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).

Trip report: a tale of mobile/WiFi in two developing countries, Haiti & Cuba

I've been away for the past 3 weeks in two very different, but very close countries: Haiti & Cuba, separated by less than 100km. While it was a vacation and I was mostly "off-grid", there were still a few interesting things I noticed about local use of communications and the Internet in each place.

Haiti is one of the poorest countries in the Western hemisphere, and has some of the worse conditions of poverty and restricted infrastructure I've seen anywhere. Outside the Petionville district of the capital Port-au-Prince, there are still many signs of 2010's devastating earthquake, and often severe poverty. It's a beautiful country, with some fascinating places - but it's also one of the hardest places to travel that I've visited.

However, cellphones are pretty ubiquitous, with growing use of low-end smartphones, but still a lot of basic voice/SMS devices around. There are two mobile networks - Digicel, which is prominent throughout the Carribean and various other island nations, plus fixed/mobile Natcom which is majority owned by Vietnamese telco Viettel, but apparently holds a small market share. Most users (except roamers and wealthly UN/NGO/government types) use prepaid SIM cards, with top-ups available from many locations, often street-side or even sold through bus windows during stops. Adverts for mobile networks are everywhere, often permanently painted onto walls of houses or shops.

3G coverage is present across a fair amount of the larger Haitian cities and by major roads - I visited Jacmel and Cap Haitien as well as the capital. (By coincidence, one of the press releases in my post-holiday inbox is from Astellia, talking about a contract with Digicel for 3G network optimisation in the country).

Data charges are reasonable to external eyes (eg 20c/day for 90MB, or bizarrely at an anti-discount $8/mo for 2GB - see here) but still pretty expensive for many of the inhabitants (my guide used a BlackBerry because of its compression abilities, primarily for email & Whatsapp), but seem to be of growing importance to many. I noticed various Facebook-centric per-app or zero-rating plans being advertised.

The few good hotels in the country typically had decent fixed broadband and WiFi, but I saw very little of this in other locations, fairly unsurprisingly. Interestingly, Haiti is included in Vodafone's £5/day WorldTraveller programme, so I could use my iPhone in most places at relatively reasonable cost, rather than getting a local SIM for my spare phone - although had I known the 20c/day rate and been staying more than a few days, I would still have taken that approach.

My overall sense was that Haitian use of mobile and the Internet is broadly on a par with other developing nations at a comparable level of GDP, and apart from patchy competition it seems to have similar business and deployment models. I noticed various schools offering IT and Internet lessons, although some of the poverty I saw suggests that adoption across the whole population will be slow - there are more important problems to fix first.

Cuba, by contrast, could not have been more different.

Firstly, I switched off data roaming as it's not covered by a decent plan, but would have cost me £3/US$5 per MB. Roaming for phone calls & SMS seemed to work OK in some places but not others - I had three days of "No Service" in the middle of the country. One SMS I sent to a local Cuban took 4 days to arrive. Apparently there is 3G data available in some places, but it's aimed at tourists rather than local inhabitants. Relatively few Cubans seem to have phones anyway - although that is changing (see below). It's the only country I've visited recently that has payphones everywhere on the street - and people using them.

It seemed to be possible for tourists to get local SIM cards (eg to call hotels or the small number of private restaurants), but I didn't bother as I suspected it would mean navigating assorted bureaucracy in Spanish. I did, however, get a calling card for the payphones - the first time I've used one in about a decade. There is one state monopoly provider of fixed and mobile communications, ETECSA, and I didn't see the proliferation of mobile-related advertising you get in almost any other nation.There's quite a few places that are agents for top-up cards or payphone cards, but they're not the "phone shops" you'd get elsewhere.

I'd already told all my friends and clients to expect me to be offline, as I knew Internet access was near-impossible to find except on PCs in hotel lobbies, or telecom operator offices where I'd likely have to stand in a queue in the heat outside for ages. I'd heard that prices were $4.50-$10 per hour - well outside the reach of most Cubans, for many of whom (under the dual-currency system there) that would be a sizeable % of their monthly wage packet. Looking at some guides & reports online, I found that a few locations had WiFi, but they were mostly in Havana rather than country-wide (I visited about 7 different places). There are very few URLs displayed anywhere.

But that has changed, and very recently.

On July 1, ETECSA cut access rates by 60%, to $2/hour (bought via scratch-cards from their booths and offices, or some hotel lobby desks). They also fired up WiFi access points in various public squares and parks - often the social hubs where hundreds gather in the cooler evenings anyway.

As a result, when I visited 3 weeks later, I saw small clusters of both tourists and Cubans sitting in the shadier bits of the squares, clutching phones and tablets, wherever was closest to the telecom office or WiFi AP. I saw mostly cheaper Android phones and no-brand tablets, but quite a lot of Samsungs and a few Apples. Amusingly, some devices sported US carrier branding, suggesting recycling/unlocking of old phones. 

The WiFi (still expensive by local standards, but about the price of 2 cans of beer), was actually pretty speedy. None of the services I normally used seemed to be blocked, either.

But the most amazing thing was the realtime behavioural change I could witness. There were huge queues outside all the ETECSA offices. Out of hours (or alongside the queue) some enterprising folk re-sold the scratch-cards at a markup for the impatient. Some hotels ran out of stock of the cards, which could be used at the (ETECSA-run) indoor WiFi as well as the public venues. Online access had very quickly become the teenagers' entertainment of choice.

And then I started seeing cross-generational groups standing on the street in the evenings, using video-calls (Skype or Viber?) to connect kids and grandparents to relatives elsewhere in the world (presumably many in the US, to which numerous Cubans had emigrated during the last decades).

It will be very interesting to see what other societal shifts occur in coming months in Cuba. The Internet genie is very much "out of the bottle" - unlike a lot of countries, the low pre-existing use of the web means that the first use for many is on a smartphone or tablet. And, interestingly, via public outdoor WiFi, rather than cellular or a fixed PC. 

Ironically, the only city where I couldn't easily find any public WiFi was Varadero, the package-tourist capital of the country. And in Havana, I couldn't find a square with "vanilla" ETECSA WiFi access, so I instead ended up using the networks at hotels or Hemingway's favourite daiquiri bar, Floridita.