uploads/2018/10/3-8.jpg

Why Nokia’s 5G Trial with Rakuten Is a Big Deal

By

Updated

Rakuten is building its own network

Nokia (NOK) recently completed a successful 5G (fifth-generation) network trial with Rakuten Mobile Network. Nokia’s AirScale base station and a mobile platform provided by Intel were used in the trial, which verified a variety of 5G applications, including 4K video and 360-degree virtual reality live streaming.

Rakuten Mobile Network, a subsidiary of Japanese conglomerate Rakuten Group, wants to build its own mobile network, on which it hopes to start offering wireless services by October 2019.

Article continues below advertisement

Rakuten lines up $5.3 billion for network development

Rakuten currently operates as a mobile virtual network operator, meaning it has rented space on another operator’s network to allow it to offer wireless services under its own brand. This is also the kind of arrangement Comcast (CMCSA) and Charter Communications (CHTR) have with Verizon (VZ). The American cable companies have launched wireless operations under their own brands using Verizon’s network.

With Rakuten, Nokia is courting a potential customer with plans to invest as much as $1.8 billion in network developments within a year and as much as $5.3 billion by 2025.

Race to supply Japan’s 5G projects

Japan is expected to be one of the early adopters of 5G network technology. Operators in the country have been testing 5G services ahead of the Olympic games, which are set to be held in the country’s capital, Tokyo, in 2020. Nokia announced in January that it had won a contract to supply 5G network gears for NTT DOCOMO’s 5G network development. NTT DOCOMO is Japan’s leading mobile operator.

Working with Rakuten could see Nokia capture a bigger piece of Japanese operators’ network development expenditures. Nokia’s revenue fell 6.0% to $6.1 billion in the second quarter.

Nokia rival Ericsson (ERIC) is also hunting for business in Japan and has conducted 5G network tests with SoftBank, one of Japan’s leading operators.

Advertisement

More From Market Realist