Colt and PCCW Global try out blockchain wholesale settlements
27 April 2018 | Alan Burkitt-Gray
Carl Grivner, Colt CEO, and Mike Van Den Bergh, the CMO of PCCW Global, talk to Alan Burkitt-Gray about their pioneering trial of blockchain for inter-carrier settlement of voice minutes, and where this proof of concept may lead the wholesale carrier industry
Carriers could use blockchain for a whole new range of services – even to start a currency that companies in the wholesale industry could use to pay for the services they buy from one another, says Carl Grivner, who’s been CEO of Colt for two years. Sceptical? “Fifteen years ago people were talking about the cloud just as people are talking about blockchain today,” he says. “But, now, people are starting to study blockchain and its impact.”
Capacity announced in March that Colt and PCCW Global have started trials to see how blockchain can speed up time for inter-carrier settlements and make them more reliable. The proofs of concept they have carried out so far indicate that blockchain can cut inter-carrier settlement times from hours to minutes.
It’s early stages, says Grivner. “The settlement test with PCCW Global is a baby step.” What will follow? He already has a list of possibilities. “The most exciting of them is cyber security.”
The whole blockchain project has emerged from the Global Leaders’ Forum (GLF), created by the top industry executives who a decade ago approached Capacity Media to start International Telecoms Week (ITW).
The GLF meets several times a year at major industry events. “We came up with the idea at Capacity Europe at the end of October 2017,” says Grivner. From there to a working proof of concept took just four months, he notes.
The third partner in the project is a Singapore-registered blockchain start-up, Clear, whose CEO, Gal Hochberg, had already worked with Marc Halbfinger, CEO of PCCW Global, the international arm of Hong Kong’s HKT.
Benefit the sector
Halbfinger chairs the GLF, which aims to foster an environment within the industry that focuses on ubiquity, collaboration and interoperability between providers. This proof of concept was centred on these themes by attempting to understand how a technology such as blockchain can benefit the sector as a whole.
“I applaud Marc for his lead on this,” says Grivner.
Its power for the wholesale carrier industry is that for decades the process of reconciling records and settling debts has been laborious. Blockchain technology, it now seems clear, can make inter-carrier settlements more efficient, reliable and scalable.
“This is something that normally takes months,” says Grivner. “It’s not just the reconciliation of records but also the reconciliation of discrepancies.”
The blockchain trial by Colt and PCCW Global shows that it’s possible to reduce inter-carrier settlement times to minutes using blockchain technology. It’s not just more accurate but “it means better cashflow”, says Grivner.
Already he and Halbfinger – along with the rest of the GLF – are looking for ways to move beyond the first proof of concept, which involved voice minutes, largely because that was a well understood service provided by most carriers.
“Maybe a cryptocurrency,” he muses. “It could be used by telecoms carriers and maybe even by customers. Marc and a few others have talked about the creation of a cryptocurrency.”
Blockchain is best known, so far, as the engine behind Bitcoin, the cryptocurrency whose fluctuations in price have led to comparisons with Amsterdam’s tulip bubble of the 1630s. But whatever people say about the viability of Bitcoin and other cryptocurrencies, some are starting to realise that blockchain could have important business applications – and telecoms is just one of the possible uses.
Not just bill settlement and security uses, and not just the idea of a crypto-currency. “There are a lot more examples,” says Grivner. “The idea is to enrol more applications in the blockchain – not just settlement.”
What’s the next step? “Let’s enlist others industry-wide to look at some of the other applications, such as security.” Because blockchain is a distributed ledger, it’s almost impossible for one individual or company to create fake entries.
“Blockchain has raised the cybersecurity bar,” he adds. “It could be used for email, billing and other applications.” The mobile industry should find applications in roaming, he notes. “Ultimately I’d like to see the technology in our customers’ hands.”
Using blockchain for settlement in the wholesale carrier industry can reduce cost, improve operating efficiency and improve cashflow. But for the real value to be recognised, the entire industry needs to embrace the idea, says Mike Van Den Bergh, chief marketing officer of PCCW Global.
Van Den Bergh adds: “It is a value tool between ourselves and Colt. Right from the start we’ve got to be open and inclusive. We need to have minimum barriers to entry. The object now is to promote a new way of working. It has the potential to transform the whole industry. The value will be in inclusivity – so everyone is working on a common basis.”
Until now the industry has used conventional methods to record the transport of voice minutes – and other traffic – across each other’s networks. In the trials, Colt and PCCW Global implemented a bilateral private blockchain to record transactions, which were then reported to a public blockchain. Smart contracts were used to rate call detail records, resolve disputes and record the settlement transactions.
Levels of trust
“The industry is a success because of the levels of trust between companies,” says Van Den Bergh. “Blockchain helps to reinforce that. It offers new and more effective ways to operate.”
Voice minutes were used in the trial “because most players have a common set of rules”, he notes. “The nice thing about wholesale voice is that most carriers work in exactly the same way.” It made sense for the trial to work with existing processes “and just apply blockchain”, he adds.
Blockchain is a distributed ledger system, with multiple copies of files making it virtually impossible to distort the entries.
For the trial, Colt and PCCW Global used a combination of private and public blockchains, says Van Den Bergh. “That creates a level of resilience. It takes away the need for third-party verification.”
If the GLF and the wider industry want to adopt blockchain for all transactions, what confidence is there that the system will be scalable? One of the most famous uses of blockchain so far is Bitcoin and other cryptocurrencies, but they need so much processing power that they are unsuitable for small transactions.
“That’s the advantage of taking a private and public approach,” says Van Den Bergh. Transactions between two companies can be made on a private blockchain, and then the overall ledger is replicated on the public blockchain.
The next stage is for a larger number of carriers, working through the GLF, to do further proofs of concept. “Everyone is already talking about blockchain and knows it is a good thing.”
The trial at the start of this year used live data, so the two carriers could compare the results from blockchain with the results using the traditional way of working.
“Normally it involves large numbers of people and days if not weeks,” says Van Den Bergh. “But we were doing it in seconds. This immediately speeds up settlement.” Often the delays are caused by lengthy reconciliation and dispute procedures. Blockchain offers the potential to automate that, using what Van Den Bergh calls “smart contracts”.
The project has already “captured the imagination of the industry”, he says. “We have had more and more people knocking on our doors, even people from outside the GLF.”
For smaller players, he adds: “The real value will be created when the entire industry is working in the same way. Collaboration is a natural function of how the industry works.”
A public blockchain “will accommodate every player including the smallest, and they will decide when to implement private blockchain”. The key, he says, “will be to make it attractive enough, so that the amount of investment will be small. We are starting to think about the business model.”
And Van Den Bergh echoes Grivner’s suggestion that a later step could be a cryptocurrency that the industry would use for its settlements.
“It’s an obvious evolution of the model,” he adds. The currency would be convertible into standard – or fiat – currencies. But what would it be called? Among the latest suggestions: the Carl or the Marc.