Update: Telecom & Network Cryptocurrencies, Tokens & ICOs

Introduction

Back in August I wrote a post on blockchain-based ICOs and tokens/coins for the telecoms space (link). Quite a lot has happened since then - including a huge boom in Bitcoin and "AltCoin" valuations and public awareness - so I thought an update was useful. 

In a nutshell - there's a growing number of telecom/networking "coins" available, with a wide variety of concepts, team backgrounds and business models. Some are very interesting, but some others are... let's say, "ambitious".  And a few look like utter nonsense, seemingly lacking understanding of the relevant technology or marketplace dynamics. It's possible there's a couple of outright scams as well.

I'm not making recommendations, or giving warnings, about specific tokens here. But in the spirit of "caveat emptor", I also give a list of cautions and possible problems, that investors should think about, or ask the various currencies' teams. Telecoms is a lot more complex than many people think - especially  the "behind the scenes" bits of technology.

 
Note: If you've found this post via an ICO/cryptocurrency site, an introduction: I'm primarily a mobile and telecoms analyst. I advise on technology and business-model trends for networks and communications, eg 5G, IoT systems, Wi-Fi, voice & video & UC, regulatory policy, the future role of carriers/CSPs, and the impact of "futures" innovations like AI / ML, blockchains (public & private), quantum computing and drones on telecoms. Most of my clients are telcos or network equipment/software vendors. I'm not a fintech, crypto or blockchain generalist - I look at blockchains & tokens where they intersect with the telecom world. Please get in touch if you are interested in my research & advisory work, or if you are looking for a keynote speaker or moderator.


What's been happening with telecom cryptocurrencies?

I'm not going to repeat my previous posts on ICOs, tokens and the wider telecom blockchain space. You can read blog posts here and here, or download a full white paper I wrote for Juniper Networks, here and listen to an associated webinar here.

The second half of 2017 saw continued emphasis on private blockchain use-cases for telecoms and networks, although despite a few high-ish profile initiatives and press releases, there's not much in the "real world" yet besides pilots. I've been doing some interesting consulting work in this area, though - 2018 should throw up a lot more news.

But there has been far more noise - albeit often superficial - about public blockchain and token technologies. Few major telcos have (publicly) announced involvement, but there's growing attention from the type of smaller, competitive types of service provider. Think tier 2/3 MVNOs, travel-SIM providers, VoIP companies, messenger & mobile advertising providers and so on, rather than big carriers. [Telenor is working with a content-oriented token provider - link]

Obviously, that fits against a wider background of interest and investment in cryptocurrencies. Whether we're witnessing the birth of a new financial/transactional system, or a possible bubble, I'll leave for others to debate. To me, it looks a bit like 1995 - lots of innovative web companies, but also a lot of ridiculous concepts, with valuations to match. Which are the Amazons of the future - or the Altavistas, or the pets.com's - I'll leave to others to work out.

There has also been a corresponding rise in regulatory concern, and growing focus on so-called "utility tokens", where in theory a given coin isn't just a store of value or a payment mechanism, but has some underlying property that makes it of broader use to consumers or businesses. Typically this means that some other capability can be "tokenised" - which could be anything from property to an artist's work, and used within that business activity. 

Incidentally - one interesting comms-related trend that's appeared recently is the use of Telegram* (and some other group-messaging apps) as a mobile-friendly and anonymous/encrypted discussion & announcement forum for cryptocurrency teams. Many of the tokens use Telegram as an addition to public (often spam-infested) chat on Twitter, and private internal Slack channels, plus assorted blogging and forum tools. I haven't seen any with an RCS messenger link, obviously.

*EDIT: Telegram has just announced its *own* ICO plans, literally hours after I posted this. Details here (link)


What telecoms/networking tokens are available?

A growing number of tokens relate to things which look "telecoms-like" - whether that's data connectivity provided via cellular or WiFi, SMS or instant-messenger functions, voice-call minutes, SIM identities or something else similar. 

Some are trying to resell existing users' quotas or attention or connectivity, while others are trying to build new hardware platforms. Some are trying to create meshes or secure peer-to-peer connectivity, while others are looking to be wholesale marketplaces for service providers to offer smart-contracts to consumers (or other SPs).

(There's also another huge set of tokens for IoT-related functions and applications, but I'll consider those another time). 

Note: I'm using token, coin, cryptocurrency, altcoin etc interchangeably. Various people will assert differences vigorously, but it's not something that is relevant here.

Note 2: This is being written on 7th January 2018, so dates / funding & issuance status are accurate as of today, but obviously changing at a rapid pace.

Note 3: I am NOT making any recommendations by mentions here. Various ICOs and tokens have been of questionable quality, valuations are volatile & sometimes ridiculous, and some are rumoured to be outright scams. Be extremely careful.

Note 4: I've probably missed some out. Get in touch if you want to tell me about your telecom/network coin, or give me a detailed briefing on the ones below.

• Airfox, Airtoken $AIR (link): Attempts to draw a link between mobile prepay credits, advertising, user-data and potentially micro-loans in future. It extends the current model of gifting or sending "recharges" to many international mobile operators' prepay customers, by shifting from normal payments to a cryptocurrency bought in a marketplace or earned by viewing ads. 
• Althea (link): Aiming to build a network of WiFi and other wireless networks, underpinned by cryptocurrency micropayments and incentives. Recently decided against an ICO, in favour of being "cryptocurrency neutral" - see blog here
• Ammbr [DISCLOSURE: I am an advisor], Ammbr, $AMR (link). Private investor funded, but tokens being listed on exchanges soon. Developing a hardware mesh networking system [Wi-Fi & other technologies], linked to blockchain-based micropayment and self-sovereign identity platform. Aiming first at locations with "unconnected" or poorly-connected communities, but with broader applicability.
• Birdchain, $BIRD (link): Pre-ICO. Developing a messaging app & platform for users to re-sell their SMS allocation for application-to-person messaging 
• Blocknum, $GIGA token (link) Token sale currently occuring. Looking at using the telephone network (PSTN), SIP signalling [used for VoIP] and phone numbers as a basis for a new blockchain for transactions.
• Bubbletone, Universal Mobile Token, $UMT (link). Currently doing pre-sale before ICO. Intending to be a marketplace for MNOs/MVNOs to publish data-plans or content services as smart contracts, with the plans/identities pushed down to users via multi-IMSI SIM cards, or as eSIM profiles. Aims to remove premiums for roaming. 
• Crypvisr, $CVN (link): ICO in 2017, listing on exchanges due soon. Encrypted messaging/communications platform, aimed at both consumers and enterprises.
• DENT Wireless Dent-coin, $DNT (link). Platform for mobile data plan & allowance purchase and sale. Aiming to remove roaming fees. Early app version is live.
• EncryptoTel, $ETT (link): Token-based enterprise "cloud PBX" communications system. 
• Mobilink, Mobi-Coins $MOBI (link). Upcoming ICO. Attempting to create an ad-funded mobile voice and data service, with a custom SIM card and network of MNO/MVNO relationships.  
• Mysterium, $MYST, (link) Decentralised VPN aiming to allow people to share unused network capacity, and use encryption to reduce the risk of intrusive data analytics of Internet usage by ISPs. It's a bit similar to Tor, but more flexible
• Qlink, $QLC (link): Token sale ongoing. Platform for sharing & micropayments for a variety of telco "assets", starting with WiFi access & then aiming for cellular data, SMS and content. Also planning own access points, including LTE-U unlicenced cellular.
• Rightmesh, $MESH (link): Upcoming ICO. Creating an incentivised device-to-device mesh (WiFi, Bluetooth etc). The company operating it (called Left.io) also offers another device-to-device communications/sharing app called Yo.
• Smartmesh, $SMT (link) Tokenised device-to-device mesh based on WiFi, Bluetooth LE etc., starting with smartphones connecting via an incentivised peer-to-peer mechanism.
• SMSChain, $SMSTO, (link): Creating a decentralised SMS gateway for application-to-person text messages. Incentivises users to donate their unused SMS quotas, via a mobile app. Cancelled proposed ICO (link) & may list tokens on exchanges at later date.
• Telcoin, $TEL, (link): Payment/money-transmission token intended to be distributed through existing mobile operators, and aggregators.
• Telegram, Grams: [Added as this emerged shortly after I published this - see link] The messenger app is considering a huge ICO and token sale, which could allow it to embrace payments and money-transfer, and perhaps other applications to become a cryptocurrency-enriched competitor to WeChat and FB Messenger.

What could possibly go wrong? A lot.

A lot of my work as an analyst and consultant involves "stress-testing" ideas and business-plans. Many concepts sound interesting, but face challenges of practicality - whether that's technical, commercial, legal or other. Reading through a lot of the tokens' documentation, or speaking to project teams, I see a lot of aspirations that are going to bang heads against reality.

Some problems can be fixed with time, or clever developers. Others are going to be intractable, and will need workarounds, or completely different strategies.

In this post, I'm not offering opinions or reviews of individual tokens, although I have private opinions on a number of them. A lot of what I read could be best described as "aspirational" - and in some cases, there are many layers of complexity or problems ahead, and I anticipate pivots and revised expectations, as practical issues come to light. Some that I've seen look completely naive or muddle-headed (or even, whisper it, fraudulent).

Some of the issues that could derail the various tokens' opportunity and prospects include:

• Most existing telecom plans (fixed and mobile) have terms and conditions that prohibit resale of "unused capacity" - and are likely to be updated with new token-proof T's & C's if risks are seen.
• Most MVNOs will also have a range of limitations in their contracts, from their host MNOs.
• Security - everything new comes with its own novel risks, even if the blockchain itself is secure. For instance, would you fancy having your 2FA password codes sent via SMS, that transits some random person's phone and app?
• Nobody likes paying for stuff (even micropayments) if it's also available for free via a different path. That means that there will be a lot of arbitrage - for example, it's hard to compete against free WiFi, or against the newer "roam like home" packages.
• Nobody likes paying for stuff in a "currency" that changes in value compared to normal money. I don't want to use some sort of converter to know how many pennies it'll cost for a phone call or Wi-Fi connection.
• There's all sorts of regulatory horribleness around telcos, at national, regional and global levels. Trying to assert "it's all decentralised, we don't need to follow the rules" won't work if it involves licensed spectrum, or messing with legal rules on registering network users' identities, lawful intercept etc.
• Running anything blockchain-related on a smartphone uses power & battery - especially if it needs to keep radio connections active as well. Power-management is always a challenge.
• Traditional telecom networks have complex operational and billing software. While some is too-inflexible and very expensive, most is a necessary evil to deal with performance management, customer service, creating innovative plans, deal with inter-party revenue-sharing and so on. In a decentralised world, how do you query charges, or call when something fails? How can you watch for problems emerging? (And who watches?)
• The hard part of getting data connections working is often "backhaul", linking a base station or WiFi access point to the main Internet, especially from remote areas. It's quite hard to tokenise digging up roads to install fibres.
• Slow deployment of eSIM-capable devices & back-end infrastructure, and willingness of carriers to offer remotely-provisioned "profiles" to third parties.
• Private cellular networks (even in unlicensed / shared spectrum) need core-network software and numerous other "moving parts". Deploying LTE-U isn't like buying a Wi-Fi access point from a store & setting it up.
• A lot of existing consumer Wi-Fi access points are provided by cable operators & broadband telcos, and integrated with a modem/router. Most people won't want to replace them, or daisy-chain a second device, or re-flash the hardware. Business Wi-Fi systems are usually locked-down by IT departments.
• Anything using a mobile app for control, mining, transaction or advertising is at the whim of Apple's AppStore rules, and to a lesser degree Google's. They also need to deal with updates to features in new versions of iOS and Android, which may break things, or compete with them.
• All of the various parallel schemes will need to inter-work with each other at some point, if they're successful.
• Adding extra latency because of extra network hops (or worse, payment negotiations) is going to be a lousy user-experience. 
• The Internet and telecoms are very bi-directional. Do packets (or SMSs or calls) in both directions get charged the same amounts?
• Advertising-funded mobile connectivity has been tried multiple times, and has multiple problems. In particular, you can't insert ads into most apps, and use of encryption/privacy tools like VPNs mean that cookies in mobile browsers may not work properly forever.

There's probably another 20-100 similar "gotchas" out there, applying to some or all of the token concepts. Part of my work is trying to predict these types of problem before they arise, and have an idea of how tractable they are, and what workaround might exist. If you're an innovator in this space, or an investor, and want someone to cast a critical eye over a project, get in touch. (information AT disruptive-analysis DOT com, or on LinkedIn)

Ironically one area that's almost certainly overestimated as a problem is anything to do with Net Neutrality, though. I've covered various examples of such nonsense in prior posts, such as this one (link).

It should be noted that many of these tokens are thinly-traded, or even unlisted on any major cryptocurrency exchanges. Some are pre-ICO / private-funding. Please note that I offer no recommendations on investing in anything, especially cryptocurrencies. Do your own research and use extreme caution if you're tempted. 


Summary

The tokenisation of telecoms and networks is evolving rapidly. It's genuinely fascinating, as are the potential uses of private/permissioned blockchains inside telcos. However, anyone expecting decentralisation to change the networking world in 2018 (or 2019) is going to be disappointed. 

There's lots of enthusiasm, but many roadblocks in the way. Many of the concepts are likely to prove unworkable - and while some projects may raise enough funds through ICOs or private investors to allow them to pivot, others will likely fail. If you're speculating in the short term, that might not matter. But be aware that harsh realities will come along with the new opportunities.

Please get in touch if you'd like to get deeper analysis, or if you're looking for advisory input as a project team or investor (although I'm not able to give investment recommendations).   

Blockchain for telecoms and networks: the emergence of ICOs & token-based platforms

There's a new trend I'm currently seeing emerge: ICOs (Initial Coin Offerings) for network/Internet-related businesses and communities. These use blockchain-based "tokens" (or coins) as a way to build decentralised marketplaces, for Internet connectivity or other communications capabilities like phone calls. Most have visions for long-term disruption of existing models, although they tend to start from more humble niches.

ICOs both establish a "currency" for these future markets, and provide funding for organisations responsible for their creation and maintenance. At least five network-related ICOs have been announced already, and more seem likely to follow in due course. (Disclosure: I'm an advisor to one of these five - more details below).

Note: If you've found this post through a link from a mainstream ICO/Bitcoin site or link, a quick introduction: I'm primarily a mobile and telecoms analyst. I study and advise on technology and business-model trends relating to network evolution and communications applications. I cover areas like 5G, IoT-oriented networks, voice & video communications, regulatory policy, the future role of telecom operators, and the impact of "futures" innovations like AI / ML, blockchain and drones on telecoms. Most of my clients are telcos or network equipment/software vendors. I'm not a fintech or blockchain generalist.

Note 2: I am also not an investment advisor of any sort. I'm not making recommendations here.

I've been covering the role of blockchains and distributed ledgers in telecoms and networks for well over a year now. I've spoken at events run by TMForum, IIT, Comptel and others about the telecom-sector use-cases (and complexities), and ran a recent public workshop in London alongside Caroline Gabriel (link). I recently participated in a webinar for Juniper Networks (link) and have a forthcoming white-paper in preparation for Juniper as well.

My general stance is "pragmatic optimism": Blockchain technology has many possible touch-points with the telecoms industry, from data-integrity management to back-office systems to billing - but maturity will take time. Some of the utopian "it'll change the world" and "telcos are obsolete" rhetoric is overblown. Distributed ledgers will have many uses and opportunities in telecoms/networking - but are unlikely to overturn or radically-disrupt industry structures, at least on a 5-10 year view.

Most of the uses I've seen discussed until recently have been around private (permissioned) blockchains, intended to improve processes and security within or between telcos and their suppliers. Another set have been around new services/capabilities to be delivered by telcos - for example, using smart contracts to enforce SLAs (service-level agreements), or for identity-management in IoT networks.

The ICO trend is different - this is about public blockchain-based functions that anyone can participate in - hence the "offering". The idea is to create common, distributed, dynamic ways of storing (and pricing) network-related value - especially for Internet access, but also voice communications and potentially other capabilities. 

Actually, telecoms is lagging here: there's been a much broader rush towards ICOs across many sectors over the past year. This website (link) lists hundreds, while this article from the Economist is a useful intro (link). It should also be acknowledged that they have attracted not-always-favourable attention from financial regulators, as there is limited official oversight and most are launched as "crowdsales" on the back of a white paper and some PR, rather than a regulated prospectus and well-monitored issuance on a specific stock exchange. There are some questionable-quality ICOs and a few dubious individuals involved, it seems. Nevertheless, they are a popular way for blockchain-based initiatives to get funding and early traction - and some will undoubtedly becomes stars, even if others flame-out like supernovae.

In a way, a system for exchanging telecoms capacity or data quotas already exists - it's possible to send prepay account "top-ups" between people or companies today, although those are usually in monetary form (ie PAYG credit), rather than being denominated in minutes or MB. That is unsurprising, given the diversity of different pricing models and network operators - it would be hard for me to gift a GB of data to a friend on a different network, but I can send them a £5 / $5 / €5 credit and let them buy the data themselves. There are also other ways to share network capacity, such as FON's WiFi community.

The various ICOs are attempting to "tokenise" aspects of networks and communications, allowing different models of monetisation, with pricing driven by an external market rather than telcos' / ISPs' internal marketing functions. Some link to an existing cryptocurrency and blockchain like Ethereum, while others are trying to create something new.

The ones I've discovered that are clearly related to telecoms/networks include:

• DENT Wireless (The website is here & white paper is here): This aims to act as a clearinghouse for mobile data quotas / allocations, between users, between MNOs, or for roaming "local breakout" via visited networks, using its tokens as a common currency. Its ICO, based on Ethereum, was in July. It is aiming to build up enough members as a "buying consortium" to exert pressure on operators to cooperate. It's got some interesting execs and advisors, notably including Rainer Deutschmann who has been instrumental in getting Reliance Jio off the ground in India. One of the use-cases is "donating GB of data to Africa" as a way to improve Internet access in emerging markets. One interesting angle is a tie-up with sponsored-data software company Aquto, which works with AT&T and others. My longterm doubts about the general sponsored-data model continue (the concept of "1-800 apps" is palpable nonsense), but this could be a possible workable use-case. The key differentiator appears to be its willingness (& knowledge) of partnering with operators rather than trying to displace them. Given the wide variations of mobile data pricing (& conditions) by operator, country and tariff - especially postpaid vs prepaid - I'm not sure there's an easy common denominator, though. The inbound roaming scenario may be very tough as well, especially as it may need users to manually select networks, which they may be locked-out from doing on subsidised/customised handsets.
• AirFox (The website is here & the white paper is here): This platform attempts to draw a link between mobile prepay credits, advertising, user-data and potentially micro-loans in future. It extends the current model of gifting or sending "recharges" to many international mobile operators' prepay customers, by shifting from normal payments to a cryptocurrency bought in a marketplace or earned by viewing ads. The model of "watch these ads and get free calls/credit/data" is not a new one (eg Blyk in the UK between 2007-09), but this is the first decentralised and tokenised one I've seen, linked to a global recharge network. It relies on a customised browser and also a dedicated ad-viewer/recharge app. The browser blocks native ads and replaces them with its own (and can also fingerprint the user by looking at other apps installed). Users can thus earn Ethereum-based "AirTokens" or alternatively they can buy them at market rate, to exchange for prepay credit / recharges. It's not obvious to me how AirFox proposes to "bulk buy" data from operators without wholesale/MVNO deals - in most cases I suspect it'll have to use the usual recharge channels. Its aspiration to "replace the current mobile ecosystem (applications, sites, advertisers, data purchases) with a more efficient new decentralized AirFox mobile ecosystem" seems unrealistic given that most mobile users prefer native apps (or web-pages rendered in apps). Nevertheless, the existing model of sending real ("fiat") money or top-ups seems to work, so there's a basis for an ad-supported model, although its existing stats imply a revenue of 1/17th of a US cent per ad. The ICO / crowdsale launches on August 29th.
• Ammbr (The website is here & the white paper is here): [Note - I am an advisor - see below]. This is an attempt to blend custom mesh-network silicon and hardware units, with a blockchain and token-based model for identity and a marketplace. While AirFox and DENT focus on sharing credits/quotas for normal personal mobile access, Ammbr wants to share the access network itself, and ultimately encourage build-out of extra coverage and capacity. Its network units (initially WiFi but with other radios in future) support decentralised micropayments, allowing the node owners to earn tokens and essentially act as their own local ISPs with very little friction or setup cost. While these will obviously need backhaul from normal telcos (fixed and/or mobile), once sufficient density is reached, meshes may reduce the total number of wide-area connections needed. An initial use-case is likely to be in developing countries, where micro-loans and other local (and often informal) sharing-model businesses have grown. The hardware-based model is obviously ambitious, but also means future potential to support multiple radios (imagine a CBRS-type shared spectrum or LPWAN module), and could also potentially host distributed edge-computing or NFV capabilities. There are both opportunities and various complexities and possible pitfalls I can imagine, plus there are alternative options for community/rural connectivity (I'm writing a piece on Facebook's Telco Infra Project & OpenCellular for my STL Partners research stream at present [link]). One aspect that's interesting, but which I'm not able to comment on authoritatively, is the unique blockchain model, based on Proof of Elapsed Time / Velocity, which differs from Bitcoin & Ethereum's Proof of Work. In Ammbr is it linked to a custom silicon processor, with claims of much better power consumption than other approaches. The ICO is upcoming in September.
• EncryptoTel: (Web page is here and white paper is here. This is very different from the other network-type ICOs, as it's more about (business) voice communications than data access. It is a version of an enterprise cloud PBX / UCaaS platform, with encryption, privacy protections and (anonymous) cryptocurrency payments. It allows both on-net VoIP calls (using standard SIP endpoints or dialler apps) and integration with the public phone network, as well as (in future) interconnecting with various messaging applications. It will offer both monthly subscriptions and a pay-as-you-go model. The white paper references video calls, but it does not appear to offer full-fledged UC functions. The roadmap describes a progressive roadmap of development and deployment, with full commercial launch expected in Summer 2018. The ICO occurred in May 2017.
• Mysterium (Web page is here and white paper is here) is a distributed VPN and data-encryption platform - essentially a higher-performing, blockchain-based version of Tor. It uses an Ethereum-based token system of micropayments. In its earliest phases it retains some central control, with the intention of removing this further down the roadmap. It will compete with commercial VPN products. Its ICO started at the end of May 2017.

[Note: some white papers get updated, so the URL might change with the version number - check the main websites for the latest versions] 

There are also various other ICOs relating to cloud-computing, storage and other related areas, such as Filecoin and Internxt. Another company called Crypviser (link) is developing a secure messaging app and also references secure voice calls in its white paper, although with few details.

So - will any of these, or future, ICOs lead to commercial, scalable networking or communications platforms? It's too early to tell. While the white papers typically given enough "vision" and a tentative roadmap, it's likely that most or all of these projects will encounter challenges and pitfalls, and may end up pivoting as events unfold (and customers'/users' behaviour develops).

One of the risks is that tokenisation itself may limit the possible business and pricing models - for example, how can any of them offer hybrid centralised/decentralised services, if that's what the market seems to want? Can they support sponsored/free models, or allow more granular differentiation? What happens if they contravene other services' T's & C's? How is customer support provided for decentralised capabilities? It is also unlikely that any such proprietary mechanisms or payment instruments will become globally dominant, so there will need to be paths to standardisation - as well as deal with the beady eyes of regulators if they become successful.

Nevertheless, this is an interestingly different direction-of-travel for telecoms/network blockchain, as it sits separately to the main thrust of work around private/permissioned use-cases I'm seeing from some vendors, various operators, bodies like TMForum etc. I still think that some of the back-office applications for blockchain in the telecoms sector have more short-to-medium term opportunity, but it's possible we could see a break-out here by a new entrant of the type discussed in this post. I'll definitely be keeping a watching eye on all of these. 

Please drop me a message at information AT disruptive-analysis DOT com if you want to discuss this more, or want a telecom/blockchain speaker or analyst for an event or workshop.


Footnote on Ammbr: Close contacts may have noticed I recently added an advisory role to my LinkedIn profile, for an organisation called Ammbr, mentioned above. At present, I'm just working on a consultative basis, but unlike most of my other advisory clients, it's not purely "behind the scenes" with execs in private under-NDA workshops, but has a public aspect to it as well. It's got a genuinely interesting combination of technologies (mesh, blockchain, custom silicon, potentially private cellular etc), some talented people, and while that means a lot of moving parts to fit together, there are some intriguing possibilities I'm glad to be able to help refine and prioritise.

Internally, my role is as a telecoms-sector expert and (to nobody's surprise) a general curmudgeon pointing out any risks, technical or commercial "gotchas", competition/substitution threats and anything that seems like wishful thinking. I should point out that this is a small part of my overall activities, I'm not "endorsing" it as such, and my normal Disruptive Analysis work on all areas of analysis & futurism is continuing. It's also not going to bias my views on other wireless technologies or business models, many of which are more-developed and which I'm also enthused about (eg private cellular). Drop me a message if you want to discuss this further (or want to discuss other consulting or advisory roles).

TelcoFuturism - the impact of Quantum Technology

The other day, I was invited to the Cambridge Wireless conference on quantum computing and communications (link). Fascinating and brain-melting domain, that has profound implications for many other areas of technology (and telecom). Even though I have a physics degree, I can't claim to be able to keep up with all the maths and concepts that are discussed - but I took away a few real-world implications of what seems to be occurring.

Quantum technology is a pretty broad area, that relates to the weird properties exhibited by individual atoms or photons (light). If you've heard of Schrodinger's Cat, then you'll know how strange some of the concepts can be - especially a "qubit" (quantum bit) that can simultaneously be a 1 or 0, or "entanglement" where pairs of particles remain spookily connected at a distance.

These properties can be used to create computers, communications systems, sensors, clocks and various other applications. In a way, quantum tech is a "foundational" idea similar to semiconductors (which are themselves based on quantum mechanical principles): there will be many, many applications. 

Terminology alert: often people in this sector compare quantum computers versus "classical" alternatives. 

Some quick highlights and comments:

• It's early days. Although there are some existing quantum solutions, they are not "universal" computers, but tailored for particular use-cases. Cooler stuff is 5-10 years away depending on your level of optimism (and stealth)

• There were a lot of telecom people in the room - although that's partly a function of Cambridge Wireless's community (link). 
• Many of the opportunities (& threats) from quantum are "several layers up". For example, we should be able to make more accurate clocks, which means better timestamping, which means more accurate transactions or positioning, which means better ways to create networks... It's pretty hard to extrapolate through all the layers to work out what the "real world" impacts might be, as there are variables & uncertainties & practicalities at each stage. Same thing for quantum improving AI systems.
• There will be a lot of hybrid quantum/classical systems - including being integrated on the same chip.
• Some crypto & PKI systems are going to be compromised by quantum-enabled decryption. It makes mincemeat of some algorithms, but others are much more "quantum-proof". There might be a "Y2Q" problem digging out where the old and vulnerable ones might be, buried inside other systems and software. This might be a "big deal", but there was also debate among experts about whether some of the risks claimed might actually be scaremongering or limited in scope. I think there will be a big ramp-up in "quantum compliance consulting" though - if enough people can understand it.
• Quantum tech also enables totally-secure* networks to be built, using quantum key distribution (QKD). There's a bunch of tests and prototypes working around the world. At the moment these are mostly fibre-based, although some are using free-space optics. (*I'm not a cryptanalyst. Or a quantum wizard. My understanding is that secure here means non-interceptible or perfect interception-detection, but as always with security there are other weak links in the chain when humans are involved).
• We're not getting some sort of magical massmarket "quantum broadband" any time soon, fibre or (definitely) mobile. There might be quantum-related components in networks for timing or security, but the actual physics of shipping-around of bits through air and fibre isn't likely to change.
• One caveat - if I understand correctly (and it's possible I don't) some quantum applications might make it more appropriate either to use dedicated individual fibres, or to use frequency multiplexing (separate colours essentially) rather than networks with other forms of multiplexing. One of my "to do's" is to get my head around what quantum-level transport really means for the way we build IP networks - and whether it's only ultra-secure point-to-point connections that are impacted, rather than general "routed" ones. At the moment it seems the main use is parallel QKD streams to secure the main "media" stream. I've found some stuff on early concepts of quantum routing (link) and quantum-aware SDN (link) but if anyone has a view on the commercial impact of this, I'm all ears. 

• A lot of the current work on quantum computing seems oriented towards creating better ways to do machine learning - essentially the ability to absorb many, many different things "in parallel" rather than sequentially. Beyond AI/ML, many important tasks involve optimisation or pattern-recognition - quantum solutions should help. This has applications across the board, from finance to healthcare to telecoms, although there weren't many suggested use-cases in BSS/OSS or network design at the event. I suspect there could be a variety of interesting options & will think more about this over coming months. (Let me know if you'd like to discuss it)

• There's lots of complexity in getting quantum engineering to work for computing - components often need to be cryogenically cooled, there's all manner of software design and error-correction and control issues, maybe some engineering of microwave systems to link bits together and so on. This is Big Science. It's not going to be in the iPhone 9. (Although some of the sensing and clock stuff seems to be "smaller")

• There's some cool stuff being done around quanutum-based accelerometers, gravity sensors etc. One of the biggest drivers is the desire to create a GPS-type positioning system that doesn't rely on signals from satellites - which can be jammed, blocked or even destroyed. Currently GPS is turning into a bit of a "single point of failure" for the entire planet - especially including cellular networks and devices and financial transactions which need times-stamps.

• Someone else has beaten me to the term QCaaS (link) so I'll have to settle with QDN "Quantum Defined Networking". You heard it here first....
• There are various implied links with IoT (sensors) and blockchain (crypto). I'll keep an eye on those for future work.

Overall, a fascinating topic - and one which the UK government, academia and industry is pumping a ton of cash into. It's perhaps not as sexy as some other futurist obsessions like AI, genetic engineering or blockchain - but it's potentially just as transformative, not least by helping accelerate the progress of all of the others.

For the telecoms industry, there's relatively little to be worried about yet - although getting older network and IT systems' crypto checked over seems important given the timelines to replace legacy equipment. Given the rising desire to exploit PKI and identity in telecoms and IoT as a long-term business, the 10-year horizon for "sci-fi" possibilities is a bit uncomfortable, especially if new breakthroughs are made. And that's before second-guessing how much extra progress has been made by intelligence communities, and how fast Messrs Snowden and Assange get to hear about it. 

We might see quantum tech appearing first in clocks used in networks, or specific optimisation problems solved with early computers from the likes of D-Wave. In my mind there's a few options around NFV/SDN and network-planning that might be a fit, for instance. There's also some cool possible opportunity around super-secure communications and non-GPS navigation. But good news if you're a serious telco quantum doom-monger, don't worry about the prospect of Netflix quantum-entangling videos direct to peoples' TVs and smartphones just yet.

If you're interested in learning more about Disruptive Analysis' work on "TelcoFuturism" please get in touch at information AT disruptive-analysis dot com. My introduction to the concept is here (link) and I've also written about AI/machine learning (link) and Blockchain (link). I gave my first keynote presentation on TelcoFuturism a few months ago (link) and will be progressively ramping this up - get in touch if you need a speaker.

TelcoFuturism: Initial thoughts on Blockchain

An area I'm currently researching, as part of my ongoing analysis of telecoms/futurism intersections is Blockchain. (See here for an intro to what I mean by telcofuturism)

For the uninitiated, Blockchain (abbreviated here to BC) is the technology underpinning Bitcoin and other cryptocurrencies. It's a way to create distributed, secure, unchangeable, peer-to-peer databases for "trust" and transactions/applications which require it. It removes the need for central coordination and storage to prove that you own/bought/sold/transferred things, and stops the "double-spend" problem of digital copying of things like e-money. This is potentially great for finance, where a lot of cumbersome back-office processes could be made hugely more efficient.

When more extensive definitions of "trust" are considered (eg authentication of documents or relationships), it potentially has the ability to dis-intermediate all sorts of other existing businesses and even government functions, beyond just banking and digital money. There are tons of books, conferences and think-pieces about BC, from everyone from FinTech disruptors to governments to major IT and auditing companies. It's definitely a "thing" at the moment.

However, it is debatable whether some of the more far-fetched concepts presented are truly visionary - or sci-fi hype peddled by people who are less-than-objective wishful thinkers. It could become as important and ubiquitous as electricity, semiconductors or the Internet - or else it could just be an interesting platform for diverse applications, but not really a global "game-changer". 

An historian from the year 2100 might point to Blockchain as the most pivotal enabler of the restructuring of global business and society - or else it might be a minor footnote to the much-larger impact of other innovations around AI, CRISPR gene-editing and nanotechnology.

I'm trying to look at Blockchain through the lens of telecoms, networks, communications and cloud platforms. I can't really comment on the full impact on banking or manufacturing or property markets.... but I think I have an idea of the practicalities for telcos to deploy blockchains, and also the realities of networks as they might apply to other use-cases.

I haven't yet reached firm conclusions about the most important use-cases for blockchains in telcos & other communications infrastructure, or the probable timelines, but I'm starting to develop some initial hypotheses. There's some good arguments about BC's use in billing systems, IoT/network registration and control, vertical-market services in finance and healthcare, and perhaps integral network/OSS functions. I can also see it dovetailing with eSIM, cloud/PaaS platforms and numerous other niches in telcos, enterprise comms/UC domains and beyond.

I'm cautiously positive about the technology, rather being than a full-on religious convert and evangelist, as some Blockchain advocates seem to be. I don't buy into the notion that it's going to magically remove all intermediaries from all areas of human interaction, and lead to some anti-capitalist utopia/dystopia (delete according to taste) where middlemen no longer have roles to play.

I see a few major problem areas and "gotchas" emerging, that lie between the vision and possible reality, especially in the medium term:

• Often, blockchain is suggested as the "missing piece of the puzzle", after which a new low-friction process, or entire new industry can be born. Yet in many cases, it isn't transaction cost, or cumbersome trust arrangements that are the "gating factor" stopping deployment adoption today. There are other practicalities involved too - perhaps regulation, business model, customer preferences and loyalties, or 100 other factors. For instance, the idea that everything to do with IoT just needs a sprinkling of Blockchain pixie-dust, for trillions of dollars of value to be released, on interoperable open-source style platforms, is pure hyperbole. It might be desirable - even necessary - but it's certainly not sufficient for many things to take off.
• A fair amount of envisaged blockchain use-cases require perfect, ubiquitous connectivity. That might be OK for banks and fintech companies using multiple data-centres and redundant fibre links, but it doesn't work well for mobile/wireless which is not going to be ubiquitous any time soon (if ever). Unless the applications have some way of dealing with "offline mode", or patchy/intermittent connections, that's a major obstacle.
• Some blockchain architectures have significant time-lags involved, due to processing for verification and permanent storage/encryption ("mining" etc.) That's fine for things which operate on a scale of minutes/hours/days - say transfers of property deeds - but not ideal for network operations that involve subs-second decisions. As we move towards 5G and "millisecond latency" critical applications, this becomes even more imperative.
• Blockchain applications will need to "play nicely" with all sorts of other technology trends, such as distributed clouds, telecoms NFV/SDN architectures, third-party PaaS, integration with legacy systems, security gateways, policy-managed networks (can they spot, block or prioritise BC data flows?), AI and machine learning creating unpredictable or novel transactions/interactions and plenty more.
• Many suggested blockchain use-cases ignore what might be termed "immovable obstacles". It's all very well having a BC-based wireless mesh network, but if it's ignored by the companies owning big chunks of licenced spectrum, and creating non-BC back-office functions, it's a bit of a waste of time. The same thing applies to regulations, taxation and assorted other slow-moving areas of bureaucracy. It's all very well suggesting that your house can act as an autonomous business, renting out the WiFi to passers-by all by itself when you're out, and using the payments to pay the utility bill - but that my well cause consternation among people who tax and regulate such things. Other ideas - such as micropayments for IoT sensors selling weather data by themselves - sound great until people realise that the billing systems only support 2 decimal places, or ask the user to click "OK" or answer a captcha. There are many, many devils in the detail.
• A lot of the rhetoric seems to suggest that everyone wants a completely peer-to-peer, decentralised, no-intermediary, no-brand economy. However the evidence seems to suggest that humans actually quite like intermediaries for many things and are prepared to pay for them - Apple running an appstore, curators for a museum, editors and brand for a news service and so on. Add in the clear need for designers as the new uber-class of intermediaries, and the over-riding importance of UX in any situation, and the "fully automated world" seems even less plausible.

None of this means that blockchain based services are a bad idea, or irrelevant to telcos and network/software vendors. There are, undoubtedly, many important and possibly huge opportunities in blockchain-based telcofuturism.

But at the same time there is a lot of hype. Outside of financial services, we're still mostly at the napkin-diagram/Powerpoint/very-early prototype stage of telecom/BC use-cases. I'm hoping to get some more clarity over the next few weeks - and will try to assemble a realistic timeline that blends vision and pragmatism for comms and network applications.

Please get in touch with me if you'd like to discuss Telecoms + Blockchain combinations. I can be reached via information AT disruptive-analysis DOT com, or via Twitter or LinkedIn.

The Internet is now attacking those that try to damage it, not just avoiding them

It used to be said that "The Net interprets censorship as damage and routes around it" - a quote by John Gilmore, in 1993.

In my view, the Internet community is now maturing to a state where it is going on the offensive rather than just taking defensive avoidance strategies. 

When it is threatened, rather than just looking for ways to mitigate or "route around" potential damage, it is now going after the source of that damage (& its promoters). It is going beyond mere nullification to actually escalating the battle - either codifying methods pre-empting further problems from the same source, or actually attacking that group more broadly.

A prime example has been the rise of ad-blocking. Most Internet users are OK with the general principle of passive, neutral, non-invasive advertising. It's a bit annoying, but no more so than ads in public spaces like poster hoardings. But what gets resented is where those ads are privacy-invasive (eg with tracking), hugely interruptive (pop-ups) or consume a lot of resources (eg auto-playing video).

As a result, the Internet has given birth to a variety of tools which don't just block the annoyances, but take out the basic, more-acceptable formats too, as collateral damage. The Internet ad industry has over-reached the boundaries towards a form of pseudo-censorship (or at least, "mucking around with content" in undesirable ways), and found its fundamentals under attack. The idea that telcos will charge advertisers for traffic, on threat of blocking, is another example of something that will backfire even more strongly, as I wrote recently.

Another area is telcos'/ISPs' attempts to "monetise" Internet connections, or "optimise" traffic, in wholly self-serving fashion. The use of DPI for filtering, advert insertion with HTTP man-in-the-middle proxies, and various other unwanted forms of interference, has led to the wholly-predictable rise of encryption everywhere. We see HTTP2 with Google's SPDY baked-in, wider use of VPNs and so forth. The irony here is that this also has collateral damage, preventing some forms of actually-useful forms of network management. Again, strategic over-reach has resulted in the Internet not just defending its basic utility against a form of censorship, but escalating the battle.

What prompted this post was reading a new IETF Draft (see here) which explicitly "mandates end-users as the highest priority constituency for Internet standards". The needs of users (who generally aren't well-represented / advocated in standards) are now being absolutely prioritised above ISPs, vendors, developers, "implementors", governments and so forth. Theoretical considerations of technical "purity" or "elegance" come right at the bottom of the list.

It means that new IETF standards ought to check - and explicitly state - that user welfare is not harmed at the expense of other groups' gain. It's a bid to stop some of the back-room chicanery that goes on inside a lot of standards development (many groups are a lot worse than IETF - I'm sure readers will be able to identify the real culprits here). Small technical details are sometimes deliberately made to capture value on behalf of other constituencies, to the detriment of users (or rival groups). 

This forces the principle of "design thinking" onto the normal engineering-led (and perhaps commercially-influenced) process.

This move appears to have been catalysed, in part, by the ham-fisted opposition to HTTP2/SPDY by the ironically-named "Open Web Alliance" set up by various (mostly US) telcos and vendors as part of ATIS. This group came up with the risible notion of "trusted proxies" which did not just allow useful traffic-management, but started with the premise of allowing ISPs free rein to break encrypted streams for a variety of use-cases, including ad-insertion, big-data collection, application discrimination and various other questionable practices.

In other words, the Internet is not just neutralising a specific example of "damage", but it's trying to ensure that those that attempted to damage it are de-fanged for the future as well. 

The US battle against Net Neutrality was another instance. An attack by the ISP/telco industry on a relatively straightforward legal rule ended up with a much larger fight-back: culminating in the FCC implementing Title II for broadband, with help along the way from the likes of John Oliver and a major grass-roots campaign. What could have been a minor defeat turned into a major strategic rout, because of push-back to the way the US regulatory and lobbying system works. Whether it has learned its lesson is yet to be seen.

Various repressive regimes have also learned to their cost that attempting to harm the Internet can result in disproportionate retribution from it in response.

Over-doing the use-cases for zero-rating has also attracted the Internet community's ire, meaning that valid use-cases may suffer along with questionable ones, as some regulators ban the concept entirely.

Then there's the spies. Bodies like the NSA & GCHQ have had to deal with far more, and stronger, crypto, because recalcitrant vendors, whose reputations and exports have been hurt by intercepted data or underhand hacks, responded to users' demands uncompromisingly. The intelligence agencies - who have a difficult and thankless task - committed the cardinal sin of over-reach, and then had to deal with the consequences.

It seems likely that some of the push for LTE-U (4G in the same spectrum as WiFi) may go the same way. By angling for a version called LAA which needs licenced spectrum as a pre-requisite, the industry may well find itself unable to use LTE-U at all once the regulator gets involved. Plus it might even get worse - by suggesting WiFi and LTE can "play nicely" together (with coexistence protocols) in unlicenced bands, perhaps we'll get escalation. Surely this means private WiFi could run in today's licenced bands as well, as the evidence shows it could be implemented in ways that wouldn't interfere? That could hypothetically aid overall efficiency of spectrum utilisation, whilst not damaging the value of carriers' own spectrum.... 

The strategy of arguing "Who, me? Innocent little me? My intentions are good, honest!", with fingers crossed behind ones back, is no longer a viable one.

It could be argued that with these new powers, the Internet is in danger of becoming more than just petulant, but risks sometimes throwing the baby out with the bathwater. That seems to be the case with some of the genuine security risks that might emerge as an unintended consequence of crypto. It's possible that the Internet will need to control its own power better, a bit like the Incredible Hulk. 

But for now, until it gets that self-control, the lawyers and lobbysists, telcos and ISPs, advertisers and snoops all need to imagine the Internet saying "You wouldn't like me when I'm angry" before pushing their luck too far. If you "try it on" with the Internet, prepare for a bigger slap than you expected. So for example, all this nonsense about "level playing fields" (see here), erecting toll-gates (here), or sly attempts to influence lawmakers about spurious notions of "platform neutrality" (here) will make the Internet bite back. Hard.

Mobile Data Monetisation Report Update: Still no upside from sponsored data or paid prioritisation models

Disruptive Analysis has recently published an update of its June 2014 report on "Non-Neutral Mobile Broadband: New Models for Monetisation"

It updates and extends the model for mobile data revenues worldwide, for both traditional and new forms of charging. It also analyses the impact of the Apple SIM, mobile data encryption (including SPDY), zero-rating, paid-peering, new vendors and other recent developments in regulation.

The baseline forecast for global mobile Internet access is $354bn by 2019. New business models such as "sponsored data" or "paid priority QoS" might add another $19bn incremental revenue - but may well cost more than that to enable, deploy and market. The report analyses more than 15 different policy use-cases, such as sponsored advertising, single-app dataplans, enhanced MVNOs, and IoT-related QoS.

Despite developing markets having more lax rules on neutrality, the bulk of the "enhanced monetisation" opportunity (2/3rd) is in North America and Europe.

In other words, for mobile, all the arguments about Net Neutrality (or Non-Neutrality) are largely a waste of time and effort in terms of new revenues, justification of 4G/5G investments and so on. The telco industry's voluminous research papers and theoretical models, from assorted academics, economists and consultants, fail to understand the practicalities involved - technical, commercial alike. It's a set of straw-man arguments.

The concept of two-sided markets applied to mobile data traffic - whether "sponsored" by content companies, or "prioritised" using QoS, simply doesn't fly in the real world. The academics ignore the realities of mobile application development, behaviour & perception of users, role of WiFi, encryption (see below), recalcitrance by smartphone platform providers, lack of willingness-to-pay and ability-to-bill, and about a dozen other issues.

In a nutshell: If mobile operators can't justify investing in 4G and 5G on their current trajectories, then changing the law (or preventing Internet regulation) isn't going to help. There is very limited money in "application-based" business models - except (ironically) zero-rating of certain apps' traffic, which seems to encourage new sign-ups or switching, albeit without any extra revenue from the Internet companies. Some very low-end users are adopting restricted plans for single applications or a curated selection, but as a general rule "anybody who can afford the whole Internet will not be satisfied with just half of it".

Mobile operators would be better off switching money away from lawyers and lobbyists, and towards genuine service innovation - or (as is actually happening) either consolidation, or just getting on with building networks and selling access with decent pricing and tiering, differentiating on coverage, speed, customer service, devices, bundled content and maybe time-of-day or location-specific plans.

The obsession with application-based charging models is mostly driven by DPI and policy vendors - there is very little (if any) demand from application and content players for prioritised QoS or sponsored data. This is critically important, as attempts to "non-consensually" filter or modify Internet traffic by application (blocking or "negative discrimination") are leading to a huge rise in encryption, also catalysed by surveillance fears. 

Some mobile networks now have >50% encrypted data traffic, and that is inexorably rising as websites switch to HTTPS or (in future) SPDY or similar variants in default-encrypted HTTP2. The industry's attempts to halt the spread of crypto are likely to fail - the "Open Web Alliance" seems to be too little, too late, and over-focused on proxies which are intended to optimise telco intervention opportunities, rather than fix specific problems. The new report update gives a full analysis of where the encryption debate is likely to end up. 

Report purchasers will get both the original full 150+ page 2014 report [details here] and also the new 35-page update document. Those buying the Corporate licence will also get a free one-hour conference call with Dean Bubley, the report's author, to discuss the findings in detail.

Payment is either with the links below (Paypal / Credit Card) or via bank transfer & invoice (contact information AT disruptive-analysis dot com)


For online purchasers, the PDF document will be sent by email, typically within 24hrs of receipt of payment, although sometimes travel schedules may mean a small delay. Please include company name for licence purposes, and VAT number for EU purchasers. 

NOTE: PAYPAL's CARD PAYMENT SYSTEM CAN BE TEMPERAMENTAL, IF USED IN A BROWSER ALREADY ASSOCIATED WITH PERSONAL PAYPAL ACCOUNTS, OR WITH SOME CORPORATE CARDS THAT CANNOT BE USED FOR OVERSEAS PURCHASES. PLEASE EMAIL INFORMATION at DISRUPTIVE-ANALYSIS dot COM IF YOU HAVE PROBLEMS

Mobile Broadband report (PDF) 1-3 users

Non-UK/EU $1,500.00 USD UK/EU (+20% VAT) $1,800.00 USD Non-UK EU (only if you send EU VAT# via email) $1,500.00 USD

2014 MBB report (PDF) Corporate Licence

Non-UK/EU $2,500.00 USD UK/EU (+20% VAT) $3,000.00 USD Non-UK EU (only if you send EU VAT# via email) $2,500.00 USD