Four Areas Where Blockchain Can Impact Service Providers
This virtual ledger technology may hold the key to locking up telco security.
The use of blockchain came into the spotlight in industries such as finance, banking, supply chain management and international remittance, and while there have been discussions around its relevance to the telecommunications industry for the last couple of years, compelling case studies have been few and far between. One of the main reasons for this is that the distributed ledger technology was primarily used for security, and CSPs already have a very mature and established security sector.
It may be the next big move in upgrading telco security, but it is also becoming apparent that blockchain could have uses in areas like BSS, developing new digital services, digital identity and creating digital enablement platforms for cross-industry collaboration. Let’s take a closer look at four areas where blockchain can provide advancements over existing telecom policy and procedures:
BSS Functionality Enhancements
Billing and charging is an obvious place where blockchain can be used for authentication and other security-focused activities, but roaming and supply chain management also represent interesting potential use cases. Take the case of roaming, where reconciliation for roaming customers is time consuming and requires an intermediary clearinghouse, which charges a percentage of the transaction amount. Blockchain would allow CSPs to almost entirely bypass the clearinghouse. Within BSS there are many examples of persistent data for which is it critical to have an immutable record, such as timestamping.
Development of New Digital Services
Enabling innovation in the digital services arena is one of the current top priorities for CSPs undergoing large-scale business transformation. Blockchains are used in digital retail to enable micropayments for products like music, on-demand video, games and other similar, low cost, high volume digital items. There are a plethora of micropayment services in the financial industries that are crying out to be disrupted by CSPs. Customer-to-customer ‘digital wallet’ money transfer services, for example, are a standard service that MNOs in Africa or India offer, but they have failed to gain much traction in other markets. In the digital age, these type of payment scenarios are the most common, thus CSPs can harness blockchain to make the transactions secure, trustworthy as well as increase their own stickiness with their customers.
Fraud detection and prevention are still red flag issues for CSPs, costing the industry tens of billions of dollars annually. In the consumer markets, fake subscriber profiles are often used to access an MNO network while cloning a roaming subscriber’s identity. Blockchain would bring allied MNOs onto a single shared blockchain hyperledger network, which would use distributed identity verification data to ensure transactions are authorized based on a consensus model.
These models are part of a ‘smart contract’ system built around a blockchain that can infallibly check transactions against rules defined in the blockchain. Large enterprises have an advantage in the global market, their capital absorbs the cost of transfer fees and obtaining lower fees, they get better intellectual property protection, and many other advantages that come with having more capital and greater influence. Blockchain enables SMBs to compete in that global market without vast capital reserves.
Stimulating Cross-Industry Collaboration
For many CSPs, digital transformation is a long-term endeavor, ultimately creating an enablement platform on which other industries can themselves digitalize. In doing this, the CSPs put themselves at the center of an ecosystem of cross-industry IT and business innovation and collaboration. In this setting, blockchain can be used to create a pre-arranged master contract for the sharing of data among the ecosystem or community. This is a real opportunity for CSPs to heighten their value in the digital marketplace of the 2020s rather than being simply a connectivity provider, excluded from the real weight of revenue in the value chain.
For example, in IoT markets, blockchain can empower M2M transactions by improving authentication and security, making CSP IoT platforms the most robust offering in the market. Being a key player in IoT is very high on many telco’s ‘must do’ list for the next decade, especially as many new digital services will involve an M2M transaction element.