Will Blockchain Become a Stepping-Stone For Service Providers?
The market size of blockchain in telecom this year has reached $46.6 million, and that number is projected to grow to $993.8 million by 2023.
Communications service providers who wish to remain competitive, stay relevant to their customers, and come first to market with innovation, should consider how the decentralized, immutable database can impact their offering.
by Simon Altman, VP of Business Develpoment
Blockchain has multiple benefits to contribute to telecom. Instant traceability, data security, improved analytics, or increased cost-effectiveness are just a few. Among multiple use cases, we have identified three, which seem the most critical for service providers. It seems like the technology of trust may become the stepping stone to success for modern Telcos who compete for subscribers’ attention with digital content providers and OTT players:
OSS/BSS Security and Fraud Prevention
The technology industry is plagued by fraud and telecom is no exception. The estimated cost of fraud in global telecommunications amounts to almost $30 billion annually. Sources of fraud vary from identity, roaming scams, SMS, or signaling. Although CSPs have been successful in reducing fraud in traditional services (voice), as the industry continues to evolve, new types of challenges emerge, related to data, IP based calling, and mobile technologies. Blockchain may help service providers mitigate the outcomes and prevent future losses.
Blockchain is a digital, distributed transaction ledger that provides all stakeholders with identical copies of all entries, which they can review at any point. Each block in the chain is labelled with a unique hash and secured with advanced cryptography, and the decentralized blocks of data cannot be tampered with. By offering full transparency, delivering insight into all transactions, and providing laser-focused tagging and tracking of dealings, blockchain can be used, for instance, to prevent SIM theft or cloning subscriber data. It may also mitigate roaming fraud by attaching smart contracts between roaming operators, which will execute every time a subscriber triggers an action abroad.
Inter-carrier Settlement and Immediate Reconciliation
Imagine that a CSP requests an off-net resource from another provider in a different country to deliver an end-to-end service to an enterprise customer. They set up an inter-carrier end-to-end service for the client, which possibly involves other Tier-3 operators, negotiate conditions of a contract, and push the service. At the end of the month, it’s time to settle the bill. The problem is that provider A’s statement doesn’t match provider B’s accounts. The service is running, the customer hasn’t paid, the two providers are in the middle of a billing dispute, and all the partners in between incur losses which may even jeopardize their business.
As it is now, the current service provider inter-carrier billing systems frequently sit on top of legacy business processes with a lot of manual intervention, little automation, and limited real-time transactions. BSSs of today do not provide any visibility or correlation between what was provisioned in the network and what is the actual usage at runtime, which either leads to over-provisioning and incurring additional costs or under-provisioning and quality of service issues. Additionally, it is now possible to reconcile SLA metrics in the billing reconciliation.
Blockchain can step in here to address the issue of payment reconciliation with an accurate, shared, trusted and secure ledger. Thanks to the technology utilizing smart contracts, all the intercarrier activities can be logged and tracked in real time and remain immutable for easy audit by all involved parties. Instead of waiting until the end of month to reconcile statements, all parties involved in the service delivery process will be able to access the bill data anytime and reconcile against the received invoice.
Taking into consideration blockchain’s cryptocurrency origins, the immediate gain to CSPs when it comes to service innovation is delivering services related to micro payments, but that’s just one benefit. CSPs can also take advantage of the technology by exploring its impact on online advertising, identity management, 5G, or IoT. Blockchain can contribute here with instant traceability, security, improved trust and speed.
The technology may also deliver invaluable benefits by empowering data-tracking and providing the means for a more granular customer analytics. They can be used to create a more personalized content and customized deals, which will translate into greater customer loyalty and reduced churn rates. By leveraging blockchain, CSPs will be able to create a larger catalogue of tailored, instant-on services, such as private or on-demand Wi-Fi, optimized bandwidth network, or enterprise grade security. Moreover, by eliminating the need for intermediaries, blockchain will directly increase service profitability for CSPs who can claim higher margin and enjoy greater profit.
Until recently, blockchain has been almost exclusively associated, through the Bitcoin extension, with the banking and financial industries. Yet the advent of Ethereum and similar decentralized development platforms unraveled a wealth of opportunities for its applications in multiple industries, including telecom. Now it’s time for industry trailblazers to take one of the above use cases and implement blockchain to reap the rewards before the rest.