Can telecoms cut through the blockchain hype?

The federal government said Friday it is “experimenting” with blockchain technology to create a public record of grants and contributions — an announcement that followed what seems to be a growing amount of hype over blockchain in the past year. The technology that underpins surging digital currencies is being adopted by various companies, who have bought in and begun developing blockchain applications for uses beyond its original financial industry roots. Telecoms are no exception, according to Dean Bubley, a U.K.-based independent tech analyst. He said in a phone interview with The Wire Report that he sees two different ways for telecoms to implement blockchain. “One is internal: to improve efficiency within a company or between companies. Whether that's more efficiency because of distributed databases, it might be removing costly or complex central authorities. It might be providing trust and data integrity for something,” he explained. “The other is externally. Where blockchain, in one form or another, allows the telecom company to offer new services or improvements to existing ones.” Created to solve a perceived problem found in the need for trusted third parties, the blockchain is a way to link a series of data points (the blocks of the blockchain) that is immutable — effectively impervious to spoofing or change. Blockchains are also designed to be completely open, with every change to the dataset available to track or audit. The technology was developed by members of a group who called themselves cypherpunks. Because of their privacy-centric worldview, they wanted to create frameworks that could operate without a central authority, according to a history of cypherpunks on the bitcoin news site Coindesk. Created in the mid-2000s, one of the successful frameworks was the blockchain — a catchier name for a cryptographically confirmed, decentralized ledger. In essence, by leveraging a network of computers, all solving the same set of complex mathematical problems, you can create a consensus among them. That consensus agrees upon a list of data points which can’t be forged by an outside source. That’s the basis of how the cryptocurrency bitcoin is said to have value. No individual or outside group can claim they have been sent a million bitcoin when the networked computers disagree with that assertion. The blockchain’s cryptographic processes are the same as ones used to obscure passwords or encrypt communications. They’re too complex to be spoofed or faked, and as such the data found on the network can be verified and audited. As a result, the blockchain offers a transparent and open way to store data that can’t be changed. When it comes to systems that require trust between multiple parties, such as banks, one side will always be vulnerable due to the potential of another betraying that trust, whether through a genuine mistake or deliberate fraud. Blockchain proponents say that a “trust-less” system removes that chance by being independently verifiable no matter who is looking at it. In a report for Juniper Research last year, Bubley wrote that there are hundreds of “trust points” in the telecom industry, “and the number is increasing.” Bubley noted these trust-points require “immutable (non-changeable) records, and different models of shared/distributed data ownership and read/write privileges,” two features which are baked into the blockchain’s design. These trust points could include privacy protection for users’ data, service level agreements at the wholesale level, authenticating SIM cards to ensure no-one can spoof them, and management of users’ plans. While it doesn’t necessarily make sense to use blockchain for every application it could theoretically be used for, some basic examples of where Bubley thinks telecoms could leverage it include phone number registries (a blockchain database could track ownership of phone numbers in real time), or to reconcile international calling minutes between networks on a shared ledger, instead of the current system of individual databases. Still, he admitted the blockchain is unlikely to replace existing processes in some cases. For example, he said he doesn’t expect any telecom to start accepting cryptocurrency, with its wild swings in value. What’s more a likely scenario is a wide set of implementations in the industries telecoms are vying to enter, such as health, where encrypted records could be kept on a blockchain database, he said in his report for Juniper. Deloitte Touche Tohmatsu Ltd. released a report in 2016 that outlined four different blockchain use cases in the telecom industry — fraud prevention, identity-as-a-service sold to third parties, Internet of Things (IoT) organization and 5G connectivity. The report suggested that to reduce fraud, a blockchain could assign cryptographic keys to individual subscribers to verify that they’re the only ones using a specific International Mobile Subscriber Identity (IMSI) number. For 5G connectivity, it proposed each node in a next generation mobile network could be part of a blockchain network. As the foundation of 5G technology promises connections through a myriad of network types, telecoms could use blockchain to accurately track and measure use of each of those networks for appropriate billing. Identity-as-a-service could be a revenue opportunity for telecoms, in which they provide a way to elevate identity-related documents, such as degrees and certifications, by using a blockchain to provide digital copies records in verifiable database. In IoT, an example of a potential use would be for a large number of connected devices in, say, a manufacturing plant to authenticate themselves as part of the system through a blockchain-backed network, Deloitte outlined. According to website Telecom Tech News, companies like Orange S.A., Telstra Corp. Ltd., and Verizon Communications Inc. have invested in and begun pursuing blockchain projects. However, in Canada, telecoms are more tight-lipped. No Canadian carrier responded to Wire Report inquiries about whether they had started investigating blockchain products — but that’s not to say Canadian companies aren’t getting in on the action. Earlier this month, Wind Mobile (now Freedom Mobile after being acquired by Shaw Communications Inc.) founder Anthony Lacavera announced a project that will combine blockchain technology developed by Lacavera with artificial intelligence (AI) analytics to “track and verify accurate breaking news monitored from data feeds, social media and trusted journalism sources,” according to a press release. Meanwhile, the Canadian Media Fund (CMF) announced it will use a blockchain-based system to track royalty payments to content rights holders. But there are people who are skeptical of the approach. One of those is designer Jackson Palmer, who rose to fame because he invented the cryptocurrency Dogecoin — as a lark. The currency exploded in price at the end of 2017. When it exceeded a $1 billion market cap this month, Palmer expressed chagrin to Coindesk that his joke invention was taken far too seriously. Four days after that article was published, it hit $2 billion. He views this approach to fitting blockchain into every industry much in the same light. He recommended any company looking to implement a blockchain system be skeptical about claims of new efficiencies and cost savings. “A fundamental misconception about cryptocurrency and blockchain, is that it’s somehow cost reducing. It's not. You're paying a premium for the trustless benefit,” Palmer told The Wire Report in a phone interview. There is an opportunity for telecoms to upgrade their data storage techniques, Palmer said, but shoehorning blockchain into the equation, when another option works as well or better, isn’t necessarily useful. Palmer pointed out that performing the cryptographic calculations to maintain consensus is inefficient by design. If they were not impossibly complex, time and energy consuming calculations, they wouldn’t work very well to hide passwords or protect coded communications. “ can never be as efficient as one server that’s sitting in an warehouse,” said Palmer. “As soon as you go to having trustless decentralization you're inherently inserting inefficiencies.” CORRECTION: This story has been updated to reflect that Dean Bubley is U.K.-based, not U.S.-based. — With reporting by Bryson Masse at bmasse@thewirereport.ca and editing by Anja Karadeglija at akarad@thewirereport.ca

Can telecoms cut through the blockchain hype?

News | January 19, 2018

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Can telecoms cut through the blockchain hype?

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