How To Energize Blockchain's New CSP Business Options For Success

Julie Stoughton

The communication service provider (CSP) industry is evolving. It’s already at the forefront of data, networking, and telephone communications, but as digitization rolls forward, new technology and business models are appearing. One of these technologies that CSPs are starting to use is blockchain. About 39% of telecom operators are strongly considering investing in blockchain in the future. But what is it exactly? How can you use it to explore new business opportunities? Here’s a quick look at how to apply blockchain for your company’s success.

But isn’t blockchain for banks and credit unions?

Blockchain was originally designed for financial institutions and was also used for cryptocurrencies such as Bitcoin. The ledgers it created were automatically notarized, which created a high level of security. Blockchain automatically timestamps each entry and creates a link to a prior block, which makes the system very hard to tamper with. It can also be privately or publicly hosted.

But what does that mean for the real world? It means a private business network can be used by a brokerage firm, allowing individuals at the firm to access information while protecting it against outsiders. At the same time, blockchain can be publicly hosted for bank customers, enabling them to access their accounts anytime, even when the bank is closed. It’s already used by 80% of financial businesses, and within eight years it is expected to be the main platform used in financial services.

Blockchain’s potential for CSP services

In the same way blockchain has changed the financial sector, it can change the telecom industry. Today’s CSP has to deal with a range of inter-operators, currencies, and agreements. In a survey of telecom operators, 68% felt blockchain would be disruptive to telecoms. But with that disruption comes new opportunities. Blockchain supports innovative business models for new companies that disrupt the market.

Studies have shown that early adopters of new technology are seeing strong growth. Telecoms that are avoiding digitizing are losing ground. Blockchain has great potential for telecoms looking to succeed in the new economy. Using blockchain with new business models makes CSPs flexible and agile, able to more easily respond to change and disruption in the telecom market.

How to energize blockchain’s new CSP business options

Today’s communications are mobile. It doesn’t matter whether it’s text, email, phone, or data, as more users become mobile, the telecom system becomes more complex. CSPs have to have agreements and manage payments with other CSP companies. This can lead to a mountain of paperwork, which also creates a lot of costs as that paperwork is processed. Blockchain has the capability to simplify the process.

Let’s use Bitcoin as an example. Bitcoin is international, doesn’t have a specific bank, and isn’t tied to any government currency. It’s also easy to transfer, provides privacy to customers, and isn’t regulated. It doesn’t have to be transferred from one currency to another to determine value. In the same way, blockchain-based CSPs don’t have to change currencies to pay for roaming customers. Bitcoin isn’t regulated, so it doesn’t require a new agreement every time a transaction happens. Blockchain CSPs have smart agreements in place that don’t require additional work as a customer roams. This helps improve connectivity.

Possible opportunities for CSPs using blockchain

Because blockchain creates a direct connection from customer to CSP, the need for inter-operators is reduced or eliminated. This helps lower overall costs for the CSP, which can then offer lower rates to customers while enjoying higher profits. Nearly instant information exchange keeps billing up to date. CSPs know exactly where they stand financially.

Blockchain offers better security. Smart contracts allow CSPs to almost instantly verify subscriber ID, making it much easier to provide permission for them to use a visited operator’s services. It cuts down on fraud and scamming when customers are in a roaming area. CSPs and their customers are better protected by blockchain.

In the prepaid market, blockchain can instantly update balances so both the CSP and the customer know exactly where they stand. In both prepaid and postpaid markets, this can lower the cost of ownership on what has typically been an expensive infrastructure. New markets can be opened for CSPs that were too expensive in the past.

When a CSP uses blockchain to improve operations, it creates new partnership possibilities. In addition, by lowering the cost of operations, it opens opportunities in B2B and B2C revenues as well as Internet of Things and smart cities technologies.

Blockchain’s new platforms provide new opportunities for CSPs. New business models mean you have more opportunity for new growth in your company.

Learn how to bring new technologies and services together to power digital transformation by downloading The Future Services Sector: Connected Services for Continuous Delivery.

Julie Stoughton

About Julie Stoughton

Julie Stoughton is the Head of Telecommunications Marketing & Communications at SAP. She is a seasoned professional with 16 years of marketing and product marketing experience in software and media technologies. Julie's specialties include strategic market development, positioning and messaging, customer segmentation, product launches, ROI analysis, and go-to-market execution.