Every market I go to now – Canada, Europe, Asia Pacific – operators are grappling with the same problem. Top line growth is hard to find. Customer relevance is harder. And the standard response – invest in the network, launch a new technology cycle, run a transformation program – isn’t moving the needle. The problem isn’t execution; the industry keeps reaching for a technology answer to a business problem.
For the better part of four decades, telecom’s answer to growth was network investment. More spectrum, better coverage, faster speeds, the next “G”. And the networks got better.
But network is not the problem in the present-day marketplace.
The real problem is that a better network stopped being the reason for a customer to stay, spend more or deepen the relationship. Connectivity has simply become infrastructure that’s essential, invisible, and nearly impossible to charge more for.
In most developed markets the subscriber pool is now fixed. Every customer you win, you’re taking from a competitor – and they’re doing the same back. That’s a zero-sum game, and no network upgrade changes the rules of it. The result is what you’d expect: ARPU wars, margin pressure, and a cost base built for a growth era running on revenue that no longer supports it.
PwC has looked at this in 50+ markets: ARPU declining (inflation adjusted), costs rising and operators unable to pass both to customers.
CAC goes up, LTV declines. No efficiency program fixes a business model losing money at the unit level.
Evidently, the network isn’t the problem; the business model is. But how do we solve this problem?
There’s no single right answer to what comes next.
All three are coherent. What isn’t coherent is carrying technology company costs on utility-grade revenue while waiting for the next network cycle to fix a business model problem.
Operators have something most consumer businesses would kill for. Direct billing relationships with millions of subscribers. A continuous stream of behavioral data – location, usage, intent – that no third party can match for depth.
The customer is already there. The trust is already there. The commercial infrastructure is already built.
The gap isn’t the asset. It’s what operators do with it. And the root of that is a distinction the industry rarely makes explicitly: the difference between satisfaction and loyalty. A satisfied customer has no current complaint. A loyal customer values the relationship beyond the immediate service. In a market where switching costs are near zero, satisfaction doesn’t protect you. Loyalty does. And loyalty doesn’t come from a “better network”. It comes from a relationship that compounds every time the customer engages with something you’ve built around them.
The telco relationship is more intimate than almost any other commercial relationship a consumer has. You know when someone wakes up, where they go, what they use. That’s not just network data. It’s the raw material for customer relevance at a depth most businesses can only dream of. The question is whether you build on it or leave it sitting in a data lake.
Part of the problem is what gets measured. ARPU optimizes for the transaction. It tells you how much a customer paid this month. It doesn’t really reveal how deeply they’re connected to you, or how likely they are to stay, or how much more they’d spend on you. The metrics that reflect a loyalty-led model look different: LTV, cross-use rate, LTV:CAC ratio and so on.
Rakuten answered these questions early. It started life as an online marketplace in 1997, built around thirteen merchants and one conviction: that the customer relationship, not the product, is where value compounds. Over the years, we steadfastly held on to the belief that connectivity was never the destination – it was the fabric that amplified an ecosystem we had already built. That understanding shaped everything that followed.
Today Rakuten operates 70+ services – ecommerce, banking, credit cards, travel, insurance, content, messaging – all connected through a single ID and a single points platform. Two billion global members. FY2024 global GTV of 287 billion EUR. To sum it up – the network joined a relationship that already existed, becoming far more valuable than it could have been on its own.
Years ago, we demonstrated that a network run by 250 people and built on automation could reach 97% of Japan's population – not because lean operations was the goal, but because it freed us to focus on what actually mattered: building an ecosystem where customers spend more, engage more, and stay longer. Watch the original talk by our CMO Geoff Hollingworth.
The numbers from Rakuten Mobile are worth sitting with, because they are audited quarterly results from a live network in a saturated, competitive market.
The figures below put things in perspective.
The 13.5x number needs some explaining. A single-segment user is mobile-only and connectivity revenue only, about 3,000 JPY a month. A three-segment user uses Rakuten Mobile, shops on Rakuten Ichiba and pays with a Rakuten Card. Each of these services is modest on its own. Combine them under a single identity, with points rotating between them, and that customer generates 13.5 times the annual revenue of the mobile-only subscriber. The data plan changed hardly at all. Everything else did.
The 100-to-1 churn reduction is the stat I keep referring back to in operator conversations. A customer who uses four or more Rakuten services has a churn rate 1% of that of a single-service customer. That’s not something you grow in steps. Structurally speaking, this is a different kind of relationship – one that a cheaper SIM deal from a competitor simply doesn’t break.
Notably, Rakuten Mobile posted its first Q1 operating profit since entering the market in Q1 FY2026. Not from improved network economics. From an ecosystem of 10+ million subscribers.
The question I hear most from operators isn’t “should we do this?” It’s “where do we start?” The answer depends on which path an operator is on. For those exploring the ecosystem route, their starting position is actually better than Rakuten, which had to build its network from zero. Existing operators already have the customer base, the billing relationships, the operational scale. The harder half is already done.
For operators on this path, one shift matters more than any other: from thinking about connectivity as the product to thinking about it as the foundation of a member relationship. That changes what you build, what you measure, and who you partner with. The network doesn’t become less important. It becomes more important – because it’s the thread running through a relationship the customer actually values.
The analogy that holds up best here is the airline industry after deregulation in 1978. Faced with commoditized routes, fare wars, and collapsing margins, carriers didn’t build better planes. They built a different business alongside, based on loyalty programs, co-branded credit cards, hotel and car partnerships. Today, no major US airline makes money moving people. The profit comes entirely from the loyalty and financial-services ecosystem built around the journey. Delta’s American Express partnership alone generated $8.2 billion in 2025. Without it, the core flying business would have posted a negative operating margin.
The business model decision is the most consequential one any operator will make right now. Every technology choice – network architecture, AI deployment, platform engineering – should follow from it, not lead it.
The network will keep getting faster. The opportunity is in what you build on top of it and whether your subscribers are members or just connections.
If you're heading to DTW Ignite at Copenhagen in June, let's talk. These are the conversations I find most useful – and the ones the industry needs more of.
— Sandeep Arora is SVP & Head of Global Sales at Rakuten Symphony, leading go-to-market strategy across APAC, MEA and global markets.
