Blockchain In Telecom: A Paradigm Shift

Today, there isn’t much left to debate on endless possibilities of the Blockchain as a technology. And rightly so, as it is one of the most revolutionising technologies in the present time and can disrupt almost all industries and transform them to efficiently tackle both current and future challenges.

It was not long ago when blockchain was almost feared and viewed as a threat by factions within economists, governments and industrialists alike. This was primarily due to its association with Bitcoin and other cryptocurrencies, that generated bad PR amongst regulators. Fortunately, those fears quickly dissipated as people realised that cryptocurrencies are only one among many applications of the blockchain technology.

As the blockchain tech further evolved, businesses started looking at it as a reliable solution for many of their problems. Because of this, blockchain has become one of the most hyped phenomena spanning across different sectors. Among many sectors that are being transformed by leveraging the blockchain tech is the telecom sector, which has its own issues, and several if not all of these issues can be solved by blockchain.

Why All This Hype for Blockchain?

Before we learn about its implication on the telecom industry, it is wise to have a quick glimpse on the blockchain technology.

The idea of a concept like the blockchain was first introduced by 1991 by Stuart Haber and W. Scott Stornetta back in 1991. However, it was not until 2008 when the first practical blockchain was made a reality by a person/persons known by the pseudonym Satoshi Nakamoto.

A blockchain is a record of information and data stored in cryptographically interlinked blocks with new blocks being added continuously as more information is stored. It is a distributed ledger shared among several peer-to-peer nodes within the network. These P2P nodes are responsible for managing the network by verifying information and storing it to new blocks when a consensus has been reached on the given information.

Anything stored on the blockchain is permanent with a timestamp, and cannot be tampered with or altered by a single party. Furthermore, the entire network is decentralised, where one node failure won’t take down the entire network. This makes the technology relatively safer and more suitable for storing sensitive data and preventing malicious intrusions.

The Advent of Blockchain in Telecom

Telecommunications is now an inseparable part of daily lives. And major credit for this, apart from tech innovators, goes to the communication service providers who have been working to build a global network and infrastructure to improve their services and overcome new challenges.

For decades, telcos have been operating in a centralised environment that has been largely focused on providing voice connectivity, messaging, and other services. However, with the evolution of the Internet and subsequently telecom networks, the entire sector is facing greater pressure than ever. The increased number of users and the corresponding network load have caused several issues plaguing telcos — such as billing discrepancies, heightened fees, service disruptions, privacy and security issues etc.

Right now, globally, the telecom sector is experiencing revolutionary changes with the advent of 5G and Internet of Things (IoTs). This will increase the exchange of sensitive data on the network — a change that demands security, privacy, inspection, integrity, and prevention of malicious attacks. Achieve many of these goals isn’t very feasible in a centralised environment. Nonetheless, the blockchain has the potential to provide much-needed security and transparency to the telecom sector. As a result, several blockchain-based telecom startups are emerging with the potential to disrupt the telecom sector and catapult it toward new and better prospects.

Recently, CBCCom, PCCW Global, Sparkle and Tata Communications announced their plan of collaboration on developing a blockchain Proof of Concept (PoC). The primary goal here is to demonstrate the management and settlement of inter-carrier bandwidth services without needing a centralised infrastructure. Several other telecom-based organisations have also expressed their interest in using blockchain as a potential solution to industry-wide issues.

As per a report published by the Mordor Intelligence, In 2019, the share of blockchain technology in the telecom sector was about USD 151.93 million, and with a CAGR of 28.3%, it can potentially reach USD 677.66 million by 2025. The report further highlights that the growing penetration of 5G can be a game-changer in accelerating the use of blockchain in the sector, as it can elevate the efficiency and speed of blockchain-based operations.

Advantages of Blockchain for the Telecom Sector

There are three key areas where blockchain can truly benefit the telecom sector. Let’s have a look on these areas:

1. Increased Efficiency & Speed

One of the major issues faced by telcos is that of efficiently handling large volumes of transactions taking place on the network. The problem can turn more challenging as large bulks of data are generated from IoT devices we’re adding to our networks. This situation can lead to a high likelihood of discrepancies and inaccuracies in the data processing. Another major issue is the time taken in settling transactions such as roaming partner settlements that can take a month.

As a promising solution, blockchain can automate telecom operations more transparently and accurately by invoking smart contracts. Due to the automated nature of smart contracts, transactions can be settled instantaneously, and all the involved parties will be able to view it in real-time.

2. Cost Reduction

Since the blockchain is a distributed ledger, it provides an infrastructure for resources sharing among telcos. All participating parties in a blockchain can contribute their resources to the network, and will be able to share them. This will not only help in providing easier access to necessary resources but also provides an opportunity to generate revenue from shared resources. Furthermore, the use of smart contracts can automate labour-intensive processes and can eliminate the need to involve intermediaries, significantly lowering the costs.

3. Fraud Prevention

As per a survey conducted by the Communications Fraud Control Association (CFCA), amounts as high as USD 38.1 billion are lost in telecom fraud each year. Whether it’s roaming fraud or identity fraud, timely detection and prevention have always been a major challenge for telcos. In a blockchain-based infrastructure, telecom operators who are roaming partners can assign nodes to verify each transaction requests that will be settled through smart contracts based on the roaming agreement between operators. This way, both the Home public mobile network (HPMN) operator and the Visited public mobile network (VPNM) operator are able to view and verify transaction details in real-time, preventing any possibility of fraudulent activity.

To prevent identity fraud, the blockchain can be used to assign two keys to each subscriber — one public key and one private key. The private will hold all sensitive and encrypted data of the subscriber, while the linked public key will be used to verify the subscriber’s identity. So instead of International Mobile Subscriber Identity (IMSI) that can be compromised, the device will broadcast the public key to the network.

Conclusion

The blockchain remains a revolutionising concept that can benefit the telecom industry in numerous ways. Of course, it ultimately depends on telcos to make the most out of its potential. While blockchain’s adoption in telecom is certainly going to be an uphill path, (as transforming a traditional infrastructure to a blockchain-based infrastructure is a difficult and time-consuming task), nonetheless, all the advantages should be worth the cost of the leap. Let’s hope for the best.

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A blockchain enthusiast and entrepreneur’s musings on the next big revolution since the Internet.

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Dr Vin Menon

Dr Vin Menon

A blockchain enthusiast and entrepreneur’s musings on the next big revolution since the Internet.

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