The power of trust: How blockchain is disrupting telecom and the global economy
One of the most interesting uses for blockchain is its application for the telecom industry. Blockchain-based solutions can solve challenges that have plagued the industry for years, such as how to bill end users for exactly the amount of bandwidth they use, and how to deploy new services quicker. Industry players are exploring a variety of applications for blockchain in telecom; we’ll discuss a couple of key ideas here. NOTE: The following is taken from an article I wrote that was recently published in Connect World (Europe edition)
How much do you trust the internet? It’s one of the greatest inventions of our time, offering to provide virtually any answer instantly, to connect people across oceans, to send data, pictures, sound and video around the world with the click of a button. But can we trust that those answers are accurate and unbiased, that those people are who they say they are, that the data doesn’t mean us any harm? Sadly, we’ve simply come to accept that we can’t.
What if there were a way to collaborate via the internet in full confidence of every aspect of that interaction?
You might see where I’m going with this — the answer, of course, is blockchain, the distributed, decentralized digital ledger. With blockchain, it all comes back to trust. The entire platform is built on trust, and this trustworthiness makes it transformative. Thanks to that trust factor, blockchain is disrupting the global economy by allowing people and organizations to make financial transactions without the oversight of a third party or financial institution.
It’s a new and exciting proposition — like the first time you bought something on an online marketplace, such as eBay. The idea that you could purchase a product through your computer from a complete stranger who lived across the world was revolutionary at the time. It seemed strange at first, but now it’s the new normal. Fast forward a few years, and we’ve even turned strangers’ cars into our taxis and strangers’ homes into our hotels, all through the power of the internet!
If you’re not following the burgeoning blockchain world too closely, you’ve probably still heard of Bitcoin and cryptocurrency in general. Bitcoin is, to date, the most well-known blockchain application and a fascinating concept at that, but it is far from the only use for blockchain. In fact, blockchain has far-reaching applications across multiple verticals, from healthcare to real estate to e-commerce.
A New Pricing & Provisioning Model
One of the most interesting uses for blockchain is its application for the telecom industry. Blockchain-based solutions can solve challenges that have plagued the industry for years, such as how to bill end users for exactly the amount of bandwidth they use, and how to deploy new services quicker. Industry players are exploring a variety of applications for blockchain in telecom; we’ll discuss a couple of key ideas here.
Today, carriers proactively determine bandwidth pricing based on a variety of measures. They typically develop a pricing model and allow customers to choose (which is to say, guess) which package they will need. If an enterprise needs 10Gb to interconnect offices for three months of the year, and only 1Gb for the other nine months, it’s often stuck in a long contract for the higher price. The concept of “bandwidth on demand” is the root of many conversations in the telco space, but unfortunately, nowhere near the norm. By tracking data via a registry that everyone has access to and building a bandwidth on demand system, blockchain turns the current telecom pricing model on its head. It improves upon telco inefficiencies by using predictive measures to determine how much bandwidth is needed, to charge customers only for what they use and to turn up circuits on a dime through software defined networking. No more bandwidth guessing; no more entrapment in a long-term contract that doesn’t match your needs.
Here’s an example using a niche sector of the industry, in which we can see the benefits of this new approach play out to the extreme. Imagine a high-frequency trading firm locked into a three-year contract for its data connection between New York City and London. If the firm’s team overestimated the amount of bandwidth they would need, they would be stuck overpaying, potentially for years. If they underestimated and required an additional circuit, it would take 30–90 days for the carrier to make that happen. In the incredibly fast paced and competitive world of high-frequency trading, that could translate into millions of lost dollars.
Increasing Competition
This pricing model shift will create a ripple effect throughout the telecom industry as it strums up competition in the carrier space and lowers prices for customers.
For years, large carriers have kept their prices as high as they think the market can bear, constantly finding opportunities to justify this strategy because they need to profit from the investment they’ve made in their infrastructure. The only way this model will ever change is for new companies that have found a way to lower prices through increased efficiencies to enter the market. Blockchain delivers those efficiencies and will allow Tier 3 operators to compete with the major players. This will, in turn, cause Tier 1 & 2 carriers’ prices to drop — and enterprises and other customers will benefit from this market correction.
Network Convergence
Now, let’s talk a bit about how blockchain-based technologies will make telecom networks more scalable and efficient from a data networking perspective.
In modern networks, reliability, scalability and network convergence are vital. Four components are essential to network convergence: event detection, event propagation or flooding, event processing, and routing and forwarding tables updates. Blockchain really shines in the two middle phases. Without getting too in the weeds here, once your network discovers an event (such as an update or failure), the message will pass quickly to the blockchain software component on the same node. Any event recorded over the blockchain can be retrieved by all participating nodes throughout the world, because they all have the same copy of records. This is the beauty of the distributed nature of blockchain. In the event processing stage, real-time communication between the blockchain and the processing techniques allows for the fastest processing possible. Though Bitcoin couldn’t support quick enough convergence for telecom networks due to low block production rate and transactions per second, a blockchain with a much higher rate and TPS would do the trick.
In other words, blockchain can and will disrupt the telecom market, but only with blockchain-based solutions built specifically for the unique needs of the industry. With OpenCryptoTrust (OpenCT), we built a platform for creating new and innovative blockchain-based solutions tailored to the telecom industry — with the goal of removing significant cost-impacting inefficiencies in the traditional telco model.
Telecom executives are taking note of the power of blockchain to eliminate these inefficiencies. In a survey of telecom C-level executives, IBM found that 36 percent of CSPs are considering or already engaged with blockchains. According to IDC’s Worldwide Semiannual Blockchain Spending Guide, released in January 2018, the firm estimates that the telecom sector will demonstrate the highest growth (79.1 percent CAGR) in blockchain spending.
It all comes back to my first point — blockchain is already disrupting the global economy because it’s a network of trust.
The question is: will you embrace the change?
Mayande Walker, CEO of OpenCT, AG., and COO of Seshaat, Inc., has built numerous successful IT companies, is one of the international leaders in Optical Networks infrastructure and has built over 14 private networks for the largest financial institutions in the world. With over 20 years of strong technical business and management experience under his belt, he is in constant demand for his innovating thinking in the deployment of large scale, state-of-the-art complex technology solutions throughout the London, Hong Kong, Tokyo, Middle East and North American markets.
For more details about OpenCryptoTrust’s blockchain project please visit www.openct.io or join one of our weekly webinars to find out more /www.openct.io/upcoming-webinars
