Industry Thought Leadership

Blockchain Technology in Telecom: The Revolution is Coming

July, 2018
Oleg Pravdin
Managing Director

Blockchain in Telecom

Perhaps each of us has found themselves in a situation when we have to purchase roaming services, which are rather expensive, in order to stay in touch with relatives and colleagues while travelling. Those who prefer not to spend money on roaming remain silent or communicate using Wi-Fi at hotels or restaurants. Research shows that 71% of all roaming users remain silent, with just 1% of subscribers consuming 80% of all traffic. This results in billions of lost revenue for the telecom industry. Operators’ revenues fell 11% globally in 2017, with average revenue per user being less than 75% of its 2015 value.

In addition, collaboration between mobile operators from different countries to make roaming possible involves huge expenditures on infrastructure support. In fact, provision of services to a network subscriber in another network requires complex interactions between various equipment of the providers. The amount that the inter-operator charges for entering the roaming market now exceeds $20 million. Developing countries suffer the most from exceptionally high roaming prices in a market dominated by a few telecom giants.

Therefore, international roaming means prohibitive expenses both for telecom companies and subscribers around the world. Luckily, the blockchain can take care of this concern by making it possible to eliminate the outdated roaming technology.

What is a blockchain?
You’ve probably heard the word ‘blockchain’ get thrown around the media, yet a lot of us are still fuzzy on the exact meaning of this term. Meanwhile, blockchain technology is becoming more and more popular. Today, it serves as the basis for cryptocurrencies and implementing ideas that only yesterday seemed too bold. Cryptocurrency is gradually being used as a payment vehicle in everyday life, for instance, to purchase jewelry or real estate, and blockchain technology itself is being used to provide traditional government services (identity verification, notarial functions, land cadaster, etc.).

In simple terms, a blockchain is a growing list of records, called blocks, which are linked using cryptography. Each block contains a cryptographic hash of the previous block, a timestamp, and transaction data. It is an open distributed ledger that can record transactions between two parties efficiently and in a verifiable and permanent way. This technology opens up new opportunities wherever a reliable way of storing data and secure transactions are needed. The telecom industry is no exception.

Blockchain in telecom
Blockchain implementation into the telecom industry implies building a decentralized ecosystem that allows mobile network operators, phone users, and service providers to interact directly. Mobile operators’ interactions get conducted through smart contracts — computer protocols that allow the performance of credible, trackable and irreversible transactions without third parties.

Here is how it works:
Mobile operators publish their own offers as smart contracts at a blockchain-based marketplace. These offers are available to all other operators. Home operators choose offers that they would like to provide their subscribers with. They also have total control over these offers and determine prices in local currencies for subscribers.

A subscriber chooses the most suitable offer and pays for it. By selecting the offer, a new “request” smart contract is created, with the digital identity of the subscriber and payment transaction going with it. The user’s money is transferred to the home operator and the visited operator — the one whose service package they purchased.The offer issuer, i.e. the visited operator, identifies the user, receives the money and starts servicing the subscriber directly at the local price with high quality. In addition, the subscriber uses their existing SIM card while traveling abroad. Thanks to blockchain technology, operators can interact with each other as equal partners and the concurrence procedure between operators is greatly simplified. All calculations between them are made using SDR tokens, which are tied to a basket of five currencies, and performed instantly. Therefore, blockсhain allows us to leave expensive roaming agreements behind.

What are the benefits for the telecom companies?
This decentralized system of equal participants will allow even the smallest mobile operators to get access to the global telecommunication services market without any complex network integrations. Small operators will be able to provide services at the same level as large operators and large operators will be able to expand their client bases. Moreover, the system implies absence of any intermediaries or commissions when making mutual settlement of payments. In addition, interaction with service providers via smart contracts grants multiple value-added services for the mobile operators’ subscribers.

Therefore, telecom companies will be able to increase their revenue without making any investments.

Bubbletone
To get access to services of this kind, subscribers will be provided with a new generation mobile application — Bubbletone. Thanks to this application, users will be able to make calls and use data at local rates using their home SIM-cards and phone numbers while travelling worldwide.

The market for using this technology is huge — 1,000+ small and medium-sized operators, 10,000 online service providers and 1.3 billion travellers a year. The technology is ready for use. We invite all mobile operators who want to bring these significant changes to the industry to join the ecosystem. More information available here: https://blockchaintele.com/

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