What's Happening?
Rakuten Mobile, a subsidiary of the Japanese e-commerce company Rakuten, has faced significant challenges in its attempt to disrupt the telecom market in Japan. Founded by Hiroshi Mikitani, Rakuten Mobile aimed to offer competitive mobile services by leveraging cloud and software technologies, similar to the successful model of Reliance Jio in India. Despite these ambitions, Rakuten Mobile has struggled to gain a substantial market share, serving only 9 million customers as of June, a small fraction compared to Japan's major operators like SoftBank. The company has reported losses, with a recent operating loss of JPY39 billion ($263 million), and has faced technical and commercial setbacks, including a lack of spectrum and delayed 5G rollout.
Why It's Important?
Rakuten Mobile's difficulties highlight the challenges new entrants face in established telecom markets. The company's struggle to compete with incumbents like NTT Docomo, KDDI, and SoftBank underscores the importance of spectrum availability and customer loyalty in the telecom industry. Rakuten's experience serves as a cautionary tale for other companies looking to disrupt similar markets, emphasizing the need for strategic planning and understanding of local market conditions. The financial losses incurred by Rakuten Mobile also impact the broader Rakuten group, affecting its overall financial health and strategic direction.
What's Next?
Rakuten Mobile aims to improve its market position by expanding its 5G infrastructure and addressing technical shortcomings. The company plans to deploy additional base stations to enhance service quality and coverage. However, achieving profitability remains a challenge, and Rakuten Mobile must navigate competitive pressures and technological hurdles. The company's future strategies may involve further investment in technology and partnerships to bolster its offerings and attract more customers.
Beyond the Headlines
Rakuten Mobile's journey reflects broader trends in the telecom industry, such as the push for open RAN and network virtualization. While these technologies promise cost savings and innovation, Rakuten's experience suggests that they may not be sufficient to overcome entrenched market dynamics. The company's pivot towards licensing its RAN software to vendors rather than telcos indicates a shift in strategy, potentially influencing how telecom technologies are developed and deployed globally.
