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How Will The Blockchain Reinforce The Telecommunications Industry?




Blockchain technology will revolutionize a number of industries, but what benefits can it bring to the telecom sector?

The first mobile phone was introduced in 1973 by Martin Cooper, and became a major disruptor of the telecommunications industry. Since then, the telecommunications industry has grown exponentially. However, further expansion will depend on upgrading to newer technology. According to Deloitte’s 2017 Telecommunications Outlook, “telecoms will not be able to achieve rapid growth without upgrading their network infrastructures.”

Most recently, Sprint announced its partnership with multinational telecommunications company SoftBank Corp. and blockchain start-up TBCASoft, Inc. to establish a blockchain solution for the telecommunications industry. Although the blockchain is expected to streamline processes in a number of sectors, how specifically will the technology revolutionize the telecommunications industry?

Communication service providers (CSPs) will utilize the blockchain to facilitate improvements upon their current infrastructure and operations. CSPs encompass public and private companies within the telecom industry, and transport information electronically for commercial use. Their functions include spanning network infrastructure and facilitating voice and data connectivity. The industry experiences considerable growth every year. However, since the enactment of the Telecommunications Act of 1996, which led to the deregulation of the telecommunications industry, the stakes have become higher as the industry has become more vulnerable to heightened competition, decreasing revenues, and increasing costs. The blockchain, however, can help improve the industry by providing various types of solutions to upgrade the CSP infrastructure, such as: fraud management, identity management, Internet of Things (IoT) securitization, and 5G network support.

Fraud Management

In 2015, the Communications Fraud Control Association estimated global revenue within the telecommunications industry to be $2.25 trillion. Conversely, global fraud loss within the industry was estimated close to $38.1 billion that same year as well. Unfortunately, despite its knack for innovation, the telecom industry has not yet found a sustainable method to prevent fraud. However, moving forward, the blockchain has the capacity to decrease the probability of at least two types of fraud within the telecommunications industry – roaming fraud and compromised identity.

Roaming fraud occurs when there is a latency in a roaming agreement between a Host Public Mobile Network (HPMN) and a Visited Public Mobile Network (VPMN). These networks become susceptible to fraud once transmission of a call detail record is delayed, and subsequently, the VPMN cannot charge the HPMN for services. The blockchain can prevent this discrepancy by providing a dynamic real-time system that executes a smart contract every time a user activates an actionable event (phone call, text message, email, etc.)

In addition, subscriber identities can be compromised and susceptible to fraud, but this error can also be diminished by the blockchain. Current mobile phones use physical SIMs and/or International Mobile Subscriber Identity (IMSI) to identify and authenticate users on mobile devices. Currently, every active mobile device broadcasts signals containing IMSI information to the nearest cell tower. However, this technology could be easily replaced by using blockchain technology to distribute a public key associated with a user device. This public key would be identifiable across all nodes on the blockchain network, and thus, reducing the time needed to authenticate identity and removing the possibility of fraud due to real-time processing. Furthermore, the private key is never shared so ID theft isn’t a possibility.

Identity Management

According to Deloitte, the blockchain can be used to create new sources of revenue for CSPs by providing identity authentication and data management solutions to their user base. Despite not currently having a major role in identity and authorization services, CSPs possess substantial amounts of relevant subscriber data that could be utilized to provide a dynamic platform for identity transactions. The establishment of such a system would involve a multistep process where first the subscriber creates a digital identity that’s placed on the eSIM. Using this eSim, the CSP creates a virtual identity using the public key from the eSim that includes identifiable information, such as name, address, etc. From there a digital signature is then added using a private key. The blockchain will then use this private key as reference to the user virtual identity. If the user subsequently visits a site that requests identity, the merchant site will initiate the corresponding app on the device to verify the user’s identity. Next, a copy of the ledger entry is sent to the e-commerce site app and subsequently, the corresponding app can look at all entries for that same virtual identity.

IoT Security

The consumer-oriented “things” of the IoT, including wearables, cars, homes, smart cities, will all utilize some type of infrastructure under the control of CSPs. However, before these systems can be implemented on a large scale, securing of data must take place. Because IoT sensors carry sensitive information pertaining to their users, securing of these systems will be a priority in the near future. The blockchain allows for a secure dynamic peer-to-peer distributed network solution by utilizing nodes that can be represented by embedded IoT sensors that verify every block being changed. Essentially, a real-time monitoring system for IoT systems.

5G Network Support

The rise of 5th generation networks will occur in 2017. 5G promises to provide a number of benefits, such as increased speed, greater efficiency, and less latency. However, solutions to current issues such as network provisioning rules and real-time processing need to be addressed before mass adoption of 5th generation networks can occur. Smart contracts can be used to automatically execute rules and agreements between access points and allow for real-time supplying of network resources. These smart contracts can be dynamic by allowing for code to be improved when changes in company policies occur.

Looking ahead, the telecommunication industry looks to be the perfect facilitator for innovative blockchain projects. Currently, CSPs like Sprint and Verizon are leading the charge in the industry by experimenting with practical solutions. Thus, it should be expected that within a year or so that other CSPs will follow suit and begin experimenting with blockchain technology to boost productivity, increase revenues, and provide their customer base with services and products that better connect the world.

Dan Cummings

Dan is a Los Angeles-based musician, writer, and veteran passionate about science and technology, current events, human rights, economic impacts, and strategic calculus.

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