Why is softwarisation and automation critical to the future of telcos
 

 

Distributed Ledger Technology (DLT) including Blockchain has huge potential to automate and de-fragment operations across multiple ICT-SP domains, which will both reduce costs and find new sources of revenue for communication service providers.

Blockchain is currently one of the most widely discussed and hyped technologies. There are not many industries that shouldn’t be either excited or worried about its potential, with use cases, proof-of-concepts, and full-fledged businesses based on blockchain technology emerging at an increasing pace.

The technology carries the potential to disrupt business models in many industries, including telecoms, and can increase transparency and efficiencies in the process. However, blockchain applications are young and evolving and complementary industry-wide standards are most probably still a few years away. Nonetheless, to avoid disruptive surprises or missed opportunities, strategists, planners, and decision-makers in the telecom ecosystem should take the time now to investigate applications of the technology in both core and adjacent operations and business functions. Early familiarity with related opportunities and challenges will position them better to gain advantages in terms of revenue growth and cost reductions when the technology is mature and ready for wider adoption.

The advantages of this type of multiple, decentralised storage are robustness and trust, at the expense of confidentiality and processing performance. Every participant in the network has the ability to verify the correctness of transactions. Network consensus methods and cryptographic technology are used to validate transactions. Thus, trust is not established externally by a central authority or an auditor but continuously within the network.

To many Distributed Ledger and Blockchain technology represents the hallmark of automation and is exactly the direction the world is headed for right now. The Covid-19 pandemic has accelerated the move towards automation, particularly in the telecoms industry.

Huge opportunity to transform the industry to unlock new possibilities in automation

Communications service providers (CSPs) have traditionally owned the end-to-end telecoms value chain for both consumers and businesses – spanning network infrastructure, provision of core voice and data connectivity, and related consumer services. However, in an environment of heightened competition in an increasingly digital world from infrastructure light over the top (OTT) players, together with decreasing revenues from voice and increasing costs due to the high bandwidth demands, there is a need to both reduce costs and find new sources of revenue. Blockchain has the potential to be for ‘value’ what the Internet has been for ‘information’. In addition to the many use cases being explored for industries such as finance, healthcare, and government, there are plausible applications of blockchain for a CSP, both within its current portfolio of operations and also to capitalise on some of the future telecom trends.

CSPs will most probably see the greatest impact of blockchain in their core management systems and in adjacent services, providing opportunities for cost reduction through process efficiency gains, and revenue growth through new value propositions.

Building Trust and Preventing Fraud

Fraud detection and prevention continue to be topics of relevance for most CSPs, as a result of fraud costs in the industry of over USD 38 billion annually. Blockchain is in principle a good contender for significantly decreasing the cost of fraud e.g. in roaming and in identity management.

Blockchain has the potential to reduce losses due to fraud and minimise costs for fraud detection applications. It satisfies identity and regulation that governments and consumers are asking for and ultimately the industry benefits from efficiency and satisfaction of processing millions of transactions in a secure manner, significantly reducing the prevalence of fraud.

Promoting Better Interoperability

If CSPs are still going to be infrastructure players, then they need to recognise there are other types of infrastructure providers such as cloud. Increased “softwareisation” in the industry allows much greater levels of interoperability between traditional telcos and cloud providers, improving the customer experience and cutting down on clunky systems.

By coming together and developing a common framework such as CBAN, which itself grew out of a GLF initiative, will also allow improved interoperability between providers. In the area of financial settlement for example, a move to adopting blockchain simplifies digital contracts and billing arrangements, in real time and at a scale that wouldn’t be possible as a manual process.

Efficiencies

Chief Financial Officers at CSPs are looking for possible avenues for reducing costs and improving the bottom line in a highly regulated and competitive market. Blockchain has the potential to be extremely useful for this purpose.

It provides one source of truth for transactions – The blockchain ledger provides one view of almost all transactions to the CFO, instead of relying on disparate systems to find and collate different financial views.

By automating the many thousands of transactions that would otherwise require a degree of manual intervention, cost savings can be made in terms of the manpower required and the speed of processing allows faster payments and a more real time view if the current financial situation of the business.

Find out more about this topic from leading industry experts including Marc Halbfinger, PCCW Global CEO in this webinar from the Global Telco Blockchain event

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