The emergence of Blockchain in Telecoms
Blockchain began in 2009. Fast-forward 11 years and the digital ledger is currently one of the most widely discussed and hyped technologies. Blockchain applications are young and evolving, and complementary industry-wide standards are most probably still a few years away. That includes the telecommunication industry. Abigail Opiah investigates.
Blockchain is the key underlying technology of Bitcoin. It is a way to have “blocks” of encrypted data “chained” to each other in a robust way to ensure the data cannot be altered, once its transaction has been recorded.
A central challenge of discussing blockchain in a telecoms context is that there are so many possible uses and applications. Considering the huge number of existing instances of databases and storage, that might be replaced or improved with distributed ledgers, that is when the scope is recognised, according to Disruptive Analysis.
Mirko Voltolini, global head of Network On Demand at Colt Technology Services says that blockchain is a general-purpose technology that potentially has several applications in the telco world, ranging from enabling new services (e.g. managing connectivity between IoT devices in a secure and trusted manner) to simplifying internal telco operations.
“Colt has been particularly active in the latter; we see blockchain as an enabler of digital transformation in the carrier to carrier world,” he adds.
“Inter-carrier transactions rely on a mix of automated and manual procedures that make the process of doing business together complicated, slow and expensive. Blockchain has the potential to enable full automation across several areas, from financial settlement and fraud prevention to KYC procedures for onboarding customers. The space of applicability is extensive.”
Colt has run a Proof of Concept (PoC) using blockchain technology to automate the financial settlement process between carriers, initially in collaboration with PCCW Global, then extended to several other global carriers.
“The PoC has progressed to a production deployment, and we are in the process of implementing multilateral agreements among the participants,” Voltolini says.
“The initiative has evolved with the creation of the Communication Business Automation Network (CBAN), a technology platform with a governance structure that aims to standardise and promote the adoption of blockchain technology in the carrier world.”
Voltolini mentions that the initial use cases identified are International Voice and Data On Demand, but more will be added in the space of 5G, IoT, edge compute, mobile roaming and storage.
Where Blockchain is heading
Blockchain, in particular, has emerged as a critical technology to manage this connectivity, opening a new era in the efficiency, transparency and security of the world’s transactions.
Dennis Meurs, vice president and general manager at Syniverse, is responsible for strategy, product development, and business development for the company’s full portfolio of transaction, clearing, fraud, and security services, including blockchain. He says that with IoT, a lot of enterprises are doing business with players that they have never done business with because connectivity isn’t their core business.
“There is an art for how we can optimise and how we can connect better, faster, quicker, more secure. Blockchain is a good fit for this,” says Meurs.
“In telecoms, everything is standardised so you need to make sure that whatever you send at a data point, I actually can read, and then the other part you can read as well. Why don’t we just build a system which is much more generic, which will be where blockchain will be labelled as a good technology. There are a lot of commonalities when it comes to monetising any type of transaction.”
Meurs joined Syniverse in 2013 and has more than 18 years of experience in senior-level clearing, settlement, and revenue management roles for a range of leading telecommunication companies.
“I can go out to the market and I can hire tons of very smart and expensive people and then get all kinds of hardware and start building these standardised systems all myself, or I can find a partner that knows how to do this stuff and can bring scale. Bearing in mind that we do a couple of billion transactions a day, it needs to be a scalable solution,” he explains.
“That is how we ended up with IBM - they have around 700 to 800 live deployments of blockchain.”
Together, Syniverse and IBM offer a solution that combines Syniverse monetisation-and-settlement expertise with advanced technology and IBM’s blockchain leadership.
Blockchain and 5G
The power of 5G coverage through its reduced latency, high speeds and capacity allow for IoT devices to become widely used. Simultaneously, these devices can leverage the security, decentralisation, immutability and consensus arbitration of blockchains as foundational layers.
“Old worlds will coexist with new worlds as always. I know that 5G in the telco space will use a specific format, which we have chosen to put on blockchain,” Meurs explains.
“What I see in IoT is the number of positives that telcos built up to address customer demands. Enterprise demand is growing exponentially.
“Blockchain is a technology, but more importantly, the solution is that you can standardise all these non-standardised things and get them much faster time to watch it, which means that the entry barrier for a smaller company to deal with bigger companies is becoming much easier.”
5G is on its way to being deployed across the world, connecting all the heterogeneous devices and machines.
Blockchain adoption could significantly reduce roaming fraud and also optimise ID management through instantaneous and automated processes based on smart contracts, according to a report by Monitor Deloitte.
Nuggets, a British blockchain start-up, works with major telecoms providers to bring about some of the benefits that blockchain can provide for the industry. The company’s founder Alastair Johnson has spoken with a number of telcos in terms of the human reactions and the challenges it may cause when using blockchain in the sector.
“It takes a business with a bit of confidence and ability to be able to move to gain the benefits of blockchain, and it seems like it is on everyone’s radar, but there seems to be a lot of talk but not a lot of action,” says Johnson.
“You see all the young start-up companies sprinting past telcos in regards to the adoption of blockchain, but the telecommunication industry is somewhat slow.
“They have done very well in the past, and have made a lot of money, but sometimes they are just happy in that norm. These days, if you do not innovate, you get left behind very quickly.”
Johnson predicts that some of the smaller, faster telecommunication companies looking to differentiate and break ground will take it home first as far as blockchain is concerned. Some of the bigger telcos who may have been left behind will follow this.
“They will take it on too and reap the benefits,” Johnson concludes. “That combined with 5G and IoT, will be the driving force for the economy in the next five to 10 years.”
Blockchain may be able to deliver a broad variety of applications across the telecom industry and that the technology has the potential to significantly influence CSPs operating models.
Monitor Deloitte reports state that the impact of blockchain on the telecommunication industry ultimately depends on how actively the adoption of use cases is driven by CSPs.