Blockchain: Coming soon to a cellphone near you
MTN and Vodacom are testing to see how the bitcoin backbone can cut both fraud and costs
Mobile operators including Vodacom and MTN are testing blockchain technology to see how it can be used to improve processes such as number porting and inter-carrier settlements.
Blockchain, the shared-records system based on distributed ledger technology, is best known for its role as the backbone of cryptocurrencies such as bitcoin.
Interest in the technology is quickly growing, though different industries are still coming to terms with the best use cases.
Both Vodacom and MTN, South Africa’s two largest mobile operators, said they were investigating a number of potential use cases for blockchain.An MTN spokesperson, who asked not to be named, said the mobile operator was seeing how it could use the technology to automate roaming transactions using smart contracts, to make number porting faster and more efficient, and for automated inter-carrier settlements.
Advisory and investment firm Delta Partners said in a report that blockchain could replace “the expensive mediation of clearing houses” for international voice settlements.
Operators could also access centralised databases so that a customer could instantly port their number from one service provider to another, while the technology could replace manual inter-carrier voice settlement processes, among numerous other use cases.
Delta Partners said telecommunications operators should work together to experiment with the technology, and should conduct inter-carrier trials. Operators could also partner with or invest in blockchain startups or technology giants to experiment with the technology.“They have an opportunity to not only improve their operations and the industry but also to help modernise other sectors and create benefits for the whole economy,” the firm said.
MTN’s technology unit was evaluating some potential applications “from a strategic perspective”, the company’s spokesperson said. Other “fringe use-cases” were being explored within the innovation unit as means to get “intimately familiar with the technology so that we’re able to distill the hype from the true potential”.
But a Vodacom spokesperson said to fully deploy a blockchain system, multiple parties would need to buy into the concept to form an ecosystem.
“We believe that this will be more challenging than deploying the underlying technology itself,” the person said. “We will continue to evaluate relevant projects and opportunities on an ongoing basis, especially as the technology matures.”
Delta Partners said in its report that while blockchain could have a “significant impact” on telecommunications operators, “the question is how they can capitalise on this technology”.
Craig Nel, Oracle’s mobile and cognitive experience leader for the Middle East, Africa and Turkey, said blockchain was now “top of the most widely-discussed and hyped technologies in recent times”.
Nel said while industry standards would take several years to finalise, telecommunications companies should be investigating blockchain’s applications to avoid “disruptive surprises or missed opportunities”.One potential opportunity was in fraud detection and prevention.
“Given that the telecoms industry has not yet found a way to effectively and sustainably prevent fraud, blockchain is, in principle, a good contender for significantly decreasing the cost of fraud in, for example, roaming and identity management,” he said.
The technology could also open up new revenue streams. For instance, operators could provide “identity-as-a-service” or verification services.
“At the moment, every time a person wants to sign up at a vendor, they need to prove their identity and credentials using physical or digital documents. A blockchain can be used as the shared ledger that stores identity transactions,” Nel said.
Danny Allan, vice president of product strategy at Veeam, said other applications included data usage tracking, call tracking, and location tracking.
“The primary value of blockchain will be to provide attestation or auditability around factors in the mobile industry, and we’ll see innovations blossom from there,” Allan said.
In other sectors, blockchain is already starting to take hold.
Some experts say the technology could help to solve SA’s food safety issues, citing the recent listeriosis outbreak that affected Tiger Brands.
Blockchain is being used in other markets to track food products from farms, through supply chains and onto retailers’ shelves. That means a contaminated product’s origins can be traced within seconds.