By Greg Kaszas
Before discussing 5G in Japan, let’s introduce the basics: 5G is the fifth generation of mobile network, promising to be much faster and more reliable compared to most of today’s systems, with a greater capacity and lower response times. Unlike previous mobile network generations, 5G cannot be defined by any single form of technology. It’s often referred to as “the network of networks” because of the way it binds together many existing and future standards. While 4G encouraged the spread of smartphones, 5G looks likely to affect a broader range of industries thanks to its versatility.
Beyond a simple boost in performance, 5G is set to open up a wide range of new use cases from smart factories, through to driverless cars, and infrastructure communication to remote health care solutions for patients. With the recent arrival of 5G phones and other devices such as 5G TVs, the technology has started to make its way into everyday life.
5G technology is being adopted globally
Telecom companies all around the world are competing to win their own slice of local 5G networks, as well as tapping into related services such as cloud computing and consumer-focused opportunities, including e- commerce and electronic payments.
Three of the UK’s mobile service providers have introduced 5G networks since March 2019. The new generation network has also started to be rolled out in the US and South Korea, although currently only in a limited form. During these early stages, UK, US and South Korean mobile carriers have been offering limited 5G coverage across major cities and business hubs.
What’s the situation for 5G in Japan?
In April, the Japanese government approved plans from four domestic conglomerates to build 5G networks, with investment estimated at 1.6 trillion yen ($14.4 billion USD) over the next five years. NTT Docomo and KDDI plan to invest a minimum of 795 billion yen ($7.4 billion USD) and 466 billion yen ($4.3 billion) respectively. SoftBank will spend 206 billion yen ($1.9 billion USD), while Rakuten has earmarked 194 billion yen ($1.8 billion USD) for this purpose. Beyond building networks, the four companies are also forming partnerships to explore opportunities in high-tech fields for future revenue streams.
Japan’s big three mobile carriers are looking to enter new markets with the help of 5G technology as a fourth competitor threatens their hold over domestic consumers and the government pushes for ever steeper price cuts. Facing the prospect of lower profit margins, the telecom companies are rushing to set up partnerships with big companies such as All Nippon Airways and Toyota to create new revenue streams beyond their core mobile operations.
Japanese companies working on 5G
Renowned entrepreneur Masayoshi Son’s tech giant SoftBank will launch a commercial service for 5G in Japan from March 2020. (It’s worth noting that it did in fact launch in March, but come May users were still not finding it very useful.) Softbank is looking to complete the initial stage of building its wireless network by 2023, two years ahead of rivals NTT Docomo and KDDI. Softbank has teamed up with Sweden’s Ericsson and Finland-based Nokia, who have the technology and expertise in building base stations. The carrier is planning to install base stations across Japan which will provide coverage to more than 60% of the country.
As competition in the industry is heating up, SoftBank wants to get ahead of rivals by accelerating the rollout of high-capacity 5G networks. The race is partly a battle between new technologies as well. SoftBank uses base stations with multiple antennas to prevent slowdowns even in crowded urban areas, and it plans to combine this with artificial intelligence in order to optimise the quality of transmissions.
“Beyond Carrier” is one of SoftBank’s official slogans, reflecting its determination to harness IoT and AI. In 2018, the company opened the 5GxIoT Studios in Tokyo to provide a trial environment for 5G and IoT and work toward the joint creation of new value with a variety of companies. These studios incorporate technologies from companies backed by SoftBank, such as California-based graphics processing unit maker Nvidia and UK-based semiconductor designer Arm Holdings.
E-commerce leader Rakuten is a newcomer in the mobile carrier industry, with aspirations to disrupt the main proponents of 5G. Rakuten’s entry into this sector has been closely monitored for its potential to inject fresh competition into a market long dominated by three incumbent carriers. The company has also pledged to deliver the new service at a much lower price than competitors.
Rakuten has partnered with Japanese information technology group NEC to install low-cost fifth-generation base stations across the country over a five-year period. The two companies will seek to develop an inexpensive 5G antenna built around the concept of network virtualisation, in which the functions needed to run the network rely on internet-based software. The goal is to reduce the need for specialised hardware, allowing for the cost-effective installation of a network with 56% national coverage by the end of fiscal year 2024.
As of October 1, Rakuten will have its own network of base stations covering parts of the Tokyo, Nagoya and Osaka metropolitan areas. Their trial service will be limited to only 5,000 users. According to the Communications Ministry, however, Rakuten had only 532 base stations in place as of the middle of August 2019, compared with initial plans for 3,432 by the end of March 2020. Progress has been slowed by trouble connecting the stations to existing fiber-optic and other networks, an industry source said. Rakuten has declined to comment on the status of its network construction. The company is still hammering out its pricing for the fully-fledged mobile service now due next spring.
Price competition is heating up as incumbent firms are fighting to retain users. NTT Docomo shocked market watchers last year when it announced it would slash its mobile rates by up to 40%. The company expects that tapping into revenue streams beyond its core business will generate sufficient income to restore its operating profit in the long term. By launching the NTT Docomo 5G Open Partner Programme in 2018, this strategy is already being implemented. As part of the programme, NTT Docomo is seeking to work with around 2,000 companies and institutions that want to develop services based on the new standard. For now though, the company is providing 5G technology and information for free hoping it will lead to new business.
The Tokyo 2020 Olympics is likely to serve as a key showcase event for 5G operators and tech companies to demonstrate new applications for next-generation technology. NTT Docomo has already collaborated with Intel, an official Olympic partner, to deploy a 5G network offering a range of new features, including trials of ultra-high-resolution 360-degree video feeds from recording devices mounted to athletes to enhance viewer engagement. Intel’s 5G smart city sensors will support connected self-driving cars around the city and at sporting venues. Athletes will gain access to rich data and analytics via wearables and e-health equipment, which will allow them to improve their training regimes.
5G promises to bring a wide range of cutting-edge technologies to the forefront, some of which are likely to make their way into everyday life. From a corporate perspective, monetising 5G investments will be the next significant challenge. Although Japan is not currently a world leader in rolling out the new generation network, Japanese companies are experimenting with related services that might thrust them deeper into the technology field.
Lowering the cost of network infrastructure could accelerate the spread of faster 5G wireless communication in Japan. Rakuten has the lowest cost of base station installation among Japan’s four top wireless carriers, an analysis of plans submitted to the communications ministry shows. The company’s cost totals about 8.2 million yen ($76,000) per unit, only 10% to 20% of the level for industry leader NTT Docomo.