By: Dr. Daniel Diemers, Partner, PwC Strategy& Switzerland, Jad Hajj, Partner and Imad Atwi and Ramzi Khoury, Principals with Strategy& ME, part of the PwC network
Blockchain has the power to transform the public and private sectors, with significant effects on the national economy. For telecom operators in the Middle East and North Africa (MENA), leading and facilitating that change presents a major opportunity.
The operators that can capitalize on blockchain’s potential will be at the forefront of its disruptive impact. Telecom operators can do this because they possess in-built advantages. They have developed digital infrastructure and strong customer relationships, which would allow them to use blockchain to improve their internal operations and diversify their core revenues.
Blockchain is a decentralized digital record of transactions that are permanent and tamper-proof. Various types of companies are examining how they can benefit from blockchain and its potential to improve the building of trust and verification of transactions in an increasingly complex economy.
Of all these companies, however, telecom operators possess a unique combination of attributes and capabilities that put them at the center of the delivery of blockchain solutions in terms of competitiveness and their ability to collaborate with blockchain companies and customers.
Telecom operators already have large sales and distribution channels that they can use to provide blockchain applications to their many long-standing and loyal customers, which include corporates, consumers, and governments. Their flexible business models—proven through diverse arrangements such as service provider models, public-private partnerships, and joint ventures—make it easier for them to find the right approach for each blockchain use case.
Moreover, their close customer relationships mean that telecom operators have a good idea of their clients’ most pressing challenges, and which of these can be addressed through blockchain. Telecom operators have the requisite talent in-house, with developers capable of building or integrating blockchain-based solutions to these challenges. In the MENA region, these operators also have the financial resources to make the necessary investment in emerging technologies.
Blockchain can be used both to gain operational benefits, through streamlining internal systems and improving service to customers, and to boost revenue, by offering new blockchain-based services to customers.
On the internal operations side, operators can bolster their fight against fraud by using blockchain to make the identity management system more efficient. Also, by using blockchain to store customer identities, they can make customer authentication faster and more secure.
Blockchain can also help to accelerate the process of moving a customer from one operator to another, with minimal disruption to the relevant individual’s service if all operators register their number-portability database on the system. Indeed, blockchain is particularly useful for navigating between different operators. It can make roaming between multiple operators work smoother by checking subscriber permissions to see whether a particular user has the right to roam.
In terms of revenue generation, there are four potential opportunities. First, telecom operators can use their existing infrastructure to host their clients’ blockchains. Although possibly the least preferred option, this is straightforward and inexpensive as it does not require major investment in blockchain capabilities.
Second, telecom operators could deploy and manage their clients’ blockchain software while these clients build their own applications and use cases. Operators can achieve this by exploiting their own cloud infrastructure and through forming partnerships with blockchain technology providers.
Third, telecom operators can provide industry-specific applications. Telecom operators could potentially engage in joint investments with companies in different sectors, such as banking, government, healthcare and real estate, to develop prototypes and proofs of concept. They already possess many of the capabilities required, with in-house developers and close relationships with a range of organizations that they can partner with or sell to.
Fourth, telecom operators could supply blockchain professional and advisory services, such as by helping to develop blockchain-related strategy, business models, and proofs of concept. To succeed at this, they would need to invest heavily in technology and talent. This approach involves some risk due to the shortage of blockchain professionals and existing competition from specialist blockchain firms.
Telecom operators should select the option that best fits their capabilities. If further investment is required to pursue that strategy, operators must be confident that the market opportunity is worth the cost and that their decisions are based on a solid business case. They should then identify their target market, define their blockchain value proposition, and then plan how to deliver that proposition to their customers.
Whichever option is selected, getting the operating model right is crucial. This may entail the introduction of major new technologies and a training and recruitment program to guarantee that they possess the necessary skills. Organizational structure and appropriate processes are also vital.
To safeguard their position in the blockchain market, telecom operators also need to tackle restrictive and outdated regulations. They should engage proactively with regulators to ensure that blockchain adoption is properly supported and encouraged.
Various industries have adopted their own use cases for blockchain. Telecom operators should do likewise, creating a portfolio of relevant use cases for their different target segments. This would be a major boost to their overall marketing and business development efforts. They should then settle on the appropriate business model for each application or market segment.
The novelty of blockchain sometimes makes leaders cautious. However, a deliberate strategy of identifying its opportunities should help them understand its considerable potential. Blockchain is likely to have a significant impact on many industries, companies, ecosystems, and even the national economy. Given their natural advantages, telecom operators can lead these efforts if they get involved at an early stage. By becoming blockchain pioneers, MENA telecom operators can strength their ambitions to become the enablers of the region’s digital ecosystem.