Blockchain in Telecom Market to Grow 210X to $113 Billion By 2030

Blockchain technology is playing a significant role in eliminating incidences of fraud by recording the history of digital assets’ transactions between two or more parties in a decentralized environment.

At its core, blockchain is a distributed digital ledger that securely records and verifies transactions without the need for a central authority.

This innovative technology ensures a decentralized, trustless, and immutable ecosystem, making it the perfect solution for a world increasingly reliant on digital data and transactions.

To begin with, it’s essential to understand the architecture of a blockchain. The digital ledger is comprised of a series of ‘blocks,’ each containing a collection of transactions. These blocks are chronologically and cryptographically linked, hence the term ‘chain.’

The network operates based on consensus, where multiple nodes (computers) work together to validate and verify transactions, ensuring accuracy and security.

One of the primary features of blockchain technology is its decentralization. Unlike traditional systems that rely on a central authority, like a bank or a government, to manage and verify transactions, blockchain disperses the responsibility to a network of nodes.

Decentralization eliminates the risks associated with a single point of failure and cuts down the need for intermediaries, which often leads to higher fees and transaction delays.

In a blockchain, a transaction’s immutability is achieved through cryptographic hashing. Each block contains a unique code called a hash, which is generated by applying a mathematical function to a combination of the block’s content and the hash of the previous block.

Once a block is created and added to the chain, any attempt to alter its content would result in a different hash, instantly causing the entire chain to be invalidated. This trait, combined with the consensus mechanism, ensures that the blockchain remains unchangeable and transparent for all parties involved.

Global Blockchain in Telecom Market Growing at a CAGR of 81.2%

According to recent market research, there has been a notable growth in the global blockchain in the telecommunications industry with a recorded size of $53.18 million in 2021.

This market is projected to experience further expansion and is expected to reach $113.12 billion by 2030, with a forecasted CAGR of 81.21% during the period from 2022 to 2030. Asia-Pacific is the fastest-growing region while North America is the largest market in this relatively young global sector.

Organizations have been turning to cryptographic technology to build transparent networks, store data precisely for each device, stop theft at the same time, and streamline administrative processes.
Some of the most popular use cases of blockchain include smart contracts, payment and billing, network connectivity provisioning, and identity management.

In addition, organizations employ distributed ledger technology “to automate processes, provide immediate traceability and boost operational effectiveness,” as outlined in the Straits Research market report.

The Impact of Blockchain in Telecom Market on Fraud

Blockchain has proved to be a significant contender in fighting fraud and lowering related costs, a feature that has the potential to drive adoption in the telecom industry, considering the sector has not come up with other ways of combating fraud not only effectively but sustainably.

Telecom companies globally are facing threats from scams that keep changing tactics and causing a great deal of harm be it to customers or business operations.

A survey conducted by the Communications Fraud Control Association (CFCA) found that $38.1 billion is lost every year through fraudulent schemes, eating into revenues in the telecom sector.

Two of the most popular fraud types are subscription identity and roaming fraud in the industry. Telecoms use subscriber identity data to allow users to open an account and assign services to them.

Subscription fraud occurs when a user signs up using a fake ID or another subscriber’s identification document (the victim) to access services. In this case, the fraudster uses a stolen ID to register a SIM card in the victim’s name.

Usually, telecom companies use the International Mobile Subscriber Identity (IMSI), embedded on the physical SIM to authenticate and identify subscribers on mobile devices alongside an associated key.

Limitations of Global Blockchain in Telecom Market

Although blockchain-based telecom products and services are being developed, they currently lack standards or guidelines regarding transaction format. Despite promising high audibility and transparency, the telecom industry is hesitant to adopt this technology without standardized protocols.

As the technology is relatively new, there are no significant technology associations, leading to a lack of technological uniformity and a wide range of iterations in the market’s core capabilities.

Regulatory efforts to bring communication service providers (CSPs) together have been hindered by the lack of a secure platform or channel for collaboration.

By enabling collaboration with blockchain, the sector can envision a wide range of applications, leading to the creation of new business models through partnerships and the sharing economy.

Blockchain technology has the potential to improve efficiency and transparency, as well as disrupt business models in sectors like telecom.

Though blockchain applications are still in development, industry-wide standards are expected to take a few years to develop. The lack of such standards, however, may hinder the growth of the market.

Market Players Spearheading the Growing Adoption

Artificial Intelligence (AI) has a fundamental impact on enterprise computing as it influences the way organizations obtain, handle, and store business data securely.

Oracle had predicted that by 2022, 90% of all applications and services would have integrated AI with more than half of business data managed autonomously. Blockchain would be used for telecommunications applications ranging from smart contracts to billing, identity, and roaming services.

“The increased use of blockchain in telecommunication and post services for creating crypto-currencies and secure platforms for financial transactions is one of the main factors driving this technology,” Straits Research said. “It is anticipated that blockchain and 5G will potentially revolutionize upcoming technologies in the telecommunications sector. Blockchain ensures a high degree of trust and security among peers, much like 5G promises users high rates and QoS.”

Fundamentally, 5G-enabled applications require a range of parameters to function, including bandwidth, speed, and other key elements. Nonetheless, telecommunications companies find it cumbersome to effectively deploy the fifth-generation mobile network, citing numerous bottlenecks such as the need to roll out trillions of nodes and link everything so that they are providing services to one another.

That brings forth new challenges “for data value, data security, and exchange transaction models.

Growing adoption by significant telecom players is anticipated to boost demand and raise the adoption rate in the telecommunications sector over the forecast period,” Straits Research added.

Market Segmentation

The global blockchain in the telecom market is mainly segmented by applications like identity management, payment and billing, connectivity provisioning, and smart contract.

With an estimated CAGR rate of 57.36%, the smart contract segment is the largest contributor to the market but specifically during the forecast period.

Smart contracts are self-executing digital contracts that automatically enforce the terms and conditions written into them. They allow for secure and transparent transactions without the need for intermediaries and are used to “digitally simplify, confirm, or enforce a contract’s performance.”

Besides automation, smart contracts are designed to reduce other transaction costs in connection with contracting.

Blockchain technology can revolutionize the identity management industry by eliminating intermediaries through smart contracts, leading to significant cost savings, reduced fraud, and faster settlements.
Smart contracts enable tamper-proof transactions and real-time updates to customers, allowing telecom players to quickly resolve disputes.

Additionally, blockchain technology can automate processes such as billing, roaming, and supply chain management, freeing up resources. Transactions in telecom ledgers currently require a clearinghouse for approval.

However, smart contracts can automate this process, transferring data between operators’ blockchains and increasing transparency to the end user. Industry leaders, such as SK Telecom and Deutsche Telekom, are already utilizing blockchain technology for real-name authentication, subscriptions, and verification.

SoftBank is also developing an international ID. By providing a smart contract ID number, blockchain technology can help eliminate identity theft and offer carriers a secure, borderless identification system.
Quick and secure user authentication can replace outdated systems, making blockchain technology a game-changer for the identity management industry.

Global Blockchain in Telecom Market – Regional Analysis

The global blockchain in telecom market is also segmented by region and encompasses North America, Asia-Pacific, Europe, and the Rest of the world.

North America is estimated to grow at a CAGR of 56.02% and is by far the most substantial contributor in the sector during the forecast period. Telecoms in the region have in recent years turned to blockchain technology to speed up transaction processing and decentralize both internal and external operations in addition to resolving other challenges facing North America.

The most significant driver in this remarkable adoption is the extensive presence of some of the main blockchain vendors across the region. Telecoms adopting blockchain technology are driven by the need to decrease identity and roaming fraud as well as improve customer experience.

Despite the commendable progress, the rate of adoption is slow compared to other technologies like AI. AT&T for example, is using blockchain technology but in a different way.

“Internally, AT&T has adopted blockchain technology for its supply chain for mobile devices. This covers mobile device upgrades, returns, and other supply chain-related activities,” the market report added. “The development of a proof of concept for a blockchain application in the area of software tampering evidence was announced by AT&T and Microsoft. They also collaborated to develop enterprise solutions for networking, the Internet of Things, and blockchain.”

Researchers at Straits have estimated Europe to grow at a CAGR of 64.51% in the forecast region as blockchain is considered to offer a lot more than cryptocurrency and a financial tool in the European market.

Telecoms in this region are applying the technology to eliminate middlemen, thus saving money not to mention the possibility of reducing fraud and human error.

“The technology allows for simultaneous record-keeping, shorter transaction times, automation, digitization of business processes, supply chain management, and mobile money features. For the benefits of blockchain technology, many telecommunications companies have partnered with suppliers of those solutions,” the researchers outlined.

The Asia-Pacific region is poised for significant growth in the coming years, driven largely by the increasing popularity of mobile payments in countries like China and India.

As a result of India’s demonetization scheme, many telecom operators in the region have shifted their focus towards this model.

The CAICT’s Trusted Blockchain Initiative has also gained momentum in the region, with China Telecom, China Mobile, and China Unicom all joining the initiative to leverage blockchain technology for enhanced security and operations in the telecom sector.

With the rise of blockchain-based applications related to IoT data sharing and customer identity verification, businesses are expected to increasingly embrace this technology in the telecom industry.

Key Market Players

The Straits Research report identified Blockchain Foundry Inc., Huawei Technologies Co. Ltd, Microsoft Corporation, Oracle Corporation, SAP SE, and ShoCard Inc. (Ping Identity) as the key players in the global blockchain in telecom market.

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