Blockchains have been around for more than ten years, the most well-known example being the crypto currency Bitcoin. However, the potential of blockchains reaches far beyond crypto currencies. The technology is particularly interesting to industries that lean on trusted intermediaries to manage transactions between businesses. Blockchains automate such transactions in a secure and very cost-effective way, cutting out intermediaries and related costs.
Vodafone is exploring the blockchain potential in a number of areas, including for inter-operator discount settlements in roaming, and we recently completed a series of trials with Deutsche Telekom Global Carrier and Telefónica. Sherif Bakir, CEO of Vodafone Roaming Services (VRS), explains why: “The wholesale roaming business is incredibly complex. We were interested to see if blockchains, which are a great tool to radically simplify complex value chains, had a role to play in speeding up and simplifying the essential processes.”
More than 700 mobile operators around the globe regularly settle wholesale roaming discounts between them. Currently, roaming partners keep separate records of their bilateral transactions. Both sides spend a considerable amount of time with exchanging, reconciling and challenging each other's records to establish what they owe each other for roaming on their respective networks. This process is highly complex, largely manual and takes months. A blockchain drastically simplifies that process.
Vodafone’s Finance Operations team, who act as an internal clearing house for VRS, helped to develop the Vodafone trial. It confirmed the technical feasibility and business benefits of automating settlements via blockchain technology. By relying on automated, rather than manual, methods, it took just 10 minutes on average, rather than months, to process calculations. The system was also ‘always on’, which meant it could handle transactions at any time, and in much larger frequency than previous models. It was also much easier to set up and calculate bespoke charging models, and, crucially, proved to be more accurate, leading to fewer settlement disputes between partners.
The trial results were very encouraging, with Sara Tavacoli, Head of Innovation in Finance, noting: “It is clear that blockchains can deliver instantaneous and frictionless commercial roaming processes, and we are excited about the potential to transform not just wholesale settlements, but much, much more.”
Vodafone, Deutsche Telekom and Telefónica are now looking to work with the wider industry and the GSMA to investigate the potential for an open blockchain ecosystem and consider the future for ongoing financial settlements based on this technology.