Rakuten Has Ambitious Plans to Become a Mobile Cloud Network Provider

Summary Bullets:

m rogers
M. Rogers
  • Rakuten Mobile is taking the cloud-native, open RAN-based mobile network it built in Japan and commercializing it as an open, end-to-end solution for other operators.
  • While Rakuten’s mobile network solution is competing with similar recently launched products from leading technology companies like Microsoft and VMware, they all might have trouble convincing their target operator customers.

Rakuten Mobile, Japan’s fourth mobile operator, made headlines in the mobile industry in 2020 for launching its 4G mobile services using a cloud-native, fully virtualized mobile network, one that works on the principles of open RAN.  (Open RAN is a set of specifications for open and interoperable radio access networks allowing for disaggregation of portions of the radio access network, namely the radio unit [RU] as well as the distributed baseband and core baseband units, and for those subsections to be supplied by different vendors).  However, the company has taken lessons learned from the buildout of its own 4G and 5G cloud-native network and is now trying to productize this into a solution called Rakuten Communications Platform (RCP).  In addition to providing a solution for mobile operators, Rakuten is reportedly developing enterprise use cases for 5G edge computing for industry and IoT that can be also supported by the platform.

What Does It Offer

Rakuten has pulled together various components and partners from its own network to offer a 5G telco cloud virtualization solution that encompasses both its own IP and the integration of various ecosystem partner components.  This includes an infrastructure layer with physical radios and a horizontal cloud platform built on Kubernetes that runs on off-the-shelf, commoditized servers.  The next layer is the network function virtualization (NFV) layer, where Rakuten offers vRAN from its partners, both in 4G baseband unit and in 5G distributed and core unit flavors.  For core, the platform includes vEPC, vRCS, vIMS, and others.  The NFV layer also offers SDN capabilities.  The last layer is the operations and orchestration layer that consists of OSS/BSS, orchestration, analytics, and reporting as well AI and automation tools.  Furthermore, while the platform offers end-to-end capabilities in developing a cloud-based mobile network, the company is reportedly willing to work with operators to trial and commercialize different components and has even set up a marketplace for virtual network functions (VNFs).

Rakuten has been able to develop much of this platform using its own IP or through acquisition.  While the company does not outright develop its own radio units, it invested USD 45 million in U.S.-based Altiostar, which produces radio units, baseband units, and its own vRAN software solution.  In addition to Alitostar, Rakuten has partnerships with Airspan, NEC, and Fujistu to supply radio equipment as well as vRAN solutions.  For the platform itself, Rakuten has worked with several partners in development including Cisco, Intel, and Red Hat.  For VNFs, its key vRAN partners include Altiostar, Fujistu Airspan, and NEC, as mentioned, as well as Mavenir.  For core network functions, it offers solutions from NEC, including 5G core, as well as Mavenir for vEPC.  Its key OSS solution comes from Innoeye, which Rakuten acquired in May 2020.  Meanwhile, for BSS, Rakuten is reportedly developing its own solution but also works with multiple partners including NEC.  Rakuten provides its own data analysis and operations automations tools but also works with third-party vendors to onboard them onto the platform.  Overall, the platform is built on open standards and Rakuten is working on an onboarding system to drive interoperability and add partners who develop solutions for any part of the stack.  Rakuten already has over 200 VNFs deployed for its own network and is working to bring many of these partners on board commercially for the RCP as well.

While the RCP began development several years ago as the in-house engine behind Rakuten’s mobile network, it is in its nascent stages as a commercial product.  Rakuten has been offering the platform commercially for less than a year, and its composite components, VNFs, supported partners, and even its ultimate go-to-market model continue to be in flux.  As recently as this month, Rakuten has announced new partnerships with NEC and Fujistu around supplying 5G radios with vRAN, as well as collaboration on the best way to approach the international market.  Despite the greenness of Rakuten on the scene, the company has claimed over 15 commercial engagements for RCP internationally, with some named companies ranging from MNOs like Etisalat, STC, and Telefonica to U.S.-based private network provider Ligado.

In Good Company

While Rakuten has taken an interesting route to market in developing a 5G telco cloud solution, it is far from the only technology company looking to capitalize on the growing interest in mobile network virtualization and open RAN concepts. The big three hyperscalers and leading private cloud providers are also rapidly developing their own telco solutions, with products that in some cases compete directly with Rakuten’s RCP.  Microsoft Azure is pushing heavily into the mobile networks space.  In 2020, the company acquired Affirmed Networks, a network virtualization solution provider specializing in vEPC and v5GC.  Following the Affirmed acquisition, Microsoft then acquired Metaswitch, another provider focused on carrier network virtualization.  Then, in September 2020, Microsoft announced ‘Azure for Operators,’ a suite of products with Azure’s networking and cloud infrastructure, network virtualization, and cloud applications, as well as Azure’s AI and analytics engine that address operators mobile network virtualization demands, including solutions like vRAN and virtual core.  Since Azure for Operators’ launch, it has attracted many industry heavyweights as partners to supply solutions to operators, including Nokia, which is bringing a library of AI cases for operators to the platform, and  Amdocs, which is bringing its cloud-native OSS and BSS solutions to the platform.  VMware has also been pushing into the telco sector with more updates to its telco cloud platform, including support for open RAN (for more, please see “VMware Heightens Its Telco Cloud Presence and Beefs Up Support for Controversial ORAN,” May 3, 2021).  The company offers cloud infrastructure using its vSphere platform for VMs and Tanzu for containers.  On top of this, it is working to deploy vRAN and vCore network functions in partnerships with many of the same companies that Rakuten works with, including Altiostar and Mavenir.  VMware also has a wide network function partners ecosystem through its certification program to drive interoperability and minimize integration challenges in a multi-vendor environment, a more structured version compared to Rakuten’s partner onboarding program.  Beyond the cloud and technology companies looking to enter the mobile operator market, the traditional RAN vendors are also beginning to be more receptive to launching vRAN architectures and are acknowledging the possibilities of open RAN.  After initially not participating in open RAN discussions or joining the Open RAN Alliance, three of the four leading RAN vendors are now members – i.e., Ericsson, Nokia, and ZTE (Huawei is noticeably absent).  These vendors are virtualizing their RAN products, and while they might still favor a closed ecosystem, they have the greatest mindshare with operators and largest influence on the radio market.

In many ways, Rakuten is at a disadvantage as the company has neither the scale in cloud computing of Azure or VMware, nor the mind share.  Many operators already have relationships with either VMware or Azure or both.  On the RAN front, it cannot compete with Huawei, Ericsson, Nokia, and ZTE in terms of product range and economies of scale.  While the largest RAN vendors are beginning to explore vRAN and open concepts, these vendors would likely still want to control the commercial relationships with operators even in an open scenario.  Huawei in particular tends to favor a closed approach, but its customer base of smaller operators in emerging markets is who Rakuten would likely want to approach.  It will be difficult to unseat Huawei from these accounts   Furthermore, Rakuten’s sales and go-to market for RCP are only just now evolving, and by the time the technology and sales organization get into gear, there might limited market share left over.

However, Rakuten is itself a mobile carrier and has worked hard on bringing together an end-to-end solution from the physical radio to cloud virtualization and operation and orchestration.  The company already has a wide range of radio capabilities from macro to picocells and the supporting software from its partners already integrated with the service, and it has on-the-ground experience in running a fully virtualized mobile network.  While Tier 1 operators may look towards scale and working in environments they are already used to, Rakuten’s approach has value for Tier 2 and Tier 3 players, including private network operators, which would value that experience.  Moreover, as this market evolves, there is potential for collaboration alongside competition.  RCP is being built on Kubernetes, and while Rakuten has expressed that it is aiming for deployment onto existing operator data centers and servers, it is not unfeasible that the company could begin to offer some components of its RCP IP on other telco cloud platforms from technology companies or offer its VNFs or OSS/BSS to the big network vendors.

Still Unproven

While there is currently a lot of investment around mobile network virtualization and open RAN architectures, many of the operators themselves are cautious to adopt the technology.  Whereas Rakuten built its platform from the ground up in a greenfield deployment, most operators have invested massively in their mobile network estates comprising of 2G, 3G, and 4G, offered by vendors with closed ecosystems, providing a challenge both from an integration standpoint as well as financial standpoint.  Rakuten’s approach to allow customers to pick and choose which components of the RCP they want to work with could help build confidence in wider deployments.  However, as virtualization and open RAN mature and accelerate, many of the larger operators may decide to go their own way and develop their own platforms.  Rakuten might be best suited to helping greenfields and challengers which align with its own story.      

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