Driving Innovation in Telecommunications with Blockchain

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Over the last year, we’ve seen blockchain disrupt several industries, and organizations are quick to realize the positive impact of adopting this emerging technology. Communication service providers (CSPs) are no exception.

In a world that increasingly revolves around data, customer experience, trust and digital ecosystems, CSPs are reinventing themselves to stay relevant in a highly competitive market with a business network that is becoming even more complex. Traditional providers, now challenged by declining revenues, growing customer expectations and a rise in over-the-top platforms, are moving towards virtualized, more optimized infrastructures to create differentiated, digital environments.

Blockchain is changing how we make digital transactions, offering benefits to CSPs who must modernize operations to remain competitive in a disruptive landscape. As an immutable, transparent digital record, blockchain provides a gateway into the knowledge economy, paving the way for improved efficiencies, streamlined services and revenue growth and can play a pivotal role in a CSP’s transformation.

By securely sharing data and creating a permanent, transparent record of transactions, blockchain can help CSPs operate more effectively within their business networks. A new report by the IBM Institute for Business Value (IBV), “Reimagining Telecommunications with Blockchain,” indicates the potential impact of blockchain is already generating interest among telecom leaders.

The study surveyed 174 CSP executives around the world about their experiences and expectations with blockchain. More than one-third of surveyed executives are considering or actively engaged with blockchain to support their enterprise strategies, including, data quality and accuracy, faster, more reliable transactions and improved security.

Blockchain is still new to the telecom industry, yet the study found that CSP executives are confident in its potential for their organization, particularly as the technology continues to evolve across other industries.

Before investing, organizations must understand the opportunities and challenges associated with the technology. According to the study, there are several factors that will influence a CSP’s decision to add blockchain to its transformation program. Eighty-seven percent of surveyed executives said the customer is an important role affecting their ability to move forward with blockchain at a commercial scale. And 72 percent see industry groups, like the Linux Foundation’s Hyperledger, playing an integral role in their blockchain projects given these groups can facilitate agreements on standards.

As CSPs embark on their transformation journey, investing in blockchain can alleviate challenges with their current operations. Of those surveyed, 76 percent of CSP executives cited security as a top reason to invest in blockchain, while 46 percent see it as an opportunity to develop new business models.

Blockchain has the potential to restructure the telecommunications industry, and, as demands for transparency and trust continue, its importance is only expected to grow. CSPs will see the greatest impact on their business in the following three areas:

  • Smart contracts enable CSPs to streamline internal processes, including interactions with suppliers and other CSPs, and improve efficiency within core management systems such as billing and eSIM provisioning.
  • CSPs can provide trusted, digital services built on blockchain that will meet the rising expectations of today’s customer. Examples include micropayments in exchange for digital assets, mobile money, and identity-as-a-service.
  • Transactions across multiple participants can be recorded on a blockchain, providing transparency and improving trust among parties and fostering better collaboration in business ecosystems.

In preparing for the future, CSPs must embrace emerging technologies as they look to differentiate themselves in the market. Blockchain can play a key role in transforming the way CSPs transact with partners and customers, paving the way for new business opportunities.

IBM Distinguished Engineer, Global Telco Industry Chief Architect

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