The blockchain way to cut fraud and speed up settlements
06 June 2018 |
Wholesale telecoms leaders are trying out the first uses of blockchain to end reliance on slow, paper-based settlements. Alan Burkitt-Gray talks to Eran Haggiag and Gal Hochberg, the executives behind the proofs of concept
The company behind this year’s blockchain trial by Colt and PCCW Global believes that the technology will reduce fraud and settlement times – and increase efficiency.
The team has been working on blockchain and cryptocurrencies for about five years now, “waiting for the right timing for enterprises to start considering blockchain technology”, says Eran Haggiag, now executive chairman of Clear. “We have tried to find how to create significant value to enterprises using blockchain.”
He and CEO Gal Hochberg set up Clear, a Singapore-registered company, to develop the technology. “What we’re doing is building core technology for various markets,” says Hochberg. “We’re looking at energy, shipping, advertising and others. Our main focus at the moment is the telecoms wholesale market. We aim to make it more effective and enable the creation of new services and products.”
He observes: “In many markets services are delivered by automatically by computers, but billing is done by people.” That description fits the wholesale market precisely.
Clear is working with the Global Leaders’ Forum (GLF), the grouping created by the top industry executives who a decade ago approached Capacity Media to start International Telecoms Week (ITW). The trial by Colt and PCCW Global a few months ago was the first proof of concept, but we expect details of others to emerge this week.
As Colt CEO Carl Grivner told Capacity in March, blockchain’s power for the wholesale carrier industry is that for decades the process of reconciling records and settling debts has been laborious. “This is something that normally takes months,” Grivner told us. “It’s not just the reconciliation of records but also the reconciliation of discrepancies.”
A distributed ledger
Blockchain technology, it now seems clear, can make inter-carrier settlements more efficient, reliable and scalable.
The GLF meets several times a year at major events in the industry, such as ITW. “We came up with the idea at Capacity Europe at the end of October 2017,” said Grivner in March. From there to a working proof of concept took just four months.
Let’s take a step back. What is blockchain? Hochberg says: “Think of it as a ledger that’s distributed – unlike a database, that one person owns and someone decides about. With blockchain, everyone comes together. You agree on it as one source of truth, and it’s built for a global scale.”
In the proof of concept with Colt and PCCW Global, “we managed to settle a month of traffic in less than one minute between the two carriers”, he says. “I’m confident that the technology can be scaled up to handle all voice and data settlement and clearing.”
Is it really secure? “We use a technique called zero knowledge proof – which allows us to maintain privacy,” says Hochberg. “It’s slightly counterintuitive: it lets you create a transaction that someone can check without knowing who you are or knowing the details of the transaction.”
But is it proof against attack? He is sure: “Over the last few years it’s held values in billions of dollars, and the underlying technology is very strong.” It is open-sourced and run by a wide range of bodies. “We’ve not seen any government take them down. Bitcoin has been around for almost 10 years. It’s constantly under attack, so we have a high confidence that the core underlying technology is secure.”
For the carrier business, “Clear’s contract creation system allows you to define the ways disputes are resolved, starting with simple rules of averaging and scaling to sophisticated rules that can take advantage of the data in the network while respecting privacy,” he adds.
Clear plans a multilayer blockchain, he says: “You have an interface between the private blockchains between carriers and a public blockchain. It gives you scale: we’re talking multiple orders of magnitude. It’s a decentralised network, leveraging the power of the network. You distribute the load across the network.” The more companies that join, the more power you have.
When I spoke to Hochberg and Haggiag a few weeks ago, they were already discussing new projects with the GLF, “but I can’t disclose the information”, said Hochberg. “We’re working with carriers to understand the relevant timelines as we’re building the system up. Over time we’ll be scaling up the number of carriers and the percentage of traffic from each carrier.”
The final word goes to executive chairman Haggiag: “This is a big opportunity for the wholesale telecoms industry to unlock significant cost-cutting through reducing manual labour, reducing fraud through fast and rapid settlement and increasing collaboration in the industry by making it easy to create and execute contracts.”
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