Blockchain Application in Telecom Industry

Telecom plays a critical role in every aspect of our life. It affects every quadrant of our life the way how we manage our business, the way we manage our day to day activities, the way we stay in touch with our loved ones, and the way we construct our collective human experiences that we call culture. In simple words, you can say Telecom is a way of life. Telecom has played a crucial role in shaping not only our society and culture but it has also been instrumental in shaping the business and economics world as well. Telecom is a huge industry with its global market valued in trillions of dollars.

blockchain technology implementation for telecom industry

But this industry is definitely not a cakewalk for the telecom operators who run this show. They are being challenged by increasing costs and decreasing revenues and on top of that, the ever-growing competition always keeps them on their toes. Today these telecom operators are in dire needs of reducing costs, exploring and implementing new revenue generation streams and make their digital offerings more lucrative and competitive. Though this industry is in a technological transformation phase as it moves towards an augmented, virtualized and digitized environment. But there are still many loopholes in this industry that are unaddressed and Blockchain technology has the potential to plug them in.

Blockchain technology has great applications for these Communications Service Providers or CSPs in short. Blockchain can help these CSPs through cost reduction, better efficiencies, and new value offerings. Fraud is one of the biggest nightmares for most of these Communications Service Providers. According to a recent survey report it has been estimated that fraudulent activities cost these Service Providers 38 billion USD. Most of the frauds in this industry revolve around Roaming and Identity Management and Blockchain based solutions have the potential to reduce these frauds and thus cost to these Service providers.

Let’s first discuss about roaming fraud. Currently, when a subscriber places a call from the roaming territory, the partner roaming network service provider queries the Host Service Provider about the roaming services that user has subscribed to. After that Call Detail Records are sent to the billing systems of the host Service Provider. After receiving these records, the host service provider is required to settle their accounts with the roaming service provider in accordance with the agreed applicable roaming tariffs. Roaming fraud occurs when a user uses the roaming services of the Roaming Service provider and the host service provider is unable to charge the user for the services rendered but the host service provider is liable to pay the Roaming service provider for rendering the roaming services.

There are primarily 2 reasons that lead to Roaming Frauds: The first one is the longer detection time. Since roaming fraud occurs when the subscriber is not in the home territory, it takes a longer time to detect the fraud because of the delays in data exchange between the host and the roaming service providers. The second cause is the longer response time. Host service provider has no control over the systems where this fraud takes place, therefore the time to respond to these fraudulent cases is comparatively longer than the time taken to respond to a fraud that has taken place in a system owned by the Host Service Provider.

blockchain technology application in telecom industry

Now let’s discuss how blockchain based solution can help to tackle this roaming fraud. A permissioned blockchain would be implemented between the operators having a roaming agreement. The roaming agreement between these service providers would be implemented as a smart contract on the blockchain network. Whenever a user makes a call in the roaming network, the Roaming Service Provider publishes the Call Detail Records as a transaction on the Blockchain Network. When this transaction is broadcasted on the network, smart contract gets executed and the predefined terms of the agreement are implemented. The Host Service Provider automatically calculates the billing amount for that call and send this information to the Roaming Service Provider. The implementation of Blockchain and smart contract assists in prompt authorization and settlement in accordance with the pre agreed terms defined in the smart contract.

Now let’s discuss the second fraud that is identity fraud. Identity fraud happens when a particular subscriber uses a false identification or some other subscriber’s identity to access the telecom services. There are cases where improper identity proofs are submitted, the IDs provided have blurred data and the data is illegible but still, the IDs get approved without proper validations. There is still no universal database to verify the customer details. Every telecom operator maintains its own database of frauds to identify the potential future fraud risks. These records are confined to the individual service provider’s database and are not available for other service providers. This leads to an inefficient identity fraud management system.

Using Blockchain based system, telecom providers can develop a solution for Identity Management that can be used across various devices, applications and organizations. There are numerous applications of IoT ranging from smart homes, smart cities, connected vehicles, smart entertainment, smart agriculture etc. and this list is bound to grow further. It is estimated that by 2020 there would be around 200 billion connected devices. This could lead to an exposure of a huge amount of personal and professional data to these devices, which in turn can lead to an increased probability of hacking of these devices.

blockchain for telecom industry

Some of the biggest challenges in developing IoT devices are Privacy, Security, Compatibility and Connectivity. In the current ecosystem, IoT devices have a dependency on the internet for any sort of communication
with other devices and are highly centralized. This lack of proper security measures, in turn, can leave them vulnerable to hacking. But with the implementation of Blockchain, IoT systems which are currently centralized will be replaced by Decentralized Ledger. Thus making it extremely secure against hacking activities. Processes like number portability and billing can be streamlined using Blockchain Technology. Telecom providers can verify number portability and billings without any hassle once this distributed ledger technology is implemented.

In this scenario, a blockchain will be shared among all the telecom operators, customers and other players in the telecom industry like Value Added Service or VAS providers, Over the top media providers like Netflix, Amazon etc. When a subscriber applies for number portability from one network to another, his request would be stored on the Blockchain. The telecom provider who receives the porting request from the customer can verify his identity over the Blockchain and once verified he will be on-boarded on the new telecom provider network. Thus making number portability a hassle-free experience for the customer. SIM card or simply put the lifeline of today’s mobile ecosystem is facing extinction with the introduction of Blockchain solutions. These solutions promise to deliver better and flexible services to customers.

Though hardware-based storage tools evolved over time and many of them went digital but the sim technology didn’t show any new technological development and even today they work the same way as they were initially created. This is bound to change with the implementation of eSim technology. With Blockchain every user will have a unique and secure Digital ID which can be accessed by any service provider after taking due permission from the user. With the implementation of eSim Technology, a user can choose a voice plan from one service provider, mobile data plan can be bought from a different service provider and video streaming services can be bought from a third service provider. The user will have the complete freedom to choose different service bundles from different Service providers on an eSIM ID on the Blockchain, accessible to all service providers. Google has become one of the first companies to deploy this technology. And with the introduction of Blockchain, this is bound to spread to even wider markets.

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