There’s a paradigm shift in the telecom carrier industry presenting the communications service providers (CSPs) both with challenges and opportunities.
According to a report by PwC, global data consumption will grow threefold from 3.4 million petabytes (PB) in 2022 to 9.7 million PB in 2027. Hence, telecommunication companies(telcos) must make heavy investments in ramping up the infrastructure which helps them to serve customers better. With the rapid adoption of standalone 5G services and the advent of generative AI in telecommunications, telcos are projected to invest over US$342.1 billion in their networks in 2027.
We’ll drill down to understand the key driving factors of the future of the telecom industry its regulatory landscape and the shifting consumer demands.
Key Drivers of Change
IoT
As we are witnessing a park shift in consumer demands in the B2C space, telcos are adopting IOT across industries. By 2025, there will be over 27 billion connected devices globally according to IoT Analytics.
However, IoT is prone to cyber-attacks due to its lack of built-in security measures. IoT devices often are low-power with limited computational capabilities. This makes them vulnerable to cyberattacks. As per Kaspersky, there’s an upsurge in security breaches, with over a whopping 1.51 billion breaches occurring between January and June 2021 alone. Let’s see some key security concerns associated with IoT:
1. Weak Device Security
Default passwords: IoT devices come pre-configured with weak or easily guessable default passwords, making them vulnerable to brute-force attacks and unauthorized access.
Limited security features: Due to cost constraints and resource limitations, some IoT devices lack essential security features like encryption, secure boot, and firmware updates, leaving them susceptible to malware and manipulation.
2. Insecure Data Collection and Storage
Unsecured data transmission: Sensitive data collected by IoT devices, such as personal information, video footage, or sensor readings, might be transmitted unencrypted, making it vulnerable to interception during transmission.
Inadequate data storage: Insufficient data protection measures on devices or cloud platforms can lead to data breaches and unauthorized access to sensitive information.
3. Botnet Formation and Denial-of-Service (DoS) Attacks
Large attack surface: The vast number and diverse nature of IoT devices create a massive attack surface for malicious actors. Hackers can exploit vulnerable devices and incorporate them into botnets, launching coordinated cyberattacks like Distributed Denial-of-Service (DoS) attacks, and disrupting critical services.
4. Lack of User Awareness
Limited understanding of security risks: Users are unaware of the inherent security risks associated with IoT devices and may fail to implement basic security measures like changing default passwords or promptly installing available updates.
Neglecting security best practices: Users might not understand the importance of strong passwords, secure Wi-Fi connection, and keeping software updated, leaving their devices vulnerable.
How Blockchain Helps IoT?
1. Enhanced Data Integrity and Immutability
Blockchain technology acts like a tamper-proof ledger, recording all data transactions within the IoT ecosystem in a transparent and verifiable way. Any attempt to alter data leaves an undeniable mark, making it impossible to manipulate or forge information, ensuring data integrity and preventing unauthorized changes.
2. Decentralized Security
Unlike traditional centralized systems with a single point of vulnerability, blockchain operates using a decentralized network. This means data isn't stored in a single location, making it incredibly difficult for hackers to compromise the entire system. This distributed nature significantly enhances security and reduces the risk of large-scale attacks.
3. Secure Cryptographic Identity
Blockchain technology can assign unique and tamper-proof digital identities to each IoT device within the network. These identities are secured using cryptography, making it virtually impossible for unauthorized devices to impersonate legitimate ones, preventing unauthorized access and malicious activities.
4. Increased Transparency and Auditability
Every interaction and data exchange within the blockchain network is recorded and readily accessible to authorized participants. This transparency allows for easy monitoring and auditing of activities, enabling quick identification of suspicious behavior and maintaining accountability within the system.
5. Improved Access Control and Permissions
Blockchain allows for the implementation of granular access control mechanisms. Specific permissions can be assigned to different entities within the network, restricting access to sensitive data and functionalities only to authorized users or devices. This helps prevent unauthorized access and misuse of data.
6. Automated Trust and Secure Collaboration
By eliminating the need for a central authority, blockchain fosters trust and facilitates secure collaboration between various stakeholders in the IoT ecosystem. This enables seamless communication and data exchange between different devices and organizations while maintaining a secure and transparent environment.
7. Enhanced Security for Supply Chain Management
Blockchain can track the journey of components and devices throughout the entire supply chain, from manufacturing to end use. This allows for the verification of their authenticity and origin, preventing the infiltration of counterfeit or tampered devices into the system, thereby enhancing overall security and reducing the risk of vulnerabilities.
5G
With various new technologies emerging and existing ones evolving, the telecom landscape is becoming increasingly diverse, offering telcos and their customers more choices. As of early 2023, close to 200 telecom companies had launched 5G networks, with more expected to follow soon. 5G is projected to become the dominant technology for smartphones, accounting for over half of all connections by 2025 and exceeding two-thirds by 2027. While fiber optic deployments are increasing, there's still significant room for growth. Open RAN, a technology that enables better compatibility between devices and providers, is still in its early stages but gaining traction, as evidenced by initiatives like Vodafone's Open RAN project involving partnerships with several tech companies.
Historically, there's been a 10-year cycle of major investments in new mobile network technologies, like 4G and 5G. 2021 and 2022 saw a surge in spending as companies built out their 5G networks, pushing total telecom capex to a record-breaking $319.1 billion in 2022. However, this growth is expected to slow down in the coming years, with investments in both fixed and mobile broadband decreasing annually until 2027. Factors like higher inflation and interest rates are making companies cautious about spending. Notably, mobile network investments are expected to exceed fixed broadband investments by 2026. This recent growth in spending is mainly driven by companies in the US, Europe, and Japan investing in the 5G rollout, expanding fiber networks, moving systems to the cloud, and exploring open-source solutions for their networks.
6G
What is 6G?
6G is the sixth generation of wireless cellular technology. It's the successor to 5G and promises significant improvements over its predecessor, including:
Ultra-high speeds: 6G is expected to be significantly faster than 5G networks, with some estimates putting its speeds in the terabits per second range.
Extremely low latency: The delay between sending and receiving data (latency) will be nearly eliminated in 6G, enabling real-time applications that were not possible before.
Increased capacity: 6G networks can support a much larger number of connected devices. This will be critical for supporting smart cities, the Internet of Things (IoT), and other advanced technologies.
Enhanced reliability: 6G networks will be designed to be more reliable with fewer dropped connections and more consistent service.
Technology Standards
The Importance of Standards: Developing common standards will be essential for 6G to reach its potential. Standards ensure that devices and networks from different manufacturers can work together seamlessly. Without shared standards, the adoption of 6G technology would be slowed by incompatibilities and fragmentation.
Competing Standards: Different countries and regions are likely to push for their preferred 6G standards. This could lead to the kind of technology competition and fragmentation seen in the earlier generations of cellular technology.
National Security
Cybersecurity Risks: 6G networks will be even more integrated into our critical infrastructure than previous communication networks. This makes them potential targets for cyberattacks, which could have dire consequences. Governments will have to invest heavily in cybersecurity measures to protect 6G networks.
Foreign Surveillance: There are concerns that certain countries may use their involvement in developing 6G standards to build backdoors into the networks. These backdoors could then be used for espionage and surveillance.
The Economy
Job Creation and Economic Growth: The development and deployment of 6G are expected to create millions of new jobs and boost economic growth. Entirely new industries and services will likely be made possible thanks to the capabilities of 6G.
Widening the Digital Divide: There's a risk that the benefits of 6G will not be evenly distributed. Countries and communities that cannot afford to upgrade their infrastructure could be left further behind.
The Emerging Need for Big Data
As per Valuates Reports, the global market for big data analytics will nearly quadruple in size by 2030, reaching a value of $684.12 billion. This significant growth, at an annual rate of 13.5%, is fueled by companies across various sectors increasingly using data analysis to make faster, more informed decisions.
Big data plays a crucial role in the success of modern-day telecom carrier industries due to the enormous amount of information generated by their operations. Here's a breakdown of its significance:
1. Enhanced Customer Experience
Personalized Services: Big data analytics enable telecom companies to understand customer behavior and preferences by analyzing call history, data usage, and app usage patterns. This allows them to offer personalized services and targeted recommendations, leading to higher customer satisfaction and loyalty.
Proactive Problem Solving: By analyzing network usage and identifying potential issues, companies can proactively address problems before they impact customers. This reduces downtime and improves overall service quality.
2. Optimized Network Performance
Traffic Prediction and Management: Big data helps predict peak usage periods and identify areas with network congestion. This allows for proactive measures like network upgrades or traffic rerouting to ensure smooth operation and prevent disruptions.
Fraud Detection and Prevention: Telcos can analyze call data records in real time to identify fraudulent activities like SIM swapping or international call scams. This helps prevent financial losses and protects customers from malicious activities.
3. Strategic Decision Making
Investment Planning: By analyzing customer trends and network usage patterns, companies can make informed decisions about network infrastructure investments. This ensures efficient resource allocation and helps them stay ahead of the curve in the ever-evolving technological landscape.
Market Analysis and Innovation: Big data provides insights into customer preferences and market trends, enabling companies to develop new services and offerings that cater to specific customer segments and market demands.
The Relationship Between Cryptocurrencies and Digital Economy
In the dynamic landscape of cryptocurrencies, 2023 brings a paradigm shift in the way economies across the globe work. As leading banks respond to inflationary pressure with rapid interest hikes and global trade takes a toll, the cryptocurrency world finds itself in a spot. The trajectory of cryptocurrencies has been quite fascinating, especially because of the tightening monetary policies, the resurgence of the US dollar, and the everlasting speculative talks about increasing inflation rates.
The graph showcases the impact of quantitative tightening by the Federal Reserve and European Central Bank in 2023. Central banks are raising interest rates and selling Treasury securities, pushing yields to their highest point this year.
As interest rates on long-term U.S. government bonds climb past 4%, investors are turning to these safer options, pulling their money out of riskier investments like cryptocurrencies. This shift in investment focus is strengthening the U.S. dollar and drying up cash and trading activity in the cryptocurrency markets.
Both stocks and cryptocurrencies have taken a hit recently. This is partly due to rising interest rates on U.S. government bonds, which haven't been this high since 2008. Additionally, the U.S. dollar has been getting stronger since July, reaching its highest point this year. This overall market trend, starting in July, is called a correction, where prices drop after a period of significant increase.
In March 2023, several bank failures triggered a liquidity crisis. To combat this, the Fed created the Bank Treasury Facility Program (BTFP), helping banks facing falling bond values and cash flow shortages. While this program effectively addressed the immediate liquidity issue, the Fed's future actions remain unclear. With no sign of a halt to quantitative tightening or interest rate cuts, the major concern now shifts to controlling inflation.
In such a scenario, cryptocurrencies becoming a haven for people who don’t conform to traditional banking methodologies looks like a far-fetched dream. But what is causing all this? Why are governments of the world concerned about the implications of cryptocurrencies?
A report by the G7 raises concerns about the potential risks of unregulated "stablecoins," digital currencies pegged to traditional assets. These risks include unfair competition, financial instability, and even threats to global monetary systems. The G7 is clear: no stablecoin should operate worldwide until proper regulations and oversight are established.
They recognize the need for global cooperation to avoid a chaotic and potentially dangerous situation if individual governments try to regulate these currencies independently.
However, not everything is alarming about cryptocurrencies. Cryptocurrencies can potentially offer financial services to the "unbanked" population in regions lacking traditional banking infrastructure. This could promote economic participation and growth in underserved areas. It can also open new doors for telcos to tap more markets and expand their businesses. Cryptocurrencies offer the potential for faster and cheaper cross-border remittances compared to traditional methods. This can benefit migrant workers sending money back home, positively impacting the economies of receiving countries.
Businesses like NovAtel are using cryptocurrencies for international trade transactions, potentially streamlining payments and reducing conversion costs, thereby boosting global trade efficiency. Even Facebook is proposing a digital currency, often known as stablecoin, with the name Diem.
Governments across the world are also recognizing that cryptocurrencies under regulation can open new means of trade and boost economic efficiency, both domestically and cross-border.
China has been at the forefront of developing government-controlled digital currencies, starting trials for its "digital yuan" in 2020. They've also cracked down on large private financial tech companies like Ant Group. This has prompted other major countries and central banks, like the European Central Bank, to consider launching their official digital currencies, weighing the pros and cons of following China's lead.
The Future of a Blockchain-Enabled Telecom Industry
1. Enhanced Security and Fraud Prevention
Identity Management: Blockchain-based identity management systems can securely store subscriber information, minimizing the risk of fraud and identity theft. This enhanced security is crucial in protecting customer data and combating fraudulent activities like SIM swapping.
Roaming Fraud Prevention: Blockchain smart contracts can streamline roaming agreements between telecom providers. This creates a transparent and immutable record of transactions, thereby minimizing the occurrences of roaming fraud.
2. Increased Efficiency and Transparency
Streamlining Billing and Settlements: Smart contracts can automate billing and settlement processes between carriers, making complex cross-network settlements faster, simpler, and more transparent. This reduces costs and the potential for errors.
Supply Chain Management: Blockchain enables secure tracking of devices and equipment throughout the supply chain. This ensures authenticity, improves inventory management, and helps combat the sale of counterfeit devices.
3. New Business Models and Revenue Streams
Micropayments: Blockchain technology facilitates secure micropayments, enabling new business models for telecoms. This includes pay-as-you-go services and content subscriptions, opening up new revenue streams.
IoT Connectivity: Blockchain can create decentralized marketplaces for IoT device connectivity. Telecoms can sell excess bandwidth and capacity in a secure and verifiable manner, leading to new sources of revenue.
Data Marketplaces: A blockchain-based data marketplace enables telecom providers to securely share and monetize anonymized customer data while maintaining privacy and control. This presents another valuable new revenue source.
4. Improved Customer Experience
Number Portability: Blockchain can streamline and speed up the process of number portability between carriers, making it easier for customers to switch their service providers while retaining their numbers. This enhances customer choice and freedom.
Personalized Services: By using blockchain to securely store and manage customer preferences, telecom companies can offer more tailored services and experiences catering to individual needs.
Impact On Key Stakeholders
Blockchain technology and cryptos at large are poised to revolutionize the telecom industry, impacting telcos as well as consumers. By using blockchain, consumers can expect enhanced security, personalized services, transparent pricing, and seamless number portability. Telecom operators, however, face challenges like implementing costly infrastructure and adapting to new competition. Fortunately, blockchain technology offers telcos increased efficiency, innovative revenue streams, and improved operations thereby helping telcos streamline their business processes and tap new markets. Companies like Zeebu are walking an extra mile to address the concerns of telecom carrier companies. Zeebu is a blockchain-enabled platform tailor-made to empower telecom carrier companies. It addresses challenges faced by the telecom industry, such as high transaction costs, slow settlement times, and complex invoicing processes.
Zeebu offers telecom carriers an agile, efficient, and cost-effective solutions for B2B settlements. It also offers a unique loyalty program specifically designed for the telecom carrier industry. This program utilizes their own cryptocurrency, the Zeebu token ($ZBU), which acts as a reward system for businesses participating in the Zeebu ecosystem. Telecom carriers can earn ZBU tokens through completing transactions or participating in the network. These tokens can then be used to access benefits and services within the Zeebu ecosystem.
Governments and regulators, though having reservations are opening up to the idea of including digital currency in their ecosystem. They can help in crafting appropriate regulations and fostering international cooperation. They also hold the key to fostering a thriving ecosystem that promotes responsible innovation, fair competition, and consumer protection.