Blockchain: A New Addition to the Telecom Business Analytics Toolbox
In this interview, Jacob Howell, TEOCO’s Global Director for Machine Learning, Innovation and Implementation, discusses how blockchain technology can be used to improve business processes for telecom operators around the world.
Q) Blockchain technology has been making headlines for several years now. Isn’t it all about cryptocurrency?
Jacob: Cryptocurrency is based on blockchain, but the concept has been around for almost 30 years. It started as an idea first presented in the Journal of Cryptography. The purpose of blockchain is to create a distributed ledger that can never be forged. It’s a distributed database that is consensually shared and synchronized across multiple sites, institutions, or geographies, and accessible by multiple people. Its two key concepts use time stamping and cryptography to link documents together through a list of ‘blocks’.
A blockchain can be a public or private ledger that tracks each of these blocks. The blocks act as a trail of activity – a digital fingerprint that changes over time. When you change one block, every other block downstream is assigned a new tag, or ‘hash’ value. The process of adding new blocks is called mining. As a reward for authenticating and adding new hash values to the chain, these data ‘miners’ are rewarded for their efforts with payments of cryptocurrency.
Q) What are the benefits of blockchain – beyond the likes of bitcoin?
Jacob: Today’s blockchain technology is being used to support smart contracts, which are especially relevant for complex agreements between carriers. Ethereum is the leading smart contract platform. Instead of legal language, computer code dictates the terms of the contract. Smart contracts can be created for use with any document, video, PDF, or recording; really, any digital document or piece of content can be added to a block and used by a smart contract. Aside from the security benefits of running a blockchain, smart contracts are also self-executing. This means there is no middle-man required, such as a bank or clearinghouse, for the transaction to occur.
Multiple copies of these smart contracts are replicated throughout the peer-to-peer network where the blockchain lives. This ensures they are distributed globally, across tens of millions of nodes, thereby ensuring they remain up 100% of the time.
Q) What are some use cases for Smart Contracts?
Jacob: My favorite smart contract use case is in the music streaming industry. They have been using them for a while. When you sign up for a music streaming service like Spotify, smart contracts keep track of all the songs played. At the end of the month, royalty payments are determined for each artist. These can be split up, with payments going to the musicians, song writers, music labels, producers, etc. Tracking all these agreements can become incredibly complex- with tens of millions of subscribers and a massive music library. But, smart contracts can keep track of all of this automatically.
Aside from the ability to securely manage complex scenarios, another benefit of smart contracts is their incredibly low cost. There is no need to set up an expensive data center to handle large volumes of information; users just need to pay data miners a few fractions of a penny every time they add a new block. And smart contracts are completely autonomous. There is no need to pay administrators or support staff. People can order and pay for services automatically. Further, smart contracts can be executed within minutes as opposed to days or months. They are also more accurate and trustworthy. The information they contain is constantly backed up and kept safe.
This doesn’t mean that smart contracts are easy to build. Because they can support such complex arrangements, they often include multiple contracts linked together, with master service agreements and highly detailed terms and conditions. This can create implementation challenges, but robotic process automation and AI are being used to mitigate some of these issues.
Q) How do Smart Contracts work?
Let’s suppose I am a telecom operator that wants to submit a purchase order to another carrier, (Carrier B). To enter into a smart contract using blockchain, I begin by entering my public and private keys, and the public key where the smart contract is stored. In this case, the smart contract is going to require that the purchase order contains specific fields of information – like my purchase details, billing information, etc.
Once I submit the information to the smart contract, a node on the blockchain captures the request, and then a data miner executes the instructions contained within the smart contract. Once the contract has been executed, a copy of the resulting transaction will be added to the blockchain and replicated to all the other copies of the blockchain across the network. In this case, the smart contract at Carrier B will have received my purchase order request and auto-filled my order. Whenever additional documents are added, or whenever other changes are made to a smart contract, they will also be linked, tracked, and recorded on the blockchain.
While most blockchains are public, where anyone can view the information, data can also be encrypted to stay secure and private–even in a public blockchain. Private blockchains are also available.
Q) What are some other use cases, and will blockchain have a long term impact on the telecom industry?
Jacob: One recent study from VynZ Research suggests that blockchain in telecom will become a $1.8 billion market by 2024. I see several ways the telecom industry will change over time to leverage the power of blockchain – and I expect many processes will be impacted. Verizon, for example, is using blockchain to create immutable identity records for virtual SIM cards. The device creates a blockchain record with a vSIM certificate and an International Mobile Subscriber Identity (IMSI). The vSIM is linked to an account and activated through a user’s mobile device. It can be assigned to many devices under one username / account and can be transferred between devices or other users—clearing the way for connecting multiple IoT devices, even cars and wearables, and making life a lot easier for large families.
Number portability is also an area that could benefit. A smart contract eliminates the need for third-party clearinghouses by allowing number porting events to be routed from one operator’s blockchain to another.
Roaming fraud is another. Roaming agreements can be created in the form of smart contract blockchains between home and visitor networks. When a subscriber roams onto a visitor’s network, the contract automatically sends the relevant roaming traffic information to the home network, while calculating and charging the correct amount in real-time.
A use case that TEOCO is actively involved with is the process of managing complex contracts related to the growth of small cells. In rolling out 5G, hundreds of thousands of small cells will be installed by network operators across cities and towns over the coming years, and many involve complicated ‘right-of-way’ issues that need to be resolved. Every municipality has their own rules, and this results in complex contracts between carriers, equipment vendors, landowners, technology partners, and government agencies. A lot of information must be linked – and there are no industry standards, which makes this a bit like the wild west of telecom right now.
Keeping track of all this information requires extensive amounts of time and resources – two things that are in short supply for most operators. In addition, all this complexity creates many avenues for revenue leakage. With the enormous CAPEX investments required for network densification, margins are squeezed tight. There is little room for error when it comes to small cell contracts, and the risks of getting tied into a long-term ‘bad deal’ are all too real.
At TEOCO, we feel that blockchain is a great solution for small cell contracts because it keeps everything secure and in the same place. Blockchains can link purchase orders, quotes, contracts, and more – and policy-based guardrails can be applied to protect margins. There is no need to query different systems or purchase new tools – everything is linked together, and every change is tracked.
We are using the latest blockchain technology to help carriers around the world process their small cell invoices. Our business analytics team loads information into the smart contract template on behalf of our customers. Invoices are automatically generated on a daily/weekly or monthly basis, depending on the need. We pack all this together into a smart contract that self-executes securely and automatically – saving our customers valuable time and resources.
Q) This is a fascinating use case- Blockchain-as-a-Service. Do you have any final thoughts on what tomorrow will bring?
New technologies are reshaping what business analytics and business assurance mean today. Blockchain is the backbone that ties it all together. When machine learning and robotic process automation are used in conjunction with smart contracts, many of today’s manual BSS and OSS processes can be streamlined, automated, and linked together. I see this reshaping our industry in exciting ways, and I’m proud to be part of an organization that is leading the way.
Global Director for Machine Learning, Innovation and Implementation