How Blockchain is evolving wholesale roaming processes

What is it, and what difference can it make to your business?

Blog author, Shamit Bhat, is our Interoperability Solutions Director and wholesale roaming and blockchain expert, responsible for GSMA Blockchain Network and Roaming Services.

Today’s operators face contracting margins and tightening regulations. Along with the increasing complexity that comes with the rollout of 5G and IoT roaming services. In addition, the international wholesale roaming industry is growing at a 5.6% Compound Annual Growth Rate (CAGR). Whereas the costs of running its processes, are growing at 8% CAGR. Making it an economically untenable model for the future. (According to data from business consultancy Grand View Research, for a recent internal GSMA study).

Yet an essential component of an operator’s cost model, is roaming. With critical OpEx and CAPEX impacts. Which is why it’s crucial to improve existing roaming processes, as soon as possible.

A key cog in the wheel is the operations side of wholesale roaming clearing and settlement. How do we oil this cog, and make it much faster, smoother and more accurate? With blockchain – a distributed ledger system. Many in the roaming ecosystem believe this provides a better way to record and share information, between members of our community.

This new technology’s use is the latest way GSMA has been evolving international roaming. GSMA members have been at the heart of creating roaming’s common specifications and standard implementations for over three decades.

The standard clearing and settlement process

A vital part of enabling roaming business, is the management of inter-operator payments. This happens through the wholesale roaming clearing and settlement process. GSMA working groups defined the standard for this process, which aims to facilitate a faster time to market for roaming services. Along with a healthy cash flow for all involved in a bilateral roaming relation.

The main pain points

Although right now, there are many obstacles in the way of a faster, smoother and more efficient wholesale roaming clearing and settlement process. Including:

  • Growing operation costs for legacy and new tech implementations, with limited monetisation opportunities
  • Long average times spent to clear, settle and pay partners
  • Disputes leading to write-offs and bad debt situations
  • Delay or non-receipt of payments
  • Inability of long tail to keep up with ever-evolving technological landscape

Addressing these problems is a necessity and requires an overhaul of wholesale roaming operations to make them future ready, at the same time as dealing with the challenge of running the legacy setup. Mobile operators are up for this challenge, and they continue to improve their overall roaming operations.

The current implementations

Most of the current implementations of roaming clearing and settlement, are based on the Transferred Account Procedures (TAP) specifications from GSMA. Although these have served the industry well, they can no longer meet the future demands of an ever-evolving technological landscape – particularly when it comes to the fast growth in data traffic.

Realising this, GSMA introduced the Billing and Charging Evolution (BCE) specifications, built against the backdrop of the decoupling of wholesale and retail processes, the explosion of data usage, and the inability of TAP to cater to future market needs.

The BCE process, unlike the TAP process, uses aggregated exchange, and provides greater flexibility in deciding exchange frequency as well as settlement cycles. This helps to resolve some of the key issues with TAP. However, its technical exchange mechanism still works in a traditional way. For instance, it’s semi-automated, labour intensive, sub-optimal with high costs, and a financial risk for all operators.

Therefore, mobile operators have been experimenting with blockchain – a type of Distributed Ledger Technology (DLT). After several trials and the recently successful Blockchain for Wholesale Roaming MVP project, GSMA announced the commercial viability of GSMA eBusiness Network: the blockchain network of the telecommunications industry. Before we get into what that implies, let’s first understand what blockchain is, and how it helps.

What is Blockchain?

Blockchain is a distributed ledger that provides a way to record and share information between members of a community. Within this community, each member gets a copy of the ledger. All members must validate any updates by consensus, before these are recorded in the ledger. The information could represent contracts, identities, transactions, and any assets that can be represented digitally.

Blockchain entries are permanent, transparent, and searchable, making it possible for community members to view the history of transactional data, with a guarantee that the entries are valid and without modification. The distributed ledger takes the form of a series of linked blocks of data, hence the name, ‘blockchain’.

How Blockchain can evolve roaming processes, for your business

Blockchain creates a “single source of truth” of wholesale charge information between roaming partners, while removing some of the current process’ intensive interchange mechanism, typically delivered through clearing houses.

The technology promises to enable efficiency gains in contract management, clearing, settlement and disputes. Its greater automation also helps to manage the increased complexity of future services (IoT and 5G), along with current process overheads.

The technology can be applied to both the legacy TAP and new BCE specifications. BCE-based services (IoT and 5G) are being rolled out, and these could be DLT (Distributed Ledger Technology) native.

To realise these efficiency gains, it is essential the industry adopts blockchain technology in a standardised fashion, through a private-permissioned consortium that’s secure, scalable, multi-party, multi-vendor, and ledger agnostic.

Where GSMA eBusiness Network comes in

GSMA, through the eBusiness Network, envisions a ubiquitous inter-connected global network of operators and partners, where businesses can streamline existing inter-operator processes and unlock new monetisation opportunities for the industry.

To begin with, the network will enable frictionless wholesale roaming settlement for faster payments and healthier revenue assurance. Achieved through greater automation, fewer disputes, faster settlement, and cumulative cost savings.

However, in the long run, the network will support use cases in key operator focus areas of wholesale settlement, payments, identity & access management, fraud, and supply chain management. In fact, any vendor with any application for MNOs will be able to use the network.

For more information on GSMA eBusiness Network, and to get involved, click here