The telecommunications value chain consists of providing the necessary network infrastructure and connectivity for voice, data, media, and other related services. There is data exchange between networks that call for data security, data integrity, data inspection, and fraud prevention. With IoT and edge computing, more devices get added to the network and there is a need for device identity and security. New flavors to network management and new infra sharing models are coming up; e.g., lease management of 5G network slices for telco and network partners, enterprises, mobile virtual network operators (MVNOs), and over-the-top (OTT) players.
Core operations like operation support system (OSS) and business support system (BSS) processes include partner management, enterprise management and customer management to address contracts, settlement, supply chain management, SLA management etc. Also, in the digital journey, new business models and eco system partners come into play. Blockchain can help simplify the process, make them secure, transparent, and efficient and find new revenue streams through digital bundle value propositions.
Blockchain as a technology has the potential to disrupt or change business models in almost every industry. According to a recent report by a leading market research company, Blockchain in telecom market is expected to grow from USD 46.6 million in 2018 to USD 993.8 million by 2023, at a compound annual growth rate (CAGR) of 84.4 percent during 2018-2023.
In the telco world, CSPs connect with their partners, other telecom companies, and suppliers in order to provide connectivity, services for their customers, and to adhere to SLAs, so that they can provide a seamless customer experience. Such complex transactions and interactions between all these parties make it imperative to ensure there is trust, security, and transparency. For telco ecosystems in the B2B and sometimes B2B2X models, we look at a permissioned network that brings in multiple benefits. In a permissioned Blockchain network, a group of participants are identified and given express authority to provide validation of blocks of transactions.
Several areas of operator’s activities could be improved through the implementation of blockchain-based solutions, which may be public, private, or a hybrid of both. Some example use cases for telecoms operators include their own internal processes, as well as digital value-added services, as detailed below.
Fraud detection and prevention continue to be topics of relevance for most CSPs, as a result of fraud costs in the industry of over USD 38 billion annually. Given that the telecom industry has not yet found a way to effectively and sustainably prevent fraud, Blockchain is in principle a good contender for significantly decreasing the cost of fraud, e.g. in roaming and in identity management.
Cost savings from eliminating the third-party clearing house.
Automatic triggering of roaming contract based on call/event data which enables near-instantaneous charging and reduction in roaming fraud.
Repository of verifiable transactions between operators, allowing for quick dispute resolution.
Reduced subscriber or other ID-based fraud.
Easier and faster device identification during mobility, due to shared database having the device public key information and history.
Can be used to provide identity to machines in an M2M or broader IoT environment, instead of having to embed physical SIMs into distributed devices.
Elimination of cost to manufacture and distribute physical SIMs.
Identity-as-a-service and data management
CSPs can create new sources of revenue by providing identity and authentication as well as data management solutions to partners, enabled by a Blockchain.
Benefits. Cost savings from a Blockchain-based federated identity management solution as compared to traditional IDM software.
New revenue stream from providing an identity-as-a-service solution to partners and end consumers.
Improved subscriber ease of use as regards ID management.
Opportunity to form a locked-in ecosystem through strategic partnerships with partners that use identity solutions provided by the CSP.
5G enablement. 5G technology implementation is another example to potentially benefit from the blockchain to streamline processes.
Benefits. Sharing of faster and regulated local connectivity for reliable service to device.
Instant monetization of diverse connection types through smart contracts.
Enables local connection prices purely based on supply and demand in the area.
New business models to use idle capacity for non-prioritized traffic.
IoT connectivity. A blockchain can enable secure and error free peer-to-peer connectivity for thousands of IoT devices with cost-efficient self-managed networks.
Benefits. Self-managed, peer-to-peer networks taking over regional routing.
High security levels for IoT devices within public blockchain networks.
Low-cost setup options for SME purposes.
Blockchain in telecom industry
Benefits. A blockchain’s ‘enabled’ trust improves coordination between various partners, due to a shared view of transactions and liabilities. This in turn permits the elimination of third parties, resulting in cost savings.
Facilitates a single view of data instead of the need for consolidation across various disparate systems. Also allows for reliable audit trails due to the history of all transactions being available in the ledger.
Implementation of smart contracts in roaming and other cases allows for near-instantaneous charging, thus leading to improved revenue assurance and fraud reduction.
Potential to facilitate new business models for revenue generation for communication service provider who are looking for new avenues to increase both top and bottom lines.
A blockchain can act as the ledger that enables, for example, an M2M economy to prosper based on the common platform available, in which M2M transactions can be recorded. It can thus act as the enabler for an IoT ecosystem.
Challenges. Since a blockchain retains all historical data, the size of an established blockchain at each node might become unsustainable. Instead, a mechanism to archive historical data needs to be looked at. Several alternatives are currently being explored in this regard by various players in the blockchain ecosystem.
Conforming to existing data standards in terms of both structure and transport for sharing of information could prove to be an initial hurdle.
Clear regulatory frameworks need to be defined for the implementation of agreements as digital, smart contracts.
There will be challenges to adoption of blockchain, as with any new technology that holds the promise of significant disruption. However, CSPs would do well to work together to enable the full realization of the benefits, just as many of the global financial institutions are currently doing (e.g. in the R3 Consortium). Working in a silo will limit the potential of blockchain, as disintermediation, robustness, and the need for trust at the intersection.
Companies are investing in startups in the blockchain area to explore the synergies and potential use cases. Many more players are researching potential use cases in-house. It is time for everyone to agree on a unified approach to enable meaningful realization of benefits.
Blockchain is a major development that could dramatically shift the way telecom companies do business. It could also change competition within the industry. It is expected to alter the ways communication service providers (CSPs) manage their business models and even create new types of models that provide higher profits.
Nonetheless, Blockchain also creates new opportunities for competition within the telecom industry, so it has the potential to disrupt current service providers. This technology was previously prominent in the finance industry, but new, programmable types of blockchain make it relevant to telecom and other industries.
Overall, it is still in its very early days. There are few production deployments of blockchain-based applications in telecoms today. But there are scores of proofs-of-concept being worked on, efforts around standardization, and regulation in numerous industry bodies, and hordes of start-ups (some credible, others less-so) looking at ways to apply various types of blockchain for telecoms and the wider communications/networking space.
Disruptive analysis recommends companies analyze the specific possibilities – short and longer term – for their individual circumstances, and start experimenting early. The blockchain space is astonishingly dynamic, with new possibilities and challenges emerging every week. There is a measure of hype – but also some likely genuine disruptions around the corner.