Hugo Feiler, CEO at Minima, explains how blockchain might solve the problems of high demand and reduced margins that 5G will present for the telecommunications industry.

Since Antonio Meucci created the first telephone in 1849, communication technology has revolutionised our way of life. In recent years, telecoms operators have faced increasing difficulties with smaller margins and increasing costs while operating in a global, highly competitive, marketplace.

At Minima, we wanted to understand how and indeed if, blockchain-based decentralised products such as ours could improve aspects of the telecoms architecture as we move to a 5G-enabled world. From detailed conversations with telecoms providers, we found that the issues they face are primarily around three key factors:

  • The first, is complexity - in all aspects of the business, from key architecture through to service offerings.
  • The second, is trust - between users and providers and between providers in terms of cross-network roaming.
  • The third, is exponential growth.

Decreased margins and increased costs

During our investigations, we found there is a range of benefits for telecoms in a decentralised, complete and highly secure tokenised blockchain protocol. Let’s start by looking at 5G and the effect that is likely to have on the telecoms providers.

One of the biggest industries to be enhanced by 5G, is the internet of things (IoT). Aside from the benefits of IoT devices, the risk to the operators is exponential growth affecting systems that are not able to scale at speed.

If we look at a household of two parents and two children, they might have a landline with a data service, four mobile phones, maybe a couple of sim-enabled tablets or laptops. But that's all. Any other ‘smart devices’ normally connect through the household WiFi.

Now imagine a 5G IoT era

Every home appliance can have its own 5G connection to send data. Every lightbulb or device connected to the mains power can send information to be logged. Every car can have built-in service tracking information: from fuel consumption through to road conditions. Every street-light and traffic light can have a 5G data connection. Every electronic device with power, be it mains or battery, has the potential to become an IoT device.

This has the potential to create massive load on the providers as, not only are they logging usage and billing hundreds of thousands of extra devices, they now have to find margins in tiny data events.

Telecoms also run the risk of decreasing their current userbase in areas with essential margins, such as home phones and internet. Just as mobiles killed the home phone, 5G could kill the home internet.

How 5G will change things

5G does not create new issues. Instead, it exacerbates existing issues, bringing to the fore any existing fragility in architecture.

The complexity issue is one that plagues any technical service which has been running for a long time. You start with ‘system A’ but want to swap to ‘system B’, which doesn't quite do everything. So, A is left partially live and a developer maps the two together. ‘System C’ is added covering part of A and B's functions, so three systems are now live. Then ‘system D’ is added to pull collective data from the others to display in a single place.

The longer the systems run, the more complexity is added, the more specialist staff are needed and the harder it is to validate data or to make fixes - particularly in a telecoms network where extended downtime is not an option.

Roaming adds to the complication

Then add into the mix that telecoms do not operate in isolation - customers roam. So, ‘network X’ needs to communicate with ‘network Y’. They share data, prove roaming usage and agree on charges, often in different currencies. All through multiple different systems and versions, for thousands of users and usage records, while using third parties to ensure data accuracy.

Finally, this all needs hiding from the end-user who wants a simple process for using their device and checking their billing, while being visible to customer-facing staff to check customer queries.

So how does trust create issues?

Quite simply, the lack of trust in the systems by customers and between providers creates layers of authority. This brings additional costs and more complexity.

For example, a phone makes a data connection. It's a fairly simple process for the user but can create confusion. How does the usage itemisation show to the user? Does it timestamp at the start of the session or the end? Does the session auto-break at fixed times? Reserved balances can also show as used or available at different times.

Different ways of doing things creates confusion and distrust in the user when they view their billing information, resulting in a high volume of queries and time spent by staff to resolve. It also means more time onboarding staff to deal with queries effectively.

Complexity leads to greater distrust

Complexity in a system also results in inaccuracy, which in turn creates more distrust. One system might total to five decimal places then round afterwards, whereas another may do the opposite. Most of the time these give the same figure; occasionally they create minor differences showing in different locations.

In the area of cross-network usage, the trust issues are more pronounced, as is the resulting complexity. Multiple trusted agencies charge for validating data passed between operators. Due to the volume of usage, there are also financial issues. For example, currency transfers might use a fixed monthly exchange rate.

Again, the result for the operator is often decreased margins and increased costs.

How can blockchains solve these issues?

Well, the short answer is, this current blockchain generation can't. Telecoms don't need to fix a couple of problems while adding more complexity, they need complete solutions they can trust to work long-term.

Scalability and the ability to transact tokens and micro-payments at high speed, while using live data, will be essential to the IoT services that telecoms will support.

In the future, the volume of 5G IoT devices being added will no longer be a challenge or a risk and will require minimal overhead, potentially handing full management via tokenisation to the end-user who controls the devices.

Being complete from launch - to act as long-term solutions - so telecoms can be happy they won't have to relearn or overhaul their architecture in a few years, is vital. At the same time, they will have the flexibility to adapt to varied requirements.

They will create a single accurate source of data that anyone with correct permissions can view, reducing confusion and errors, built with UX that lets anyone pick up and use them without detailed technical knowledge.

Tokenised blockchain solutions will give telecoms operators increased flexibility and ease to create tariffs and service packages faster for their users. This includes end-users being able to transfer service allowances between each other, an in-demand service that is highly difficult to set up and manage, currently.

Most importantly, blockchain solutions will create trust in the system rather than the people who run it. Telecoms staff will see the same base data as the user, but with additional access as required. Customers will also have much clearer live information, without complex back end calculations occurring on-the-fly from the operator to show it to them.

An auditor can be given the correct access level and can easily query the data themselves, without having support staff talk them through it and, should they have queries, the staff will be looking at the exact same data. They will also have confidence that the data present in the blockchain has never been altered since it was entered.

How to get back the trust

Truly decentralised systems, like Minima, have the trust baked into the systems - a feature that is currently missing for telecoms technology stacks.

Decentralised systems give customers trust in what they are being charged for and give telecoms trust that they are billing for all usage on their network. They also give trust in the ‘smart contracts’ billing cross-network usage, allowing for seamless and live roaming charging.

Telecommunications is not the only great use case for the next generation of blockchain-enabled protocols: any business where data and systems need high levels of accuracy and security will benefit.

Telecoms is a key area to watch

Not only do the telecoms benefit, but the decentralised solutions can also gain a large number of nodes, creating the levels of security and trust needed to work. This avoids the need for centralised control nodes or ‘temporary’ fixes to try and ensure security until they have enough real user nodes.

We wanted a detailed understanding of the telecoms issues and how our protocol (a decentralised permissionless main-chain matched with permissioned side-chains for custom tokens) could help resolve them. We recently ran a successful proof-of-concept with Manx Telecom, to prove we can solve many of these issues and gain more insight into exactly how blockchains will assist telecoms.

The next generation of blockchain technology is coming and it will be a technology that helps telecoms to solve a number of their looming issues. We have proven there are numerous benefits of implementing the technology, both to the operator and the end-user, in terms of decreased costs, reduced complexity and improved ease of use. At Minima, our goal is to ensure the telecoms industry and its customers get to enjoy those benefits.