Rakuten Gains a Foothold in Europe

Strikes a deal with 1&1 to build fully virtualized Open RAN

German mobile virtual network operator (MVNO) 1&1 Drillisch and Rakuten recently announced a long-term partnership to build a fourth mobile network in Germany.

In doing so, 1&1 will become the first European operator to commit to building a network entirely based on open radio access network technology (Open RAN), thereby putting more wind into the sails of a technology that has already enjoyed strong momentum in 2021 (see Insight Report: European Operators Set Out Approaches to Open RAN).

The German MVNO provides wireless services to more than 10 million subscribers by leasing capacity from the German networks of Telefonica and Vodafone. But now 1&1 plans to launch its own independent network and become the fourth largest operator in Germany behind leaders including Deutsche Telekom.

Rakuten has come a long way from its origins as an online retailer in Japan; the group now includes Rakuten Mobile, which also began as an MVNO. In April 2020, Rakuten launched its fully virtualized, cloud-native mobile network built on Open RAN technology in Japan (see Rakuten’s Bold Foray into the Telecom Market). A virtualized network locates data processing in cloud software, as opposed to dedicated equipment, helping to lower the costs of maintaining networks as there’s a reduced need for hardware.

Following the launch of its 5G network in Japan nearly a year ago, Rakuten is preparing to bring its network architecture to the world through Rakuten Communications Platform (RCP). The goal of RCP is to enable telecom companies and enterprises around the globe to offer a secure and open mobile network quickly and at low cost, like Rakuten has done in Japan, delivering innovative and immersive experiences. Rakuten’s novel 5G technology won an award at MWC 2021 in Barcelona, and earlier in August 2021, in a bid to boost its presence in international markets, Rakuten announced plans to acquire Altiostar, a company based in the US that provides virtual and Open RAN solutions.

A relative newcomer to the telecom industry, 1&1 is one of the first customers to fully adopt Rakuten’s virtual network technology, which will support 5G communication. Rakuten will design, maintain and operate the network, with construction due to begin in the last quarter of 2021. The core network will be supported by four central data centres, connected to hundreds of decentralized data centres in Germany, which in turn will be linked to thousands of antenna sites nationally. The German MVNO paid just over €1 billion for 5G spectrum in mid-2019, in the 2 GHz and 3.6 GHz bands.

Its partnership with Rakuten should provide 1&1 with much-needed clout, given the challenges of launching a 5G network and competing in the German mobile services market against the likes of Deutsche Telekom, Telefonica and Vodafone. Rakuten is building out its deployment of Open RAN technology, which it claims that will revolutionize the telecom industry.