Could blockchain disrupt the telecoms industry?

Profile picture for user ddpreez By Derek du Preez November 28, 2016
Analyst Dean Bubley discusses at Nexterday North this week how the role of a telecoms provider could be helped by blockchain technology.

Much effort has been put into discussing the pros and cons of blockchain, especially with regards to how it relates to financial services companies. Not only in terms of the potential of Bitcoin, but a lot of banks and financial services companies have been investing in their own private blockchain ledgers.

And the outcomes aren’t guaranteed - whilst some praise blockchain as the answer to all the problems that a traditional database presents, others point to concerns around creating a ledger that can’t be amended and the outrageous energy consumption.

However, one of the main benefits of blockchain is that it is particularly good at creating trust. My colleague Jon Reed highlighted this recently - given the nature of a blockchain is that it’s a public ledger that contains a distributed, historical ledger of all previous activity - it’s very good at ‘verifying’.

And this could be vary handy to industries outside of the financial services sector - according to analyst Dean Bubley, who was speaking at Nexterday North this week in Helsinki, the ‘anti-seminar’ event hosted by Comptel.

Bubley was specifically talking about how this network of trust could be applied to the telecoms industry, where there are likely to be examples of how telecoms providers could use blockchain to improve their data integrity. Bubley said:

Trust is one of those words that everyone and no one knows the meaning. It occurs in our day to day existence, when we hand over money, when we hand over a piece of paper, or a credit card, and expecting that the person we hand it to trusts us and trusts our bank and all the other intermediaries in the middle to actually give them usable funds.

This occurs in the telecoms industry in many, many ways. If you think about it, we trust that the person or the number that we dial, is who we expect it to be. We expect that when we port a number between one operator and the other, that it works. The telecoms industry also trusts its customers, in so far as they can do a credit check on anyone. The network trusts SIM, that’s the authentic device and end point that is permitted to use the network.

Going forward, the industry has a whole set of technologies and reasons to need trust itself. And its suppliers and its customers and lots of new intermediaries.

Being the intermediary

Bubley rightly highlights that telecoms providers are essentially intermediaries - which connect people and things to each other. He said that this relies on databases, registries, third parties - none of which is cheap. He said:

Trust is something that is more central to the telecoms industry than you might expect. They’re intermediaries - that act of interconnection, even if it’s on the same network, requires databases, requires back-office systems, requires provision of third party services. All of that can be improved.

Midsection view of students sitting on steps using smartphones © kalim - Fotolia
Bubley agues that the telecoms industry “needs to step it up” and that there are a number of areas where blockchain could be applied to improve trust and process. One area he believes has broad ranging consequences is data integrity.

He explained that there are a lot of requirements on telecoms providers to prove that data hasn’t been tampered with - an idea that is central to blockchain. Bubley said:

The one that I think is the sweet spot in the short, one to three year time frame, is data integrity. I think that this is going to be one of those areas where having an easier way to encrypt, and register and authenticate will be important.

We’re used to thinking about encryption, preventing hacking - we don’t think so much about how we ensure that things that things don’t get changed. For example, one of the operators I was talking to recently was talking about law enforcement, and they were saying they could get a request for call records about someone from the police force - how do we prove that the call detail records are actually the same as the ones that came out the back of our network? What is the chain of custody? What is the audit trail for call detail records?

The same could be true for the Internet-of-Things. How do you know that the data that comes off the sensor, which is perhaps stored offline and then transmitted the next day, is actually genuine and hasn’t changed en-route or been intercepted.

Fraud - this has got a really interesting set of implications as we go to artificial intelligence and speech as an interface. How do you know that the speech that you are hearing or the one that is getting record is actually what went into the microphone or came across the wire? How do you verify and validate that the words haven’t changed or the images haven’t changed?

Other points

However, despite highlighting this use case for the telecoms industry, Bubley isn’t one of the people claiming that blockchain is going to solve all problems. He points to the unbelievable power usage required to run a distributed ledger, and the challenges of scaling. Bubley warned that organisations should consider specific use cases for blockchain, rather than try and apply it everywhere. He said:

If you go on the internet and look at blockchain, a lot of them are science fiction. There’s a lot about ‘this will completely change the nature of society’. It may do, but it is by far uncertain. What is certain is that there are multiple intermediate steps.

But while blockchain is interesting, we will see some pilots over the next 12 to 18 months, it’s not going to be a panacea. When you hear people say ‘blockchain is the most important technology since the internet’ - be sceptical.

Image credit - Digital safety blue concept © Sergey Nivens - view of students sitting on steps using smartphones © kalim - Fotolia