Despite a lot of hype over the last few years, there has been little progress on blockchain in the telecoms industry beyond proofs of concept. This report identifies why blockchain hasn’t gained more traction and provides a framework to assess the potential value of blockchain use cases in telecoms. It then looks in depth at the structure and business model for eight promising use cases.
Is 2019 the year blockchain hype for telecoms becomes reality?
STL Partners has been exploring blockchain for several years, producing a report in May 2018 focusing on how telcos can make money from blockchain. This report looks to return to this question one year on.
The conclusions from this report have been informed by an interview programme undertaken by STL Partners and sponsored by Huawei with 11 telcos and blockchain technology vendors.
As successful blockchain proofs of concept (PoCs) begin to emerge, this report looks to answer the key question:
Which blockchain use cases should telcos prioritise and how can they turn them into real revenue or cost saving opportunities?
Worldwide blockchain revenues are sharply increasing – telcos should consider how they can get a slice of the pie.
Worldwide blockchain market forecast, 2017-2024
Source: Wintergreen Research
Private blockchains may offer greater opportunities for telecom operators
Public, permissionless blockchain has been the most high profile category, because of the association with bitcoin and other cryptocurrencies, but telcos should be equally mindful of the opportunities brought by permissioned or private blockchains. Here, telcos may find a richer right to play, along with avoiding some of the blockchain pitfalls like the issue of scalability.
- Public blockchain: Anyone can participate in the consensus system and anyone can view the blockchain.
- Public, permissioned blockchain: Only those approved can participate in the consensus system but anyone can view the blockchain. The participants’ digital identities must match their real-world identities.
- Private, permissioned blockchain: Only those approved can participate in the consensus system and view the blockchain. For example, using blockchain within a consortium, whereby only members are able to view and participate.
Blockchain PoCs are becoming more prevalent but most telcos are still in the exploratory phase
Based on the discussions of our interview programme, we found that most telecoms operators were still at an early stage of trying to understand blockchain as a technology and its potential implications on business opportunities and processes. Despite interviewing many of the leading telcos, very few are further than evaluating PoCs.
Maturity of telecoms blockchain use cases
Source: STL Partners
Telecoms operators should evaluate use cases at a business level to ensure they move beyond 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
In order to ensure that blockchain solutions become commercialised, telcos should consider the following factors:
- Focus on a key functionality. Different types of telecom blockchain use cases will require different frameworks and skill sets. Building expertise in one blockchain domain, such as Clear which focuses entirely on blockchain-based settlement solutions, could help telcos and technology companies to develop an effective strategy to commercialise their solution.
- Internal vs external use cases. Internal use cases will provide benefits to the telco themselves such as cost savings from improved operational efficiencies, whereas external use cases will enable telcos to provide benefits to other users. Telcos should decide which of these best suits their business interests to further develop use cases.
- Set out clear business drivers and benefits. Because blockchain technology is still evolving, there is a tendency among those exploring potential use cases to get bogged down in how they will work – who runs the nodes, what goes on the blockchain – and forget to build a clear view of how they will deliver value and to whom.
- Ease of implementation. Some telecom blockchain use cases may be more or less difficult to implement, due to aspects such as the maturity of the blockchain technology, collaboration between multiple parties (a key area blockchain is well suited to but one which requires an ecosystem to be established) or market maturity. Telcos should therefore consider how significant these are when deciding on which use cases they can feasibly develop.
In Moving beyond the lab: How to make blockchain pay these four factors are explored in detail. The report then sets out eight of the most promising use cases that telcos could implement to turn promise into money-making reality.
- Executive summary
- Telecoms and blockchain: the current landscape
- Why are so many telco blockchain use cases staying in the lab?
- How will telcos make blockchain a (money-making) reality?
- Example 1: Inter-carrier network services
- Example 2: Edge compute marketplace
- Example 3: Telco mobile wallet
- Example 4: Supply chain management
- Example 5: Telco credit scoring
- Example 6: IoT micropayments
- Example 7: IoT DDOS prevention
- Example 8: Roaming Conclusions