How The Blockchain Will Disrupt / Innovates Telecommunication Industries.
Blockchain technology is breaking away from the conventional fintech sector and switching to industries like telecom and auto. The world is at the feet of Blockchain. The IoT (Internet of Things), AI (artificial intelligence), VR (virtual reality) and Big Data have some connection to the crypto realm.
As far as the telecommunication industry is concerned, there’s no secret that the system is centralized, defective and obstinate because billing and distributing content can’t happen without extremely high transactional fees and fickle security around data transmission. Unlike a controlled telecom model, an open-source, decentralized system could solve the glitches and ensure a seamless end-user experience by leveraging the Blockchain to provide affordable, flexible and more secure data plans.
Telecommunication or Telecom in short refers to interchange of information by electronic and electrical means over near and quite significant distances. It is rather a generic term used for a wide range of info transmission technology like mobile phones, land lines, Broadband, VoIP and broadcast networks. In telecoms, information are transmitted among the communication participants in form of electrical signals referred to as carrier waves, which can be modulated into analog and digital signals for transmission, and then demodulated into its original data form i.e. image, audio or video. Telecom technicians play major roles in delivering Internet, phone and digital services to their customers.
Communication is one of the extremely important aspects, not only for people around the world, but also for small to mid-sized and large businesses. If communication were to fail, then the world would not be what it is now and would go into a stand still. Though there are numerous challenges being faced in the telecom sector, the recent advancements promise to take care of the flaws and resolve the issues lurking in this. Blockchain is one such aspect of technology that holds tremendous potential to influence the telecom industry and projects a promising future trajectory for communications to move forward.
Blockchain in telecom- What’s new?
Roaming
Blockchain could possibly solve the problem of operators to integrate costly systems and provide authentication or access settings to enable roaming call across operators and networks. Blockchain can also enable complex and numerous data sets across multiple parties, in real-time providing security and trust to establish subscriber’s identity.
Internal operations
Process like the OSS (Operation Support System) and the BSS (Business Support System) process like billing and number portability databases can be streamlined with blockchain. The billing can be validated without hassle. It is possible with the help of blockchain shared among customers, VAS providers, HPMN, VPMN and telecom companies.
Also, migrating customers could be easily on-boarded onto the network after receiving a porting request, if the receiving operator shares any blockchain with the porting customer’s operator.
Smart connections
With the help blockchain, operators can provide device connection to multiple local hotspots and WIFI based on permission and adherence to provided terms and conditions. Blockchain also helps with automatic generation of billing amount, transactions and payment receipts.
Mobile money
Blockchain has enabled cost-effective international remittances across the globe with very minimal transaction charges. Telecom operators can become global remittance providers.
Smart transactions
Blockchain has enabled purchasing of digital assets, including music, mobile games, gift cards and loyalty points.
Privacy
Operators could develop identity management tool that are accessible to organizations, devices and applications.
Compliance
Blockchain solutions are instrumental in enabling interoperability between internal as well as external systems for telecom companies. This can bring down infrastructure as well as compliance cost, and save operators from roaming/identity fraud.
Use Case #1
Fraud Prevention
Benefits of blockchain:
Reduced subscriber or other ID- based fraud.
Easier and faster device identification during mobility, due to shared database having the device public key information and history.
Can be used to provide identity to machines in an M2M or broader IoT environment, instead of having to embed physical SIMs into distributed devices.
Elimination of cost to manufacture and distribute physical SIMs
Fraud detection and prevention continue to be topics of relevance for most TSPs, as a result of fraud costs in the industry of over USD 38 billion11 annually. Given that the telecoms industry has not yet found a way to effectively and sustainably prevent fraud, blockchain is in principle a good contender for significantly decreasing the cost of fraud e.g. in roaming and in identity management.
Roaming fraud
Current system — When a call/event is placed, the Visited Public Mobile Network (VPMN) queries the Host Public Mobile Network (HPMN) about the services to which the roaming user has subscribed, by querying the Home Location Register (HLR). The Call Detail Records (CDRs) are sent to the billing systems in their respective networks. These systems are in charge of processing CDRs and the generation of invoices to subscribers.
The VPMN sends CDR information to the HPMN as a Transfer Account Procedure (TAP) file. Certain companies act as a Data Clearing House (DCH) for these files. A DCH is responsible for the transmission and conversion of the TAP files on behalf of the TSP which has hired it. Once the TAP files are received, the HPMN must settle accounts per costs incurred.
Blockchain has the potential to reduce losses due to fraud and minimize costs for fraud detection applications.
Current challenges — Roaming fraud occurs when a subscriber accesses the resources of the HPMN via the VPMN but the HPMN is unable to charge the subscriber for the services provided, but is obliged to pay the VPMN for the roaming services. Roaming fraud exploits two characteristics:
- Longer detection time: since the fraud occurs when the subscriber is in a network other than that of the HPMN, the time required to detect the fraud is longer due to delays in the exchange of data between VPMN and HPMN.
- Longer response time: due to lack of control over the systems in which the fraud has occurred, the time to respond to the fraud is longer than if the fraud had occurred in a system owned by the HPMN.
Blockchain-based solution –
A permissioned blockchain could be implemented between every pair of operators which have a roaming agreement. Designated nodes from both operators act as miners to verify the sanctity of each transaction broadcasted on the network. The roaming agreement is implemented between the HPMN and the VPMN as a smart contract that is triggered when a transaction containing the CDR data is broadcasted on the blockchain network.
Every time a subscriber triggers an event in a visiting network, the VPMN broadcasts the CDR information as a transaction to the HPMN. This data triggers the smart contract and the terms of the agreement are executed. The HPMN can thus automatically calculate the billing amount based on the services rendered and send this information back to the VPMN.
This helps instantaneous and verified authorization as well as settlement to occur in line with blockchain-based smart contract terms. TSPs can also do away with the DCH acting as middleman, resulting in further cost savings.
Subscription identity fraud
Current system — Subscriber identity information is necessary to create an account and assign services to the subscriber.
Subscription ID theft occurs when a subscriber uses false identification or another subscriber’s (victim) ID to obtain services. Fraudsters can for example use the stolen identity information to obtain a SIM card in the victim’s name.
The physical SIM stores the International Mobile Subscriber Identity (IMSI) and the related key is used to identify and authenticate subscribers on mobile devices. Each time a mobile device is turned on, it broadcasts a signal containing the IMSI to the nearest base station. That identification number links the device to the account with the carrier.
Some telecom providers maintain their own fraud databases to identify potential fraud activities. Current solutions are either weak (TSP asks customers to create pass- code while creating a wireless account) or expensive (stand-alone ID protection systems such as Equifax), and are some- times not up-to-date.
Current challenges –
There are many ways in which a subscriber’s identity can be compromised (email phishing, SIM cloning, etc.). Due to the multiple-play services provided by telecom operators, an ID theft can result in compounded losses through the access to many services under a stolen identity
Blockchain-based solution –
Public-private cryptography
which is inherent in a blockchain can be used to identify a device and link that device to a subscriber’s identity. Instead of broadcasting the IMSI to the network to identify the device, the phone-generated public key is broadcasted instead.
The device generates this public key from the private key that is stored securely on it. Neither the carrier nor any other third party needs to know the private key. This ‘eSIM’ solution can help protect private information that is encrypted in the private key. The private key is associated with only one particular device and is hence difficult to steal. The public key is used to identify the device and to authorize it on the network.
The subscriber is uniquely identified by this public key, while able to keep the private key information secret. This way, the services can only be used by the subscriber who has subscribed to them and the ID cannot be easily stolen. This process also avoids the device information having to be authenticated by the base station every time the device enters a new cell territory. Instead, due to the base stations being nodes on a common blockchain, the device information is already available at the base station and can be authenticated quickly, once the public key is sent to it by the device.
Use Case #2
Identity-as-a-service and Data Management
Benefits of blockchain:
Cost savings from a blockchain- based federated identity management solution as compared to traditional IDM software.
New revenue stream from providing an identity-as-a-service solution to partners and end- consumers.
Improved subscriber ease of use as regards ID management.
Opportunity to form a locked-in ecosystem through strategic partnerships with partners that use identity solutions provided by the TSP.
Telecommunication Service Providers “TSPs” can create new sources of revenue by providing identity and authentication as well as data management solutions to partners, enabled by a blockchain.
Blockchain adoption could significantly reduce roaming fraud and also optimize ID management through instantaneous and automated processes based on smart contracts.
Currently, every time a person wants to sign up at a vendor, they need to prove their identity and credentials using physical or digital documents. They would need to provide their PII (Personal Identity Information) even though most of the information would not be needed by every vendor; the vendor would only need a subset of that information. Also, signing up online either requires creating many username/password combinations or utilizing the services of third party providers (such as Google and Facebook) to use their SSO (Single Sign On) functionalities.
This leads to many challenges such as lack of convenience (many username/ password combinations) and security (personal data shared with third parties) in current identity and authentication services. And while there are a few alternatives, TSPs currently do not play a significant part in identity and authorization services, even though they possess substantial amounts of relevant subscriber data.
Opportunity for Telecommunication Service Providers “ TSP”-
A blockchain can be used as the shared ledger that stores identity transactions. The TSP can provide identity-as-a-service to partners, thus allowing for additional revenue generation by negotiating appropriate agreements.
When a subscriber opens an account with a TSP, the TSP creates a digital identity. The private key associated with this identity is stored safely on the eSIM. The TSP creates a virtual identity, using the public key from the digital identity and adds a set of standard fields (name, address, etc.) as required. It then adds a digital signature using its own private key. A pointer to this virtual identity along with necessary descriptors is then added to the blockchain.
If the subscriber now visits a partner website, say an e-commerce site, the site will need to know their identity, so the merchant site starts running the corresponding app on the phone to provide the identity. A copy of the ledger entry is sent to the e-commerce site app. Now the e-commerce app can look at all entries for that same virtual identity. Once the virtual identity is established, the e-commerce site needs to know that the virtual identity belongs to the subscriber so its app takes the public key from the virtual identity, encrypts a challenge and sends it to their app which decrypts it (because it has the associated private key) and responds. Now the e-commerce site generates an e-commerce virtual identity which is then stored in the ledger itself.
The next time the subscriber visits the same e-commerce site, he can be authenticated using the same mechanism. Also, the ledger already holds his transaction history and hence knows his preferences. The e-commerce site can use related insights for a recommendation engine. The subscriber can also use the same e-commerce virtual identity to login to a completely different e-commerce site using the same mechanism.
The TSP virtual identity can be used to help create further virtual identities similar to the e-commerce one (such as a travel virtual identity). This identity need not know all of the details from the subscribers digital identity, only the ones that are relevant (such as his home location) and add other attributes (such as his preferred mode of travel) to create a travel virtual identity. The possibilities of such identity management are limited only by the number of partner service providers that the TSP can sign on to the blockchain-based system.
Use Case #3
5G enablement
Benefits of blockchain:
Sharing of faster and regulated local connectivity for reliable service to device.
Instant monetization of diverse connection types through smart contracts.
Enables local connection prices purely based on supply and demand in the area.
New business models to use idle capacity for non-prioritized traffic.
Blockchain can enable a new generation of access technology selection mechanisms required for the realization of 5G networks.
Use Case #4
IoT connectivity
Benefits of blockchain:
Self-managed, peer-to-peer networks taking over regional routing.
High security levels for IoT devices within public blockchain networks.
Low-cost setup options for SME purposes.
A blockchain allows for highly secure peer-to-peer self-man- aged mesh networks using a sufficiently large number of nodes. These blockchain network nodes can be represented by single embedded IoT sensors with the ability to verify every block being changed within the blockchain. For a start, these networks can be introduced into a private environment based in mid-range cell-towers with relatively low investment requirements. By establishing such a network in a public blockchain language (e.g. Bitcoin or Ethereum), further expansion or evolution into a public blockchain enables seamless connectivity and security. CSPs could then provide private/public key security and global, always-on connectivity to enable such a public blockchain network with global reach
Osama A.Ali
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References:
News BTC, Monitor Deloitte, Scala Blockchain.
