Rakuten reduces Capex by sourcing directly from component vendors

Rakuten Mobile CTO Tareq Amin is confirming that his team has built mmWave 5G radio access network infrastructure systems that cost 60% less than ‘traditional’ vendor by sourcing the required technology direct from the component manufacturers and building it together as part of an open RAN rollout.

Rakuten launched its 4G services in April this year, and now has more than 1 million “applications” for the service: It is still building out its 4G network and is expecting to have 70% population coverage by Q3  2021. According to Tareq Amin, that network, has been built at a capex level about 35% lower compared with the expected cost using “traditional” network systems.

Meantime,  Tareq Amin said that they are building their 5G network and are now planning to launch services using that infrastructure in early October.

And it’s here that Amin believes Rakuten is achieving significant relative cost savings: He says the projected capex saving, compared to a traditional build, for the 5G access network is about 55%.

How has that been achieved? By cutting out the supply chain middlemen.

CTO stated that “For 5G we decided that rather than working through the traditional [supply chain] channels, we decided to work directly with component vendors. When you work on a component vendor architecture, the cost optimization you can achieve is just incredible. So just imagine that the end destination for you is to reach a factory… What happens if you take [out] the middleman? The discovery we had is just unbelievable… it’s unbelievable how much inflation there is on hardware”.

Amin said that the sub-6 GHz massive MIMO 32T/32R (transmit/receive) antenna panels “are exactly 50% the cost of traditional OEM infrastructure,” but for the mmWave access systems, “honestly speaking, I believe it is even north of 60% cheaper than [traditional] mmWave [technology]… I think we have really knocked it out of the park” by working directly with Qualcomm as the component supplier.

Of course, this means having to take the multiple elements from multiple vendors and integrate them, a major task that is one of the main downsides of disaggregated networks, and rakuten will have to become the glue among all these vendors.”