Telecommunications

Blockchain in telecom: From concept to reality

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Blockchain is currently one of the most talked-about technologies. Across industries, organizations are exploring blockchain’s potential impact in their space and how they can benefit from this emerging technology. The communications service provider (CSP) industry is no exception.

The biggest questions for CSPs, however, are “Where is the bang for the buck?” and “Where and how do we get started?” The good news is the opportunity to benefit appears real. The core attributes of blockchain’s shared ledger approach help provide trust, security, transparency and control across the participating ecosystem for all points in a transaction process. This results in the potential for lower costs, faster throughput and improved experiences for all players.

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).

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. Recognized as a trusted party, CSPs are best placed to accelerate this development to materialize their ambitions in the IoT space.

The way forward

From our survey of 174 C-suite executives from the telecommunications industry we found that a significant 36 percent of CSP-organizations are already considering or actively engaged with blockchains. Though blockchain technology is still young and evolving, many

CSP executives expressed confidence in its potential for their organization. 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

The full report is available at ibm.biz/blockchaintelco

Global Telecommunications Industry Leader at the IBM Institute for Business Value

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