27 April 2018
Will blockchain’s distributed ledger technology unlock new carrier operational dynamism and revenue opportunities? Sue Tabbitt reports
Open just about any publication at the moment and, if
it’s not artificial intelligence,
it’s blockchain dominating the headlines, heralded
as the next big thing that’s going to change the
way the world works. But will it – and what,
specifically, might it mean for wholesale telcos?
Certainly it’s something carriers, in common
with many other organisations, are looking into. On the one
hand it promises to open up the possibility of managing
transactions very differently; on the other,
blockchain’s premise potentially opens up new
service and revenue opportunities. But how much of
what’s being promised is hype, where might the
reality settle, and what are the more innovative options that
blue-sky visionaries should keep a look-out for?
First, it’s worth setting out some definitions.
Originally associated with bitcoin/cryptocurrency, blockchain
technology provides a distributed ledger mechanism that enables
secure trans-actions – not just financial ones
– to be agreed and processed along a supply chain, or
across an ecosystem, without the need to pass through an
official central settlement hub.
Distributed ledgers use independent computer nodes to
capture, share and synchronise transactions in their respective
electronic ledgers, removing the need for a single, centralised
ledger or data store. The idea of managing payment settlements
or other transactions such as contractual agreements this way
means that it’s potentially faster, more efficient
and dynamic – allowing more real-time stuff to happen
and paving the way for transactions to be highly
Transactions could be for the tiniest amounts too, because
there isn’t a minimum charge for processing them,
which means the proposition ought to lend itself well to
real-time service personalisation and more granular
The potential interest to telcos is substantial. Blockchains
rely entirely on networks to exist, because that’s
where everything happens. Secondly, seamless telco
network-based services involve complex handovers, agreements
and financial settlements between service providers as traffic
is carried between destinations. As that traffic becomes
richer, more diverse in nature and more sensitive to service
quality, the measures and controls around what happens to it
and their timeliness become more critical.
Additionally, telco services are becoming increasingly
virtualised and cloud-based, placing greater emphasis on
clever, software-based automation of service management and
monitoring and discrete, real-time billing.
Finally, the potential for blockchain-based operational
improvements and value-added service innovation has attracted
the attention of enterprise customers, which are now looking
for suitable technology and service partners to help them
harness the opportunities and guide them through any risks.
So, looked at from just about any direction, blockchain or
the broader category of distributed ledger technology, of
which blockchain is just one variant, deserves board-level
attention from telco carriers.
For Ravi Kumar Palepu, VP and global head of telco solutions
at IT consultancy Virtusa, the possibilities are exciting for
carriers, with operational potential spanning contract
management, capacity planning, identity management, root cause
analysis, network, device and infrastructure management,
quality of service and performance management.
Immediate opportunities include simplifying and providing
greater visibility in inter-carrier relationships. Here,
blockchains offer greater visibility of what’s
going on across a service ecosystem, he says – not
only offering new options for billing management, but also
leaving individual parties with no place to hide if something
goes wrong for customers.
"Blockchain is particularly useful in contexts where there
is a need to manage multiple partners, so it is a perfect fit
for inter-carrier contract management and dispute resolution as
it provides transparency between customers, the carrier, their
partners and suppliers," Palepu explains.
One of the challenges for wholesale carriers is that they do
not own the entire customer journey, he notes. Where there is
an agreement to provide services to a global bank, for
instance, the lead carrier is likely to rely on other service
providers in at least some countries – a complex
scenario to manage, involving multiple agreements and SLAs. In
the event of a customer complaint, the wholesale carrier must
first confirm whether any service issues have occurred, if
these breach SLAs, and which partner is responsible.
"Traditionally, the carrier would rely on third-party data
feeds to build up this picture," Palepu notes. "But this can be
very time-consuming and often incomplete, leading to
inter-carrier disputes and irate customers. A breach of SLA can
cost the carrier hundreds of millions of pounds, so this
information black hole is a huge business risk."
Blockchain brings transparency to the
customer-carrier-partner-supplier ecosystem by enabling all
parties to contribute and share information, Palepu
"Whether it’s a network engagement, or billing
or operational support, each partner, supplier and customer
involved in that customer engagement can feed their respective
information into the blockchain."
He adds: "As blockchain is a trans-parent distributed leger,
each party can update their thread in real-time with agreed
information and only have to worry about their piece of the
puzzle. The carrier can then pull together all this data and
apply analytics to derive meaningful insights."
One obvious result is an end to buck-passing, boosting
customer service. "Everything is right there in plain sight,"
Palepu says. "This visibility also enables carriers to identify
and fix problems more quickly, so they are more likely to stay
within the terms of their SLA. This ultimately would help telco
wholesalers to offer better service and connectivity than ever
Having greater clarity and the ability to resolve
inter-party dealings more efficiently and accurately also
offers telcos a chance to manage their operations in a more
streamlined and dynamic way.
Phill Lawson-Shanks, chief innovation officer at EdgeConneX,
a specialist infrastructure provider which helps deliver a
better content experience for end users, says: "Very soon,
International Telecoms Week will take place in Chicago
– an event that historically saw representatives of US
telco organisations turn up with boxes of computer printouts:
logs of all of the call minutes they’d handled and
details of who owed each other what. With blockchain, all of
this can be reconciled instantaneously."
On the brink
If he is reserved in his enthusiasm it is only because of
the work that needs to be done so that telcos can exploit the
potential of blockchain technology. "We’re on the
brink of something really exciting, but there is a lot to sort
out first," he says. "Certainly blockchain is a key enabler,
but a lot of things need to be lined up for everything to fall
Lawson-Shanks believes that early movement towards
blockchain-style mechanisms is happening in pockets –
as part of the move away from expensive, monolithic,
proprietary back-office systems, and as telcos strive for an
end-to-end view of customers, and a more dynamic approach to
billing. Blockchain could certainly help with this, "but it
will be a while," he says.
Virtusa’s Palepu agrees. "Blockchain is a
foundational technology; it’s not something you
can quickly switch in," he says. "Carriers have incredibly
complex network infrastructures, so making a change like this
takes time and planning. There are a number of considerations
that need to be taken into account – such as
scalability, security and costs – before a service
provider can take the leap. So, while blockchain use is tried
and tested in banking and insurance, carriers are rightly
cautious about taking the plunge and have not adopted the
technology fully at this stage. However, we are seeing more and
more proofs-of-concept taking place, so I expect this to start
to change as theory moves into reality."
One such proof-of-concept, by PCCW Global, the international
operating division of Hong Kong-based telecom giant HKT, and UK
telecoms/data centre company Colt Technology Services, in
collaboration with Clear, a blockchain start-up company, has
shown that it is possible to reduce inter-carrier settlement
time from hundreds of man-hours per month to less than a minute
using blockchain technology.
But it’s important not to get too carried away,
as there are issues and challenges that need to be overcome
before telcos can start reaping the many potential benefits of
blockchain/distributed ledger-based opportunities.
One of the concerns around blockchains is security,
especially given that telcos are custodians of vast quantities
of sensitive personal data about customers and their
activities. With the new General Data Protection Regulation
coming into play in EU countries from May, wholesalers will not
want to gamble their reputations if there is any doubt about
information falling into the wrong hands or straying beyond EU
borders. Although blockchains are supposed to be inherently
secure, in a cryptocurrency context there have been
Lawson-Shanks thinks telcos will create their own
distributed ledgers within their own firewalls, to minimise
their exposure. "They’ll do everything within
their own walled garden to fulfil the requirements of governing
bodies around data handling and ensure everything is traceable
and auditable," he says.
Yet, carriers will need to be more inclusive than not if
they want to maximise the commercial potential blockchain
enables – so there is a balance to be struck between
security and openness.
Ed Finegold, director of content strategy at Netcracker
Technology, a specialist in OSS/BSS and network virtualisation,
says: "One of the core tenets for blockchains is that they are
meant to safely facilitate trading partner relationships in
environments where many of the parties don’t
necessarily know or trust one another. So, because the
wholesale side of the business is growing and changing to
create more partner-driven services and mash-ups, it could make
sense for service providers to organise around the idea that
all trading partners in a partner ecosystem join and belong to
Reservations and challenges aside, EdgeConneX’s
Lawson-Shanks speculates that, in five years, the industry
could look back with amazement that anyone questioned
blockchain’s potential. "We can’t be
sure when, but it will become commonplace," he says.
Beyond operational and customer service advantages,
Lawson-Shanks envisages blockchain/distributed ledger
facilities helping carriers to exploit and manage rich media
content opportunities. "A lot of the traffic being passed
across networks is video and other rich media, from Facebook,
YouTube, Netflix and the like, and it’s no
coincidence that telcos are buying content companies to get
access to their catalogues," he says. "But telcos need to know
who’s using what and when, and blockchain is the
perfect tool to monitor that.
"Once 5G is a reality and we have ubiquity of connectivity,
everyone will be a broadcaster. If you’re the
carrier of that content, you’ll have an
interesting degree of responsibility – especially in
the wake of the recent Facebook scandal over data sharing. So
carriers will need good insight into what’s being
said, what’s being moved and looked at where." Of
potential additional revenue opportunities, Lawson-Shanks sees
blockchain paving the way for telcos to act as the conduit and
customer owner for all sorts of innovative microservices, such
as mobile phone-based banking and micropayments in markets such
as Africa, or validating access to secure patient medical
"And that’s before you even get into IoT
opportunities such as smart homes and connected cars," he says.
"For all of these emerging applications, there’s a
huge monitoring and measuring requirement. Using blockchain,
carriers can distance themselves from the race to the bottom on
pricing for voice minutes or data plans. This is a chance to
rise above the crowd and offer something unique."
Netcracker’s Finegold picks up on the potential
for blockchain in digital identity management. "If being a
trusted digital identity broker is still something service
providers would like to achieve, applying blockchain could make
great sense because it can create the concept of ownership of
one’s digital identity in a way that is lacking in
the market now."
Joanne Frears, a solicitor at law firm Lionshead and an
advisor on the legal aspects of blockchain, agrees that digital
identity management is one of many lateral routes large
operators could take with the technology if they have vision.
"As early adopters and rapid accelerators of technology,
customers already trust telcos to provide safe access to
systems," she says. "There is scope to provide better
transparency and is it an easy step for telcos to add
blockchain’s self-certification of accuracy to
their service offering."
Ridiculous use cases
But John Wilmes, director of IoE projects at TM Forum, warns
against thinking that distributed ledger technologies including
blockchain offers an automatic passport to future fortune.
"Distributed ledger technology (DLT) is not a panacea," he
says. "It currently suffers from the 'hammer
problem’ – that is: 'I have a hammer and
everything looks like a nail’. If we step back and
take the perspective that DLT is a database that may be slow or
otherwise inefficient, but can be trusted by parties that need
not trust each other, it helps to filter out some of the often
ridiculous use cases being proposed."
He adds: "When looking at the revenue opportunity, it makes
sense to 'follow the patents’. This is a fairly
good indicator of intent, whether the patent is being used as a
sword or a shield. BT filed at least six DLT patents in 2017.
Other recent telco patents include Verizon (digital rights
management), Telefónica (data tracking through service
function chain), and others from Comcast, Du, Orange, Swisscom,
Huawei, IBM and Microsoft. With the caveat I’ve
already outlined, any use case involving trusted multi-party
decentralisation is a candidate."
Getting telcos themselves to speak openly about their plans
is another matter, which may be a measure of the competitive
value they see attached to the opportunity – or
evidence that most are still unsure of which route to take at
Orange International Carriers was among the carriers that
actively declined to speak on the subject at this stage; others
politely ignored our requests for comment.
Activity is clearly underway though, with new members
signing up to a global blockchain consortium, the Carrier
Blockchain Study Group, whose stated aim is to explore how to
collaborate on building a global next-generation cross-carrier
blockchain platform and ecosystem. South Korea-based carriers
LG Uplus and KT, along with Etisalat, Telefónica and
PLDT from the Philippines joined existing collaborators
SoftBank, Sprint, Far EasTone and TBCASoft.
In the meantime, legal advisor Shears thinks the need to
build confidence in services will restrict how ambitious telcos
can be – at least initially. "Privacy by design seems
to conflict with blockchain transparency but they are in fact
two ends of the same spectrum," she notes. "People want to
trust what they see and what they receive. How to mitigate
these is a whole other issue."
So, what level of movement can be expected for the rest of
2018 towards blockchain projects?
"Many are predicting that 2018 is the year we will start to
see 'productisation’ of blockchain, and it seems
likely this will happen," says Frears. "With that in mind,
within the next 12-15 months we will start hearing
announcements of telco blockchain projects and receive
invitations to participate in these services. My best guess
will be hardware and billing as small-scale springboard
projects, followed by wider offerings to other