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Summary

Blockchain – the technology behind cryptocurrencies – is not just for the financial services industry. Blockchain and distributed ledger technologies can do more than add transparency to supply chains and inventory management; they can improve automation, collaboration, customer experience, and monetization opportunities for communication service providers (CSPs) undergoing digital transformation.

Blockchain can be transformative for the telecoms industry

It's a pattern that many following technology trends have come to recognize: a hot new technology emerges, and everyone is sent buzzing about why it should be adopted across industries. Currently on this familiar merry-go-round is blockchain, which many recognize as a distributed ledger technology that is the engine behind cryptocurrencies such as Bitcoin and Ethereum.

Having been around for nearly a decade, blockchain technology is now beginning to pick up steam across industries for its transformational potential. The telecoms industry has been slow in adopting it, and somewhat skeptical about the prospect and benefits of doing so. At a time when CSPs are struggling to compete with Netflix, Google, Amazon, and Facebook for customers, it does not help that many of the early, non-financial-services use cases for blockchain have been focused on inventory and supply chain management – definitely not sexy. However, as blockchain technology and vendor support mature, there is an opportunity for CSPs to take a closer look at how the technology can transform other areas of the business.

By leveraging a combination of smart contracts, secure transactions, and blockchain's decentralized nature, CSPs can improve monetization opportunities, automation, customer experience, and collaboration with partners.

Smart contracts, for example, allow CSPs to automatically facilitate or enforce a contract based on a given set of parameters. This capability can be used as a tool to automate complex contracting processes, such as those used for large B2B customers. It can also be used to streamline the partner management process, automating revenue share and settlement terms for third-party partners and enabling CSPs to better manage their partner ecosystems. The secure and decentralized nature of blockchain also offers the potential to transform the interconnect and settlement process for roaming customers, which, as it stands, is one of the costliest services offered by CSPs. CSPs can level the playing field and compete with internet content providers (ICPs) such as WhatsApp, Skype, and Viber by using blockchain to gain more transparency around customer usage on partner networks, and minimize the costs associated with handling interconnect activity.

Improvements in automation, collaboration, and monetization opportunities (such as blockchain-enabled micropayments) are just some of the examples of how the power of blockchain can be harnessed by the telecoms industry. Rather than approach this new technology with the usual skepticism, CSPs should look to familiar vendors such as SAP, Microsoft, and IBM – which are all active in the blockchain space – as partners for new blockchain use cases. One thing is sure: if CSPs are going to compete with fierce competitors such as the Googles and Amazons of this world, they'll need to do more than sit by as ICPs dive head-first into new technology.

Appendix

Further reading

Blockchain for Beginners, IT0059-000071 (September 2016)

Service Providers and Blockchain Technology, IT0019-003596 (January 2017)

Author

Chantel Cary, Senior Analyst, Telecoms Operations and IT

chantel.cary@ovum.com

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