Thinking Blockchain in Telecom
Published on : Monday 30-11--0001
In the past couple of years, companies in a variety of industries – including health care and banking – have been investigating or deploying blockchain technology. But what’s in it for the telecommunications industry? What positive impact will blockchains have on existing processes and costs? Will it help create opportunities to generate more revenue and develop new services? And how can blockchains help communications service providers (CSPs) better position themselves in a world that is increasingly all about data, customer experience, trust and digital ecosystems?
To learn more about CSP executives’ perspectives on blockchain, we looked at data from the 2017 IBM Institute for Business Value (IBV) C-suite survey of almost 3,000 global executives from 20 industries, including 174 from CSP organisations. Though blockchain technology is still young and evolving, many CSP executives expressed confidence in its potential for their organisation.
CSPs are in the middle of all data transport and transactions that result from the use of smart devices and the IoT. CSPs expect that blockchain can support them in ensuring data quality and accuracy, increasing trust and transparency in transactions and improving security against fraud and cybercrime (see Figure 1). They also believe blockchains will help them simplifying and automating business processes, as a blockchain provides the opportunity to rationalise various aspects of a CSP’s operations. And blockchains will increase transaction speeds by reducing clearing and settlement time.
Figure 1: CSPs identified numerous ways that blockchain could support their enterprise strategies
We found that 36 per cent of CSP executives surveyed indicated they are already considering or actively engaged with blockchains. It’s not surprising that 76 per cent of them cited security as an important reason to invest in the technology (see Figure 2). After all, as custodians of the networks, CSPs play a pivotal role in fighting the new threats that are emerging and they are expected to support proactive protection against these threats with a range of technical and operational innovations. In addition, almost half (46 per cent) of them see blockchain also as an opportunity to develop new business models for revenue generation.
Figure 2: CSP organisations that are considering or are are already engaged with blockchain cited numerous reasons for blockchain investments
Early familiarity with opportunities and challenges associated with blockchains will help CSPs gain advantages in cost savings, revenue growth and new business models. We see the greatest impact for blockchain in streamlining internal processes, building blockchain-based digital services, and providing trust, security and transparency in business ecosystems, including the IoT (see Figure 3).
Figure 3: Three areas in which blockchain will have the greatest impact
Streamlining internal processes
The modularity provided by smart contracts enables various aspects of CSPs’ operations to be streamlined, including billing, roaming, wholesale, NFV management and supply chain management. In the context of roaming, blockchain’s benefits include faster identification of visiting subscribers, prevention of fraudulent traffic and claims reduction. In addition, the elimination of clearing houses could lead to significant cost reduction.
Blockchain technology is also perfect for supply chain management, improving efficiency between CSPs, suppliers and distributors. We already see examples of blockchain projects in supply chain management emerging in other industries, such as at Walmart, Maersk and IGF.
Developing trusted digital services
CSPs can provide a variety of digital customer services built on blockchain, bringing them new revenue streams. Areas in which they should consider deployment of blockchains include digital asset transactions (micropayments for music, mobile games and the like), mobile money (subscriber-to-subscriber money transfers, international remittance) and identity-as-a-service.
New digital identity ecosystems are coming, and CSPs should be among the leaders and early adopters. Because CSPs enjoy a high level of customer trust, they are well positioned to offer such a service. The vast amount of data CSPs possess and the proliferation of smartphones put CSPs in a unique position to act as a source of identity and authentication. New revenue streams could be generated by offering identity management services to both subscribers and business partners.
Collaborating in ecosystems
For CSPs that want to become digital services enablers (DSEs) by creating and operating platforms, blockchain could become a foundational building block to handle complex transactions across multiple participants. Early stage examples include blockchains for advertisement sales and digital rights management, to name a few.
In addition, blockchain could play a role in machine-to-machine (M2M) and IoT environments, where devices connected to the internet automatically interact with each other by collecting and exchanging data. Blockchain and smart contracts could both monitor and orchestrate these interactions. Recognised as a trusted party, CSPs are best placed to accelerate this development to materialise their ambitions in the IoT space.
The way forward
While blockchain technology is still evolving, the opportunity to benefit is real. To move toward reaping benefits, we recommend the following first steps:
- Spend time with a lead partner in blockchain to understand the business models and technologies, as well as understand the early use cases, proof points and emerging solutions.
- Evaluate where the technology stands today, the various blockchain providers and the position on standards and regulations. Join industry groups like the Linux Foundation’s Hyperledger, given these groups can facilitate agreements on standards.
- Invest in ideation on potential opportunities in both the revenue growth/platform business area and internal efficiencies.
We believe blockchain has a bright future and the potential to change the way CSPs transact with their partners and execute core business processes. The time is now. CSPs need to take the first steps toward building real use cases and applications and, most important, under- standing the opportunities blockchain offers.