Exploring blockchain's role in the future of telecoms
As telcos seek to simultaneously streamline operations and create new business models, they are looking to new technologies to create new opportunities. One of the most promising emerging innovations for telecoms today is blockchain.
What is blockchain?
Blockchains are dispersed databases (blocks) of ever-growing, automatically notarized ledgers. With timestamps and links to each previous block, this extensive record-keeping structure has a built-in level of security against data tampering and revision. This highly tamper-resistant structure facilitates verifiable and secure transactions without the need for third party authentication, enabling autonomous transactions between machines. Because of this, blockchain has the potential to reduce risk, reduce financial fraud and streamline operations for enterprises of all types.
What it means for telcos: Operational efficiency and new revenue models
Blockchain can help communications service providers (CSPs) deliver digital services more efficiently and securely and at a lower cost. Because telcos provide the infrastructure for the digital economy, they are uniquely positioned to leverage the value of blockchain across multiple aspects of the digital value chain. CSPs provide the roadways for digital services – blockchain raises the speed limit.
Nearly everyone on the planet has a mobile phone these days – and that means that CSPs spend a lot of time managing customer profiles and identities. They need to track each customer’s usage, hardware, usage contract, billing history, etc. Because blockchain provides a current single version of the truth, it’s well suited to provide the foundation for a simplified identity management system.
Identity management can help prevent not only identity fraud, but also roaming fraud. Managing the charges associated with customer roaming currently requires managing multiple contracts, pricing plans, and banking systems. Blockchain can vastly simplify secure financial transactions between carriers while keeping them in compliance with contracts. Smart contracts enabled by blockchain can instantly verify subscriber authenticity and permissions to use an operator’s network.
Because blockchain allows for smart (autonomous, machine to machine) contracts, it will likely play a key role in enabling the new digital services associated with smart homes. As more sensors are embedded in more devices, in more homes across the globe, carriers are looking for a seamless and secure way to manage usage based contracts for their customers. Giving your home network the ability to autonomously provision and track network usage for your refrigerator and lighting system will massively reduce the complexity of managing and billing these services.
Those same autonomous contracts can take the form of payments. As customers become accustomed to using phones for payments, new opportunities spring up everywhere. One area that’s already seeing traction is the idea of using a phone (or the car itself) to negotiate payments with toll agencies, parking agencies, fueling stations and more. Blockchain can make all of these types of transactions quicker, easier, and more secure, increasing both customer satisfaction and telco revenues.
As telcos look to support progressive municipalities in enabling smart city services, blockchain’s security and autonomous contracts can help simplify complex relationships and manage very large numbers of connected devices (in buildings, utilities, fleets, and so on). This can be even more crucial in areas that are served by multiple networks, allowing for seamless brokering of contracts as digital services run across more than one network.
Building blocks for the future of telco
Innovative CSPs are now considering the benefits of blockchain throughout their businesses, and collaborating with other industry actors to create a connected network for consumers. Blockchain will allow CSPs to improve their core business processes, communication speeds, and security concerns, while accelerating their innovation capacity. Blockchain is perfectly suited to enhance the role of digital enablers that CSPs can play in a hyper-connected world. It will provide a meaningful competitive advantage to those who embrace it early.
Editor’s note: To read more blockchain news and analysis, visit our sister publication The Block.
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