Blog Post

Five ways blockchain will change the telecoms industry

05 Dec 2017 4 min read

In the space of a few years, blockchain has transitioned from a technology tentatively discussed by tech enthusiasts to a topic we can happily pick apart with our taxi drivers – as indispensable to our ambitions as automatic cars, IoT, AI or VR.

But whilst awareness is currently confined to its application in the finance sector – as the technology used to create cryptocurrencies – its implications for the telecoms industry are similarly disruptive.

What is Blockchain?

Blockchain is a decentralised peer-to-peer distributed network ledger, and the architecture to a new Internet. Unlike traditional network interactions, blockchain does not rely upon centralised servers or trust authorities to manage transactions. Rather than third-party intermediaries, trust and transparency are guaranteed by immutable records of transactions, recorded through the blockchain.

As individual blocks cannot be altered without infiltrating the entire chain, which acts as a shared database, the ledger is essentially impervious to manipulation. It facilitates secure, transparent and verifiable peer-to-peer exchanges, with no third-party intermediaries, such as governments, corporations or regulative bodies. It’s also faster, more efficient and lower cost than existing solutions.

Five ways it’ll change telecommunications

We’ve discussed the why, but here’s the how. Even if blockchain presents no actionable opportunity to individual CSPs, it’s a technology to keep a weathered eye on – as its evolving rapidly and new applications are being identified each day.

1. Lower cost

It’s no secret that telecom operators have faced slimming margins for the past decade, led by changes in technology and consumer behaviour. The industry has undergone a transformation to a digitised and virtualised environment – with digital services and data taking precedent over traditional cellular services, and the rise of virtual operators (MVNOs). Blockchain will allow the industry to harness this digital environment as a growth enabler, rather than incurring new costs through additional infrastructure, or developing home-grown IDM and virtualization solutions. We will also see the elimination of physical SIM cards and their associated distribution cost – a symbolic result that’ll help counter fraud and significantly reduce distribution costs.

2. Anti-fraud

Fraud, especially from overboard roaming, is still an industry challenge. Blockchain will enable the replacement of physical SIMs with secure software, eliminating the need for end-to-end roaming service or a ‘clearing house’. Instead, minutes and bytes will be negotiated through a P2P roaming data exchange, drastically reducingthe overhead incurred by fraud and monitoring usage. In addition, blockchain solutions will lead to a reduction in subscription identity theft through public-private cryptography, whereby locally stored private keys generate public keys for device verification, without the need for physical SIMs or weak passcode protection. The user maintains control, and man-in-the-middle vulnerabilities are reduced.

3. New revenue

Blockchain is an answer to an already-disrupted industry. The transformation to a digitised ecosystem was rapid, and operators have often found themselves behind the curve set by the likes of Google, Skype, WhatsApp, etc. In a nutshell: communication has changed. Through blockchain, many of the cost-incurring hurdles – not least legal fees – can be bypassed, facilitating a more secure and streamlined service delivery. Blockchain will also lead to more predictable and transparent revenue. Operators will gain an overview of every transaction made, and be more easily able to manoeuvre for new opportunities. The creation of additional-value services, such as identity authentication and data management for third-party applications, will also provide new revenue streams. 

4. Security

Everything blockchain achieves culminates in better security. Operator transactions are locked into the chain through smart contracts, with customers’ details encrypted and virtually impervious to tampering. IDM and authentication will also be easier and more streamlined, processed through public databases instead of by the operator, or by a third-party intermediary. Microsoft is already developing a blockchain-based identity management platform for cross-device authentication, and a similar solution will be achievable for CSPs. This will prove essential as the concept of ‘smart cities’ becomes a reality, for which high levels of transparency, authenticity and audibility are essential.

5. Innovation trigger

Blockchain is a door that opens into a room of doors; the possibilities for new solutions and revenue are practically endless. The determiner will be the continued evolution of the blockchain technology and the commitment of early adopters. Once a few CSPs prove the technology – as a means of revenue production and cost reduction – others will follow. Blockchain accelerates the industry’s ascent into a highly energised digital economy, with flexible service provision and service access achievable across multiple devices and from any location – home or abroad – with impugnable security and transparency.

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