Telefónica teams up with Rakuten in search of 5G networks alternative

One of the world’s biggest telecoms groups has joined forces with Japan’s Rakuten to speed up the development of 5G equipment from alternative suppliers to established players such as Huawei.

Telefónica, Spain’s largest telecoms company and the owner of O2 in the UK and Germany, has teamed up with the ecommerce group to foster the development of “open RAN” (radio access network), developed by smaller suppliers. The technology offers an alternative to relying on systems provided by market leaders such as Huawei and Ericsson.

The Madrid-headquartered group will jointly test, develop and procure open RAN systems alongside Rakuten, it said on Wednesday. Enrique Blanco, Telefónica chief technology and information officer, said that it was planning a “massive deployment” of open RAN technology after more widespread trials had taken place next year.

Mr Blanco expected that at least half of the sites that Telefónica upgraded between 2022 and 2025 would use alternative telecoms technology.

“This is not a wish. This is not a hope,” he said of the move away from “monolithic” systems provided by the largest equipment vendors.

The agreement between one of the world’s oldest telecoms companies and a pioneer such as Rakuten — which earlier this year launched an open RAN mobile network in Japan using components and software not developed by the largest equipment makers — could be a symbolic moment for the industry.

Open RAN has been championed by governments, including in the UK and US, as an alternative to relying on kit supplied by Huawei and as a way of stimulating more diversity in the supply chain. The telecoms equipment market is dominated by the Chinese group, as well as Sweden’s Ericsson and Finland’s Nokia.

They have historically provided systems that lock carriers into buying entire radio access systems from one company. In contrast, open RAN allows carriers to pick and choose components from different providers.

The move to open up those systems would stimulate the growth of smaller specialist software and component makers, as well as boosting the competitiveness of larger players such as Samsung, NEC and Fujitsu that struggled to compete with the larger players in the 4G era.

Rakuten’s push has caught the attention of other relatively new entrants to the telecoms market around the world, including Dish in the US and Jio in India. These companies regard open RAN as a low-cost option for mobile services.

Established players including Vodafone and Orange have also backed the move towards open RAN and started testing technology from smaller companies for rural and indoor coverage.

Tareq Amin, chief technology officer of Rakuten Mobile, said: “This is a defining moment for industry transformation”. He added that Telefónica’s backing would prove that the use of open RAN technology was suitable not only for “greenfield” companies such as Rakuten, but also for the sector’s largest players.

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