Rakuten takes openness up a level with 'no secrets' hardware pricing pledge

• Japanese firm has big plans for its mobile network hardware and software 'app store'
• Will expose hardware pricing to component level
• Promises 5G network update when 4G rollout complete in Japan

Open RAN pioneer Rakuten Mobile is taking the ‘open’ network concept to a whole new level with a move towards transparent pricing for the cloud-based mobile network platform elements and functions it is selling to operators globally as part of its Rakuten Communications Platform (RCP) strategy.

Rakuten Mobile Chief Technology Officer Tareq Amin (pictured above) on Tuesday shared the first details of his company's 'no more secrets' plan, which essentially means a pledge to be transparent on pricing and costs, particularly when it comes to hardware.

"We want to expose the exact hardware cost," including components, engineering, manufacturing and delivery, Amin said during a strategy update. "We will offer complete transparency," Amin said, which means no more hidden margins on hardware. "[Rakuten will be] an open book for component-level pricing."

The 'no more secrets' pledge will start to appear alongside Rakuten's corporate branding and messaging in "no more than two months," Amin said.

"We will launch our own telecom app store," Amin explained. The launch will come either during the week of Mobile World Congress later this month (if it is ready in time), or during July, he clarified. The store will enable customers to see hardware costs – including build costs, shipping, and any mark-ups Rakuten would need to charge to front the cost of the kit – plus the software cost from Rakuten. It will be up to them to decide whether they want Rakuten to serve as a middleman though; the company insists it is happy either way. It foresees offering two models: One in which customers take hardware only; and a second as-a-service option, in which Rakuten guarantees the whole lifecycle, including all software refreshes.

Amin gave the distributed unit (the DU, one of the main RAN building blocks), as an example of a product that fits this model, taking the opportunity to drop hints about a forthcoming DU innovation from Rakuten that's "going to be a game-changer." We can expect an announcement on that imminently.

Rakuten, which already has traction with its early RCP outreach, is pitching the app store approach as a challenge to the whole telco industry, and it will indeed create waves for many. Amin is focused purely on how it will benefit network operator customers.

"I think they will save a minimum of 40% on the capex side compared to a traditional base band," he predicted. The executive also cited private conversations he has had with European operator executives who "were speechless" when he shared actual costs of hardware with them. "I know the exact pricing," to mount a remote radiohead, for example, he said.

On the tech developer side, "quite a [few] of the suppliers are extremely interested in this idea," especially companies that otherwise struggle to reach the telco community, he said.

Of course, this is not an altruistic model and Rakuten was keen to point out that it – and the whole Rakuten Mobile ecosystem – has been conceived to ensure profitability across the industry. "Everyone has a path to make money," he said, from silicon providers to system engineers to factories. "At the end of the day, we cannot just run the business without profit."

Right now, though, that is exactly what Rakuten Mobile is doing in terms of its own operations in Japan.

Rakuten Mobile posted an operating loss of ¥97.25 billion ($886 million) in the first quarter of this year, largely due to the cost of its network build-out and the roaming deal it has in place with established player KDDI.

Rakuten's big challenge in Japan is to "finish the coverage build-out," Amin admitted, and move all mobile customers to its own network. This will be "good for us, of course, financially," as well as benefiting customers, he insisted.

Rakuten Mobile reached 88.6% population coverage with its 4G infrastructure in May, thanks to the deployment of around 22,500 Open RAN sites, and targets hitting 96% by the end of the summer, something that is well "within grasp," Amin said. At that stage, the telco will consider sharing some concrete information on its 5G rollout, which is currently "on target and on track," the CTO reiterated.

"I will be able to announce a mass acceleration plan for 5G," in September, when the company reaches its 4G coverage target, Amin promised.

We wait with bated breath.

- Mary Lennighan, reporting for TelecomTV