Telecom

Telecommunications are a central aspect of our daily life: we are always connected through our phones as are the majority of people on the planet. To support our connectivity, communication service providers have been building a network of infrastructure and business relationships for the past few decades. The new trends of the industry (global mobile, Internet of Thing and 5G) are bringing new challenges and a new business approach. Recent projects within the industry show that blockchain is a technology that can support the industry transformation.

A common scenario

In 2018, 93 million* Americans traveled abroad, according to the U.S. Commerce Department’s National Travel and Tourism Office. Of course, all of them had a cellphone. When they landed on foreign soil, their phones connected to a foreign network. Their American carriers charged them for every phone call, text or data consumed abroad through the foreign network. In the back end, the foreign network providers charged the American ones for letting the subscribers using the local infrastructure. 

Now imagine this scenario repeating itself for the millions of people traveling every day across any country in the world or for the millions that make international calls from their home or offices to other countries. You can get an idea of how much data carriers need to manage to successfully charge each other for these services.

Every month billions of transactions need to be tracked, validated, reconciled, cleared and settled based complex international agreements between competing parties. That makes for an ideal scenario where blockchain can streamline operations and lift carriers from the burden of manual processes, legal disputes and unforeseen costs.

A growing interest in blockchain

Several telecom industry organizations, such as the GSMA and ITW GLF-backed Communication Blockchain Network, are showing interest in blockchain as the solution of choice for the management of high-volume transactions.

The main reason for this choice is that, to solve an industry-wide problem, they are looking for an industry-wide solution. A blockchain network, through its distributed ledger technology, can provide the reach and the governance required to push shared standards among competitors in the same sector in a collaborative way.

In addition, blockchain enables an open and interoperable ecosystem based on shared standards, where each player is able to bring their own data, safely share it and contribute to the achievement of their business goals.

Looking closer to the specific process of clearing and settling large amounts of transactions, blockchain has capabilities that match perfectly with the issues faced by carriers.

Distributed ledger technology allows parties to see the same data (values, volumes, etc.) for each transaction. Smart contracts translate complex agreement into digital code, so that they do not need to be manually executed any longer. Consensus mechanisms reduce the disputes at the end of the settlement process. 

These capabilities allow telecommunication companies to save time and labor dedicated to manual processes and to reduce the cash tied up in disputes.

Hyperledger Fabric  is a central enabler of such use cases. In fact, Fabric is designed to support enterprise implementation, providing scalability, security and operational tools that make enterprise transactions safe and scalable.

But there is more

The telecommunication industry is facing one of the greatest shifts in its history due the arrival of Internet of Things (IoT)and 5G. Both technologies are supporting the voice to data substitution. Historically, voice was the driver of large volumes of transactions, but now data have a larger and growing share thanks to the role of machines in generating large amounts of IoT input.

The abundance and growth of data poses carriers with the challenge of storing, managing, and exchanging that information in order to drive business value. Hyperledger Fabric can be the enabling platform of high value and innovative use cases such as data access control (empowering final users to decide how and who should have access to the data they generate), device identity (integrating blockchain, IoT and security to record device on the network and prevent harmful usage) or data exchange (create marketplaces of accessible data where data supplier are rewarded by data consumer).

To conclude, the industry is strengthening its global ecosystem and is looking for a technology that fosters collaboration and creativity. Hyperledger Fabric is an ideal fit and can allow greater efficiencies and new capabilities that have not been explored yet.

* https://travel.trade.gov/tinews/archive/tinews2019/20190402.asp

The rise of blockchain

Blockchain is already a reality in the Telecommunication, Media and Entertainment (TME) industry. In fact, many companies, both established and start-ups, have implemented blockchain-based solutions to automize, digitize and re-invent some of their processes.

Like other industries, TME is characterized by the lack of visibility, transparency and auditability of some of its processes, making asset transactions less efficient, thus generating both extra costs and revenue leakage. In telecommunication, a good example of such a process is wholesale voice settlements. Carriers around the world exchange large amounts of money for interconnection costs, but there are no industry standards to ensure consistency and transparency. Each report is subject to dispute and reconciliation. In the media industry, we all know how difficult it is for artists and music labels to track the revenues that are due to them from streaming and video platforms.

Hyperledger helps in bringing efficiency to TME operations

The stakeholders in the TME industry are pioneers in the application of blockchain to solve some of the critical industry issues. In particular, they recognize that a platform designed for the enterprise like Hyperledger Fabric provides tangible value-adds such as  privacy, transparency, trust and security. Leveraging these key characteristics, telco and media companies have started building consortia and projects to validate the value of the technology. These consortia can be categorized into three categories: operations-focused, customer experience and full revenue generating ecosystems.

In the first category, companies collaborate to improve back end processes that take place between them, with the goal of eliminating redundant costs and activities. This helps improve productivity and efficiency in the value chain. In a nutshell, this is an efficiency play. Some processes touch all players in the industry. Examples include roaming settlements for telecommunications or digital advertising supply chains for the media industry. (Recently, Syniverse and IBM went live with the first blockchain-based roaming solution compliant with the new GSMA billing standard.) Alternatively, some processes may interest only a major player and its closest suppliers. 

Reinventing customer experience with Hyperledger 

The second category, customer experience-focused consortia, revolves around improving the engagement of the customer rather than the efficiency of the processes. The main financial goal is not cost cutting but revenue generation, either through new services or new business models.

In this context, the sky is the limit: use cases are several and very different. When the goal is to provide a better customer experience, Hyperledger technologies can be used to improve customer engagement and make client-facing activities easier and less redundant. For example: IBM uses Hyperledger Fabric to simplify the dispute resolution process for commercial financing. Fabric is also used to automatically enforce warranties or reduce the time needed to port your mobile number from one carrier to another, thus improving the customer experience. 

On the other side, blockchain can be used to create new services for telecommunication and media companies. For decades, telcos have harbored an ambition to get into the mobile payment business. Now, with blockchain, they have an easy and secure way to implement digital wallets, create tokens and exchange them in their own network or with other networks. The same can apply to the gaming industry, where the concept of credits and digital token has been popular in the last few years but was hard to monetize.

Carriers can also now provide digital identity services. Blockchain is the ideal platform for creating a trusted identity, and carriers are in the perfect position to enable subscribers with digital identity and to develop an ecosystem of applications. IBM’s Verify Credentials creates a decentralized approach to identity management – enabled by blockchain – building on top of open standards in combination with Decentralized Identity Foundation (DIF), World Wide Web Consortium (W3C) and other standards groups

Hyperledger Fabric is the foundation of new industry ecosystems

Finally, the third category, the ecosystems, comprises consortia that cover the entire industry. Consortia turn into ecosystems over time, when an initial application becomes an industry-wide platform, setting the standards for the whole industry and allowing for flexible, modular and open participation, in a “network of networks” fashion. The founder of the ecosystem can extract high value from the platform and become a winner.

The application of Hyperledger Fabric in the TME industry has not achieved the level of maturity necessary for the establishment of a real ecosystem, but a few companies and industry organizations are already laying the foundations for the future ecosystems.

There are several organizations that are creating consortia and implementing blockchain networks.

• Companies that interact frequently are getting together to form small groups of three  or four participants to streamline existing processes. They can either be telecom carriers that need to facilitate settlements among themselves or music streaming services that want to remunerate music labels faster and more accurately.
• Regulators are playing a big role: in India, the local telecom regulatory agency (TRAI) mandated the use of blockchain to prevent unsolicited commercial communication. Indian mobile subscribers can opt out of telemarketing calls and a blockchain distributed ledger will manage this information for carriers, content providers and the regulators.  IBM is working with TRAI and Bharti Airtel on the commercial deployment that will initially help the operator curb unwanted calls and messages from advertisers. It will also help the operator in Mobile Number Portability, interconnect settlements, supply chain streamlining and content partner settlement.
• The European Union, through the Horizon 2020 fund, is financing several blockchain projects to improve the way information and infrastructure is shared within telecom companies.
• Service providers are very active organizations that are leveraging their neutrality to build industry-wide ecosystems. They can be either established platform providers that already serve the majority of their market or new start-ups trying to disrupt the competition. In the first case, service providers are improving their value proposition through blockchain. In the second case, start-ups are rethinking the way the industry works.
• Finally, industry standard organizations are gathering their members to define how blockchain can transform their industry. This is happening both in telco and media. In telco, organizations such as the GSMA, TWI GLF and the Bridge Alliance are advocating for blockchain with the goal of establishing common standards for the most immediate blockchain use cases (e.g., wholesale and roaming settlements). In the media space, AdLedger is leveraging blockchain to re-shape the digital advertising industry.

2020 is going to be a KEY year for blockchain in the TME industry: we are going to see the outcome of the work done in the last couple years and the move to production of many consortia.

Cover image by pisauikan from Pixabay

The fifth generation of cellular networks or 5G promises revolutionary improvements compared to the previous generation that reaches beyond merely multiplying the bandwidth and reducing latency. 5G is expected to enable a wide range of new internet-based services such as vehicular communications and Smart City infrastructure that, in addition to connectivity, require on-demand fine-grained infrastructure and resource access to operate. Hence, the allocation of the underlying resources has to be capable of supporting and adapting to sudden changes in demand for resources and be able to flexibly provide customized bundles of resources to fit the demands of the vertical industries using the 5G infrastructure.

Entering the 5G market, an operator may experience up to 65% increase in RAN deployment and infrastructure costs [1]. Discovering new ways to more efficiently allocate resources can, to some extent, alleviate the massive increase in the infrastructure cost. Network and infrastructure sharing is one of the solutions that could help major operators to gain considerable returns by leasing out portions of their idle resources to other service providers that o are willing to operate in the same geographical region.

A Decentralized Marketplace for Network Infrastructure Sharing

The practice of infrastructure/network sharing dates back to the previous generations of cellular networks. However, these sharing models were typically in the form of bilateral agreements and were limited to long-term sharing of passive and seldom active network resources. Such sharing models cannot support either the on-demand short term sharing requests or the larger markets where the parties involved in resource trading exceed only two operators. On the other hand, the intense competition in the telecoms industry rules out the prospect of a centralized marketplace where a trusted intermediary is in charge of the market and makes the final decision regarding the allocation of the resources and the price. Therefore, a decentralized approach is required to incentivize participation by the infrastructure providers, network operators, and over-the-top service providers.

Hyperledger Fabric blockchain technology can provide the foundation for the described decentralized marketplace where all the market players could participate in the resource allocation and pricing process in a transparent and trustworthy way and without relying on a third party. 

Case Study: 5G Network Slicing

Network virtualization technology allows the division of network resources into isolated virtual slices of the network that could be then offered to other users. This creates a new business opportunity for network operators and infrastructure providers to monetize their idle resources. Therefore a new business model has been gaining attention where operators and service providers can trade network resources in a marketplace equipped with a market mechanism(e.g., auctions). The aim is to develop a marketplace that does not rely on a third-party broker to conduct the market.

Why Hyperledger?

Hyperledger Fabric is an open-source project that is built as a modular software so that every piece of it can be tailored into the needs of the developers. Besides, with Hyperledger Fabric, there are no coding language lock-ins as the platform does not force the developer to use a particular language for the smart contracts. Finally, compared to other blockchain frameworks, the supported high transaction throughput and low latency make it a right candidate for 5G use cases.

Scenario:

A number of operators and service providers are participating in a marketplace to buy/sell network slices [2]. They each offer ask/bid prices for the offered quantity of a network slice and the smart contract that has to be endorsed by every single operator decides the final allocation and price of the network slices.

• The commodity: A network slice consisting of computing, RAN, and storage resources.
• Member organizations: Infrastructure providers, network operators, and service providers.
• Technology: Hyperledger Fabric v 1.4.1, Raft ordering service
• Architecture: Five organizations each with one peer node and 10 Raft orderers.
• The Smart Contract: A sealed-bid double-sided auction mechanism that allows bilateral trade of network slices.

Conclusions:

The research team at Connect Centre [3] have developed the smart contracts and deployed the Hyperledger Fabric network on one of the major public cloud provider’s infrastructure. The results of the performance benchmarks of the blockchain solution are reported in [2]. In addition to the 5G slicing, other resource sharing problems in 5G are expected to benefit from the blockchain technology. One other example is Virtual Network Function (VNF) marketplaces where network operators and software vendors could offer their virtualized network services such as Firewall, DNS, CDN, etc. 

[1] Future Networks. “5G-Era Mobile Network Cost Evolution.” Accessed September 10, 2020. https://www.gsma.com/futurenetworks/wiki/5g-era-mobile-network-cost-evolution/.

[2] N. Afraz. and M. Ruffini, “5G Network Slice Brokering: A Distributed Blockchain-based Market,” in EuCNC conference 2020.

[3] CONNECT – the Science Foundation Ireland Research Centre for Future Networks and Communications, https://connectcentre.ie/

If you’re interested in how blockchain is being used in the telecom industry, get involved with the Hyperledger Telecom Special Interest Group. 

About the author
Nima Afraz is a postdoctoral researcher with Connect Centre for Future Networks and Communications, Trinity College Dublin. He is a member of Hyperledger Telecom Special Interest Group. His research interests include network economics, network virtualization and blockchain for telecoms.

Cover image by mohamed Hassan from Pixabay