The impact of blockchain on telecoms
Image By BiztechAfrica
Jan. 24, 2019, 10:14 a.m.
By Ahmad Sayed, Regional Director, Middle East and Africa at Nexign
With the blockchain expected to contribute almost $1 billion to the telecoms sector within the next five years, the technology clearly offers more than just a vehicle for cryptocurrency. From Smart Contracts to speeding up inter-carrier settlements, the blockchain has the potential to reshape the telecoms environment for the digital age.
Already, we are starting to see relationships being established between service providers, telecoms operators, and the like to reinvent how business support systems (BSS) are delivered. An example of this is the recent exclusive partnership between Nexign and Bubbletone to develop an industry-first blockchain-based BSS solution for the telecom sector.
This sees the establishment of a global marketplace that facilitates the secure exchange of financial and identity information between mobile network operators and service providers. This will enable roaming users to instantly purchase service packages using their existing SIM card. And with the price levels to reflect customer demand, the ‘home’ communication service provider (CSP) will still be able to retain its existing clients.
For CSPs, the blockchain provides significant technological enhancements. For one, it provides a more secure and scalable environment with global connectivity. Considering that a blockchain essentially links records (blocks) using cryptography, it is a safer way to store subscriber identity information.
Secondly, the blockchain provides CSPs with a better way to optimise costs. Service Level Agreements (SLAs) can be managed through the blockchain. If certain conditions are not met, automated actions can be taken created a significantly smoother process.
It also unlocks new revenue opportunities thanks to the growth of the Internet of Things, verification services, mobile money transfers, and other digital asset transactions. The blockchain will also result in the establishment of new revenue models to provide further platforms for growth.
Outside the telecoms environment, the blockchain can provide opportunities for industry verticals. From enabling financial services transactions on mobile devices to directly paying for utilities and other accounts, it offers a key enabler for technology. Ultimately, this could accelerate the growth of smart cities with e-services becoming more secure and directly linked between service provider and customer.
Several mobile phone manufacturers are already introducing blockchain-based devices. Some feature built-in wallets (secured through the blockchain) while others see the establishment of a blockchain-based operating system and communications protocol for making calls, sending messages, and transmitting data.
Contracts done smarter
Even though the notion of Smart Contracts as a benefit of the blockchain is nothing new, the potential it provides for SLA management are especially useful for the telecoms industry. Legal staff can use a template to create a contract with technical staff using the validated electronic contract to transform it into a Smart Contract.
The SLA can focus on the fulfilment of certain conditions. If these are not met, funds placed in escrow by the two parties can then automatically be paid out according to the contract. Because this can be managed programmatically, it is a more effective way of managing contracts. While the market is still a few years away from seeing this go mainstream, the potential is there.
Meanwhile in Africa, research has shown that internal migration is driven by the need for jobs, often in neighbouring countries. This, together with new technologies such as e-SIMS (an embedded or electronic SIM card built into a mobile phone), create an environment where CSPs are looking for ways to maintain their subscriber base while still investing in their networks.
This creates an ideal environment for new solutions to be developed that cater for an increasingly connected customer base. As such, the blockchain is perfectly positioned for this. According to the United Nations, investment in the blockchain increased from $1 million in 2012 to $550 million by the end of 2016. Part of this growth can be attributed to the evolving technological landscape in Africa.
Ever since the advent of mobile communications, people have become less reliant on landline infrastructure for calls. Given how digital transformation is further adding impetus to a shift in use cases, the blockchain can help African CSPs meet specific requirements around how communication is taking place in a connected environment.
These various elements combine to require the development of a commercial solution that can assist operators to further develop and refine blockchain-related offerings that maintain their subscriber base while at the same time sees investment in their network.
For BSS providers, it is about investing in specific use cases of the blockchain as it relates to CSPs. For example, establishing a global marketplace addressing many of the challenges (and opportunities) in the sector will create more revenue potential for operators.
CSPs can become the backbone for this dynamic new blockchain economy. As the underlying foundation for all communication in Africa, they are in a strong position to drive a first-to-market advantage, develop new business models, and work with organisations of all sizes irrespective of industry sector.
However, to do so, they need to have a strategic vision in place for how they want to leverage the blockchain. Combined with a solid roadmap and collaboration with their partners in the BSS landscape, they can harness new opportunities and drive their business in the digital future.