Blockchain Use Cases in the Telecom Industry

The current business environment for telecom entrepreneurs is rather challenging. Over-the-top service providers offer applications and streaming content straight to the customers via the internet. By this, they have settled their dominance even in the most vital communication services. WhatsApp already accounts for 100 billion text messages sent daily. VoIP services actively substitute cellular networks for voice calls. As a result, telecom enterprises suffer revenue losses due to drop-offs in SMS messaging and roaming.

Blockchain in the Telecom market grows actively. According to the report from Verified Market Research, the market size will grow from over $143 million in 2021 to $14,889 million by 2030, at a CAGR of 67.47%. This significant growth is explained by the numerous benefits that blockchain technology can bring to different telecom branches. They include internal and external operations advancements, new revenue streams, efficient enterprise cybersecurity, and more.

In this post, we will explore the most advantageous uses for blockchain in today’s telecom industry. You will also explore the opportunities it will create in the near future, alongside the rise of 5G cellular mobile communications and the internet of things. 

Telecom Branches that Benefit from Blockchain

The advantages of blockchain for telecom include better security, data immutability, transparency, and control the technology provides across the entire ecosystem and at every transaction point. The below blockchain use cases describe how the technology can be applied to address key challenges the telecom industry faces today.

Telecom Operations Advancement

Blockchain and smart contracts can streamline internal processes automation, like billing, supply chain management, and roaming. Currently, the transactions in telecom ledgers need to go through a clearinghouse to be approved. Smart contracts automatically provide the settlement between the participants by routing from one operator’s blockchain to another operator. It also increases transparency to the end customer. The roaming subscriber initiates a voice call on the telecom network. The transaction is then recorded in the blockchain network, and when the call ends, the call duration is saved on the blockchain platform. The charges are set upon the rules of smart contracts, and the payment is set from the home operator to the remote partner.

The process is based on a consensus model and shared ledger technology, which does not involve any clearinghouses. It helps avoid disputes between the participants involved. It is less time-consuming, decreases the costs spent on auditing and accounting, and, most importantly, excludes the expensive mediation of the clearinghouse services..

Digital Asset Transactions

Telecom enterprises can use blockchain to enable micropayments for music, mobile games, and other 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 an approach results in cheaper international remittances and more swift and convenient transfers, which, as a result, positively impacts 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 maintains transparent record keeping through the whole supply chain cycle, reducing the accounting and auditing costs. 

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, more transparent, secure, and convenient systems for 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. It is implemented via subscriber information exchange transactions on the blockchain-based network. The subscriber is then approved and registered on a smart contract. Blockchain software for identity management will allow users to manage their IDs across various applications, devices, and organizations with only one single password. Each subscriber receives a master key. With its help, they will be able to verify their identity in any digital presence. 

It 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. Currently, such an ID management project is already unfolding in Europe. The ID2020 project intends to provide 1 billion people with a secure and reliable identity management system in the nearest future. 

Fraud Prevention and Cybersecurity

The telecom industry significantly suffers from fraudulent schemes each year. According to the Communications Fraud Control Association(CFCA) survey, it lost $39.89 billion due to fraud. In telecommunications, there are two main types of fraud – subscription identity and roaming fraud. 

Roaming Fraud Prevention

Roaming fraud occurs when a subscriber accesses the Home Public Mobile Network (HPMN) resources via the Visited Public Mobile Network (VPNM). Still, the HPMN cannot charge the subscriber for the provided services but is obliged to pay the VPNM for the roaming services. The two major issues in roaming fraud are longer detection and response time. Concerning the longer detection time, fraud happens when the subscriber is in a network other than HPMN. The time required to detect the fraud is longer due to delays in data exchange between home and visited networks. Therefore, the time to eliminate fraud is longer due to a lack of control over the systems where it occurred.

Secure blockchain technologies could be implemented between operators with 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 containing the call detail record data is broadcasted on the blockchain network. Every time a subscriber triggers an event in a VPMN, it broadcasts the detailed record data information as a transaction to the HPMN. This data triggers the smart contract, and the terms of the agreement are executed after this. 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 telecom services. The deceivers can use the stolen identity information to register 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 a subscriber's identity can be compromised, such as email phishing, SIM card fraud, and others. Due to the multiple-play services telecom operators provide, ID theft can result in severe losses through access to many services under a stolen identity. 

Blockchain can potentially exclude any identity theft fraud, thus reducing telecom revenue losses and ensuring customer security.  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. In such a case, neither the carrier nor any third party needs to know the private key. Blockchain can help to protect the personal information that is heavily encrypted in the private key. The private key is associated with only one device, so data theft probability is dramatically reduced. 

Read our Definitive Guide to Telecom Security to find out more about telecom fraud cases and ways to mitigate potential risks.

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. The company began by producing 2,500 transactions per second (TPS) and aimed to reach 100.000 TPS in a year, all due to the new blockchain network. Moreover, KT has developed an advanced blockchain-based network security solution entitled “Future Internet”. The system will enable secure data exchange between businesses and individuals while creating new sources of profit. 

DENT Exchange: Ethereum-based Marketplace

DENT, the global digital operator for eSIM, has created an Ethereum blockchain-based marketplace to buy and sell data packages. It allows end-users to communicate quickly and transparently with the telecom industry, which results in increased trustworthiness and mobile data usage. DENT Exchange features have extended over the last few years. Now, the platform helps automatically trade instrument repositories and manage orders, portfolios, and pricing data.

Verizon Blockchain-Based Solution for Dispute Management

Verizon is the largest wireless telecommunications provider in the US. The enterprise recently introduced a blockchain-based solution for dispute management and billing remediation. Previously, dispute settlement with wholesale partners was an inefficient and labor-consuming process. The new solution is a win-win for Verizon and its partners due to reduced operational costs, quicker revenue realization, and increased cash flow. Adopting Hyperledger Fabric technology for dispute settlement provided complete transparency and efficient automation for the billing dispute process.

The Future of Blockchain Usage in the Telecom Industry

Blockchain and 5G Enablement

The demand for communication services is increasing, and the world is switching to a 5G network, which is ten times faster than 4G and has much lower latency and greater capacity. The report from MarketsandMarkets states that the 5G services market will grow from $107 billion in 2022 to $331.12 billion by 2027 at a CAGR of 25.3%.

However, 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 a significant 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. It 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, so they cannot be changed. GPRS, WiMAX, WLAN, and Wi-Fi access networks in a specific area can be networked with blockchain. Each access point, like a Wi-Fi router or an SP cell tower, can serve as a node in the network. A smart contract can establish rules and agreements between the various access-providing networks. 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, the corresponding communication service provider accepts it into the network. Once the device reveals its location, it accesses the node that can best provide service to the device. It results in seamless rating and charging of all services between the various access nodes.

Within the next few years, the share of 4G LTE subscriptions will gradually decrease, being substituted by 5G subscriptions. GSA reports LTE subscriptions accounted for 67.1% of all global mobile subscriptions, and 19.1% were 5G. Yet, the LTE market is forecasted to decrease as customers migrate to 5G. By 2026 5G will account for 39.4% of the global mobile connectivity market.

Blockchain Improves IoT connectivity 

IoT cellular connections will reach billions by the next decade. SkyQuest Technology Consulting predicts the rapid growth of the cellular IoT market from $5.6 billion in 2022 to $16.1 billion by 2027 at a CAGR of 25.5%. 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 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 improves IoT security scalability. Secure verification and validation will not allow a rogue device to interfere in a home or a factory system by delivering false information.

Source

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 on cell towers. Communication service providers could then provide private/public key security and broad connectivity to enable such blockchain networks with global reach. 

Conclusion

There is a plenty of reasons why to use blockchain in the telecommunications industry. It has the potential to enhance security and create additional sources of income for telecom enterprises. Although adopting blockchain may cause several issues, for example, conforming to existing data standards in terms of 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 accounting costs. With blockchain, telecom entrepreneurs can prevent roaming and identity fraud, which is the industry's primary source of financial losses. Most importantly, blockchain will become integral to future communications alongside the 5G network and IoT.