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Network and datacentre owner Colt Technology Services and PCCW Global, the international arm of Hong Kong Telecom (HKT), have completed a successful trial of blockchain technology to manage inter-carrier settlements.
Simply put, inter-carrier settlements are the trading mechanism by which telecoms carriers are able to exchange services with one another to enable voice calls and other services to flow around the world across multiple networks. Due to the sheer number of carriers swapping services, these are often managed on a prearranged, wholesale basis.
“No carrier has 100% network coverage in a location where customers want service, so it’s common to buy access rights to services from other carriers,” says Colt chief of staff Louisa Gregory. “We often buy voice minutes from each other to meet customer needs.”
“If you think about the amount of voice carried across the world, everybody tends to terminate calls on each other’s networks on a constant basis. This is where the purchasing of minutes take place. On an annual basis we exchange billions of minutes with other carriers,” says Mirko Voltolini, Colt vice-president of technology and architecture.
However, this process is time-consuming, labour intensive, and prone to error. Colt, for example relies on a team employed in India to sift through millions of records every month – over 170 million of them in the case of a typical larger carrier customer.
“Every month, their sole responsibility is to take all the records and translate those into customer bills,” says Gregory. “They have to manually identify any fraud and take any dispute from a customer that comes in. It is a full-time job just to manage this part of our revenues.”
It was the desire to automate this process that led Colt and PCCW – which came on board through the firms’ mutual involvement in the ITW Global Leaders’ Forum – to consider how blockchain might streamline this process.
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The objective of the trial was to find out if the advantages offered by blockchain technology – in particular data immutability – could maybe be used to make inter-carrier settlements more efficient, reliable and scalable.
Colt and PCCW enlisted blockchain startup Clear to help implement a bilateral private blockchain to record transactions, which could then be reported to a public blockchain. The trials then used smart contracts to rate call detail records, and record the settlement transactions.
The application of a decentralised, cryptographically enforced and immutable ledger meant that Colt and PCCW were able to analyse tens of thousands of call records, and settle up, in just a few minutes, eliminating hundreds of hours of manual work.
“Blockchain significantly reduced the need for that team,” says Gregory. “[We saw] cost-efficiency gains through reallocating resources.”
The extra layer of security and trust brought by blockchain means the trial has also potentially reduced the amount of fraud associated with voice, and has helped resolve disputes or discrepancies between Colt and PCCW, because the system can more easily detect problematic incidents and flag cases that may need human intervention.
“Today, two carriers need to compare their own records and discrepancies can take place,” says Voltolini. “On blockchain, the same ledger is distributed and available to both [so] there is only one truth.”
Blockchain ‘viable’ for wholesale
“Everyone is talking about blockchain but the use cases in the telecom industry have been fairly limited until now,” says PCCW Global CEO Marc Halbfinger.
“While this deployment is currently only at the PoC stage, through our collaboration with Colt and Clear we are eager to demonstrate how the many potential uses of blockchain across our industry can deliver exponential value by improving the ways we interoperate.”
Although most current blockchain technologies lack solutions for scalability, contract privacy and enterprise-class business logic – all critical elements of an industry-wide settlement and clearing platform – the proof of concept did demonstrate the viability of a future blockchain-based wholesale trading system, says Colt.
This would be achieved through proprietary technologies such as multi-layer blockchain architecture, advanced cryptography and scalability enhancements to existing blockchain implementations.
The partners say the proof of concept could eventually herald a cryptocurrency-based wholesale model where, instead of exchanging cash to settle transactions, carriers could instead operate a token-based credit environment. Such a model could even be rolled out beyond the carrier community to other technology services providers.