Bringing Blockchain to Telecom

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Since the first blockchain was implemented in 2009 with the release of the cryptocurrency Bitcoin, blockchain technology has sparked wide interest among a variety of industries. One community that stands to benefit from this emerging technology is that of communication service providers (CSPs), who may rip a variety of benefits if they can properly harness blockchain technology. These benefits include the possibility of lower operating costs, new revenue streams, higher network efficiencies, and improved customer experiences.

The Features and Benefits of Blockchain

Blockchain technology is a decentralized, cryptographic approach to permit trusted collaboration within a network. Key components of this technology include: a shared append-only ledger visible to all parties, smart contracts that govern business terms when a transaction occurs, privacy such that all transactions are reliable, authenticated, and verifiable, trust such that all transactions are endorsed by relevant parties, and transparent such that all members of the network are aware of transactions applicable to them.

With these components in place, blockchains offer: consensus, as all parties agree on the validity of all transactions; provenance, as the changing ownership of all assets is clear over time; immutability, as no participant can edit a previous transaction; and finality, as there is a single source of trust in the form of the shared ledger.

In a survey that included 174 CSP C-Suite executives by the IBM Institute for Business Value, it was found that 36 percent of CSP executives are considering or already engaged in implementing blockchain technology. In fact, some CSPs began exploring blockchain technology as early as 2015. In that year, Orange launched its ChainForce initiative supporting collaboration between corporate partners and blockchain startups. Verizon and Du have also explored and piloted blockchain programs, and in 2017, Sprint, SoftBank, FarEasTone, and TBCASoft launched a consortium exploring blockchain-based services.

The Value of Blockchain for CSPs

The CSP executives surveyed indicated a variety of ways that blockchain technology could aid their enterprise strategies. The highest potential, cited by 41 percent of respondents, suggested that blockchain could be used to ensure data quality and accuracy. With data becoming increasingly important with the rising Internet of Things (IoT), ensuring data quality and accuracy may itself be justification enough to invest in blockchain solutions. However, several other possibilities were reported by CSP executives. 38 percent cited the potential to increase trust in transaction reliability, 37 percent cited the potential to increase transactional transparency, 35 percent to simplify and automate business processes, 34 percent to improve security against fraud and cybercrime, 28 percent to increase transactional speed by reducing clearing time, and finally, 28 percent of respondents cited the possibility of blockchain to reduce transaction costs by eliminating intermediaries.

There are many good reasons to consider early investment in this technology. Of the 36 percent of CSP executives who have already considered or begun implementing blockchain solutions, 76 percent chose to do so in a bid to address security concerns. 46 percent saw the potential to develop new business models, 36 percent to address shifting profit pools, 30 percent were spurred by competitor adoption, and 14 percent saw the potential to be the first in the market. With significant technical barriers to entry, moving blockchains beyond the proof-of-concept stage will require major industry players able to support many types of use cases over the public network to work in collaboration with private entities and government regulators that represent the legal systems of different states, provinces, and countries.

Some possible areas of deployment for blockchain technology by CSPs include: transactions for digital assets, i.e., micropayments for games, music, etc.; subscriber-to-subscriber money transfers and international payments; secure handling of electronic health records; and for identity-as-a-service, in which CSPs provide identity authentication across devices, apps, and organizations, while maintaining privacy for individual users. Blockchain technology could also be effectively deployed for roaming, supply chain management, supply chain financing, advertising sales, and more.

Steps Forward

CSPs face an excellent opportunity to capitalize on blockchain technology but they first need to get a clear picture of what problem they are trying to solve and not adopt a technology for the sake of it.

CSPs need to take the time to understand the business models, use cases, and emerging solutions of blockchain by spending time with blockchain leaders and determine which partners, policies, and regulations are most relevant to their use cases. The possibilities range from enabling smart city applications to 5G service enablement.

 

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Mr. Fellah, is a Senior Analyst and founder of Maravedis with 20-year experience in the wireless industry. He authored various landmark reports on Wi-Fi, LTE, 4G and technology trends in various industries including retail, restaurant and hospitality. He is regularly asked to speak at leading wireless and marketing events and to contribute to various influential portals and magazines such as RCR Wireless, 4G 360, Rethink Wireless, The Mobile Network, Telecom Reseller to name a few. He is a Certified Wireless Network Administrator (CWNA) and Certified Wireless Technology Specialist (CWTS).

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