Blockchain Use Cases in the Telecom Industry
In order to retain an advantage in a fiercely competitive environment, address the new era of customer needs and increase the company’s revenue, telecom entrepreneurs must consider implementing emerging technologies in their business practices. The one promising technology that can pull telecom business owners out of the fire is blockchain.
Implementing blockchain can create a multitude of benefits for different telecom branches. Some of them include the advancement and support and internal and external operations, new revenue sources, efficient enterprise cybersecurity and more. Now we will explore how blockchain can enhance the telecom industry now, and what opportunities will it create in the nearest future, alongside with the rise of 5G cellular mobile communications and the internet of things.
Telecom Branches that Benefit from Blockchain
Telecom Operations Advancement
Blockchain and smart contracts can create a lot of automation in internal processes, like billing, roaming and supply chain management. Currently, the transactions in telecom ledgers need to go through a clearinghouse to be approved. Smart contracts can automate this process and guarantee the settlement between the participants, by routing from one operator’s blockchain to another operator and increase transparency to the end customer. The roaming subscriber initiates a voice call on the telecom network. The transaction is then recorded on the blockchain network and when the call ends, the call duration is saved on the blockchain platform. Based on the smart contract rules, the charges are set, and the payment is registered from the home operator to remote partner.
The process is based on a consensus model, and shared ledger technology, which does not involve any clearinghouses. This helps to avoid disputes between the participants involved; it is less time-consuming and deceases the costs spent on auditing and accounting, and most importantly, excludes the expensive mediation of the clearinghouse services.
Digital Asset Transactions
Telecom enterprises could leverage blockchain to enable micropayments for music, mobile games, and other types such services. Moreover, blockchain may be implemented for customer-to-customer money transfer services. Airtel, the leading telecommunication company in India offers digital wallets that enable customer-to-customer payments. By employing blockchain to handle the transactions, Airtel makes its wallets more secure with ID verifications. Furthermore, such approach results in cheaper international remittances, more swift and convenient transfers which, as a result, has a positive impact on the company’s revenue.
Smart Contracts and Supply Chain Management
Telecom enterprises can enhance their supply chain management with the help of blockchain. Smart contracts enable automated cooperation between the enterprise and the partners within the chain and may automate the inventory management process. Smart contracts have prior established terms, and the contract self-executes only when the terms are fulfilled entirely. The use of smart contracts offers ultimate cost reduction for telecom entrepreneurs. It eliminates intermediaries, facilitates settlements with vendors and suppliers, and keeps the record keeping though the whole supply chain cycle easy and transparent, which reduces the costs on accounting and auditing.
Digital Identity Management and Verification
Identity verification costs corporations and governments hundreds of billions of dollars annually. Currently, new blockchain-based identity verification systems are being developed by startups like Civic. Telecommunication enterprises work with enormous amounts of customer data it is profitable for them to act out as a source of identity authentication. They can design new systems, which are more transparent, secure and convenient, for both customers and businesses to generate additional sources of income.
When a subscriber gets on the roaming partner’s network, the roaming partner determines that this is a visitor from the home operator. This is implemented via the subscriber information exchange transactions on the blockchain-based network. The subscriber is then approved and registered on a smart contract. Blockchain identity management system will allow the users to manage their Id’s across various applications, devices, and organizations with only one single password. Each subscriber receives a master key with the help of which he or she will be able to verify his or her identity in any digital presence.
This can be an excellent opportunity for telecommunication organizations to grow and spread their business segment. A few examples would be the subscriber’s driving license, passports, marriage certificates etc. At the moment, such an ID management project is already unfolding in Europe. The ID2020 project intends to provide 1.1 billion people a secure and reliable identity management system in the nearest future.
Fraud Prevention and Cybersecurity
Telecoms industry significantly suffers from fraudulent schemes each year. According to the Communications Fraud Control Association (CFCA) survey, 38.1 billion dollars get lost due to fraudulent schemes, so they the major reason for revenue losses in telecom. In terms of telecommunications, there are two main types of fraud – subscription identity and roaming fraud.
Roaming Fraud Prevention
Roaming fraud occurs when a subscriber accesses the resources of the Home public mobile network (HPMN) via the Visited public mobile network (VPNM) but the HPMN is unable to charge the subscriber for the provided services but is obliged to pay the VPNM for the roaming services. The two major issues in the roaming fraud are the longer detection and response time. Concerning the longer detection time, the fraud happens when the subscriber is in a network other than HPMN, and the time required to detect the fraud is longer due to delays in the exchange of data between home and visited networks. In terms of longer response time, due to lack of control over the systems in which the fraud has occurred, the time to respond to the fraud is longer.
Secure blockchain technologies could be implemented between the operators that have a roaming agreement to reduce fraud rates. Designated nodes from both operators verify the validity of each transaction broadcasted on the network. The roaming agreement between the HPMN and the VPMN is settled by a blockchain smart contract that is generated when a transaction that contains the call detail record data is broadcasted on the blockchain network. Every time a subscriber triggers an event in a VPMN, it broadcasts the detail record data information as a transaction to the HPMN. This data triggers the smart contract, and after this, the terms of the agreement are executed. The HPMN can automatically calculate the billing amount based on the services provided and send this information back to the visited network.
Identity Fraud Prevention
Subscriber identity information is necessary to create an account and assign services to the subscriber. Subscription ID theft occurs when a subscriber uses false identification or another subscriber’s ID to obtain the telecom services. The deceivers can use the stolen identity information to obtain a SIM card in the victim’s name. The SIM card stores the International Mobile Subscriber Identity (IMSI) and the related key is used to identify and confirm subscribers on mobile devices. Each time a mobile device is turned on, it broadcasts a signal containing the IMSI to the nearest network station. That identification number links the device to the account with the provider. There are many ways in which a subscriber’s identity can be compromised, for example, email phishing, SIM card fraud and other. Due to the multiple-play services provided by telecom operators, ID theft can result in serious losses through access to many services under a stolen identity.
Blockchain has the potential to exclude any type of fraud that involves identity theft, thus cutting down the telecom revenue losses, and ensuring security for the customers. Blockchain can be used to identify a device and link that device to a subscriber’s identity. Instead of broadcasting the IMSI to the net, the device-generated public key is broadcasted instead. In such a case, neither the carrier nor any other third party needs to know the private key. Blockchain can help to protect private information that is heavily encrypted in the private key. The private key is associated with only one device, so the data theft probability is dramatically reduced.
Blockchain and Telecom Success Stories
KT Blockchain Telecom Projects
KT Corporation, the largest telecom company in South Korea, has launched a blockchain network that will improve its data roaming and ID verifications. Currently, the company produces 2,500 transactions per second(TPS), but KT claims to improve its scalability up to 10,000 TPS in the nearest future and aims to reach 100.000 TPS by the end of 2019 all due to the new blockchain network. Moreover, KT has developed an advanced blockchain-based network security solution, which is entitled “Future Internet”. The system will enable secure data exchange between businesses and individuals while creating new sources of profit.
Sprint Blockchain Consortium
Sprint, one of the largest US-based telecom carriers has consolidated with two Asian telecom giants – SoftBank and FarEasTone to form a consortium that will implement blockchain solutions to improve the communications between the telecom carriers. The consortium members have already developed efficient mobile payment systems functioning on the platform, and in the future, additional features will include connected computing, mutual authentication methods, and debt resolution services.
Verizon Blockchain Security Project
Verizon is the largest wireless telecommunications provider in the US, and recently the enterprise stated that it is currently developing a blockchain platform to improve the customer’s security. The key areas that Verizon will focus on are the customer’s privacy, as well as the platforms scalability. The data will not leave the enterprise, and the rate of speed and response will not change despite the data size.
The Future Use of Blockchain in the Telecom Industry
Blockchain and 5G Enablement
The demand for communication services is increasing, and soon the world will switch into a 5G network, which will be ten times faster than 4G, will have much lower latency and greater capacity, but managing such a complex network will require a greater calculation power and storage capacity.
5G is another technology that can benefit from blockchain. 5G promises prevalent access to various networks, and telecom entrepreneurs will need to handle versatile access nodes and diverse access mechanisms. Choosing the fastest access node for every user will soon become the major challenge for telecom companies. Blockchain has the potential to enable such access selection mechanisms when 5G is developed.
Today the communication systems are centralized in a client-server model where the rules stored on the server are pushed to the customer. This causes delays and does not allow seamless provisioning between access networks for the device. In addition, the provisioning of rules is not a real-time process, which means that they cannot be changed. GPRS, WiMAX, WLAN, and Wi-Fi access networks in a specific area can be networked with blockchain where each access point, like a Wi-Fi router or an SP cell tower, can serve as a node in the network. Rules and agreements between the various access providing networks can be established in a smart contract. These contracts can be dynamic in nature wherein any time a policy needs to be altered, only the contract code needs to be changed. When a device broadcasts its identity, it is accepted into the network by the corresponding communication service provider. Once the device broadcasts its location, the access node that can best provide service to the device. This results in seamless rating and charging of all services between the various access nodes.
Blockchain and IoT in the Telecom Industry
IoT cellular connections will reach in billions by next decade. The major issue is that the growth of IoT and increasing data insecurity are directly proportional. IoT connectivity creates serious challenges, like the need to secure billions of interactions among machines and sensors, and the need to secure the sensitive information that is captured and transmitted via the devices. As a result, data and network security requirements can become costly as these IoT networks continue to grow. Blockchain-based decentralized control allows IoT security to be more scalable, and secure verification and validation will not allow a rogue device to interfere in a home or a factory system by delivering false information.
Blockchain can create highly protected peer-to-peer self-managed mesh networks that use an extensive number of nodes. These nodes can be represented by IoT sensors with the ability to verify every block that is being changed. Such networks can be introduced into a private environment based in cell-towers. Communication service providers could then provide private/public key security and broad connectivity to enable such blockchain network with global reach.
The blockchain is an advanced technology that can make an enormous contribution to the telecommunications industry. It has the potential to enhance security, and create additional sources of income for the telecom enterprises. Although adopting blockchain may cause a number of issues, for example conforming to existing data standards in terms of both structure and transport of information could become an obstacle. Furthermore, telecom companies need to define regulatory frameworks to implement smart contracts in their business practices.
Nevertheless, adopting blockchain is worth the cost. Smart contracts will exclude the need for clearinghouse intermediaries and steeply decrease the accounting costs. With blockchain, telecom entrepreneurs can prevent roaming and identity fraud, which is the main source of financial losses in the industry. Most importantly, blockchain will become an integral part of future communications, alongside with the 5G network and IoT.