Blockchain Set to Play Key Role in Telco Operations: Analyst

Blockchain technology is set to be used by telcos in multiple applications across all areas of operations in coming years, according to an industry analyst who has delved into the potential use of the digital ledger technology (DLT) in the space.

James Crawshaw, a senior analyst at Heavy Reading, says communications service providers (CSPs) see significant potential for the use of the much-hyped technology, which is best known for underpinning cryptocurrencies such as Bitcoin.

“Today, CSPs use databases for thousands of applications. Blockchain might reach dozens of applications in the next few years. Examples include mobile number portability, SLA monitoring, or replacing CDRs for billing,” says the analyst, who describes blockchain, in essence, as a “decentralized, immutable electronic ledger; a write-once-read-many record of historical transactions, as opposed to a database that can be written over.”

Currently, CSPs are considering using blockchain in three key areas, according to Crawshaw:

  1. Fraud management: for roaming and subscription identity fraud.
  2. Identity management: storing identity transactions (network logins, purchases, etc.).
  3. IoT connectivity: a blockchain could enable secure and error-free peer-to-peer connectivity for thousands of IoT devices with cost-efficient self-managed networks.

Crawshaw examined those use cases in depth in a recent report, Blockchain Opportunities for CSPs: Separating Hype From Reality.

And while there is a certain level of marketing enthusiasm around blockchain currently, that shouldn’t get in the way of real-world tests and deployments, notes the analyst.

“Like all complex new technologies there is a degree of hype and bandwagon-jumping with blockchain. Its main purpose is as an alternative to centralized systems for recording information (primarily databases). By distributing the control, you eliminate the risk of a hack of the central controller and the information being altered fraudulently.  By using clever computer science you can replace the central controller (and the fees they normally charge) with software and get a cheaper, more reliable solution. But in most cases where we use a database today we will continue to use them in the future,” notes Crawshaw.

So which CSPs are taking the lead with the exploration of blockchain as a useful tool? Colt is one network operator that has been taking a close look at multiple ways to exploit blockchain’s potential for some time.

The operator, in collaboration with Zeetta Networks, is also set to deliver a proof-of-concept demonstration of a blockchain-based offering that enables network carriers to buy and sell network services in a secure, distributed marketplace. That PoC will be unveiled at the upcoming MEF2018 show in Los Angeles.

And Colt is one of the operators participating in a panel discussion – What Opportunities Are There For Blockchain In Telecoms & How Can These Aid Automation? – on November 8 in London as part of Light Reading’s ‘Software-Defined Operations & the Autonomous Network’ event. PCCW Global and Telefónica will also be involved in that discussion.

There are also a number of industry initiatives involving multiple CSPs: The key ones related to blockchain are:

  • The Carrier Blockchain Study Group, which counts Axiata, Etisalat, Far EasTone, KT, LG Uplus, PLDT, SoftBank, Sprint, Telin, Turkcell, Viettel and Zain among its participants
  • The Mobile Authentication Taskforce, which includes AT&T, Sprint, T-Mobile and Verizon
  • The International Telecoms Week Global Leaders’ Forum, in which BT, HGC Global Communications, Telefónica and Telstra are involved.

In time, blockchain might be joined in CSP back offices by other DLTs. “Blockchain is a particular type of DLT that uses cryptographically hashed blocks to record transactions in a time series or chain. If security is less of an issue you could use a simpler DLT. But then again, you might just use a regular database,” notes Crawshaw.

Q&A with Bobby Bathia, CEO and Founder at TrakInvest Group

As discussed in the MVNOs Series report ‘An Introduction to Blockchain’, characteristics such as automation of contracts and transactions, the ability to manage enormous networks of users efficiently, security and speed are just some of the reasons why analysts predict that Blockchain could add $1bn in value to the telecoms industry in the space of five years.

In order to discuss these opportunities further and draw a full picture of what Blockchain actually means for the telecoms industry, Logan Armendone-Mowbray, Content & Communities Manager for KNect365’s MVNOs Series, spoke with Bobby Bathia, CEO and Founder at TrakInvest Group.

Why do we need Blockchain and how is it currently being used across the board?

Blockchain has the power to connect the world globally and seamlessly in all industries. It offers the promise of faster, secure execution and a better management of the overwhelming data that is being generated. With the decentralised power of blockchain, not only are the existing business models being disrupted but also many newer business models are now possible. For instance, in TrakInvest, we are creating a reward economy that works seamlessly across the world using the power of blockchain.

Blockchain is being used across a multitude of industries. In the finance industry, transactions can be conducted much more securely with a permanent ledger being created and recording millions of transactions each day. In real estate, smart contracts are being used to record transactions and release funding only when all conditions are met. Similar concept can be applied to the legal industry for the execution of wills or the education industry for providing certificates on smart contracts.

What are the prospects and the potential of Blockchain for the telecoms industry?

Blockchain in telecom industry has a potential to bring about significant improvements in identity theft prevention and providing global servicing across multiple service providers. USD 38 billion is spent annually as a result of fraud costs in the telecom industry primarily in identity and roaming frauds. Blockchain adoption could significantly reduce the variety of frauds and also optimise ID management through instantaneous and automated smart contracts. Value added services across service providers can be made accessible to users that travel across countries where in, when someone travels they retain their number and are able to download a local package at much cheaper rates from the local service provider through blockchain.

How can Blockchain help with fraud prevention and ID management? What are the other key benefits to enterprises?

Blockchain can prevent fraud with the use of automated smart contracts between the host network and the visited network. Every time a subscriber accesses the host network, the smart contract gets triggered and the user is automatically billed based on the services used. Customer IDs can be stored on the digital blockchain network and can be accessed any time an identification is required. Currently, every time a person wants to sign up, they need to prove their identity and credentials using physical or digital documents which are stored within the database of one service provider. When they decide to switch, the data is required once again. If stored on blockchain, the identity of the person can be used across multiple parties with a fee being charged every time the id is accessed. Telecom service providers can add on an additional revenue stream for providing identity verification to third party providers.

What’s the relationship between Blockchain, 5G and IoT?

Providing 5G services involves providing access across various networks which means the handling of heterogeneous access nodes and diverse access mechanisms. Selecting the fastest access node for every user will be a central challenge in the future. Blockchain can enable a new generation of access technology selection mechanisms to build sustainable solutions. A blockchain can also enable secure and error free peer-to-peer connectivity for thousands of IoT devices with cost-efficient self-managed networks.

What are the benefits for MVNOs who embrace Blockchain and adopt Blockchain- enabled business models?

The biggest benefit for the MVNOs is the ability to quick launch global services without investments into infrastructure and commitments. Providing value added services due to a shared view of transactions and liabilities helps in the elimination of third parties, resulting in cost savings.

How can MVNOs use Blockchain to improve data management and engage with their customer more effectively?

MVNOs can extend blockchain-enabled identity and access solution to provide data storage and verification services to private clients. For instance, an educational institution signs up with the telecom provider to digitize and store certificates of subscribers on the blockchain. For those subscribers who also sign up and are alumni of the university, their identity and degree certificate are verified by the university through traditional channels, and the university assigns the digital copy of that certificate along with all details to the subscriber.

If a prospective employer of the subscriber now wants to verify the credentials and inspect the certificate, the subscriber only needs to produce the digital certificate available on the blockchain and the employer can be sure that this has been issued by the university and is genuine. The telecom provider can further benefit by extending related authentication services to corporate clients for all types of documents, such as insurance certificates, airline tickets, hotel reservations, etc., where digital storage and verification may be required at some point.
Attend MVNOs Europe 2018 for more insights on what Blockchain means to the telecoms industry. The event will take place at the ILEC Conference Centre in London, on 6 – 7 November.

 

Bobby-Bathia-CEO-and-Founder-TrakInvest-Group-MVNOs-Asia-Speaker-Singapore_400x400 (002)Bobby Bathia has 20+ years of experience across private equity and investment banking as a Principal for J.P. Morgan Partners and then a Managing Director and Head of Principal Investments at AIG. He has executed over $5bn+ of equity and mezzanine transactions in Asia across various industry segments. As means of background, Mr. Bhatia attended Stanford (Scholar’s Program) and Duke Universities (BA Economics / Asian Literature).

The prospects and potential of Blockchain for the telecoms industry

In ‘An Introduction to Blockchain’, the MVNOs Series team explores what Blockchain is and what it can do. The report starts with a crash course on Blockchain basics, before moving the focus to its wide-ranging benefits, its synergies with other emerging technologies, and the impact it could have on the telecoms ecosystem across-the-board.

In the short space of a couple of years, Bitcoin and other cryptocurrencies have gone from frontier technologies used by shadowy figures on the edges of the World Wide Web to being courted at the highest levels of government and corporate finance.

To many, the emergence of functioning decentralised currencies not tied to any national bank or state authority has the potential to revolutionise money, banking and fiscal organisations at all levels.

But for many businesses and tech insiders, the concept of digital money isn’t the most interesting part. It is what lies beneath the surface of Bitcoin, Ethereum and all the others, the technology that drives them, that offers real cause for excitement.

For many, the real revolution starts with Blockchain.

Blockchain is the foundation on which cryptocurrencies are built. What really excites people about it is that its main functions and capabilities – simultaneously and securely logging and registering transactions across a shared self-authenticating network – have potentially groundbreaking applications far beyond the narrow confines of cryptocurrencies.

Much like the Internet of Things (IoT), Blockchain advocates believe it will fundamentally change how commerce, trade, industry, public services and mechanisms of social organisation operate. It has been called the technology that will usher in ‘Web 3.0’, a technology so powerful it will ‘digitize away’ the majority of the barriers and friction points we still experience in how we transact and interact.

Like most industries, these grand claims are being made about the potential impact of Blockchain in the telecoms industry too. According to GM Insights, the economic value of Blockchain will grow by a CAGR of 75% to become a $10bn industry by 2024. MarketWatch believes that $1bn of that value will come from telecoms alone.

Blockchain basics

Blockchain first emerged to prominence with the launch of Bitcoin in 2009. No one is quite sure when Blockchain itself was developed, or who by, or whether it was invented to serve the needs of Bitcoin or existed as a concept independently of it.

One useful way to trace Blockchain’s development is to look at the different technological concepts it makes use of, which also helps answer the fundamental question – what exactly is it?

Blockchain has been described as an amalgamation of technologies that were in existence well before 2009, namely: peer-to-peer networks, private key cryptography and decentralized exchange protocols.

Another popular aspect of Blockchain is that it represents a fundamental departure from the typical ‘client/server’ web architecture. Instead of having central servers running databases and programmes controlled by a central authority, you have a completely decentralised network which depends on the whole, not single points within it, to operate.

Manaz Gupta, author of Blockchain for Dummies, sums up the drawbacks to the linear, Microsoft Office-like approach to recording transactions:
“With traditional methods for recording transactions and tracking assets, participants on a network keep their own ledgers and other records… This traditional method can be expensive, partially because it involves intermediaries that charge fees for their services. It’s clearly inefficient due to delays in executing agreements and the duplication of effort required to maintain numerous ledgers. It’s also vulnerable because if a central system (for example, a bank) is compromised, due to fraud, cyberattack, or a simple mistake, the entire business network is affected.”

Yet as with IoT four or five years ago, much of this remains hypothetical. With practical applications of Blockchain outside cryptocurrencies still very much at a formative stage, there remains a healthy degree of scepticism about what the much-vaunted technology can achieve.

Blockchain benefits for business

Even after all the progress in digital technology seen over the past couple of decades, businesses today still face some common problems, such as:

  • Time lags between transaction and settlement, for example those caused by having to authenticate processes one after the other.
  • Duplication of effort on the buyer and seller side, sometimes requiring third party involvement for validation, which creates further inefficiencies.
  • Exposure to risks in centralised systems, for example from theft or fraud. A single point of control also means a single point of vulnerability for entire systems.
  • Many overlapping, proprietary payment systems have evolved with little coordination between them. Some, for example credit cards, use a “walled garden” approach to set a high price on participation.

Gupta argues that the digital evolution of business has only served to make these flaws more and more apparent. With more and more trade and commerce conducted online and on mobile, there are more transactions happening than ever before, due to greater accessibility and simplicity. Blockchain is viewed by many as the ideal solution because it offers the following characteristics:

Speed

The decentralised, distributed architecture of Blockchain means that transactions can in theory be processed across any number of nodes / network members simultaneously. In practice, there is a small-time lag involved – Bitcoin famously refreshes its ledger every 10 minutes, but more recent applications of Blockchain have reduced this to seconds.

Efficiency & cost savings

Where there are increases in speed, there are usually efficiency gains to be made. But Blockchain is not just about doing things faster, it also allows for much leaner, streamlined processes. One consequence of a distributed ledger is that it avoids duplication. Every shared version is automatically updated with each transaction, you don’t need different parties creating their own records.

Process automation

Automation is widely associated with efficiency gains. Blockchain automates and therefore speeds up key elements of a transaction process, such as exchange and validation. But it can also contain software programmes which in their own turn automate any other business process capable of being automated.

Security

Arguably one of the most attractive features of Blockchain to businesses is the inherent security built into the architecture. Ever since the internet first arrived, there have always been concerns about conducting sensitive transactions over open networks. Thanks to cryptographic hashing and network validation, systems built on Blockchain are simply not vulnerable to fraud, hacking, identity theft and other forms of abuse the way traditional networks are.

Trust and transparency

In a world where there is a lot of mistrust about political institutions and vested economic interests, there is a lot of focus in the world of business on becoming more open and equitable. Blockchain lends itself to creating more transparent ways of doing business in several ways.

With that in mind, like any new disruptive technology, until people see it working in their industry, it is difficult for people to grasp what it is, what it can do, and what its potential might be. With the ‘An Introduction to Blockchain’, the MVNOs Series team aims to remove some of the myth and mystery surrounding Blockchain. We look in more detail at some of the ways it is already being used and why so many people back it as the next big disruptive force in business and industry.
Download the full report and discover why the mobile industry should keep an eye on Blockchain.

 

Innovating change: How FinTech and Blockchain will impact the mobile market

Telecoms.com periodically invites expert third parties to share their views on the industry’s most pressing issues. In this piece Freelance Technology Journalist Kate O’Flaherty argues that value added services are the key to new revenue streams for mobile operators and MVNOs.

At a time when margins are under increasing pressure, operators and MVNOs are looking to recoup revenues through value added services. An area offering growing potential is the technology enabled by the financial sector – including micropayments, loans and even full banking services.

Indeed, Orange Bank, launched in November 2017 following the operator’s purchase of a 65% stake in Groupama, is an interesting example of a mobile operator entering the FinTech space. The operator’s online banking unit, which is targeting two million customers, had already reached 50,000 users by the end of last year.

“This is the chance for Orange to get into a new area,” says Kester Mann, Analyst at CCS Insight. “Their target is everyone, but the service will be attractive to the young market who have been brought up with mobile and would trust them”.

It is with this in mind that financial services are also being offered by MVNOs. Take, for example, the GiffGaff game plan in partnership with peer-to-peer lending platform RateSetter, which offers financial services to its users. In addition, ethnic MVNOs such as Lebara offer money transfer services to customers.

Going one step further, there is also the potential for banks to start their own MVNOs. It has been rumoured that Standard Bank in South Africa is poised become the second bank in the country to launch an MVNO after FNB Connect entered the market in 2015.

Indeed, there are already MVNO banks in Africa and others are planning to enter the space, says Ian Streule, Partner Consulting at Analysys Mason. “They know this gives them a way of offering financial services to users through the end device, benefitting from security and authentication through a mobile. MVNOs are good at innovating and creating new services”.

This is especially relevant in emerging markets, according to VP Marketing at Juvo, Jacquie Amacher: “Subscribers in cash-based societies who lack access to formal credit can instead use financial services through their mobile provider.

She points out: “Mobile service providers are uniquely positioned – they have the distribution to provide access. It’s about creating an identity-based relationship and moving them up the pathway to financial inclusion by offering them mobile financial services for the first time.”

By providing ongoing access to otherwise unattainable mobile financial services, MVNOs can boost engagement, dramatically reduce churn and increase average revenue per user (ARPU), says Amacher.

Blockchain in Mobile

At the same time, the technology commonly known as the distributed ledger that enables cryptocurrencies such as Bitcoin, blockchain offers further potential for both mobile operators and MVNOs.

For example, Deutsche Telekom’s recently-launched City Pass is based on blockchain technology. Replacing the membership passes usually found in someone’s wallet, City Pass can be used via a smartphone app or physical card.

More broadly, blockchain can be built into a variety of mobile apps. At the same time, the technology has the ability to improve internal efficiencies including operator to MVNO wholesale billing and cyber security.

According to experts, the application of blockchain is in its early stages, with most mobile players merely considering the technology and working out what it can do. But there is much more to come as the area matures.

Csilla Zsigri, Senior Analyst, Cloud Transformation and Blockchain at 451 Research explains: “Blockchain can be built into all sorts of mobile apps, from financial to public services and retail. One use case is where people without bank accounts can make mobile payments using apps”.

“Another example would be to have a network that verifies your identity using a mobile app –  your identity data is on the device itself –  and this can be used for services such as getting a driving license or opening a bank account”.

VP of product management at Juvo, Jason Robinson agrees, saying: “Emerging solutions around decentralised, digital identities provide a path for those who lack a formal financial identity to gain access to a broader set of services”.

Meanwhile, says Zsigri, airlines are working on blockchain-based mobile loyalty apps as part of a digital wallet. She adds: “Even blockchain powered app stores are being talked about.

AppCoins is an app store protocol under development that aims to power advertising, in-app purchases and app approval with blockchain technology. It ultimately acts as a medium of exchange between developers and end users”.

MVNO and Mobile Operator Solutions

Taking this into account, Garry Partington, CEO of Apadmi thinks Blockchain will offer multiple additional use cases to both operators and MVNOs. He cites the example of an MVNO solution for removing international call and data roaming charges.

In addition, according to Partington, there is potential for products offered by blockchain-based solutions such as Ethereum, which allow for the distributed exchange of ‘smart contracts’.

He explains: “A smart contract is a piece of software that’s run as part of a transaction in a distributed computing environment. It works by validating the transaction and storing the record on the open ledger, in a ‘block’. When a block is full, a new one is created, and they’re chained together through a link – creating a blockchain”.

So how does that translate into a real-life use case? Global Security Strategy and Blockchain Leader at Aricent, Shaan Mulchandani says: “The smart contract aspect of blockchain can be used to establish and validate wholesale billing rates between operator and MVNO”.

It is true to say blockchain has huge potential, but the technology is still very new. In contrast, the impact of financial services on MVNOs and operators is already starting to be felt.

For now, according to Andy McDonald, VP, Merchant Retail EMEA, ACI Worldwide: “The most innovative convenience-enhancing solutions are the ones that connect the dots quickly, particularly between customer and payment. Think peer-to-peer transfers via Facebook chat, or the millions of Chinese WeChat and Alipay users who pay for products by scanning QR codes from newspapers, online adverts or smart TVs”.

He advises: “To make the most of opportunities, telcos need to position themselves as the hub of the emerging digital marketplace: As an integrator for devices, applications, methods of mobile payment and customer identity management”.

 

Join us at the MVNOs World Congress 2018 in Madrid, 23 – 26 April, and hear from the industry leaders, including Andy McDonald and Ian Streule, on how FinTech and Blockchain will impact the MVNOs market.

 

A blockchain smartphone – the future of devices or a buzzword parasite?

Sirin Labs is a recognizable name if you know where to look. Last year, it brought you a £11,400 smartphone with ‘military grade’ security, and now it wants to bring you a blockchain smartphone called Finney.

The smartphone industry seems to have finally woken up to the idea that software is the way to differentiate, and with this in mind, Sirin Labs CEO Moshe Hogeg has leeched onto the buzziest of buzzwords; blockchain. Hogeg’s attempt to capture the hearts and minds of the wealthy (or at least those with more money than sense) failed quite spectacularly, and we’re slightly sceptical whether the tides will change for this one.

“Sirin Labs understands that the world can’t truly embrace digital economy without a paradigm shift in device architecture that will enable true security, without compromising user experience,” said Hogeg.

“We’re paying close attention to the feedback we’ve received for Solarin, and while Solarin is still being sold and serviced, we decided to take the core offering and to wrap it with a new sleek design that’s a fraction of the cost, so it can serve the crypto community, and their growing need for enhanced security.”

The official line is the devices are designed ‘from the ground up on an independent, fee-less blockchain specifically for crypto wallets, applications and shared resources’. It is being sold on the idea of security, and perhaps ignorance.

Blockchain is certainly more secure in the sense that a distributed network has no central point of corruption or failure, but what does this have to do with smartphones? Is Hogeg simply shouting about blockchain as he is reliant on the idea most people will be too embarrassed to let others know they don’t know what it actually means.

Blockchain

Essentially, you have a device and operating system which are optimized for blockchain. That is what we think it actually means. The claim is Finney will be a ‘blockchain-enabled mobile phone’ but surely most phones will be blockchain-enabled after a software update to the operating system?

But where will the money come from, we hear you ask. Well a crowdsourcing event of course.

The crowdsourcing event is an interesting one, as it could indicate one of three things. Firstly, Hogeg dropped all his cash into the development of Solarin and can’t fund the new venture himself. Secondly, he might not have the confidence to invest his own cash after being burnt by the first ridiculous idea. Or, he has had a chat with the VC community, and they have told him where to stuff his blockchain phone.

Whichever is correct, it doesn’t necessarily get the life of the smartphone off to the greatest start. At the crowdsourcing event, you will be able to buy a cryptocurrency (SRN) which Hogeg is creating only for purchasing Sirin Labs products and services. Fair play to Hogeg for creative thinking, buy something off me which doesn’t actually exist, with the promise you’ll get something which doesn’t actually exist yet. Hogeg is quite literally trying to create something out of thin air. Sounds a little bit suspect.

Another slightly suspect aspect of the plan is the operating system. This does seem to be one of the more prominent selling points of the device, but work on the operating system won’t start until $100 million has been raised. Once $50 million has been raised development of the smartphone will begin, but there doesn’t seem to be any indication of what happens if the funding thresholds are not reached.

Let’s say Hogeg reaches, $75 million through sales of the cryptocurrency. Does that mean the smartphone will be developed but not the operating system? What happens is he only raises $37 million – will development of the smartphone begin? Will the idea be scrapped and people refunded? Or will there just be another cryptocurrency on the market which can only be used with Sirin Labs and Hogeg ends up $37 million richer? It all seems a little bit dodgy.

Should the device make it into the hands of the consumer, SRN tokens will be able to be used to fuel the ‘P2P resource sharing ecosystem’. Every time you do something for someone else who has a Finney device you get rewarded. Connectivity is an example, we assume some sort of Finney specific mobile hotspot, or trading battery power with another user. It sounds like a lovely idea, but it is pretty reliant on mass market penetration of the device. And considering it costs $999, we are once again a little bit sceptical.

The operating system will be released as open source once it is finished (assuming it does get finished of course), allowing other OEMs to adopt the Finney architecture, the software platform, and the SRN currency. It’ll essentially be going head-to-head with Android.

The whole thing sounds so ridiculous, more like a wind-up that a piece of news, but we promise you it is true. Hogeg wants you to buy cryptocurrency which can only be used with his company, to fuel the development of a smartphone, the success of which is dependent on mass market penetration.

We wouldn’t trust him with our wallet, but you can’t say this guy isn’t ambitious.