The blockchain opportunity for telecom operators

The future of Web 3.0 and metaverse is a topic of intense discussion among Investors, academia, start-ups, and big tech. While this future is largely unknown, and the opinions on the changes that it will entail are varied, one of the few areas where a broad consensus seems to be forming is the need for financial decentralization (DeFi) – underpinned by the blockchain technology. Simply put, a blockchain is a highly distributed data structure, comprising a peer-to-peer chain in which each data block is cryptographically linked to its predecessor. By its design, such a chain is strongly resistant to any irregular manipulation of its data content. Blockchain, in its turn, will trigger some internet redesign to implement the required levels of personal identity, security, and trust.

Unfortunately, the value of blockchain and its benefits beyond cryptocurrencies is not well understood resulting in an adoption rate that has lagged many other emerging technologies. Blockchain suppliers and evangelizers need to simplify its description, and educate enterprises about its business value –through clearly articulated use cases, solutions and measurable, tangible outcomes. I interacted recently with a Coinstar ATM at a supermarket; the session ended quickly as I was turned off by its maze of complex menu, disclaimers, and contracts.

Today, blockchain applications are being used largely in digital industries, such as banking, finance, and insurance, and some physical industries, such as retail, and transport. It has not found much usage in the telecom industries.

Telecom operators should closely examine all opportunities created by blockchain because of their strategic links and the established customer relationships with the ICT industry, to explore how they can help in boosting revenue and margins. For a few years now, there have been discussions (see, for example, blockchain applications in telecom) on its use for internal purposes – such as roaming, number portability, identity management, and internal processes like BSS/OSS – and for external services – such as  infrastructure, PaaS, applications, financial, and professional services.  

While there are also a few well-documented implementations – such as blockchain in roaming and blockchain for data monetization – I'd like to discuss a few more relatively simple blockchain-driven applications, like Blockchain-as-a-Service (BaaS).

BaaS can well become the major driver of mainstream blockchain adoption. It allows telecom operators to experiment with blockchain applications hosted in the cloud without developing expensive in-house solutions. Integrating blockchain into an enterprise’s core technology increases its ease of use, making it an attractive enabler of digital transformation efforts. IBM, Amazon, Oracle, and Salesforce are among the leaders of this service with well-established partnerships with telecom operators who leverage blockchain technology to gain business value but also contribute to its growth by testing its components, protocols, and applications.

BaaS provides telecom operators, who are largely risk-averse, an opportunity for to learn – and also fail, but in a more controlled context with minimal regret. For BaaS suppliers, it is a great opportunity to showcase the business benefits of their solutions.

Given their inherent decentralized nature, cryptocurrencies are becoming a viable alternative for people to bypass price and exchange rate inflation across countries. According to a recent study from Chainalysis, cryptocurrency adoption has skyrocketed in the last twelve months. The varied list of countries contributing to this adoption shows that cryptocurrency is truly becoming a global phenomenon.

Source: Chainanalysis, The 2021 Geography of Cryptocurrency Report

Going back to my personal experience with the cryptocurrency ATM, I strongly believe that the Web 3.0 winners must and will find ways to simplify it in order to onboard new customers. Setting up a new digital wallet, sending money from a Coinbase account to a digital wallet, or connecting the wallet with other Web 3.0-enabled sites should be as easy as setting up a Tik-Tok account.

Telecom operators have been investing in their mobile money platforms, such as Tigo Money and Personal Play, but can they be the major disruptors within their markets and be the trailblazers of these DeFi trends? Time will tell.