Blockchain in Telecommunications
Blockchain in Telecommunications
Volume 8 Issue 6, Nov-Dec 2024 Available Online: www.ijtsrd.com e-ISSN: 2456 – 6470
Blockchain in Telecommunications
Matthew N. O. Sadiku1, Paul A. Adekunte2, Janet O. Sadiku3
1
Roy G. Perry College of Engineering, Prairie View A&M University, Prairie View, TX, USA
2
International Institute of Professional Security, Lagos, Nigeria
3
Juliana King University, Houston, TX, USA
INTRODUCTION
Recently, modern technologies have aided business industry is noted for its complexity, as shown in
titans in deciding to use digital currency rather than Figure 2 [2]. Telecom industry today has the most
conventional trade in order to avoid fraud. Blockchain complex operations framework, involving many
is a shared ledger that is replicated across users in a partners, vendors, customers, distributors, network
particular network. It enables the existence of Bitcoin providers, and VAS providers. The acceptance of
and many other cryptocurrencies. We all associate blockchain in telecom is a requirement in the digital
blockchain with Bitcoins. A cryptocurrency refers to era. Its transformative potential is reshaping the
a digital asset that works as a medium of exchange industry, promising a future of enhanced connectivity
between various business organizations. Blockchain and seamless operations. By adopting blockchain
technology has gained significant popularity in technology, companies like China Mobile, Deutsche
various industries, including finance, healthcare, and Telekom, SK Telecom, Telstra, and Vodafone
supply chain management. Figure 1 shows the symbol prioritize your security, transparency, and overall
of blockchain [1]. satisfaction.
Originally synonymous with cryptocurrencies, WHAT IS BLOCKCHAIN?
blockchain has transcended its financial roots to Blockchain, a type of distributed digital ledger
permeate various industries, promising enhanced technology (DLT), is a relatively new and
security, transparency, and efficiency. Among these exciting way of recording transactions in the
sectors, the telecommunications industry stands on digital age. It is a decentralized and distributed
the cusp of profound transformation. The digital ledger technology that securely records and
telecommunications industry, which is responsible for verifies transactions across multiple computers or
connecting people and devices globally, can also nodes in a network. Basically, it is a chain of blocks
benefit greatly from blockchain technology. The in which each block contains a list of transactions.
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The blockchain technology was created as the be deleted. No entity can modify the transaction
foundational basis for Bitcoin – a digital currency in records. Thus, Blockchains are secure and
which secure peer-to-peer transactions occur over the meddle-free by design. Data can be distributed,
Internet. It is expected that the spending on but not copied.
blockchain solutions worldwide would grow from 4.5 Tokenization: Value is exchanged in the form of
billion USD (2020) to an estimated value of 19 billion
tokens, which can represent a wide variety of
USD by 2024 [3]. asset types, including monetary assets, units of
Originally developed as the accounting method for data or user identities.
the virtual currency Bitcoin, Blockchains are
Decentralization: No single entity controls a
appearing in a variety of commercial applications
majority of the nodes or dictates the rules. A
today. Blockchain technology is a type of distributed
consensus mechanism verifies and approves
digital ledger that uses encryption to make entries
transactions, eliminating the need for a central
permanent and tamper-proof and can be programmed
intermediary to govern the network.
to record financial transactions. It is used for secure
transfer of money, assets, and information via a Bitcoin and its underlying blockchain technology
computer network such as the Internet without increasingly impact all facets of society. Bitcoin’s
requiring a third-party intermediary. It is now being status as digital gold is merely the tip of this
adopted across financial and non-financial sectors. As technology. Figure 5 shows Bitcoin [8]. Although
a catalyst for change, the Blockchain technology is blockchain technology will for all time be associated
going to change the business world and financial with Bitcoin due to their common genesis, it has
matters in major ways. broader applications. Cryptocurrency will
The first Blockchain was conceived in 2008 by an increasingly become a factor in family law issues as
anonymous person or group known as Satoshi well.
Nakamoto, who published a white paper introducing In a nutshell, blockchain technology involves three
the concept of a peer-to-peer electronic cash system basic concepts [9]: (1) It is a system for recording a
he called Bitcoin [4,5]. Bitcoin and Ethereum are the series of data items (such as transactions between
first two mainstream blockchains. Other modern parties); (2) It uses cryptography to make it difficult
blockchains include Namecoin, Peercoin, Ether, and to tamper with past entries; (3) It has an agreed
Litecoin. Figure 3 shows different components of process for storing copies of the ledger and adding
blockchain [6]. new entries (also called a consensus protocol).
Blockchain combines existing technologies such as BLOCK CHAIN IN TELECOMMUNICATIONS
distributed digital ledgers, encryption, immutable Blockchain technology, at its core, is a decentralized
records management, asset tokenization and digital ledger that records transactions across multiple
decentralized governance to capture and record computers in such a way that the registered
information that participants in a network need to transactions cannot be altered retroactively.
interact and transact. As illustrated in Figure 4, a Blockchain in telecommunications refers to
complete blockchain incorporates all the following integrating blockchain technology within the telecom
five elements [7]: industry. It means using unique technology to make
Distribution: Digital assets are distributed, not telecom networks safer and more efficient. It involves
copied or transferred. A protocol establishes a set utilizing blockchain’s distributed ledger technology to
of rules in the form of distributed mathematical optimize processes, transactions, and security
computations that ensures the integrity of the data measures within the telecom sector. Figure 6 shows
exchanged among a large number of computing blockchain in telecommunications [10].
devises without going though a trusted third party.
The telecommunications industry plays a pivotal role
A centralized architecture presents several issues
in global connectivity, and the adoption of blockchain
including a single point of failure and problems of
technology has become increasingly relevant due to
scalability.
its potential to address various challenges and provide
Encryption: BC uses technologies such as public innovative solutions. Blockchain is being explored by
and private keys to record data securely and semi- all major industries, including the telecom sector, to
anonymously. Completed transactions are determine its benefits and how to apply it to its
cryptographically signed, time-stamped, and operations. The integration of blockchain technology
sequentially added to the ledger. in the telecom sector presents numerous opportunities
Immutability: The Blockchain was designed so for creating new revenue streams while addressing
these transactions are immutable, i.e. they cannot existing operational challenges. There are many
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reasons to use blockchain in the telecommunications can automate process and guarantee the
industry. The telecom sector is suffering from several settlement between the participants, by routing
shortcomings. Blockchain can benefit the telecom from one operator’s blockchain to another
industry in overcoming these shortcomings. It has a operator and increase transparency to the end
lot to offer and is ready to deliver results and customer. A telecom provider utilizes smart
transform the telecom industry for good. It has the contracts to automate billing processes for
potential to enhance security and create additional international roaming services.
sources of income for telecom enterprises. Adopting
Supply Chain Management: Telecom operators
blockchain is worth the cost.
rely on a complex supply chain to deliver their
APPLICATION OF BLOCK CHAIN IN services, including hardware, software, and third-
TELECOMMUNICATIONS party services. Blockchain in telecom facilitates
Blockchain, which started as the underlying and transforms supply chain management. It will
technology for the digital currency Bitcoin, has since enhance transparency and traceability. Moreover,
expanded to include real estate, finance, education, you will track product journeys seamlessly,
retail, telecom, and other industries. In the telecom reducing fraud possibilities and ensuring
sector, blockchain is already being leveraged to authentic transactions. Integration of blockchain
enhance various aspects of operations. Blockchain in will simplify supply chain operations, optimizing
telecommunications encompasses various efficiency and reliability. AT&T is utilizing
applications that revolutionize the industry, promising blockchain to automate and transform their supply
enhanced efficiency, security, and transparency. The chain processes that impact their products –
following applications demonstrate the different ways handsets and network equipment.
that telecom industry can invest in the development
Fraud Prevention: This is another use case that
and implementation of blockchain-based products
telcos are depending on blockchain to help cater
[11-13]:
to. Telecom companies face challenges related to
Decentralized Networks: Blockchain technology billing accuracy and fraud prevention. They
can be used to create a decentralized network for significantly suffer from fraudulent schemes each
telecommunications providers, which can help to year. Telecom networks are vulnerable to cyber-
reduce infrastructure costs and improve the speed attacks and fraud, leading to financial losses and
and reliability of data transfer. The core solution reputational damage. Blockchain can enhance the
of the telecom problem can be solved by security of telecom networks by providing a
decentralization, which is one of the core features tamper-proof record of all network activities.
of the blockchain method. Telecom, through Using blockchain we can look at significantly
blockchain, creates decentralized networks, decrease the cost of fraud in roaming and in
reducing reliance on central authorities for identity management.
operations. You benefit from a more resilient,
Billing and Settlement: Blockchain technology
transparent network structure, enhancing
automates critical telecom operations, including
reliability and trust in communication.
billing and roaming. Blockchain modernizes
Smart Contracts: Smart contracts, being self- billing processes, ensuring transparent, accurate,
executing, are programed in a way that they can and timely payments within the telecom sector.
verify that the terms of the contract have been met Blockchain technology can be used to create a
and then execute the terms without the need of an more efficient and transparent billing and
intermediary or central authority. Smart contracts, settlement system for telecommunications
embedded within the blockchain, ensure the providers. By using blockchain technology,
integrity of operator transactions while encrypting telecommunications providers can reduce costs
customer information to prevent tampering. and improve the accuracy and speed of billing and
Through blockchain platforms in settlement processes.
telecommunications, smart contracts automate
Mobile Payment Solutions: Blockchain
and secure agreements. With blockchain
technology can be used to create mobile payment
technology, telecom providers can create smart
solutions that are more secure and efficient than
contracts that are executed without human
traditional payment methods. By using
intervention, making for a seamless automated
blockchain technology, telecommunications
experience. You reorganize contract execution,
providers can offer customers a more secure way
ensuring transparency and reducing transactional
to make payments and transfer funds. Blockchain
disputes. By using blockchain, smart contracts
for telecommunications revolutionizes mobile
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payment solutions, enabling secure and efficient peer-to-peer self-managed mesh networks that use
transactions. Your mobile transactions become an extensive number of nodes.
faster, more transparent, and resistant to fraud or
Operations Advancement: Currently, the
manipulation. Telecom enterprises can use
transactions in telecom ledgers need to go through
blockchain to enable micropayments for music,
a clearinghouse to be approved. Smart contracts
mobile games, and other services.
automatically provide the settlement between the
IoT Connectivity: Within the next decade, there participants by routing from one operator’s
will be billions of IoT cellular connections. With blockchain to another operator. It also increases
IoT connections growing exponentially over time, transparency to the end customer.
data insecurity will increase simultaneously.
Content Distribution: With blockchain for the
Blockchain technology can be used to create a
telecom industry, content distribution becomes
more secure and efficient network for the Internet
more efficient and transparent. You can securely
of things (IoT) devices. By using blockchain
share and access content, ensuring authenticity
technology, telecommunications providers can
and copyright protection.
offer customers a more secure and reliable way to
connect their IoT devices to the Internet. Figure 7 shows some of the applications of
Blockchain for telecommunications empowers blockchain in telecommunications [14].
IoT connectivity in telecom, enhancing the BENEFITS
reliability and security of interconnected devices. The integration of blockchain in telecommunications
You experience seamless, trustworthy offers great benefits to telecom. It boosts security by
communication among your IoT devices. protecting data from online threats, makes
Identity Management: One of the clearest cases of transactions faster and cheaper by cutting out
blockchain applications for telecom is identity middlemen, and ensures everything is transparent and
management. Blockchain can facilitate user- accountable across the network. Other benefits
controlled identity management. Users can have include [12]:
control over their personal information, allowing Improved Connectivity: Blockchain can improve
them to share specific data with service providers connectivity by enabling direct transactions
while maintaining privacy. Currently, when between telecom service providers and their
customers register for new accounts, they have to customers. This means that customers can directly
go through a cumbersome “Know Your pay for the services they use. Blockchain in
Customer” (KYC) process which involves telecommunications offers enhanced connectivity
handing over or uploading sensitive information. by creating a decentralized network. You benefit
Integrating blockchain with your existing telecom from smoother communication channels, ensuring
networks can remove this hazard as customer seamless interactions. With blockchain’s
identities are no longer stored with a centralized distributed ledger system, information
third-party but in a decentralized, tamper-proof transmission becomes more efficient. Whether
immutable ledger, with no single point of failure. securing digital identities or managing supply
This revolutionary technology gives rise to a chains, blockchain’s integration reshapes telecom
blockchain identity management use case into a more efficient, secure, and interconnected
(identity-as-a-service). ecosystem.
5G Enablement: 5G is another technology that Increased Transparency: There are a lot of trust
can benefit from blockchain. The demand for issues and transparency challenges due to the
communication services is increasing, and the involvement of multiple entities. Blockchain can
world is switching to a 5G network, which is ten increase transparency in telecommunications by
times faster than 4G. Managing such a complex providing an immutable and auditable record of
network will require a greater calculation power all transactions. Blockchain technology in
and storage capacity. 5G promises prevalent telecom provides heightened transparency within
access to various networks, and telecom operations. You get a clear view of transaction
entrepreneurs will need to handle versatile access histories and data exchanges. Through its
nodes. Choosing the fastest access node for every immutable ledger, every transaction becomes
user will soon become a significant challenge for traceable and verifiable. This can help to reduce
telecom companies. Blockchain has the potential fraud, improve compliance, and increase trust
to enable such access selection mechanisms when between telecom service providers and their
5G is developed. It can create highly protected customers.
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Greater Security: In telecom, security is Blockchain technology fosters improved
paramount. Cyber security attacks have become a interoperability among telecom systems and
common phenomenon in every industry and the devices. It facilitates seamless integration
telecommunication industry is not immune to between different networks and platforms. This
them either. One of the most significant interoperability enhances communication and data
advantages of blockchain in telecommunications exchange between various stakeholders.
is enhanced security. Blockchain technology
Secure Payments: Blockchain development in
ensures robust security, safeguarding sensitive
telecommunications will ensure secure payments
data and transactions from cyber threats. Through
by eliminating intermediaries. You will
its decentralized structure, blockchain offers an
experience faster, tamper-proof transactions,
immutable ledger, minimizing the risk of data
bolstering trust and reducing fraud risks.
breaches. Blockchain helps manage data and
Implementing blockchain technology will
transactions better, making systems more reliable
enhance payment security, streamlining financial
and trustworthy. It employs advanced
processes within the telecom industry.
cryptographic techniques to safeguard data
integrity. With its decentralized nature, Global Roaming: At the moment, roaming
blockchain diminishes vulnerabilities associated agreements between telecom operators are
with centralized systems. complex and require intermediaries to facilitate
transactions. With blockchain in
Enhanced Privacy: Data privacy has been a
telecommunications, global roaming will become
trending issue for some time now. Awareness
easier and transparent. You will experience
among consumers as well as regulators has been
enhanced connectivity across diverse networks.
increasing about the significance of consumer
Moreover, it will reduce complexities and costs
data. Blockchain technology is safe and robust. It
associated with roaming. Blockchain will surely
is ideal for storing and processing sensitive
facilitate smoother transactions, ensuring better
information. Blockchain encrypts data and
service availability worldwide.
enables users to control their information. It
enhances privacy and minimizes the unauthorized Lowering Operational Costs:
access risk. Telecommunications operators have long
grappled with shrinking margins amidst
Enhanced Customer Experience: Through
technological advancements and shifting
blockchain in telecom, customer experiences are
consumer behaviors. The digitization and
enriched. Transactions become more seamless,
virtualization of services have necessitated a
empowering users with increased control and
reevaluation of operational strategies, with
transparency over their data and services.
blockchain emerging as a cost-effective solution.
Blockchain platforms in telecommunications
The elimination of physical SIM cards and
revolutionize customer experiences by optimizing
associated distribution costs signifies a symbolic
services. You can enjoy improved service quality
shift towards efficiency and fraud prevention.
and personalized offerings. Through efficient data
management, telecom providers modify solutions Quality of Service (QoS): Blockchain can be used
to your specific needs. to monitor and verify quality of service metrics,
ensuring that customers receive the promised
Cost Savings: Blockchain can help telecom
levels of service quality. This is particularly
service providers to reduce costs by eliminating
important as 5G technology and the Internet of
intermediaries and automating processes. This can
things (IoT) continue to expand.
help to reduce overheads and improve the
efficiency of transactions. Blockchain in telecom Enhanced Efficiency: By leveraging smart
enables significant cost savings through contracts and automation, blockchain can
restructured processes. By eliminating streamline and optimize various processes
intermediaries, transactions become more involved in international financial transactions. A
efficient and cost-effective. Smart contracts blockchain-enhanced approach for telecom
automate tasks, reducing manual intervention and payment and invoicing offers several advantages
associated expenses. over current market norms. It enables
interoperability, allowing seamless transactions
Improved Interoperability: Blockchain can
between different carriers or payment platforms
improve interoperability between different
without intermediaries. The use of smart contracts
telecom service providers by creating a
automates processes, increasing efficiency and
decentralized and standardized network.
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reducing costs. Blockchain technology improves Cost: Implementing blockchain in
trust, efficiency, transparency, and security in telecommunications can incur substantial costs.
telecom payment and invoicing systems. Developing and maintaining blockchain networks
Some of these benefits/advantages are displayed in demands significant technological, expertise, and
Figure 8 [12]. infrastructure investments. Upgrading existing
systems and training personnel adds to the
CHALLENGES expenses.
While blockchain brings numerous benefits,
challenges exist. Blockchain for telecommunications Combatting Fraud: Fraud remains a persistent
encounters challenges that necessitate careful challenge in the telecommunications sector,
consideration and strategic planning. Scalability and particularly concerning roaming services.
interoperability concerns need addressing to ensure Through peer-to-peer roaming data exchanges,
seamless integration and widespread adoption across telecom operators can enhance security measures
the telecom network. Overcoming integration hurdles, while minimizing the resources dedicated to fraud
ensuring scalability, complying with regulations, detection and prevention.
fortifying security, and managing costs are pivotal for Some of these challenges are displayed in Figure 9
successful implementation. Both providers and [12].
subscribers struggle with roaming, high fees, risk of
CONCLUSION
fraud, privacy issues, and so much more. Other
Although blockchain technology is relatively new to
challenges include the following [12,13]:
the telecommunications industry, it has the potential
Integration: Integrating blockchain for
of revolutionizing telecommunications in the future.
telecommunications poses challenges due to its
Blockchain is changing how telecom works, offering
complex nature. You will need expertise and
better security, efficiency, and trust. We are looking
resources for seamless integration into existing
at a future where we reduce dependency on traditional
systems. Ensuring compatibility between
centralized software/ operators to provide an
blockchain and current telecom infrastructure
authentication mechanism. As the industry undergoes
demands careful planning and execution.
rapid digital transformation, blockchain emerges as a
Scalability: One of the main challenges of catalyst for innovation, offering solutions to
blockchain in telecommunications is its limited longstanding challenges and unlocking new
scalability. As network demands grow, ensuring opportunities for growth and efficiency.
blockchain can handle increased transactions and
As the need for secure communication grows, picking
data becomes crucial. One will need scalable
blockchain for telecom is crucial. It means
solutions that accommodate the expanding
committing to a safer, faster, and more customer-
network without compromising efficiency.
focused telecom world. The future of blockchain in
Regulatory Compliance: Telecommunications telecommunications is promising, offering
companies operate in a heavily regulated transformative solutions to various industry
environment, and implementing blockchain challenges. Blockchain technology will enable secure
technology may require them to navigate complex and efficient payment systems. More information on
regulatory frameworks. Meeting regulatory the integration of blockchain technology into
requirements poses a challenge for blockchain in telecommunications is available from the books in
telecom. Adhering to evolving legal frameworks [15-18].
while maintaining blockchain’s decentralized
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