Why telcos must ring in blockchain tech

That telecom companies in India are under financial strain is no secret. With continued aggressive pricing by the new entrant, there has indeed been heavy disruption. In order to grow at a sustained rate, the telcos are under pressure to introduce enhanced systems and technologies while maintaining cost-efficiency.

One of the important technologies being examined across the world is blockchain. And leading from the front is TRAI (Telecom Regulatory Association of India), which recently proposed the use of blockchain technology to curb and eventually prevent pesky telemarketing calls.

Telcos are pushing back on this due to high investment costs. They, per se , are not questioning the efficacy of blockchain technology. In fact, telcos have reportedly initiated evaluation processes. Vodafone India, for instance, is already at the proof of concept (PoC) stage with blockchain technology, working with IBM, while Airtel is believed to be currently involved in initial trials. Jio is also reportedly using start-up accelerator JioGenNext to bring blockchain-related start-ups on board for development.

However, as with most new technologies of promise, there is a certain degree of hype and the path of adoption, according to experts, is unlikely to smooth. Currently, the maximum possible speed of processing on blockchain is 6-7 transactions per second; this adds to the cost.

According to Huawei India, there are major technical barriers to entry, and moving blockchains beyond the proof-of-concept stage will require major industry players to support many types of usage over the public network, in collaboration with private entities and government regulators.

Notwithstanding the initial difficulties, it is well worth evaluating blockchain in the areas of subscriber verification, fraud management and roaming. The chief feature of blockchains is decentralised management, which could be leveraged in telecom applications where centralised controls have not been successful.

Identity management

Blockchain can optimise ID management through instantaneous and automated processes based on smart contracts. It can be used as a shared ledger that helps in storing identities. The telco can then provide identity-as-a-service to partners (for example, travel agencies and e-commerce sites), thus allowing for additional revenue generation by negotiating appropriate agreements.

These can be incorporated by Indian telcos so that we have a trustworthy source of network wherein unlimited amount of data can be stored without getting tampered. The common perception is that data stored on blockchains are public. This is only partially correct as usage determines the kind of blockchain required (public, private or consortium). Private information on a blockchain system cannot be tampered with as every transaction creates a hash (a unique cryptographic fingerprint to each block). And since it’s a decentralised system, any manipulations would ring an alarm to all the users in the blockchain.

As illustrated in Figure 1, blockchain can be used as the shared ledger that stores identity transactions. The TSP (telecom service provider) can earn additional revenue by providing identity-as-a-service to partners, which are mutually beneficial. When a subscriber opens an account with a TSP, the TSP creates a digital identity using blockchain tech.

The private key associated with this identity is stored safely on the eSIM. The TSP creates a virtual identity, using the public key from the digital identity, and adds the standard details like name, address, etc. It then adds a digital signature using its own private key. All the information regarding this virtual identity is then added to the blockchain.

During any transaction, all suppliers require the identity of the consumers. The same can be achieved using the aforementioned blockchain system. After attaining the virtual identity of the subscribers, the supplier (say, an e-commerce site) then looks to check the authenticity of the virtual identity, so its app takes the public key from the virtual identity, encrypts a challenge and sends it to the TSP app which decrypts it (because it has the associated private key). To complete the process, the e-comm site generates an e-commerce virtual identity which is then stored in the ledger. Figure 2 depicts a simple five-step process through which user IDs can be authenticated through blockchain. This would eliminate customers’ need to sign up at every vendor to prove their identity and credentials using physical or digital documents.

Data management

Another important use of blockchain tech can be in data management. Educational institutions issue certificates and degrees to their students to signal the completion of a course. The current system of managing certificates is slow, unreliable, and disjointed. For example, at the University of Delhi, it takes minimum two years to get the official degree. As a consequence, students often face difficulties while applying for higher studies and jobs. With the help of blockchain, data can be managed, stored and shared safely. If all the data get stored in the cloud, handing out official degrees after the completion of the course is a possibility.

In the current system, a large number of students get fake certificates from third parties. This leads to employers calling the university to verify if the certificate is valid. Such a tedious and long process can be replaced by using blockchain, where the TSPs can provide blockchain-based identity verification, data management and storage services to both private clients and subscribers.

For instance, an ideal situation would be where the educational institution ties up with the TSP to digitise and store student certificates on the blockchain. For the students and alumni who wish to be part of this process, their identity and degree certificates are verified by the university through internal processes, and the university then hands out the digital copy of that certificate (that carries course name, date of issue, etc) to the graduate.

If a prospective employer wishes to verify the certificate, the employee only needs to produce the digital certificate available on the blockchain.

A similar process can be followed in other fields where t he TSP can further benefit by extending related authentication services to corporate clients for all types of documents, such as insurance certificates, airline tickets and hotel reservations, where digital storage and verification may be required.

Due to the decentralised system of blockchain, every participant in the blockchain system has a copy of all the list of transactions. Every action is transparent and hence prevents any tampering and revisions.

India should not be a laggard in the use of this new technology. With its IT prowess, it could actually help fine-tune the tech and be a leader in this field.

The author is Hon.Fellow of IET (London) and President of Broadband India Forum. The views are personal.