By Supantha Mukherjee and Isla Binnie
STOCKHOLM/MADRID (Reuters) - Spain's Telefonica (NYSE:TEF) has signed a pact with Japan's Rakuten to develop a 5G radio network system that uses an open platform and artificial intelligence, the companies said on Wednesday.
The Japanese firm has become the first mobile operator to deploy a network based on a technology called Open Radio Access Network (RAN) that uses software to run network functions on the cloud, which requires less physical equipment.
Rakuten plans to launch 5G services in Japan later this month, Rakuten Mobile's Chief Technology Officer Tareq Amin said on a call with journalists, after it was forced to delay the introduction by months due to disruption from the coronavirus outbreak.
The technology promises to radically cut costs for telecom operators as it uses cloud-based software and commoditized hardware instead of proprietary equipment supplied by companies such as Nokia (NYSE:NOK), Ericsson (BS:ERICAs) and Huawei.
The companies plan to develop a joint procurement scheme for Open RAN software and hardware that will increase volumes and reach economies of scale.
"We are not building a competitive tool with Open RAN. We are trying to build an ecosystem," said Enrique Blanco, chief technology & information officer at Telefonica, adding that they are open to working with other operators.
Telefonica has been deploying Open RAN pilots in Brazil, Germany, Spain and Britain, and plans to ramp up deployments in 2021 and significant rollouts in 2022.
The Spanish group plans to phase Huawei equipment out of the sensitive core for its 5G network in order not to run the performance and data protection risks that come with relying on one sole supplier, although it has repeatedly said it has no evidence to support U.S. President Donald Trump's accusations that the Chinese firm's kit is unsafe.