The three telco Metaverse strategies

The Metaverse offers opportunities beyond connectivity for telcos

The Metaverse is the increasingly accepted term for a set of interconnected virtual worlds. One way to think about the Metaverse is to see it as a 3D version of the world wide web in which organizations operate their own virtual 3D worlds, rather than 2D web sites. Represented by avatars, visitors to a virtual world can interact with other users or with avatars controlled by artificial intelligence. The term Metaverse entered the popular consciousness when Facebook renamed itself Meta in October 2021.

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The renaming of Facebook sparked a surge of interest in the Metaverse

Source: Google Trends

Whereas the existing Internet is essentially a 2D digital overlay of the world, composed of text, voice, images and video, the Metaverse will provide a 3D digital overlay. This is the way Nvidia’s CEO Jensen Huang, portrayed the Metaverse in a speech in November 2021. As a leading provider of graphics chips, Nvidia is thinking deeply about how to build a business case for the Metaverse, which could drive rapid growth in demand for its products.

For a fully immersive experience, the Metaverse will need to be accessed through virtual reality (VR) headsets, but it could also be explored by moving through 3D environments using a conventional handset, laptop or television. Indeed, it is important to stress that the fortunes of the Metaverse won’t necessarily depend on the fortunes of VR. Hundreds of millions of people already play video games in 3D, interacting with each other, without wearing headsets.

The Metaverse looks set to host both entirely fictional virtual spaces where people can socialise, play and enjoy entertainment, as well as simulations of the real world, where people can test new product designs, learn new skills or watch concerts and sports events they can’t attend in person.

The first part of this report considers how the Metaverse could create value and the obstacles that lie in its way. It also outlines the strategies of Improbable, Meta (formerly Facebook), Microsoft and Nvidia – four companies developing many of the key enabling technologies.

The second part explores the Metaverse strategies of telcos. Broadband networks and related telco services are fundamental to the smooth running of digital environments today, and will be the building blocks of the Metaverse. We believe that telcos could play a coordination role that will help prevent the Metaverse from fragmenting into silos that are unable to interoperate with each other.

Our landmark report The Coordination Age: A third age of telecoms explained how reliable and ubiquitous connectivity can enable companies and consumers to use digital technologies to efficiently allocate and source assets and resources. In the case of Metaverse, telcos can help people and businesses to interact and transact with each other safely and securely in 3D environments.

As it considers the opportunities for telcos, this report draws on the experiences and actions of SKT, Telefónica and Verizon, which are each deploying strategies to help coordinate the development of the Metaverse.

Table of Contents

  • Executive Summary
  • Introduction
  • What is the Metaverse for?
    • The lure of the virtual road
    • Corporate worlds take over from web sites
    • Dominance or democracy?
    • The non-fungible flexibility paradox
    • Facebook pursues metamorphosis
    • Microsoft has most of the pieces
  • What will the Metaverse mean for telcos?
    • Recreating the real world is challenging
    • Traffic implications for telcos
    • Opportunities for telcos
    • SK Telecom – the full stack standard bearer
    • Telefónica looks to play coordination role
    • AT&T and Verizon – connectivity plus edge
  • Conclusions
  • Index

Related Research

 

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36 blockchain applications: What’s next?

Why is blockchain important?

Blockchain applications are valuable because they decentralise control. This offers a new way to reduce friction and speed up adoption of solutions that require collaboration between various players, but where no one wants to cede control to a single entity.

Collaborative ecosystems are only going to become more important in the Coordination Age, so mastery of blockchain technology can enable telcos to successfully address their customers’ changing needs.

But telcos are still figuring out what to use blockchain for

Based on an interview programme with telcos and technology partners, our research shows that one of the key barriers to adoption is finding valid use cases that are worth taking beyond the PoC stage.

Part of the challenge of knowing which applications are most worthwhile is that there are few large scale, real-world implementations of blockchain. This means that its key value proposition – that it can ease collaboration by removing the need for a centrally controlling authority, instead distributing power across all participants within an ecosystem – still needs to be proven.

Without many successful examples of blockchain-supported applications, it is difficult to know which ones are likely to succeed in telecoms. Telcos are therefore unsure of where to focus their time and investments.In practice, applications that leverage blockchain’s ability to broker trust through transparency and decentralisation are still at an early stage of development.

In the first report in this series, Moving beyond the lab: How to make blockchain pay we looked at eight of the most promising applications in telecoms in detail.

In this report, we look at a broader range of applications where blockchain is being tested to see if it can deliver better results than other technologies.

We explore 36 use cases across six categories, based on key blockchain capabilities:

  1. Tracking / registry: Recording information and data in an immutable and transparent way, whereby no party has asymmetric power over the data
  2. Data access / transfer: Enabling ease of transferring data between multiple parties
  3. Identity /authentication: Managing identities and permissions for authentication or verification
  4. Transactions: Enabling (real-time) payments and transactions
  5. Settlements: Revenue settlement by recording movement of goods/revenues or use of services/assets
  6. Token exchange: Virtual currency/tokens with intrinsic value traded between multiple parties

Key takeaways

  • Tracking / registry and data access / authentication are the two biggest categories in terms of use cases, reflecting the relative maturity of blockchain technology in addressing these pain points.
  • While enterprises are prepared to rely on the distributed ledger and shared consensus mechanisms of blockchain technology to support business processes, the regulatory and reputational risks of using cryptocurrency or tokens to exchange real-world value are still too high.
  • Therefore, there are fewer emerging use cases around transactions, token exchange, and to some degree settlements, and they will likely take longer to develop into viable commercial solutions.
  • Identity / authentication is one of the most technologically advanced application areas where blockchain is enabling enterprises to develop truly novel solutions for consumers, IoT, and to ease commercial partnerships. However, the business model is still untested at scale and/or not directly related to telcos’ core operations, so these applications can be difficult to justify as priority investment areas.

Overview of 36 telecoms blockchain applications

36 telecoms blockchain use cases

For each of these use cases, this report covers:

  • The current problem or pain point
  • How blockchain can help solve the problem
  • Which of the following blockchain characteristics are most relevant to the use case
    • Security: Decentralisation makes tampering with records or DDOS attacks extremely difficult
    • Cost efficiency: Shared ledgers can disintermediate middlemen
    • Traceability: Immutable, transparent record
    • Business process speed: Automation through smart contracts
    • Token value: Holding real-world value in digital assets, such as loyalty points
    • Neutral and equal: Shared ownership through consensus mechanisms
    • Confidentiality: Blockchain can enable collaboration without having to publicise sensitive information (particularly in a consortium/private application)
  • Type of blockchain most suited to the use case (public, permissioned public, or permissioned private)
  • The business drivers for telcos, such as:
    • Increase existing revenues
    • Decrease costs
    • New revenues: market disruption
    • New revenues: new market
    • Compliance / regulation
    • Customer experience
  • Real world examples in development or production
  • Potential challenges or barriers to adoption

Moving beyond the lab: How to make blockchain pay

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

Telecom Blockchain Market Forecast

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

Blockchain telecom use cases at each stage

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:

  1. 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.
  2. 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.
  3. 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.
  4. 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.

Report Contents

  • 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
  • Conclusions

Personal data: Treasure or trash?

Introduction

This report analyses how the Telefónica Group is looking to reshape the digital services market so that both telcos and individuals play a greater role in the management of personal data. Today, most Internet users share large amounts of personal information with the major online platforms: Google, Facebook, Amazon, Apple, Tencent and Alibaba. In many cases, this process is implicit and somewhat opaque – the subject of the personal data isn’t fully aware of what information they have shared or how it is being used. For example, Facebook users may not be aware that the social network tracks their location and can, in some cases, trace a link between offline purchases and its online advertising.

Beyond the tactical deployment of personal data to personalise their services and advertising, the major Internet players increasingly use behavioural data captured by their services to train machine learning systems how to perform specific tasks, such as identify the subject of an image or the best response to an incoming message. Over time, the development of this kind of artificial intelligence will enable much greater levels of automation saving both consumers and companies time and money.

Like many players in the digital economy and some policymakers, Telefónica is concerned that artificial intelligence will be subject to a winner-takes-all dynamic, ultimately stifling competition and innovation. The danger is that the leading Internet platforms’ unparalleled access to behavioural data will enable them to develop the best artificial intelligence systems, giving them an unassailable advantage over newcomers to the digital economy.

This report analyses Telefónica’s response to this strategic threat, as well as examining the actions of NTT DOCOMO, another telco that has sought to break the stranglehold of the Internet platforms on personal data. Finally, it considers whether Mint, a web service that has succeeded in persuading millions of Americans to share very detailed financial information, could be a model for telco’s personal data propositions.

As well as revisiting some of the strategic themes raised in STL Partners’ 2013 digital commerce strategy report, this report builds on the analysis in three recent STL Partners’ executive briefings that explore the role of telcos in digital commerce:

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In pursuit of personal cloud services

For the best part of a decade, STL Partners has been calling for telcos to give customers greater control over their personal data. In doing so, telcos could differentiate themselves from most of the major Internet players in the eyes of both consumers and regulators. But now, the entire digital economy is moving in this direction, partly because the new General Data Protection Regulation (GDPR) requires companies operating in the EU to give consumers more control and partly because of the outcry over the cavalier data management practices of some Internet players, particularly Facebook.

In a world in which everyone is talking about protecting personal data and privacy, is there still scope for telcos to differentiate themselves and strengthen their relationships with consumers?

In a strategy report published in October 2013, STL Partners argued that there were two major strategic opportunities for telcos in the digital commerce space:

  1. Real-time commerce enablement: The use of mobile technologies and services to optimise all aspects of commerce. For example, mobile networks can deliver precisely targeted and timely marketing and advertising to consumer’s smartphones, tablets, computers and televisions.
  2. Personal cloud: Act as a trusted custodian for individuals’ data and an intermediary between individuals and organisations, providing authentication services, digital lockers and other services that reduce the risk and friction in every day interactions. An early example of this kind of service is financial services web site Mint.com (profiled in this report). As personal cloud services provide personalised recommendations based on individuals’ authorised data, they could potentially engage much more deeply with consumers than the generalised decision-support services, such as Google, TripAdvisor, moneysavingexpert.com and comparethemarket.com, in widespread use today.

Back in October 2013, STL Partners saw those two opportunities as inter-related — they could be combined in a single platform. The report argued that telcos should start with mobile commerce, where they have the strongest strategic position, and then use the resulting data, customer relationships and trusted brand to expand into personal cloud services, which will require high levels of investment.

Today, telcos’ traction in mobile commerce remains limited — only a handful of telcos, such as Safaricom, Turkcell, KDDI and NTT Docomo, have really carved out a significant position in this space. Although most telcos haven’t been able or willing to follow suit, they could still pursue the personal cloud value proposition outlined in the 2013 report. For consumers, effective personal cloud services will save time and money. The ongoing popularity of web comparison and review services, such as comparethemarket.com, moneysavingexpert.com and TripAdvisor, suggests that consumers continue to turn to intermediaries to help through them cut through the “marketing noise” on the Internet. But these existing services provide limited personalisation and can’t necessarily join the dots across different aspects of an individual’s lives. For example, TripAdvisor isn’t necessarily aware that a user is a teacher and can only take a vacation during a school holiday.

STL Partners believes there is latent demand for trusted and secure online services that act primarily on behalf of individuals, providing tailored advice, information and offers. This kind of personal cloud could evolve into a kind of vendor relationship management service, using information supplied by the individual to go and source the most appropriate products and services.

The broker could analyse a combination of declared, observed and inferred data in a way that is completely transparent to the individual. This data should be used primarily to save consumers time and give them relevant information that will enrich their lives. Instead of just putting the spotlight on the best price, as comparison web sites do, personal cloud services should put the spotlight on the ‘right’ product or service for the individual.

Ideally, a mature personal cloud service will enrich consumers’ lives by enabling them to quickly discover products, services and places that are near perfect or perfect for them. Rather than having to conduct hours of research or settle for second-best, the individual should be able to use the service to find exactly the right product or service in a few minutes. For example, an entertainment service might alert you to a concert by an upcoming band that fits closely with your taste in music, while a travel site will know you like quiet, peaceful hotels with sea views and recommend places that meet that criteria.

As a personal cloud service will need to be as useful as possible to consumers, it will need to attract as many merchants and brands as possible. In 2013, STL Partners argued that telcos could do that by offering merchants and brands a low risk proposition: they will be able to register to have their products and services included in the personal cloud for free and they will only have to pay commission if the consumer actually purchases one of their products and services. In the first few years, in order to persuade merchants and brands to actually use the site the personal cloud will have to charge a very low commission and, in some cases, none at all.

Since October 2013, much has changed. But the personal cloud opportunity is still valid and some telcos continue to explore how they can get closer to consumers. One of the most prominent of these is Madrid-based Telefónica, which has operations in much of Europe and across Latin America. The next chapter outlines Telefónica’s strategy in the personal data domain.

Contents:

  • Executive Summary
  • Recommendations for telcos
  • Introduction
  • In pursuit of personal cloud services
  • Telefonica’s personal data strategy
  • Questioning the status quo
  • Backing blockchains
  • Takeaways
  • What is Telefónica actually doing?
  • The Aura personal assistant
  • Takeaways
  • Telefonica’s external bets
  • Investment in Wibson
  • Partnership with People.io
  • The Data Transparency Lab
  • Takeaways
  • Will Telefónica see financial benefits?
  • Takeaways
  • What can Telefónica learn from DOCOMO?
  • DOCOMO’s Evolving Strategy
  • Takeaways
  • Mint – a model for a telco personal data play?
  • Takeaways

Figures:

  • Figure 1: Telefónica’s tally of active users of the major apps
  • Figure 2: Telefónica’s view of digital market openness in Brazil
  • Figure 3: Investors’ valuation of Internet platforms implies long-term dominance
  • Figure 4: Key metrics for Telefónica’s four platforms
  • Figure 5: How Wibson intends to allow individuals to trade their data
  • Figure 6: Telefónica’s digital services business is growing steadily
  • Figure 7: Telefónica’s pay TV business continues to expand
  • Figure 8: DOCOMO’s Smart Life division has struggle to grow
  • Figure 9: NTT DOCOMO’s new strategy puts more emphasis on enablers
  • Figure 10: DOCOMO continues to pursue the concept of a personal assistant
  • Figure 11: DOCOMO is using personal data to enable new financial services
  • Figure 12: Mint provides users with advice on how to manage their money
  • Figure 13: Intuit sees Mint as a strategically important engagement tool

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Blockchain for telcos: Where is the money?

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Introduction

Looking at existing players in the industry, there are two business approaches to blockchain.

Blockchain to make money

Blockchain to save money or do something new

In this report, we look at how these business models apply for telcos seeking to participate in blockchain ecosystems for digital identity and IoT.

We will also present this report in a webinar on Tuesday, June 19th – register here

Contents:

  • Overview of existing blockchain business models
  • Telco monetisation models in:
  • Digital identity
  • IoT
  • Conclusion & recommendations

 

IoT and blockchain: There’s substance behind the hype

Introduction

There is currently a lot of market speculation about blockchain and its possible use-cases, including how it can be used in the IoT ecosystem.

This short report identifies three different reasons why blockchain is an attractive technology to use in IoT solutions, and how blockchain can help operators move up the IoT value chain by enabling new business models.

This report leverages research from the following recent STL publications:

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The IoT ecosystem is evolving rapidly, and we are moving towards a hyper-connected and automated future…

Blockchain IoT

Source: STL Partners

This future vision won’t be possible unless IoT devices from different networks can share data securely. There are three things that make blockchain an attractive technology to help overcome this challenge and enable IoT ecosystems:

  1. It creates a tamper-proof audit trails
  2. It enables a distributed operating model
  3. It is open-source

Contents:

  • Introduction
  • IoT is not a quick win for operators
  • Can blockchain help?
  • The IoT ecosystem is evolving rapidly…
  • The future vision won’t be possible unless IoT devices from different networks can share data securely
  • Application 1: Enhancing IoT device security
  • Use-case 1: Protecting IoT devices with blockchain and biometric data
  • Use-case 2: Preventing losses in the global freight and logistics industry
  • Application 2: Enabling self-managing device-to-device networks
  • Use-case 1: Enabling device-to-device payments
  • Use-case 2: Granting location-access through smart locks
  • Use-case 3: Enabling the ‘sharing economy’
  • Blockchain is not a silver bullet
  • Blockchain in operator IoT strategies

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Blockchain: What’s in it for telcos?

To view the webinar click here, or download the slides under Additional files.

Introduction: What is blockchain?

Bitcoin beginnings

Blockchain was first created as the technology that powers the Bitcoin cryptocurrency. The aim of Bitcoin is to transfer value between remote parties securely and anonymously, without a traditional ‘trusted’ intermediator like a bank. The creator of Bitcoin’s aim was to circumvent the traditional financial services sector – central banks, commercial banks and governments – in order to protect privacy and prevent currency manipulation (e.g. through interest rates or printing money).

However, without a bank to broker trust between two parties, users needed new means of guaranteeing that party A will deliver ‘x’ amount of money to party B in exchange for ‘y’ services. Blockchains overcome this lack of trust by distributing a ledger containing the entire history of all transactions across thousands of end-points globally.

Figure 1: How the Bitcoin blockchain works

Source: Financial Times, via Reuters

By relying on a transparent record of all historical transactions to authenticate each user’s actions, where transactions are executed by a large, distributed and disinterested network of computers (nodes), users cannot renege on agreements, conceal past transactions for fraudulent purposes, and can depend on constant uptime. Thus, blockchain’s decentralised system offers two important advantages over centralised databases:

  1. Establishing trust through immutability: The shared ledger prevents anyone from tampering with historical records. Any change to a historical record will affect how all following transactions are logged in the blockchain (i.e. the corresponding hashes), and is thus highly conspicuous. Also, because the system is decentralised, it is impossible to change all stored copies of the blockchain.
  2. Resilience: The blockchain can ensure constant up-time because it doesn’t rely on any individual computer, but a network of thousands of computers.


On its own, a distributed ledger is a good way to prevent anyone from tampering with a historical record, but part of the revolution of blockchain is its combination of distributed ledgers with other technologies that help increase security and privacy, and which have protected Bitcoin from any significant manipulation since its inception. (Notorious attacks in the Bitcoin ecosystem have compromised the exchanges that trade Bitcoin for real-world currency, rather than the actual cryptocurrency.) Below we outline three of the main technologies underpinning blockchain:

Asymmetric cryptography: Each user has a public and private key, which is unique to them and impossible to alter or forge. The public key is visible and searchable to anyone and is linked to the private key. The private key is confidential to the user, and allows them to decrypt information sent to the public key. This means that the specific contents of a transaction can remain private, while the fact that it occurred is public. This is a widely-used technology, for example in end-to-end encryption of WhatsApp messages.

Hash functions: This is a technology that compresses larger pieces of data into a much, smaller unique numerical code called a hash value or a hash code. If any part of the data contained within a hash code is changed, then so will the hash code. Hash codes can also be programmed with asymmetric cryptography, so that they can only be decrypted by specific private keys. So, hash codes are useful for spotting any attempts to tamper with data and for keeping information, such as the details of a transaction between two parties over a blockchain, private. In a blockchain, each new block has a hash value, which is linked to all the previous blocks in the chain.

Proof of Work: In the Bitcoin blockchain, before a new block of transactions can be added to the chain, a computer must work out a hash value to identify it by. Proof of Work is the mathematical process used to determine possible hash values for new blocks of transactions. Essentially, it is a system that sets very strict conditions that every new hash value must meet. This means that the probability of finding a suitable hash value is very low, making it a time and energy intensive process, i.e. requiring a lot of computing power. It is also a random process, so the likelihood of discovering a suitable hash code to process a new block of transactions is evenly distributed across all participating nodes. When a node discovers an acceptable hash code, it can then create a new block and add it to the chain. In exchange for this ‘work’, the node receives newly created Bitcoin. This system makes it impossible to manipulate the Bitcoin cryptocurrency, and acts as an incentive for organisations to provide the computing power to add new transactions to the blockchain.

Throughout this report, we will discuss how these technologies have evolved as blockchain technology has matured, and their practical application within specific use-cases.

Contents:

  • Executive Summary
  • What is blockchain?
  • Why is blockchain important for telcos?
  • What are the pros and cons of blockchain?
  • What should telcos do about blockchain?
  • Introduction: What is blockchain?
  • Bitcoin beginnings
  • Moving beyond Bitcoin and cryptocurrencies
  • Blockchain is experiencing some growing pains…
  • …But the benefits outweigh the risks
  • Telco investments in blockchain
  • The why and how of blockchain
  • Understanding when blockchain is the appropriate technology
  • How will blockchain ecosystems develop?
  • How can blockchain help telcos?
  • Financial transactions between opcos
  • Identity management
  • Roaming and settlement
  • IoT
  • Conclusion
  • Recommendations for telcos
  • STL Partners and Telco 2.0: Change the Game

Figures:

  • Figure 1: How the Bitcoin blockchain works
  • Figure 2: How smart contracts work
  • Figure 3: Public vs permissioned blockchains
  • Figure 4: Blockchain’s strengths and weaknesses
  • Figure 5: Comparing blockchain with TCP/IP evolution
  • Figure 6: Blockchain applications for telcos
  • Figure 7: Blockchain technology for settling commercial transactions between opcos
  • Figure 8: How blockchain enabled cross-border mobile money transaction settlement works
  • Figure 9: Blockchain for identity management
  • Figure 10: Using blockchain to validate ID attributes
  • Figure 11: Blockchain for managing roaming agreements and settlement
  • Figure 12: How blockchain-enabled subscriber authentication works
  • Figure 13: Managing WiFi roaming with blockchain
  • Figure 14: Blockchain applications in the IoT
  • Figure 15: Tracking IoT devices from inception to ensure data integrity
  • Figure 16: IBM predicts a shift to distributed IoT networks

MWC 2017: The big themes from behind the scenes

Introduction

It was notable that the main halls at the GSMA’s Mobile World Congress 2017 in Barcelona last week were still buzzing on Thursday morning, the last of four days. Previously the crowds have always noticeably thinned by then, but there was no let up this year – certainly not until around 2pm, and the event closes at 4pm on the Thursday.

If you’ve never been, your first experience of the Congress can be quite overwhelming. There is so much going on, so many people, and an almost bewildering number of companies and halls. Even for seasoned MWC-ers, the activity on Tuesday in particular reached a new level of intensity. Just walking between stands was a battle in places. The extra energy at this years’ show was surprising because mobile is not really a growth industry any more, although it is still a huge and profitable sector.

However, despite the frenetic activity, many commentators have struggled to identify an over-arching theme or message for this year’s MWC. Nokia’s retro-phone announcement was one surprising success.  In the light of its backward-facing nature, the popularity of this story is rather confusing, but perhaps it is a sign of people looking hard for something interesting to say.

Of course, the diversity and scale of the Congress can make it hard to discern the big picture. Usually there is an announcement or keynote (such as those by Google’s Eric Schmidt in 2010 or Microsoft’s Steve Ballmer in 2012) that seems to frame the moment. Not so this year though.

This absence of one unifying theme reflects the results of our client feedback survey that we conducted in August 2016: telco strategy teams need to understand and evaluate the potential of an increasingly diverse range of new technologies, business models, and other opportunities (or threats) in order to succeed.

Behind the scenes at MWC, we found several major themes which we summarise in this report:

  • Telco change
  • 5G
  • IoT

Beyond these three areas there was a multitude of information and demonstrations about new technologies and services such as Rich Communications Services (RCS), AI and blockchain. This report summarises what we learnt about these topics at MWC, and we will continue to research these areas in the future, to assess how they will impact telcos and what strategy they need to adopt to make the most of these opportunities.

 

  • Executive Summary
  • Introduction
  • Telco change
  • 5G
  • 5G – the next generation?
  • The business case for telcos is not yet that convincing
  • The path to 5G and the “first mover” risk
  • Super low latency – what is it good for?
  • The spectrum case remains unclear
  • EHF and mmWave
  • 5G – Telco recommendations in summary
  • IoT
  • What role will telcos play?
  • The IoT challenge: Data privacy and security
  • Connectivity consolidation
  • Topics to watch
  • Rich Communications Services (RCS)
  • Enterprise digital transformation – Companies must be proactive, not reactive
  • AI – The human element

Understanding Fintech: Why Interest and Investment Has Exploded

Introduction

Why should telcos care about fintech? Telecoms operators have long been interested in financial services, especially consumer-facing financial services. STL Partners has discussed the relationship between telecoms and financial services in a range of prior reports, from Digital Commerce: Show Me the (Mobile) Money, to Apple Pay and Weve Fail: A Wake Up Call, and from Telco-driven Disruption: What NTT DoCoMo, KT, and Globe Got Right, to Digital Commerce 2.0: New $50bn Disruptive Opportunities for Telcos, Banks and Technology Companies.

It is fair to say that telcos have found only mixed success in financial services. While certain operators have had great success in recent years providing mobile money services, there have also been many examples of telco incursions into financial services that have not paid off. On the other hand, there have been many instances of successful disruption in financial services – even technology-led digital disruption. PayPal is the foremost example of a digital business that originally found a niche doing something that banks had made quite laborious – online payments for goods between private individuals – and making it easier. But these disruptions have, to date, been limited and individual. Why, then, should telcos pay attention now?

In the last two years, the wider landscape of financial services has begun to change, as the established players have faced disruption on multiple fronts from a large number of new businesses. This has become known as fintech, and interest and investment are taking off:

Figure 1: Google Trends search on ‘fintech’, 2011 – 2016

Source: Google Trends

Fintech therefore represents a potentially huge shift in the status quo in financial services: this short report provides an overview of this shift. STL Partners will follow up with a report that considers options for telecoms operators, and makes some strategic recommendations.

 

  • Executive Summary
  • Introduction
  • Disrupting the Financial Services Industry
  • Defining fintech
  • Why fintech’s time has come
  • The state of the ecosystem: investment is accelerating
  • Key Capabilities and Service Areas
  • Fintech specific capabilities: doing the same, but differently
  • Fintech service areas: Diverse and developing
  • The Future of Fintech
  • Growth ahead
  • …but there are uncertainties around the future evolution
  • The uncertainties could still play out well for start-ups
  • Conclusion and Outlook

 

  • Figure 1: Google Trends search on ‘fintech’, 2011 – 2016
  • Figure 2: Fintech companies are disrupting financial services
  • Figure 3: Global Investment in Fintech
  • Figure 4: VC-backed Investment in Fintech, by Region
  • Figure 5: A framework for understanding fintech
  • Figure 6: Fintech start-ups within each service area