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A smart contract is a self-enforcing agreement embedded in computer code managed by DLT technology (Blockchain). The code and the agreement contained therein exist across a distributed and decentralized blockchain network. The execution is controlled by code, and when the predefined terms and conditions are met, the contract is automatically enforced. The transactions under smart contracts are trackable and irreversible and can be carried out among disparate, anonymous parties without the need for a central authority, legal system, or any external enforcement mechanism.
Smart contracts provide a mechanism for efficiently managing tokenized assets and access rights between the parties involved in the contract. The smart contracts provide a public and verifiable way to embed government riles and business logic in a few code lines, which can be audited and enforced by the majority consensus of a P2P network.
Smart contract has a promising contribution to the telecom sector. Many use cases can be benefited by DLT, such as identity management, payments, roaming & wholesale frauds, and many more. Digital Asset Transactions
Telcos can leverage Blockchain the micropayments for digital services. Not only this, but Blockchain can also be used for C2C money transfer. A leading telco in APAC offers customer-to-customer money transfer service through its wallets. By enabling Blockchain to handle the transactions, the operator makes its wallets more secure with ID verification. It also allows cheaper international remittances, swift and convenient money transfer, and positively impacts the company revenue. Digital Identity Management and Verification.
The verification and identification services cost billions of dollars to organizations and governments annually. This is a valuable capability for telecom operators as they work with an enormous amount of customer data and can act as a source of identity verification. With smart contracts, telcos can design new systems that are far more transparent, secure and convenient for all the stakeholders.
Let’s take an example here. When a subscriber uses the roaming partner’s network, the roaming partner can determine that this is a visitor from home operator. The roaming partner implement this via the subscriber information exchange transaction on the blockchain-based network. The subscriber is then approved and registered on a smart contract. Blockchain-based identity management system will allow the users to manage their Id’s across various applications, devices, and organizations with only one single password. Subscribers will be able to verify his or her identity in any digital presence through the master key.
It's an excellent opportunity for telecom operators to grow their business. At the moment, ID management project is already unfolding in Europe. The project intends to provide 1.1 billion people a secure and reliable identity management system.
Enhancing the telecom supply chain management using smart contracts is another prominent use case. It can enable automated cooperation between the involved parties in the contract. The smart contract has predefined terms and conditions and are set to execute when they are fulfilled. It offers significant cost reduction to telecom operators and partners by eliminating intermediaries, facilitate settlement with vendors and suppliers. It keeps the records through the whole supply chain easy and transparent, resulting in lower accounting and auditing costs.
The telecommunication industry suffers from fraudulent activities each year, such as roaming fraud and subscriber identity fraud. According to CFCA, more than 38 million dollars get lost due to such frauds, and it is a massive loss to the telecom revenue. Roaming fraud occurs when a subscriber uses the visited public mobile network through the resources of his or her home public mobile network. In the roaming fraud scenario, the home operator cannot charge the subscriber but is obliged to pay to the visited operator for its subscriber's roaming services. Longer detection and response time are the two major issues in the roaming fraud. The fraud happens when the subscriber is in the network other than its home operator, and as the exchange in data is delayed between the home and visited network, it takes more time to detect the fraud. As the home operator lacks control over the systems where the fraud happened, it takes a longer response time to respond to the roaming fraud.
Subscriber ID fraud occurs when a subscriber uses false information such as a stolen identity to use the telecom services. The SIM stores IMSI and the related key is used to identify and confirm subscribers on mobile devices. Each time a device is switched on, it broadcast a signal containing the IMSI to the nearest network station. The identification number links the device to the account with the provider. There are many ways identity fraud can happen, such as email phishing, SIM card fraud, and more. It can result in severe losses to both the service provider and the subscriber.