Blockchain in the Telecommunications Market

2 min read

In an ever-increasing world of technological advances, the telecommunications market has been slow to adopt blockchain technology.  Smart contracts based on blockchain platforms have been employed to fund many technological sectors including IT start-ups, music, VPNs, etc. This type of business model solves several problems for telecom companies, especially international and rural-based, by automating instantaneous payments, building trust through proof of concept/work and a decentralized platform that is less susceptible to individual attacks and fraudulent transactions.  

The main advantages of this business model are that it is decentralized and robust which builds trust, at the expense of confidentiality and processing performance. Each participant in the network verifies transactions. Cryptographic technology along with network consensus is then used to validate the transactions. Therefore, trust is required from a central authority or auditor but is continuous within the network.

Blockchain enables complex datasets across multiple parties in real-time with high trust and security, particularly establishing subscriber identity.  Blockchain-based platforms can then easily enable authentication across devices and organizations by using the decentralized blockchain principle with identity verification.  Through standardization and process simplification, blockchain technology will support a variety of BSS/OSS processes allowing for number portability between providers, billing for both contract and prepaid accounts and for activating mobile services on an existing network.

Smart contracts are computer protocols designed to facilitate, verify and/or enforce legally binding contracts between two or more parties. They run on blockchain node networks which are beyond the control of the contracted parties, assuring contract execution as written once the performance begins.  The objective is to provide security over the execution of the terms of a contract which is superior to, and less costly than conventional legal agreements. From a financial standpoint, the advantages of a smart contract include minimized counterparty risk, almost instantaneous, and as often as daily, settlement times and increased transparency. Payment streams are effectively and securely automated, thus benefiting of all the parties involved.

The ITW Global Leaders Forum announced the launch of a special purpose vehicle to develop a live, blockchain-based platform, which will revolutionize the ICT Service Provider industry’s commercial settlement infrastructure. This move creates an opportunity that is potentially worth billions in the form of cost savings and revenues of products and services.  The Communications Blockchain Network (CBN) already has the following carrier members agreeing to support the creation of the proposed platform: A1 Telekom Austria, China Telecom Global, Colt Technology Services, Deutsche Telekom Global Carrier, IDT, Orange, PCCW Global, Tata Communications, Telefonica, Telstra and TNZI.

Furthermore, several Telecom funding companies have begun to include blockchain technologies into their business model.  By connecting with business such as Carriox Capital, TessPay,, and others funding, and payments can be made and received instantaneously removing the need for an independent third-party audit system which can take time to issue final payments.


These capital funding groups create and execute smart contracts after the individual company submits the necessary documents, due diligence is performed by the funding company.  Once the legal step is confirmed, the funding organization will execute transactions and funding. Allowing smaller carriers to fund their operations without having to spend too much time in the red, thus damaging their creditworthiness.

As blockchain technology advances, it is clear that it can play a vital role in the creation and execution of smart contracts in the telecom market sector.  With a variety of funding companies and carriers already creating the foundations for such ventures, the short-term future looks to be a period of building and proof of concept testing.  Should the smart contract model develop efficiently, and the network resources remain stable enough, the uptake in the use of smart contracts to fund the market could prove to be a very profitable endeavor for all those involved.  As this is an emerging technology, due diligence is required by all parties involved to maintain trust in the system.

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