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Why aren’t telecoms

blockchain use cases moving
beyond the lab?
Dalia Adib - Principal Consultant, STL Partners
ITU Webinar
DLT Meet-ups Episode #3: Telecoms Use Cases

14 October 2020

© STL Partners | Proprietary and Confidential 1

Blockchain was promised provide benefits that solve
problems in telecoms across a range of domains…
Identity/authentication Settlements Transactions
Managing identities and permissions for Revenue settlement by recording movement of Enabling (real-time) payments
authentication or verification goods/revenues or use of services/assets and transactions

IoT device Edge computing International carrier

authentication for licensing Mobile money
settlements
DDOS prevention
Roaming settlements
Partner/vendor Automated IoT
onboarding SD WAN multi-vendor Roaming settlements micropayments
networks

Data tracking/registry Data transfer Token exchange

Recording information and data in an immutable way, Enabling ease of transferring data to Virtual currency/tokens with
whereby no party has asymmetric power over the data multiple parties intrinsic value

Supply chain Media distribution Digital rights

mgmt. Telco credit authentication management Gaming
scoring
Carrier
Do not call marketplace KEY Networks
Electronic prescription
registry Revenue IoT
delivery system
Spectrum sharing management Other
© STL Partners | Proprietary and Confidential mgmt. BSS 2
VAS
…and telcos have been trying to collaborate and working
together for a number of years...
Global Leaders’ Forum
BT, Telefonica, HGC and Colt and Zeetta Networks T-labs (Deutsche launches
Telstra join intercarrier announce inter-carrier Telekom) joins Sovrin Communications
settlement PoC network services PoC as a founding steward Blockchain Network

Mar 2018 May 2018 Aug 2018 Oct 2018 Nov 2018 Dec 2018 Feb 2019 Jun 2019 Feb 2020

PCCW Global, PCCW Global, CBCcom, Bubbletone and Nexign Exprivia and Italtel Deutsche Telekom,
HKT, Clear and Sparkle, Clear and Tata announce marketplace PoC announce number Telefonica, T-Mobile US
Colt announce Communications announce portability PoC and Orange create first
intercarrier bandwidth on demand PoC interoperator blockchain
settlement PoC network

© STL Partners | Proprietary and Confidential 3

…however, while PoCs for blockchain are becoming more
prevalent, most telcos are still in the exploratory phase
Ideas / early stage
Tracking / registry
• Provision of medicine
(supply chain)
• Procurement tender
submission
• Using SIM cards as a private
key to store sensitive
transaction data
Identity / authentication
• Device verification
• Identity authentication
• Healthcare: electronic
prescription delivery system
Transactions
• Cross-border payments
© STL Partners | Proprietary and Confidential
Actively exploring concept
Use cases at each stage
Tracking / registry
• Agriculture supply chain tracking
combined with IoT device
management
• Tracking and verification of tenders
between telcos
• IoT self-management of devices
Settlements
• Elimination of CDRs (roaming)
• Managed data on demand
• Grey routes and fraud
• Hybrid cloud orchestration
Identity / authentication
• Secure key delivery for IoT devices
• Identity management – know your
customer
• Media distribution authentication
• Sovrin Wallet Android app
Token exchange
• Network data currency
• ICO for start-up investments
Data access / transfer
• B2C connectivity
• Decentralised rate exchange
• Independent music playlist
management
• Smart home IoT
Transactions
• Mobile money for retail
• Ethereum tokens for network access
Proof of concept
Settlements
• International carrier
settlement
Data access / transfer
• Carrier market place
Other
• Sovrin stewardship
”
Most blockchain deployments
out there are more hyped than
reality
- Technology Insights Principal,
APAC fixed & mobile CSP
4
 Telcos should evaluate use cases at a business level to
prevent them from staying in the lab
The majority of interviewees either had blockchain as a personal passion project or were part of R&D – senior management engagement was limited

6 4 2

0 2 4 6 8 10 12
Individual crusader R&D team Part of role with senior mgmt buy in

In order to ensure that blockchain solutions become commercialised, telcos should consider the following factors:

1 Key functionalities

2 Internal vs external use cases

3 Business drivers and benefits

4 Ease of implementation

© STL Partners | Proprietary and Confidential 5

 Categorising use cases into key functionalities can provide
1
direction to telcos looking to develop skills in a particular area

Type of functionality Definition Example use cases

• IoT device authentication for DDOS prevention

Managing identities and permissions for
Identity / authentication authentication or verification
• Partner/vendor onboarding
• Employee background verification
• Edge compute marketplace
Revenue settlement by recording movement of
Settlements goods/revenues or use of services/assets
• Roaming settlements
• International carrier settlement
• Mobile money
Transactions Enabling (real-time) payments and transactions
• Automated IoT micropayments
• Supply chain management
Recording information and data in an immutable
• Telco credit scoring
Tracking / registry way, whereby no party has asymmetric power
• IMEI device fraud prevention
over the data
• Do not call registry
• Inter-carrier network services
Enabling ease of transferring data to multiple
Data access / transfer parties
• Number/KYC portability
• Digital rights management
• Cross-retailer loyalty schemes
Token exchange Virtual currency/tokens with intrinsic value
• Gaming (e.g. in-game cryptotokens)

© STL Partners | Proprietary and Confidential 6

2 Telcos’ decision to focus on internal or external use cases should
align with their overall priority in implementing blockchain
Number of internal vs external use cases The majority of examples for external opportunities was around IoT
discussed during interview programme

IoT 6

Transport / vehicles 3

31 Healthcare 2

36 Advertising 1

Agriculture 1
*

Finance 4

External facing use cases AKA something telcos would *3 out of 4 Finance use cases were about mobile wallets

?!
provide to others
Internal facing use cases AKA something telcos would use

”
themselves

“I want to just say, why are we talking about blockchain?

Because it is very successful in the financial sector, but we need to
Retail vs. wholesale
external opportunities
use the best of blockchain. So, the best in our use cases will be the
financial sector, of course, it is already proven”.
- North American Fixed & Mobile CSP

© STL Partners | Proprietary and Confidential 7

 3 Considering key business drivers may help telcos prioritise use cases: For most
this is about growing revenues and automating processes
Business driver Example use case
Most important business
driver for implementing new services to increased customer choice INDEPENDENT MUSIC PLAYLIST

blockchain for each "Cost saving is a good value but it’s interesting only in extreme cases. We are looking for new revenue…” – Asia Pacific CSP
interviewee (international business)

improving customer experience or existing services KYC

1 “If there is one centralised authority, who has no competition… of course, they probably use outdated technology and outdated
processes” – Open source technology company
1
4 reducing supply chain margin inflation ROAMING SETTLEMENT

“21% of mobile revenues are used to reconcile settlements between operators” - Network technology company
2
speeding up processes compared with intermediaries PROCUREMENT

“Multi-party processes suffer because the participants have to go down to the lowest participant” – Western European fixed &
mobile CSP
3
reducing discrepancies in payments/settlements INTL VOICE SETTLEMENT

Revenue
Process automation
Costs (removing intermediaries)
Customer Experience
"A lot of companies go to court, arguing whether or not the records are correct, and other issues.“ – Open source technology
company
reducing fraud WHOLESALE VOICE MARKET
“Emerging domains…where both the scale of the potential consumer user-base is huge, and the lack of infrastructure for
traditional trust and authentication were there, I think there is an immediate use case.” – North American fixed & mobile CSP

Unclear improving multi-party collaboration & innovation CPaaS

“One example: we have had times where we want to share Wi-Fi capacities between different network providers” – Western
© STL Partners | Proprietary and Confidential 8
European fixed & mobile CSP
 4 Telcos should also consider potential challenges, such as
ease of implementation, when developing use cases
Number of interviewed CSPs who
Challenge identified as a challenge
Duplication of computing on distributed nodes and the need for cryptographic ID
Scalability proofs can pose scalability issues (easier with private permissioned).
6/11

Many use cases are not specific to blockchain and there are established
Alternatives 6/11
alternatives today that are more mature and work adequately.

Blockchain technology is still new and is constantly evolving, so not

Technology maturity 2/11
4/11
4/11
always suitable integrate it into live commercial deployments.

Some regulation conflicts with blockchain and will take time to change,
Regulation 3/11
2/11
e.g. GDPR and right to be forgotten vs. immutable nature of blockchain.

Operators are competitive; large telcos often try to influence the market
Operator collaboration 1/11
3/11
rather than be collaborative. Hence, consensus/governance is difficult.

There is a lack of skills in the telecoms industry for complex blockchain

Skills / expertise 2/11
technology to be implemented in a non-costly manner.

Cost of replacing existing Blockchain has the potential to improve existing processes, but these may
2/11
technology / systems be linked to multiple legacy systems with a huge cost burden to change.

The usability of blockchain could be an issue both from the perspective of

Usability 1/11
the developer and end-user of the solution.
© STL Partners | Proprietary and Confidential 9
 The cost of migration from existing systems is making
4 implementation too difficult – easier if greenfield
(Relatively) greenfield opportunities named explicitly

”
Highlighted comment
Edge computing 2 “I think the issue is that, coming from a telecoms
background in North America, the legacy ways of
doing things with centralised databases are both
well understood and well capitalised, and certainly
the infrastructure exists to do tens of thousands of
NFV 2 transactions per second with current technology”.
North American Fixed & Mobile CSP

”
Autonomous vehicles 3
Highlighted comment
“There is maturity in the centralised database, a
good centralised database, and the management of
5G 4 centralised databases, we lose in comparison to
distributed blockchain architecture. The advantages
of blockchain need to be doubled or three times
higher than the advantages of a centralised
database”. Western European Fixed & Mobile CSP
IoT/smart homes/smart cities 6

© STL Partners | Proprietary and Confidential 10

The most promising use cases for telcos will combine several
of these factors
Long term strategic Increasing Short term tactical Increasing
opportunities framework opportunity for opportunities framework opportunity for
telcos Quick time to telcos
Greenfield market

Blockchain use cases in a Blockchain use cases in a Blockchain use cases Blockchain use cases
greenfield area where greenfield area without the where there are limited where there are limited
those who benefit from the need for largescale legacy barriers to entry for the barriers to entry for the
solution are telcos migration which will market but benefits are market and benefits
themselves – the benefit is enable access to new not easily quantifiable e.g. provided by the blockchain
normally around cost verticals for telcos, and solution may improve solution are easily
saving rather than new therefore new revenues customer experience quantifiable
revenues
Internal External Not easily Easily
quantifiable quantifiable
Blockchain use cases in an Blockchain use cases in an benefit Blockchain use cases Blockchain use cases
benefit
area with pre-existing area with pre-existing where there are some where there are some
(revenue or
solutions where those who solutions but where telcos barriers to entry for the barriers to entry for the
cost)
benefit from the solution do not currently play – market or the market is market or the market is
are telcos themselves – blockchain will enable right less mature and benefits less mature but benefits
the benefit is normally to play for telcos, and are not easily quantifiable provided by the blockchain
around cost saving rather therefore unlock new e.g. solution may improve solution are easily
than new revenues revenues customer experience quantifiable

Legacy Lengthy time to

market

© STL Partners | Proprietary and Confidential 11

This framework compares use cases based on the type of business
opportunity and existence of legacy systems…
Greenfield
Edge
compute
marketplace
Inter-carrier
network
IoT
services
micropayments
DDOS
prevention

Telco credit
scoring

Partner
onboarding
Internal opportunity External opportunity
NFV licensing SD-WAN
Telco mobile Advertising
settlement
wallet marketplace
IPX exchange
rate Loyalty
VAS schemes
settlement

Supply chain
mgmt.
Roaming

© STL Partners | Proprietary and Confidential 12

Legacy
…And here use cases are compared based on their time to
market and ability to bring measurable business value
Quick time to
market
Telco mobile
Telco credit wallet
scoring

IPX exchange Partner Supply chain

Roaming
rate onboarding mgmt.

Loyalty Inter-carrier
schemes network
services

VAS SD-WAN
settlement settlement
Not easily Easily quantifiable
IoT
quantifiable benefit micropayments benefit
(revenue or cost)
NFV licensing

Advertising
marketplace

DDOS Edge
prevention compute
marketplace

© STL Partners | Proprietary and Confidential Lengthy time to market 13

(difficult to implement)
The truth is, telcos will start to leverage blockchain once solutions
come to the market, rather than develop specific use cases
Categories of Inter-carrier
IoT device Supply chain
use cases network Roaming
services verification mgmt.

Onboarding Onboard Onboard Register Onboard

Identity / authentication telcos telcos device supplier

Recording information
and/or transaction Price lists Attacks Movement
Price lists
Data tracking / registry CDRs detected of assets

Settlements
between Roaming
Ensuring parties receive carriers (and settlements
payments customers)
Settlements

Real-time Real-time
Real-time
Enabling real-time payments payments
payments to
payments between between
telcos
Transactions telcos suppliers

© STL Partners | Proprietary and Confidential 14

Within these, there are multiple roles and business models a
telecoms operator could choose to pursue

INFRASTRUCTURE BLOCKCHAIN-AS-A- SOLUTION

END-USER NODE OPERATOR
PROVIDER SERVICE PROVIDER

Consumes blockchain Platforms for customers

Run and operate a node Provide members in the End-to-end solutions;
services rather than actively (e.g. developers) to
on the distributed ledger blockchain ecosystem the third parties plug into the
participates in the create their own
to verify records and underlying compute blockchain ecosystem
blockchain system. The blockchain-enabled
processes. Could be a infrastructure to operate and the telco provides
operator may still provide solutions. These are
miner (cryptocurrency) nodes and related governance and/or
services that leverage the likely to include the
or participant / steward. processes. managed services.
benefits of blockchain. compute infrastructure.

Telcos in India plan to Swisscom, Spark and Platform for simplified T-Labs is prototyping a Blockchain and biometric
leverage blockchain other CSPs are Sovrin deployment onto its blockchain-as-a-service security smart home
registries for Do Not Call stewards compute infrastructure platform – hashstaX solutions

© STL Partners | Proprietary and Confidential 15

 Conclusions
• The telecoms industry has been evaluating use cases for a number of
years now, mostly in the lab
• A key issue is that this is often driven out of R&D / innovation
• Telcos need to bring blockchain POCs closer to the core business
objectives to ensure they leave R&D stage
• And increasingly opting for ready-made solutions, rather than to focus
on standalone use cases
© STL Partners | Proprietary and Confidential 16