For Rakuten's mobile service, should we focus on expanding network coverage or improving data speeds in existing areas to better serve customers?

Introduction

For Rakuten's mobile service, we're facing a critical trade-off between expanding network coverage or improving data speeds in existing areas to better serve our customers. This decision will significantly impact our user experience, market position, and long-term growth strategy. I'll analyze this trade-off by examining our product ecosystem, key metrics, and potential experiments to inform our decision-making process.

Step 1

Clarifying Questions (3 minutes)

• Context: I'm thinking about our current market position. Could you share our current market share and how it compares to our main competitors?

Why it matters: Helps determine if we need to focus on user acquisition or retention. Expected answer: We're the third-largest provider with 15% market share. Impact: Lower market share might prioritize coverage expansion for user acquisition.

• Business Context: Based on our revenue model, I assume most of our income comes from subscriptions. Is this correct, or do we have significant revenue from other sources?

Why it matters: Influences whether we prioritize new user acquisition or ARPU increase. Expected answer: 80% subscription-based, 20% from value-added services. Impact: High subscription dependence might favor speed improvements for retention.

• User Impact: I'm curious about our user segments. What's the split between urban and rural users, and how does their usage differ?

Why it matters: Helps balance the needs of different user groups. Expected answer: 70% urban, 30% rural; urban users consume 3x more data. Impact: High urban usage might prioritize speed improvements in dense areas.

• Technical: Regarding our current infrastructure, what's our 5G rollout status compared to 4G coverage?

Why it matters: Determines the feasibility and impact of speed improvements vs. coverage expansion. Expected answer: 5G in major cities, 4G covers 80% of the population. Impact: Limited 5G might suggest focusing on its expansion for speed improvements.

• Resource: Can you give me an idea of our current capex allocation between network expansion and upgrades?

Why it matters: Indicates our current strategy and resource constraints. Expected answer: 60% expansion, 40% upgrades. Impact: Higher expansion budget might suggest continuing that focus.