A Clear Path to Blockchain in Telecom
Blockchain in telecom is a powerful concept and the hype is somewhat justified, if only because it can generate a fantasy of rendering large swaths of the lawyers, bankers and OSS vendors as unnecessary. What could be better? A blockchain system could do this by establishing the trust imparted by third-party services.
There are, of course, many barriers to blockchain technology. These include the perceived lack of maturity as well as the difficulty in selling the technology of crypto-hobbyists into large enterprises. Service providers, slower moving than even large enterprises, usually aren't the first end market that comes to mind.
But Clear Blockchain Technologies, based in Singapore, thinks it has an approach that works. This involves building private blockchains that can help speed the automation of one of the trickiest areas in the field, inter-carrier settlement. Clear is also targeting using blockchain-based automation in billing and OSS software.
"Telcos are at an inflection point," says Gal Hochberg, co-founder and CEO of Clear Blockchain Technologies. "There is an exponential need for data and telcos need to deliver new things but their ability to deliver value is limited. We can enable new services using blockchain."
Hochberg pointed out that the telcos, in order to compete with cloud, need to speed up their inter-carrier agreement process, which is still largely manual. Clear's private blockchain technology is running on an Ethereum-based network for its current proof-of-concept, but the company supports a variety of distributed ledger technologies. The technology targets "smart contracts" which can be built in code that is automatically executed as services are fulfilled.
Hochberg believes the service-provider market may not be ready for the public blockchain, so it has built a distributed ledger on a private one. He believes that someday large corporate entities will be more comfortable with public blockchains, which he likens to using the Internet, but for now there is more safety and control in the use of a private blockchain.
Those new services would include things like bandwidth-on-demand services for things like virtual reality and augmented reality, says Hochberg. Or it could be as simple as using the blockchain to automate inter-carrier Ethernet links targeting the enterprise.
Of all the potential areas, inter-carrier contracts seem like the the areas most ripe for benefit. Global service providers have the reputation for being painfully slow in adopting innovation. But if there's any areas ready to change, it's communications contracts such as those for MPLS or private-line Ethernet, which can famously take months to complete.
Distributed ledger and bitcoin technology has already found real world use cases. These include tracking shipping assets, as implemented in a larger partnership between IBM and Maersk. It has many other applications in vertical markets because its promise to automate trusted transactions and verify data. Think of verifying and tracking drugs in the pharmaceutical industry.
Telecom has many characteristics that make it a likely home for blockchain. There are large numbers of third-party agreements. Communications sessions are transactions that often require a complex settlement process. If you think of blockchains and distributed ledgers as a secure, automated records of transaction data, this could be the place, as the Talking Heads once sang.
Heavy Reading's own James Crawshaw recently pointed out the opportunities for blockchain telecom include:
Fraud prevention: If blockchain-based security were to lead to a halving of fraud, this would save the telecom industry $19 billion annually, or 1.8 percent of total revenue. Network Security: We see this as a risk-mitigation opportunity, not a cost-saving or new-revenue opportunity for CSPs.
Identity: Here we see a potential new revenue stream for CSPs as trusted entities providing identity management as a service (IDaaS).
Settlement: If mobile roaming settlement was to migrate to a lower-cost, blockchain-based alternative to existing systems, it might save the global mobile industry $650 million annually, or 0.04 percent of total revenue.
Mobile payments: Blockchain could play a role in mobile payments as an alternative to established intermediaries.
Clear is working with the MEF , which also has its eye on blockchain. There will be an upcoming blockchain Proof of Concept (POC) at the MEF conference in November in Los Angeles. MEF is looking to accelerate inter-carrier automation with Application Programming Interfaces (APIs) known as LSO Cantata and Sonata.
MEF CTO Pascal Menezes says the potential is real, with trials already underway. "Blockchain is real, trials are happening and it's being used commercial settlements," Menezes told me in an interview. "It’s not pie in the sky."
Menezes says blockchain technology has the right attributes to help automate billing in during settlement. It also has the potential to help with security and identity.
"It's a distributed general ledger, so it's the perfect technology [for carrier settlement]," says Menezes. "It's designed to settle on currencies."
The potential has certainly gotten the attention of some telcos, with some major ones already making moves.
Colt and PCCW, for example, are working on a trial to help automate international carrier settlements. (See Colt Ramps Its Blockchain Efforts, Explores SDN Federation Use Case.)
Japanese giant NTT, meanwhile, has filed for a patent to use blockchain technology for smart contracts, described as "methods, systems, and devices for leaving evidence of a contract on a blockchain with a simple method while having agreements made among the involved parties, maintaining the mode of one electronic signature per transaction, and maintaining credibility."
While the industry has targeted many potential use cases for blockchain in telecom, I believe that Clear and the MEF are correct to target carrier billing and settlement processes. Intercarrier agreements and billing are the most painful technology areas in telecom, and those areas seem to slow carriers from entering new markets as quickly as younger, newer cloud providers. Any progress to update an antiquated BSS/OSS settlement and orchestration process would be a breath of fresh air for the industry.
— Scott Raynovich, Founder and Principal Analyst, Futuriom