Blockchain technology in telecoms looks to grow even further

Blockchain technology

The Blockchain technology Market in the Telecom Industry was valued at $157.9 million in 2020 and is expected to reach $2759.8 million by 2026, registering a CAGR of approximately 61.45 percent over the forecast period (2021 – 2026).

The onset of the pandemic has highlighted the criticality of telecom infrastructure. The global health emergency is placing new pressures on telecom services and suggesting a key role they can play beyond simple connectivity in emergency scenarios such as this.

Beyond the coronavirus pandemic, the world is expected to see substantial interest in new fintech services as the growing demand for virtual and online services continues to build. Within the telecommunications industry, the pandemic is driving the need for expanding digital infrastructure and data-driven services. Telecom companies are now increasingly focused on network resiliency and reliability, particularly in 5G investments.

Increasing adoption of 5G is a catalyst for blockchain implementation in telecom, as 5G is helping in quick and reliable blockchain operation.

Blockchain technology provides strong encryption to record and store the data on the network in a more secure and verifiable way. It makes the information transparent and tamper-proof.

Blockchain technology is expected to help various telecom companies boost their network security and reduce their operational costs.

Telecommunications or telecom fraud is a fast-growing field of criminal activity. According to Europol’s European Cybercrime Centre and Trend Micro, telecom fraud costs $32.7 billion annually to the world.

It represents a new challenge for law enforcement agencies. Blockchain can help in fraud detection and prevention for communication service providers.

Scalability and interoperability are the factors necessary for blockchain adoption. This is only possible when industry standards are set, which is at a lagging phase right now. The Telecom sector is struggling with mass adoption of blockchain technology.

Key Market Trends

Smart Contract to Dominate the Market

Smart contracts allow computer code to execute on its own when specific conditions are met. In the telecom industry, it is expected to witness significant adoption as it provides scope for automation in its internal operations, like billing, supply chain management, and roaming.

Deploying smart contracts to manage all of the billing related to roaming can lead to significant cost savings, as it provides prevention against fraudulent traffic. Blockchain can also add value to identity management solutions, as it can cut out intermediaries through smart contracts.

This helps in the reduction of roaming frauds, cost savings, and instant settlements. It helps telecom players to resolve disputes quickly through tamper-proof verifiable transactions and real-time updates to end customers.

Currently, transactions within the telcos ledgers go through a clearinghouse to be authenticated. However, the adoption of smart contracts can automate this process leading to the elimination of post-processing, which saves time for the companies. Furthermore, in doing so, telcos also save money by spending less on auditing and accounting as the process is automated.

Asia Pacific to Witness the Highest Growth

The region boasts tremendous potential for the market, primarily owing to the growing prominence of mobile payments in countries, such as India and China. India, specifically after the demonetization scheme, has been witnessing a lot of telecom operators shifting toward this model.

For instance, Jio and Airtel, the country’s leading telcos, offer their digital wallets to enable customer-to-customer payments. Thus, the adoption of blockchain to handle the transactions by these companies could make their wallets more secure and cheaper.

China Mobile, China Telecom, and China Unicom have joined the CAICT’s Trusted Blockchain Initiative, which will use blockchain to bolster operations and security in the industry. The companies are expected to focus on blockchain-based apps that relate to IoT data sharing and customer identity verification.

Further, as the world is currently embroiled in privacy debate over WhatsApp’s policy changes, India’s communication platform as a service (CPaaS) industry has been gearing up for the adoption of end-to-end encryption of commercial mobile SMSes, emails, and all other types of business communication between the enterprises and service providers.