Rakuten’s 5G launch today could rattle rivals

Japan’s telecoms market is undergoing major upheaval this week. 

 

Yesterday, it was revealed that ex-monopoly NTT has plans to buy back mobile unit NTT DoCoMo for around $40 billion, perhaps in part inspired by governmental pressure to reduce mobile fees.

 

Now today, after months of delays caused by the coronavirus pandemic, Rakuten has finally commercially launched its 5G network, offering customers access to 5G for the same price as its existing plan: around $28. This price is, according to Rakuten CEO Hiroshi Mikitani, is around 70% cheaper than those offered by its domestic rivals. 

 

Japan has some of the most expensive mobile plans in the world and the government has been applying pressure to telcos for some time now in an effort to force a reduction in prices. Last year saw an initial round of price cuts and new PM Yoshihide Suga is keen to drive prices down further. With NTT absorbing DoCoMo, analysts suggest that a major barrier to reducing prices will have been lifted and a price war could be looming on the horizon.

 

If so, this will mean that Rakuten’s radically low-priced 5G-capable plan will be less appealing than initially hoped, with the delay to its rollout meaning that its 5G coverage is not as broad as that of the other operators who launched 5G around a year ago. 

 

Nonetheless, it still remains a very attractive proposition to customers, in part due to its promise of offering free 4G (and now 5G) service for one year to the first three million subscribers to its Un-limit V plan. Rakuten’s 4G network launched in back in April and by July around one million consumers had taken the operator up on this offer, meaning there is presumably still a great deal of free mobile subscriptions available. The operator is rapidly expanding coverage, aiming for 96% of the Japanese population by next summer.

 

Rakuten is also a major player in the Open RAN space, a fact that was recently acknowledged with a partnership with Telefonica to further develop the technology. If Rakuten’s 5G network is largely successful, additional operators could begin to look more seriously at this emerging technology in future.