Telecom & Blockchain: Why Telefonica launched DLT-based services

Leading communication service providers are changing their standards and striving for more security and transparency. Recently, Telefonica introduced a blockchain-based workflow. But other gaps remain in the telecom industry – and blockchain can bridge them.

Seven leading communication service providers – AT&T, Colt, Deutsche Telekom, Globe Telecom, Softbank, Vodafone, and Telefónica – are experimenting with blockchain and distributed ledgers. Successful experiments are becoming a part of the market, and blockchain is changing the game.

Spanish company Telefónica recently announced the implementation of TrustOS, its blockchain-based software for document flow. It combines a user's digital signature with cryptographic hashing of verifiable documents. Both elements are recorded on the blockchain to protect their origin and data integrity. Before this, Telefonica had used IBM's blockchain platform to log information from its network and improve the reliability and transparency of the collected data.

TrustOS is an example of how blockchain can eliminate paperwork. Telefónica reports that its legal department has already tested the blockchain for internal control over confidential data transferred to partners. Blockchain, unlike paper documents, does not require copies, storage space, certain conditions, timely destruction, and cannot be lost or damaged. Thus, it allows users to demonstrate and prove the facts in any incident or lawsuit involving a potential breach of confidentiality.

The company also has opportunities to expand its blockchain service for other purposes in the future. The document service has many recommended uses in education, legal notarization, proof of ownership, copyright, and more. Decentralized management is becoming an indispensable tool for contemporary communication services providers. In a world where cybercrime is growing every day, data security and process transparency are major priorities.

Blockchain has proven to be a perfect tool for managing digital assets, tokenization, supply chain management, and other scenarios requiring a trusted and immutable environment. But in the field of communication services, blockchain also can become a remedy for pain points.

With the help of blockchain, it’s possible to organize effective telecom infrastructure and reduce the cost of maintenance. Automation of internal processes with smart contracts will make the performance of telecom companies more accessible and transparent. According to a Deloitte report, communication service providers lose about $ 40 billion annually due to fraud involving subscribers' financial and personal data. Blockchain-based document flow, user identification, and authorization reduce fraud and make services more reliable.

Digital services still lack reliable tools for secure and controlled interactions. Most of the time, it’s enough to identify yourself using a social network account, e-mail address, or phone number. But for some e-services (e.g.,electronic voting or interactions with a credit institution), legally meaningful identification is required. For this, users must share their personal data with the data operator. How this data is processed and whether it is shared with a third party are typically unknown to the user. Proper data management requires more transparency and manageability.

The concept of decentralized identification on the blockchain assumes that the user independently controls access to their personal data. With the blockchain, it’s possible to make the digital footprint of each user visible and controlled. Blockchain and encryption protect data and keep a history of recorded and shared data.

Data management can no longer be irresponsible and insecure. Document flow, personal identification, and legal verification require trusted and powerful blockchain-based tools. While global standards have not yet been established, companies are looking for the most convenient mechanisms for using blockchain to complete certain tasks, and the best practices will emerge.

Experimentation and standardization of blockchain-based services are already shaping the digital telecommunications provider market. To stay in the game, telecom companies need to focus on implementing blockchain technology and building transparent and secure data management systems to gain and maintain the trust of their customers and partners.