Applying blockchain in telcos

By Shubhangi Chowdhury, Portfolio Consultant at Tecnotree

The pandemic has kickstarted an era of complete dependence on connectivity, highlighting the indispensable nature of telecoms like never before. The increase in usage, accentuated by the growing demand for digital content and new services, calls for even more resilient, scalable, and secure infrastructure.

With the global trends of 5G, fintech services, and the shift to virtualization, blockchain technology, which originally arrived in the world of finance as an enabler for cryptocurrency, is now seen as a driver of future opportunities for CSPs around the globe. The blockchain market in the telecoms industry was valued at $157.9 million in 2020 and is expected to reach $2759.8 million by 2026.

Unleashing the potential of blockchain

The faster a piece of business information is received and the more accurate it is, the better. Blockchain is ideal for delivering that information because it provides immediate, shared and completely transparent data stored on an immutable ledger that can be accessed only by permissioned network members. A blockchain network can track orders, payments, accounts, production, and much more. And because members share a single view of the truth, you can see all the details of a transaction end to end, leading to new efficiencies, new opportunities, and greater confidence.

The benefits of Blockchain are many but the most significant include:

Greater trust

With blockchain, as a member of a members-only network, you can rest assured that you are receiving accurate and timely data and that your confidential blockchain records will be shared only with network members to whom you have specifically granted access.

Greater security

Consensus on data accuracy is required from all network members, and all validated transactions are immutable because they are recorded permanently. No one, not even a system administrator, can delete a transaction.

More efficiencies

With a distributed ledger that is shared among members of a network, time-wasting record reconciliations are eliminated. And to speed up transactions, a set of rules — called a smart contract — can be stored on the blockchain and executed automatically.

While CSPs can use blockchain to strengthen existing business processes across the OSS/BSS ecosystem, it can also support trends such as expansions into 5G and IoT, building a two-dimensional competitive edge for the operator. Blockchain gives the promise of a more secure, customer-friendly, and future-ready telco.

Smart contracts for a superior experience

Customers are the principal focus of the telecoms value chain and blockchain can build a superior customer experience by automating contracts through smart contracting. It provides the self-execution of workflows written over blockchain, automatically providing expected actions.

Disputes raised by customers over products, invoices, delivery, etc have long been a cause of concern and revenue leakage for many businesses. Smart contracts can reinvent settlements of disputes, significantly improving customer experience, whilst also maintaining a ‘single source of truth’ to foster trust. Similarly, when applied to partner and vendor dealings, smart contracts can replace repetitive manual work and reduce mistrust and potential bad debt.

The telecoms supply chain is a vast network of multiple nodes with goods, services, and revenue passing through a largely human-dependent network. Issues such as loss and theft in the supply chain are rampant. This can be virtually eliminated by smart contracts, with goods having a blockchain identity to ensure transparency and cut overheads.

Settlements

For CSPs, settlements are generally complex, and latency or errors including intense manual work are not uncommon. Blockchain not only makes for a streamlined settlement process but can also eliminate grounds for disputes. It redefines the entire process with the help of tamper-free and verifiable transactional records, offering relief to CSPs by minimizing the need for intermediaries such as audit teams and clearing houses.

With real-time automation, a blockchain-based system will also save huge amounts of time, effort, and costs in the management of settlement disputes.

Revenue assurance & fraud management

Longer lead times to detect issues and responses coupled with huge costs incurred on revenue assurance and fraud management processes are key concerns that telcos have been experiencing over the last decade or so. Blockchain has the potential to save costs incurred by CSPs on revenue assurance tools and processes by providing end-to-end transparency in near real-time. Moreover, with the speed at which 5G is being rolled out, and the various applications it can support, it is all the more important to ensure that there are no revenue leaks. Blockchain can also eliminate the use of high-end fraud management software, through transactional data security, advanced data inspection, and real-time fraudulent activity detection.

Since data stored over the blockchain is validated, it eliminates the issue of data cleaning and structuring, making it very easy to flag concerns. It will also help CSPs to deploy complex analytical models, which are real-time, self-evolving, and intuitive for greater visibility over leakages.

Blockchain can also help tackle subscriber Identity theft by linking identities to devices.

Roaming fraud can be prevented by having a blockchain-based network for all service providers over which all transactions are immutable and verified, thereby enabling issues to be flagged in real time.

Mobile number portability (MNP)

Mobile number porting is another burdensome process that greatly takes up human effort and time, right from broadcasting MNP requests from centralised MNP systems to verification and also to settlement. The process takes days to finish, with high incidences of rejection due to verification failures. A blockchain-enabled platform can simplify this process by creating a shared data repository for all the stakeholders that cannot be tampered with, thus eliminating the scope for data mismatch and rejection.

An enabler of futuristic trends:

With the explosion in mobile data and connected devices, blockchain has the potential to give momentum to trends that are fast gaining traction, such as:

• Big data analytics, by seamlessly handling huge volumes of data
• Artificial intelligence, enhancing the ‘intelligence’ in AI by bringing about coherence in data and improving customer interactions at multiple touchpoints
• 5G expansion, supporting the ultra-low latency and reliability needs of 5G networks
• The internet of everything, facilitating self-governing networks with high levels of security by creating a Blockchain identity of ‘everything’

A new revenue stream to be monetised: ‘blockchain as a service’

CSPs can also monetise a new revenue stream by providing ‘blockchain-as-a-service’ that will allow B2B customers to quickly scale up and build blockchain applications to suit their business models.

Customer demands increase by the day and CSPs have long catered for those demands by creating new services. CSPs can therefore foster quicker adoption of blockchain technology and extend tailor-made blockchain solutions to customers by way of managed blockchain services, using their tried and trusted experience and know-how.

Blockchain is the ideal fit for the next paradigm shift in the telecommunications industry for increasing real-time transparency, supporting new revenue streams, and improving the overall customer experience. It has the power to strengthen the future telco based on the trust embedded in technology.

Though blockchain is still in a nascent stage, DSPs around the globe are showing a growing interest in its potential and have already started investing in and deploying Blockchain. As with any other potentially disruptive technology, Blockchain is bound to be posing initial challenges. However, with a long-term view on digital transformation, well-defined use cases, and an action plan, the telecoms ecosystem stands to drive past the age-old industry laggards caused by traditional centralised mechanisms.

Author: Shubhangi Chowdhury is a Portfolio Consultant at Tecnotree focusing on Digital BSS. She carries varied consulting experience in the telecommunications industry and has been part of transformation projects across Africa and the Middle East.