Overcoming the business case paradox
17 May 2021 | Sam Evans
Despite the abundance of use cases, carriers face challenges when it comes to implementing blockchain. Sam Evans, senior MD at Delta Partners Group, explores the reasons – and solutions
Blockchain, or distributed ledger technology (DLT) continues to be viewed as a key technology on which the carrier industry automation journey can be built, given the benefits that can be generated through efficiencies, fraudulent traffic reduction and new services that can be enabled, such as data on demand.
The proposed use cases are abundant and range from the existing services, such as voice, to innovations like the creation of real-time marketplaces for computing where blockchain can allocate resources and automate enquiry, order and payment processes. If we look forward to a carrier industry in which the benefits of blockchain in telecoms have been realised, it will be an industry transformed.
And here is where the paradox comes – despite the abundance of use cases, the recognition that adoption of DLT is a necessary evolution for the telecoms industry in its software-driven transformation and the theoretical value that can be created, carriers are facing challenges when it comes to implementation. Why? Given the complexity of implementation, carriers are – understandably – wanting to have clear sight on the business case in advance. However, given the nascency of DLT-based applications, it is challenging to develop a robust business case purely on hypotheticals.
For carriers, complexity in implementation comes from both the network-effect nature of DLT value and the internal requirements for system migration.
Value comes from the network effect of having many carriers using DLT for the same solutions or processes – for example voice settlement – but that creates complexity at the early stage of solution conceptualisation. Different carriers and technology providers can propose the use of different ledgers, and there is the need to ensure interoperability across the base layer (core services of identity, settlement, payments, security) and the abstraction layers that are required both for the automation of smart contracts and the different use cases.
Furthermore, while blockchain offers the industry a decentralised approach, the blockchains still need to be set up, rules created for their governance, and access managed. This is the challenge that the Communications Business Automation Network (CBAN), the special purpose vehicle set up by several of the ITW Global Leaders Forum members, seeks to overcome.
Existing BSS/OSS architecture will require, at minimum, adaptation to support DLT. As DLT solutions scale, unless the whole industry moves to a DLT-only approach there will need to be DTL running in parallel with the existing BSS/OSS systems. This has the potential to both dilute the mid-term financial benefit and create additional complexities.
While recognising the strategic value of DLT, carriers are demonstrating some reluctance to invest in implementation until they see the business case. Yet, it is only through implementation that the business case can be recognised.
Demonstrating value through implementation
We are starting to see some implementations of DLT in the carrier space – Deutsche Telekom, Telefonica and Vodafone working together for the automated settlement of roaming discount agreements, for example. The work of these carriers has demonstrated the potential of a DLT-based approach to obtain settlement results much quicker, uncover data discrepancies in real time and update data in real time. It is only from implementations such as these that the real data points can be created to build the business case.
CBAN has adopted a similar “execution to prove the business case” approach. It is working towards three live implementations by the end of 2021 – focused on data on demand, voice fraud mitigation and voice settlement – with each implementation driven by a focused set of carriers and technology providers. It is intended that the data points arising from these implementations will help additional carriers understand specifically how value can be created from DLT applications and therefore support their internal business case development.
These ‘coalitions of the willing’ will be critical to build the proof points on the value generated through DLT implementations and to serve as advocates to the wider industry. Participants in these initiatives have a critical role to play in building the foundations for scale of DLT in the telecoms industry.
Why this matters
In the long term, a movement towards a highly automated architecture within the telecoms industry is accepted and inevitable. However, the structure of the automated ecosystem will be shaped on how the carrier industry can manage the move into implementation.
The adoption of DLT has the hallmarks of previous generations of innovation, such as instant messaging or IP calling, where with hindsight the telecoms industry recognises opportunities missed. Through the work of CBAN and other groups, with a clear focus on demonstrating the value through implementation, hopefully DLT can be an opportunity taken.
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