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Blockchain @ Telco

How blockchain can impact the


telecommunications industry
and its relevance to the C-Suite
Content
Introduction to blockchain 04
CSP value chain and blockchain 06
Use Cases 08
Relevance for the C-Suite 19
Benefits, challenges and conclusion 21
Contacts 22
Blockchain @ Telco | How Blockchain can impact the telecommunications industry Blockchain @ Telco | How Blockchain can impact the telecommunications industry

Introduction
Blockchain is currently one of the most widely-discussed
and hyped technologies. There are not many industries
that shouldn’t be either excited or worried about its
potential, with use cases, proof-of-concepts, and full-
fledged businesses based on blockchain technology
emerging at an increasing pace.

The technology carries the potential to dis- cost reductions when the technology is
rupt business models in many industries, mature and ready for wider adoption.
including telecoms, and can increase trans-
parency and efficiencies in the process. What is a blockchain?
However, blockchain applications are young Blockchain is currently one of the most
and evolving and complementary indus- widely-discussed and hyped technolo-
try-wide standards are most probably still gies. There are not many industries that
a few years away. Nonetheless, to avoid dis- shouldn’t be either excited or worried
ruptive surprises or missed opportunities, about its potential, with use cases, proof-
strategists, planners, and decision-makers of-concepts, and full-fledged businesses
in the telecom ecosystem should take the based on blockchain technology emerging
time now to investigate applications of at an increasing pace.
the technology in both core and adjacent
operations and business functions. Early A blockchain’s key characteristics as
familiarity with related opportunities and illustrated in Figure 2 are integral to its
challenges will position them better to gain potential.
advantages in terms of revenue growth and

Digital 2
Distributed
1
ledger

Updated near
3
real time
Figure 1: Centralized versus decentralized transactions

The advantages of this type of multiple, of network participants the blockchain


Fewer third decentralized storage are robustness and remains available, eliminating the single
4 Chrono-logical
parties 8 trust, at the expense of confidentiality and point of failure. New information stored in
and timestamped
processing performance. Every participant the blockchain is immutable. Its method
in the network has the ability to verify of record-keeping prevents deletion or
the correctness of transactions. Network reversing of transactions once added to the
consensus methods and cryptographic blockchain, as soon as further blocks are
Operates
7 technology are used to validate trans- added.
‘trustless’
actions. Thus, trust is not established
externally by a central authority or an The use cases discussed below are all
Crypto-graphically auditor but continuously within the network built around these unique blockchain
5 as illustrated in Figure 1. Furthermore, characteristics as enablers for more
Irreversible and 6 sealed
auditable decentralized storage in blockchains is reliable, tamper-proof, and failure-resistant
known to be very failure-resistant. Even in applications.
Figure 2: A blockchain’s key characteristics the event of the failure of a large number

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Blockchain @ Telco | How Blockchain can impact the telecommunications industry Blockchain @ Telco | How Blockchain can impact the telecommunications industry

CSP value chain


and blockchain
Communications service providers (CSPs) to both reduce costs and find new sources CSPs will most probably see the great- propositions. Four use cases help illustrate
have traditionally owned the end-to-end tel- of revenue. est impact of blockchain in their core the potential of blockchain for CSPs: Fraud
ecoms value chain for both consumers and management systems and in adjacent Management, Identity-as-a-service and
businesses – spanning network infrastruc- Blockchain has the potential to be for ‘value’ services, providing opportunities for cost Data Management, 5G enablement, and
ture, provision of core voice and data con- what the Internet has been for ‘information’. reduction through process efficiency gains, secure IoT connectivity
nectivity, and related consumer services. In addition to the many use cases being and revenue growth through new value
However, in an environment of heightened explored for industries such as finance,
competition in an increasingly digital world healthcare, and government, there are
from infrastructure light over the top (OTT) plausible applications of blockchain for a Current Core and VAS Opportunities Upcoming Telecom Trends Opportunities
players, together with decreasing revenues CSP, both within its current portfolio of
from voice and increasing costs due to the operations and also to capitalize on some of Focus area
high band-width demands, there is a need the future telecom trends. Fraud Management Identity-as-a-Service 5G Enablement IoT Connectivity

Infrastructure Access Network Core Operations Services


• Spectrum • Switches • BSS • Voice/Data/Cable Description
• Base Station • Routers • OSS • Value Added Services
• Towers
• Managed Services Implement blockchain for Provide eSIM solution Platform to enable a new Enable peer-to-peer
data and value exchange and identity and authenti- generation of access tech- connectivity for IoT devices
Network Management
within and between cation services based on nology selection manage- in cost-efficient self-man-
networks to reduce fraud cryptographic identity ment, required for the aged networks
Enterprise Management realization of 5G network
potential
Partner Management
Benefits
Customer Management • Reduced losses due to • Decreased costs of • Common platform to • Common platform for
fraud implementing Identity provide seamless IoT devices to communicate
Reporting and Analytics • Reduced costs for fraud Management connectivity • Enable micropayments
Potential areas for Blockchain disruption detection applications • Additional revenue
stream
Figure 3: The CSP Value Chain and areas of likely blockchain impact
Figure 4: Potential use cases of blockchain for a CSP

Current Core and VAS Opportunities Upcoming Telecom Trends Opportunities


Infrastructure Access Network Core Operations Services
•Focus area
Spectrum • Switches • BSS • Voice/Data/Cable
• Base Station • Routers • OSS • Value Added Services
• Towers
Fraud Management Identity -as-a- 5G Enablement• Managed IoT Connectivity
Services
Service

Implement blockchain Provide Network Management


eSIM solution Platform to enable a Enable peer-to-peer
Description

for data and value and identity and new generation of connectivity for IoT
exchange within and authentication services Enterprise
access Management devices in cost-efficient
technology
06between networks to based on cryptographic selection management, self-managed networks
Partner Management 07
reduce fraud identity required for the
realizationCustomer
of 5G Management
network potential
Blockchain @ Telco | How Blockchain can impact the telecommunications industry

Use Case #1 –
Fraud Prevention

Fraud detection and prevention continue with the VPMN in accordance with the cor-
to be topics of relevance for most CSPs, responding roaming agreement tariffs.
as a result of fraud costs in the industry of
over USD 38 billion11 annually. Given that Blockchain has the
the telecoms industry has not yet found a
way to effectively and sustainably prevent
potential to reduce losses
fraud, blockchain is in principle a good due to fraud and minimize
contender for significantly decreasing the
cost of fraud e.g. in roaming and in identity
costs for fraud detection
management. applications.
Roaming fraud Current challenges – Roaming fraud occurs
Current system - When a call/event is when a subscriber accesses the resources
placed, the Visited Public Mobile Network of the HPMN via the VPNM but the HPMN
(VPMN) queries the Host Public Mobile is unable to charge the subscriber for the
Network (HPMN) about the services to services provided, but is obliged to pay the
which the roaming user has subscribed, VPNM for the roaming services. Roaming
by querying the Home Location Register fraud exploits two characteristics:
(HLR). The Call Detail Records (CDRs) are
sent to the billing systems in their respec-
•• Longer detection time: since the fraud oc-
tive networks. These systems are in charge
curs when the subscriber is in a network
of processing CDRs and the generation of
other than that of the HPMN, the time
invoices to subscribers.
required to detect the fraud is longer
due to delays in the exchange of data
The VPMN sends CDR information to the
between VPMN and HPMN.
HPMN as a Transfer Account Procedure
(TAP) file. Certain companies act as a Data •• Longer response time: due to lack of con-
Clearing House (DCH) for these files. A DCH trol over the systems in which the fraud
is responsible for the transmission and has occurred, the time to respond to the
conversion of the TAP files on behalf of the fraud is longer than if the fraud had oc-
CSP which has hired it. curred in a system owned by the HPMN.

Once the TAP files are received, the HPMN


must settle accounts per costs incurred

1
Communications Fraud Control Association (CFCA)
2015 Global Fraud Loss Survey

Use Cases
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Blockchain @ Telco | How Blockchain can impact the telecommunications industry Blockchain @ Telco | How Blockchain can impact the telecommunications industry

Current System Blockchain Alternative Current System Blockchain Alternative

HPMN HPMN VPMN VPMN


Node 2 Node n Node n Node 2 Public
key

CDR CDR

Data
Clearinghouse Public key associated with
Roaming Pact
HPMN VPMN HPMN VP one device is known by all base
- Smart Contract
Node 1 Node 1 stations on the Blockchain
network, hence reducing
time needed to authenticate

IM

SI
IM
Pay for

SI
CDR - broadcast Also, private key never
Service on Blockchain - SIM SIM shared so ID theft is
Home User Home User Home User Visitor User
triggers contract
Tower Tower Tower Tower not possible

Pay for Service


Roaming Pact

Figure 5: Roaming Fraud prevention use case - illustrative Figure 6: Subscription identity use case

Blockchain-based solution - matically calculate the billing amount based weak (CSP asks customers to create pass- private key information secret. This way, the
A permissioned blockchain could on the services rendered and send this code while creating a wireless account) or services can only be used by the subscriber
be implemented between every information back to the VPMN. expensive (stand-alone ID protection who has subscribed to them and the ID
pair of operators which have a roaming systems such as Equifax), and are some- cannot be easily stolen.
agreement. Designated nodes from both This helps instantaneous and verified au- times not up-to-date. This process also avoids the device infor-
operators act as miners to verify the sanc- thorization as well as settlement to occur in mation having to be authenticated by the
tity of each transaction broadcasted on the line with blockchain-based smart contract Current challenges - There are many ways base station every time the device enters a
network. The roaming agreement is imple- terms. CSPs can also do away with the DCH in which a subscriber’s identity can be com- new cell territory. Instead, due to the base
mented between the HPMN and the VPMN acting as middleman, resulting in further promised (email phishing, SIM cloning, etc.). stations being nodes on a common block-
as a smart contract that is triggered when cost savings. Due to the multiple-play services provided chain, the device information is already
a transaction containing the CDR data is by telecom operators, an ID theft can result available at the base station and can be
broadcasted on the blockchain network. Subscription identity fraud in compounded losses through the access authenticated quickly, once the public key
Every time a subscriber triggers an event Current system - Subscriber identity infor- to many services under a stolen identity. is sent to it by the device.
in a visiting network, the VPMN broadcasts mation is necessary to create an account
the CDR information as a transaction to and assign services to the subscriber. Blockchain-based solution –
the HPMN. This data triggers the smart Subscription ID theft occurs when a sub- Public-private cryptography
scriber uses false identification or another which is inherent in a blockchain
contract and the terms of the agreement
are executed. The HPMN can thus auto- subscriber’s (victim) ID to obtain services. can be used to identify a device and link
Benefits
Fraudsters can for example use the stolen that device to a subscriber’s identity.
identity information to obtain a SIM card in Instead of broadcasting the IMSI to the net- •• Reduced subscriber or other ID-
Benefits the victim’s name. work to identify the device, the phone-gen- based fraud.
erated public key is broadcasted instead.
The physical SIM stores the International The device generates this public key from •• Easier and faster device identifica-
•• Cost savings from eliminating the Mobile Subscriber Identity (IMSI) and the the private key that is stored securely on tion during mobility, due to shared
third-party clearing house. related key is used to identify and au- it. Neither the carrier nor any other third database having the device public
thenticate subscribers on mobile devices. party needs to know the private key. key information and history.
•• Automatic triggering of roaming
Each time a mobile device is turned on, it •• Can be used to provide identity to
contract based on call/event data
broadcasts a signal containing the IMSI to This ‘eSIM’ solution can help protect private machines in an M2M or broader
which enables near-instantane-
the nearest base station. That identification information that is encrypted in the private IoT environment, instead of hav-
ous charging and reduction in
number links the device to the account with key. The private key is associated with only ing to embed physical SIMs into
roaming fraud.
the carrier. one particular device and is hence difficult distributed devices.
•• Repository of verifiable transac- to steal. The public key is used to identify
tions between operators, allowing Some telecom providers maintain their the device and to authorize it on the net- •• Elimination of cost to manufac-
for quick dispute resolution. own fraud databases to identify potential work. The subscriber is uniquely identified ture and distribute physical SIMs.
fraud activities. Current solutions are either by this public key, while able to keep the

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Blockchain @ Telco | How Blockchain can impact the telecommunications industry Blockchain @ Telco | How Blockchain can impact the telecommunications industry

Use Case #2 –
Identity-as-a-service and
Data Management

CSPs can create new sources of revenue by combinations) and security (personal data sponding app on the phone to provide identity, only the ones that are relevant in the process. The educational institution
providing identity and authentication as well shared with third parties) in current identity the identity. A copy of the ledger entry is (such as his home location) and add other signs up with the CSP to digitize and store Benefits
as data management solutions to partners, and authentication services. And while sent to the e-commerce site app. Now the attributes (such as his preferred mode of certificates of subscribers on the block-
enabled by a blockchain. there are a few alternatives, CSPs currently e-commerce app can look at all entries for travel) to create a travel virtual identity. The chain. For those subscribers who also sign
•• Cost savings from a blockchain-
do not play a significant part in identity and that same virtual identity. Once the virtual possibilities of such identity management up (and are, of course, alumni of the univer-
Blockchain adoption authorization services, even though they identity is established, the e-commerce are limited only by the number of partner sity), their identity and degree certificate are
based federated identity
management solution as
could significantly reduce possess substantial amounts of relevant site needs to know that the virtual identity service providers that the CSP can sign on verified by the university through traditional
compared to traditional IDM
subscriber data. belongs to the subscriber so its app takes to the blockchain-based system. channels, and the university assigns the
roaming fraud and also the public key from the virtual identity, digital copy of that certificate along with all
software.

optimize ID management Opportunity for CSPs - encrypts a challenge and sends it to their Application to Data Management details (course name, date of issue, etc.) to •• New revenue stream from
A blockchain can be used as the shared app which decrypts it (because it has the The CSP can extend such a blockchain-ena- the subscriber. providing an identity-as-a-service
through instantaneous ledger that stores identity transactions. The associated private key) and responds. Now bled identity and access solution to provide solution to partners and end-
and automated processes CSP can provide identity-as-a-service to the e-commerce site generates an e-com- data storage and verification services to If a prospective employer of the subscriber consumers.
partners, thus allowing for additional reve- merce virtual identity which is then stored private clients. Consider the example of now wants to verify the credentials and
based on smart contracts. nue generation by negotiating appropriate in the ledger itself. an educational institution. Educational inspect the certificate, the subscriber only
•• Improved subscriber ease of use
as regards ID management.
agreements. institutions issue certificates and degrees needs to produce the digital certificate avail-
Currently, every time a person wants to The next time the subscriber visits the to their students to signal the completion able on the blockchain and the employer •• Opportunity to form a locked-in
sign up at a vendor, they need to prove When a subscriber opens an account with a same e-commerce site, he can be authenti- of a course. The current system of man- can be sure that this has been issued by ecosystem through strategic
their identity and credentials using physical CSP, the CSP creates a digital identity. The cated using the same mechanism. Also, the aging certificates is slow, unreliable, and the university and is genuine. The CSP can partnerships with partners that
or digital documents. They would need to private key associated with this identity is ledger already holds his transaction history disjointed. It often still requires maintaining further benefit by extending related authen- use identity solutions provided by
provide their PII (Personal Identity Informa- stored safely on the eSIM. The CSP creates and hence knows his preferences. The a paper copy of the certificate to be physi- tication services to corporate clients for all the CSP.
tion) even though most of the information a virtual identity, using the public key from e-commerce site can use related insights cally submitted to third parties legitimately types of documents, such as insurance cer-
would not be needed by every vendor; the the digital identity and adds a set of stand- for a recommendation engine. The sub- requesting proof of course completion tificates, airline tickets, hotel reservations,
vendor would only need a subset of that ard fields (name, address, etc.) as required. scriber can also use the same e-commerce and grades. Additional steps today might etc., where digital storage and verification
information. Also, signing up online either It then adds a digital signature using its virtual identity to login to a completely include an employer, for example, calling a may be required at some point.
requires creating many username/password own private key. A pointer to this virtual different e-commerce site using the same university to verify that a certificate is not a
combinations or utilizing the services of identity along with necessary descriptors is mechanism. fake, or relying on a third-party to perform
third party providers (such as Google and then added to the blockchain. that verification.
Facebook) to use their SSO (Single Sign On) The CSP virtual identity can be used to help
functionalities. If the subscriber now visits a partner create further virtual identities similar to the CSPs could provide blockchain based
website, say an e-commerce site, the site e-commerce one (such as a travel virtual Identity verification, data management and
This leads to many challenges such as lack will need to know their identity, so the identity). This identity need not know all storage services to both private clients and
of convenience (many username/ password merchant site starts running the corre- of the details from the subscribers digital subscribers, generating additional revenue

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Blockchain @ Telco | How Blockchain can impact the telecommunications industry Blockchain @ Telco | How Blockchain can impact the telecommunications industry

Use Case #3 –
5G enablement
ID Creation
5G technology implementation is another Current challenges – The system is cen-

Safety stored on eSIM


example to potentially benefit from the
blockchain to streamline processes. To
tralized in a client-server model where the
rules stored on the server (ANDSF) are
Benefits
Private Key
realize the 5G promise of ubiquitous access pushed to the client (device). This causes
across various networks, CSPs will need delays and does not allow for seamless •• Sharing of faster and regulated
to handle heterogeneous access nodes provisioning between access networks for local connectivity for reliable
and diverse access mechanisms. Selecting the device. Also, the provisioning of rules is service to device.
CSP New the fastest access node for every user not a real-time process – meaning the rules
•• Instant monetization of diverse
User
Virtual Identity created
or machine will be a central challenge in cannot be changed dynamically.
connection types through smart
Public Key the future. Blockchain can enable a new
contracts.
generation of access technology selection Blockchain-based solution -
Telecom Virtual mechanisms to build sustainable solutions. The 3GPP (LTE, GPRS) and
ID stored on
•• Enables local connection prices
the Blockchain non-3GPP (WiMax, WLAN, WiFi) purely based on supply and
Blockchain can enable a access networks in a given area can be net- demand in the area.
ID Authentification new generation of access worked via a blockchain where each access
•• New business models to use idle
point (WiFi router, SP cell tower, etc.) can
technology selection serve as a node in the network monitoring
capacity for non-prioritized traffic.

mechanisms required
1 Opens CSP-provided ID app on phone
the devices.

User
for the realization of 5G Rules and agreements between the various

5 Challenge solved 4 Encrypted challenge sent


2 App is connected to Blockchain
networks. access providing networks can be coded
using Private Key to verify authenticity as smart contracts. These contracts can be
Hence, Current system – ANDSF, which stands for dynamic in nature wherein any time a pol-
authenticated Access Network Discovery and Selection icy needs to be changed, only the contract
3 Virtual Identity info sent to Function, is an entity within the EPC code needs to be changed.
Partner Partner application
(Evolved Packet Core) which helps in the
discovery/selection of access networks, When a device broadcasts its identity,
Data Management
such as WiFi, WiMax, and LTE, in the device it is accepted into the network by the
vicinity, providing them with rules policing corresponding CSP cell. Once the device
the connection to these networks. It con- broadcasts its location, the access node
sists of a list of access networks, such as that can best provide service to the device
Employer WiFi, that may be available in the vicinity of is called upon to do so.
a device. This information is received in re-
Certificate sent for
employee verification sponse to a device request which contains This also allows for seamless rating and
its location and capability, such as types of charging of all services between the various
supported interfaces, among others. The access nodes. If, for example, a WLAN
Certificate assigned after Uploads digital received information assists the device in from an office or a home network has
ID Autthentication certificate to
Blockchain expediting connection to these networks. provided access to a device, then the CSP
Alumnus CSP University can conceivably give a reduction in the bill
Employee Blockchain
Subscriber The ANDSF response contains the fol- amount appropriately for the invoice of the
lowing information: the type of access accommodating company or home. Loca-
technology (WiFi, WiMAX, etc.), the access tion-based services can also be enabled by
network identifier, and technology-specific being a part of this blockchain network and
information (such as one or more carrier hence always knowing which devices are in
Figure 7: Identity-as-a-Service and Data Management use case frequencies). the vicinity.

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Blockchain @ Telco | How Blockchain can impact the telecommunications industry Blockchain @ Telco | How Blockchain can impact the telecommunications industry

AS-IS – Access Network Discovery and Selection Function (ANDSF)


Use Case #4 –
Access Technology
User WLAN Public WLAN 3GPP Station Car WLAN Private WLAN IoT connectivity
A blockchain can enable secure and sets or in some way pertaining to custom-
error free peer-to-peer connectivity for ers of the company, which makes data and
thousands of IoT devices with cost-efficient network security an essential and costly
Benefits
self-managed networks. For example, pillar of IoT connectivity. Also, the size of
machines within a manufacturing plant will the network defines network routing and •• Self-managed, peer-to-peer
Coverage/User be able to communicate and authenticate management complexity, leading to varying
Experience networks taking over regional
themselves via the blockchain to steer system landscapes without a common routing.
production processes. Active manual inter- platform.
vention by the workforce will for example •• High security levels for IoT devices
only be needed if individual machines Blockchain-based solution – within public blockchain networks.
Access Foreign ISP Access Foreign Car Foreign WLAN require service on the basis of predictive A blockchain allows for highly •• Low-cost setup options for SME
maintenance indicators. In addition, the secure peer-to-peer self-man- purposes.
risk of a production shut-down owing to aged mesh networks using a sufficiently
TO-BE – Blockchain (BC) enabled seamless rating and charging corrupted or hacked machines could be large number of nodes. These blockchain
limited, thanks to the distributed and con- network nodes can be represented by
Access Technology
sensus-based authentication of data in the single embedded IoT sensors with the
User WLAN Public WLAN 3GPP Station Car WLAN Private WLAN blockchain network. ability to verify every block being changed
within the blockchain. For a start, these
Current system – To cope with the in- networks can be introduced into a private
creased connectivity demand for devices environment based in mid-range cell-tow-
with low-power consumption, traffic, and ers with relatively low investment require-
bandwidth needs, current network opera- ments. By establishing such a network in a
tors build Low Power Wide Area Networks public blockchain language (e.g. Bitcoin or
Coverage/User (LPWAN). Telcos are facilitating appropriate Ethereum), further expansion or evolution
Experience
IoT use cases for regionally and globally into a public blockchain enables seamless
operating companies to push and fully connectivity and security. CSPs could then
amortize LPWANs. These use cases often provide private/public key security and
1 require appropriate platforms to manage global, always-on connectivity to enable
Access BC Access Access BC Access BC Access
single IoT devices and connect the internal such a public blockchain network with
application landscapes accordingly. global reach.
Location broadcast Smart Contract of user P2P micropayment Connectivity provisioning

Current challenges – IoT sensors usually


Figure 8: 5G enablement use case carry sensitive information about core as-

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Blockchain @ Telco | How Blockchain can impact the telecommunications industry Blockchain @ Telco | How Blockchain can impact the telecommunications industry

AS-IS - Building of diverse managed Low Power Wide Area Networks (LPWAN) for IoT/M2M purposes
Relevance for the C-Suite
Network control/ Logistic Production Energy

Trust is the cornerstone of business. Blockchains permit trust to be intrinsically


routing network network network

embedded into a technological solution, thus enabling smooth partnerships and


transactions with potentially little friction between the various stakeholders.

Embracing the blockchain and adopting Forging new partnerships – Also, in the case of roaming agreements,
blockchain-enabled business models could Blockchain would force a reformulation of the clearing house can be completely
have relevance for numerous functions and the telecom eco-system and the relative eliminated as an intermediary.
executives at a CSP: influence of each player. The CEO would
have to evaluate the CSP’s new position Streamline operations –
•• CEO relevance – in such an ecosystem and forge new A blockchain provides the opportunity to
Embracing blockchain will compel the strategic partnerships as well as redefine rationalize various aspects of a CSP’s op-
Global routing Regional Regional Regional CEO to comprehensively rethink the existing ones. erations due to the modularity provided
& monitoring routing routing routing
CSP’s strategy with regard to various by using a smart contract.
stakeholders, since new business models For example, in both the 5G mesh
could thoroughly disrupt the existing tel network and the IoT connectivity use For example, implementing roaming
com value chain. cases, the CEO would need to forge agreements as smart contracts intro-
TO-BE - Blockchain (BC) self-managed peer-2-peer (P2P) networks connected for IoT/M2M partnerships with players who might be duces modularity, hence agreement
New revenue streams – new to the telecom ecosystem (e.g. smart with a new partner can be built on top
Network control/ Logistic network Production network Energy network Blockchain could enable new business meter or sensor manufacturers, WLAN of existing smart contract structures.
routing (self-managed) (self-managed) (self-managed) models to be conceived, beyond the infrastructure providers, etc.) and work in The success of such an approach would
traditional role that a telecom provider partnership with these new and existing permit the CEO to reach out more easily
has played in the past. This could enable players (e.g. other CSPs). to more CSPs to sign up as roaming part-
the cash-starved CSP to open new ave- ners, thereby enabling better roaming
nues for revenue generation. Rethink role of intermediaries – coverage for subscribers.
As a concept, blockchain promotes a
For example, the CSP could act as the broad reduction in the role of intermedi- •• CFO relevance –
pivot of a blockchain-based identity, aries, if they are not eliminated entirely. Chief Financial Officers at CSPs are
access management and a data storage This gives the CEO better control over looking for possible avenues for reducing
and verification system, as explained in costs and a wider area of operations. costs and improving the bottom line in a
the Identity-as-a-Service use case. This highly regulated and competitive market.
enables the CSP to charge both business For example, the eSIM eliminates the Blockchain has the potential to help facili-
clients and subscribers for the services it need to have multiple partnerships with tate just that.
provides. The 5G mesh network use case SIM card manufacturers. The CEO can
Global routing Global connectivity Global connectivity Global connectivity
& monitoring (if required) (if required) (if required) also points to opportunities for increasing have better control of operations and Cost savings –
the shared revenue pie by providing focus on relationships with device man- The blockchain can contribute to reduc-
Figure 9: IoT connectivity use case
seamless services to subscribers. ufacturers who would embed the eSIM. ing costs substantially by eliminating

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Blockchain @ Telco | How Blockchain can impact the telecommunications industry Blockchain @ Telco | How Blockchain can impact the telecommunications industry

Benefits, challenges
and conclusion
We have seen that blockchains may be able deliver a broad variety of applications
across the telecom industry, and that the technology has the potential to significantly
impact CSPs operating models.

intermediaries and decreasing instances Technology Innovation – patterns, whereas currently it takes a long The impact ultimately depends on how Challenges: of many stakeholders drives real value.
of fraud. For example, roaming settle- The adoption of blockchain provides time for the operator to receive roaming actively the adoption of use cases is driven Organizations such as the GSMA, which
ment costs can reach 15% of operating opportunities to introduce and offer usage details for a subscriber. by CSPs. Going forward, there is a need to 1. Since a blockchain retains all historical represents the interests of many mobile
profit for a CSP, most of which is spent on technology in the market in innovative further facilitate blockchain benefits and to data, the size of an established block- CSPs globally, could equally take a more
the clearing house and also on roaming ways, as the 5G enablement and IoT use Use of eSIMs in M2M would also allow overcome the remaining challenges: chain at each node might become active role in exploring and promoting
software solutions. cases illustrate. the CMO to offer convergent offers with unsustainable. Instead, a mechanism blockchain use cases in the industry.
multiple devices (e.g., smart appliance Benefits: to archive historical data needs to
With the blockchain-based solution, CSPs Improved Security – and smart watch) under a single contract be looked at. Several alternatives are Companies such as Orange and Verizon,
can look to significantly reduce costs due One of the biggest pain points of the with the consumer, thus allowing the CSP 1. A blockchain’s ‘enabled’ trust im- currently being explored in this regard amongst others, have already invested
to peer-to-peer (or CSP-to-CSP) imple- CTO is around system and data security. to take a leading role in the IoT market. proves coordination between various by various players in the blockchain in startups in the blockchain area to
mentation of a roaming data exchange, Security is one of the core propositions of partners, due to a shared view of ecosystem. explore the synergies and potential use
eliminating the need for a clearing house a blockchain-enabled system, and hence eSIMs, however, would equally reinforce transactions and liabilities. This in cases. Many more players are researching
and for licensing end-to-end roaming very relevant to a CTO. the importance of differentiated cus- turn permits the elimination of third 2. Conforming to existing data standards potential use cases in-house. It is time for
software. tomer ser-vice and experience to solidify parties, resulting in cost savings. in terms of both structure and trans- everyone to agree on a unified approach to
Redundancy of legacy systems – the status as a provider of choice where port for sharing of information could enable meaningful realisation of benefits.
Also, the costs of manufacturing and dis- Blockchain can also potentially make cer- alternatives exist. 2. Facilitates a single view of data instead prove to be an initial hurdle.
tributing physical SIMs can be eliminated tain legacy systems that are core to the of the need for consolidation across
with an eSIM solution. CSP technology landscape redundant. The new business model enabled by the various disparate systems. Also allows 3. Clear regulatory frameworks need to
For example, the use of blockchain in the mesh network also provides an oppor- for reliable audit trails due to the histo- be defined for the implementation of
Near real-time settlements – roaming fraud scenario could make fraud tunity for the CMO to introduce unique ry of all transactions being available in agreements as digital, smart contracts
Due to the ability to charge customers management systems redundant or at offers to subscribers, enabled by strong the ledger.
in near real-time, the CFO could have a least less important. partnerships with the other players in the In conclusion, the benefits of adopting
more timely view of cash flows. Fraud, ecosystem. 3. Implementation of smart contracts a blockchain in the core and auxiliary
such as roaming fraud which currently •• CMO relevance – in roaming and other cases allows for operations of a Communications Service
accounts for USD 10.8 billion in global rev- Chief Marketing Officers would primarily For example, CSPs would be able to near-instantaneous charging, thus Provider are plenty, as highlighted above.
enue loss, can be substantially reduced benefit from the ability to introduce new introduce bundles of premium consumer leading to improved revenue assur- CSPs should take a long term view of
due to faster settlements. offers to the market at a faster rate than hardware for either exclusive private con- ance and fraud reduction. blockchains and their potential to add value
previously possible, enabled by the mod- nectivity or for sharing the access node to the enterprise in both their current and
One source of truth for transactions – ularity of a smart contract. with other blockchain-enabled consum- 4. Potential to facilitate new business new business models.
The blockchain ledger provides one view ers and their smart contracts to directly models for revenue generation for
of almost all transactions to the CFO, For example, a blockchain-based roaming market idle access capacities and achieve Communication Service Provider There will be challenges to adoption of the
instead of relying on disparate systems to agreement between operators allows a monetary benefits for both consumers who are looking for new avenues to blockchain, as with any new technology
find and collate different financial views. CMO to introduce new roaming offers and CSPs. increase both top and bottom lines. that holds the promise of significant
and services at a faster pace, which can disruption. However, CSPs would do well to
•• CTO relevance – then be coded into the smart contract(s) 5. A blockchain can act as the ledger work together to enable the full realization
CTOs work at the intersection of technol- and charging can be nearly instantane- that enables, for example, an M2M of the benefits, just as many of the global
ogy and business and will be the execu- ous. A blockchain also enables faster economy to prosper based on the financial institutions are currently doing
tives who are best positioned to gauge gathering of roaming details, which also common platform available, in which (e.g. in the R3 Consortium). Working in a
the impact from blockchain on CSPs and reduces the time needed to bring new M2M transactions can be recorded. It silo will limit the potential of blockchain,
also would be responsible for driving its customized offers to market, based can thus act as the enabler for an IoT as disintermediation, robustness, and
adoption. on the subscriber’s previous roaming ecosystem. the need for trust at the intersection

20 21
Blockchain @ Telco | How Blockchain can impact the telecommunications industry

Contacts:
Arun Babu | Director

Consulting Industry Leader – TMT

Deloitte Africa

Tel: +27 (0)11 517 4114

arbabu@deloitte.co.za

Ben Davis | Associate Director

Innovation and Growth Services

Monitor Deloitte

Tel.: +27 (0)11 517 4646

bedavis@deloitte.co.za

Thys Bruwer Director

Deloitte Digital Africa

Tel.: +27 (0)11 209 6440

tbruwer@deloitte.co.za

Thanks to contributing authors:

Milan Sallaba | Partner

Technology Sector Head Germany

Monitor Deloitte

Tel: +49 (0)89 29036 7770

msallaba@deloitte.de

Mirko René Gramatke | Director

Monitor Deloitte

Tel.: +49 (0)89 29036 7811

mgramatke@deloitte.de

22
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