead of proprietary wireless radios.
Rakuten last month reported an unexpected operating loss for the April-June quarter, as it invested heavily in the wireless network and took a hit from the depressed value of its stake in ride-hailing firm Lyft.
A delay in the wireless network launch would relieve potential downward price pressure on its larger incumbent rivals NTT Docomo, KDDI and SoftBank. Rakuten has a roaming agreement with KDDI to help fill its coverage shortfall.
