How blockchain can speed up inter-operator settlement

GSMA’s Director of Blockchain and Roaming explains how blockchain can make inter-operator roaming settlement faster – reducing settlement calculation to one-thirtieth of its time

Shamit Bhat also talks about how operators who are investing in blockchain, expect the technology to bring them significant efficiency gains across settlement processes, along with fewer disputes.

In addition, he discusses the impact of this on similar inter-partner settlement use cases. Plus, the growing opportunity of creating an ecosystem with a shared economy model.

Roaming settlement automation

Our previous blog How blockchain is evolving wholesale roaming processes, talks about how contract management, data clearing, financial settlement, and the payment processes of wholesale roaming business are developing using blockchain. Likewise, in How blockchain is streamlining roaming contract agreements for the 5G and IoT era we discuss the use of blockchain-based smart contracts for agreeing deal parameters. While in this blog, we will delve further into roaming settlement automation.

How do the roaming settlement processes currently work?

As per GSMA standards, the two parties involved in wholesale roaming settlement clear data between themselves, through mutually agreed contractual obligations, before executing the roaming settlement process.

So, primarily, the settlement processes involve:

  • Reconciliation of applicable rates per service
  • Agreeing on wholesale rates for each applicable service under the roaming agreement
  • Management of any missing or late data
  • Handling of any rating and invoicing disputes amongst other due diligence items
  • Issuing corresponding invoices, credit, or debit notes to the partner

Roaming, clearing and settlement processes run on a daily, monthly, and periodic basis, depending on the activity. Significantly, this is largely true for both legacy TAP (Transferred Account Procedures) and the new BCE (Billing and Charging Evolution) process.

It’s important to realise that the execution of payments, including any escrow arrangements with a vendor, sit outside these financial settlement processes. In fact, the use of blockchain technology to improve inter-operator payments is another area GSMA is currently exploring.

What are the challenges in the current settlement processes?

To clarify, the issues with the existing settlement processes stem from the inability to establish a single source of truth between contracting parties.

  • Chiefly due to the limitations within the legacy integration technologies the industry uses for exchange. Since these require both parties to independently check all information multiple times, along with their agents, as a due diligence measure to establish truth. Therefore, causing what we call in blockchain terms, a double-counting problem
  • Although done with the right intent, the current exchange mechanism leads to the creation of multiple sources of truth. Ultimately generating agreement and rating disputes, as this non-synchronised information percolates to downstream settlement processes
  • Also, the monthly settlement process is only semi-automated, and the bi-annual or annual settlement process is still largely paper-based
  • Additionally, IoT and 5G roaming will only increase this complexity, as a huge growth in international data flows is forecast.

Ultimately, we lose time managing disputes, errors, and paperwork, leading to bad debt situations.  As a result, the inter-operator settlement process remains unsatisfactorily slow.

Blockchain-based automation and simplification brings huge efficiency gains

So it’s the automation that blockchain facilitates, along with its ability to create a single source of truth (with permanent as well as immutable records of negotiations), which enables faster settlement times and other efficiency gains. Such as those highlighted in the GSMA Blockchain for Wholesale Roaming (BWR) report. Including:

  • Automated settlement calculations using blockchain-based smart contracts. Significantly reducing manual settlement calculation from 2.3 working calendar years to one-thirtieth of this time
  • Auto dispute resolution implements threshold-based settlements, for faster settlement times
  • Therefore, now this time can be spent supporting the complexities of future technologies, so there’s no need to hire new resources
  • Moreover, operators can avoid disputes, thanks to blockchain-based collaborative process implementation, which isn’t feasible in today’s centralised systems
  • Furthermore, blockchain can fuel a major cost transformation enabling:
    • Hybrid models of current agents to work with new BaaS (Blockchain as a Service) players in the market
    • Current agents to become BaaS providers
    • Operators to run in-house blockchain services

GSMA’s ‘smart contract executable concept’ reduces disputes

With this in mind, GSMA plans to list all available smart contracts for operator reference during the agreement negotiation process – either through the open-source BWR initiative, or proprietary on a public website.

So, it works like this. First, both roaming partners during the agreement negotiation process agree to a smart contract for each charging model. Then smart contracts carry the executable logic for the agreed charging model, which both parties must use for settlement calculations. Next, the smart contract agreed is cryptographically signed and hashed into the blockchain ledger, for validation during the settlement process. Therefore, if either side uses the wrong smart contract during settlement execution, the validation engine would flag this.

How is GSMA enabling these efficiencies for wholesale roaming settlement?

Indeed, an operator can benefit from blockchain technology by joining an inter-operator network with participating operators and partners. Such as the GSMA eBusiness Network: it’s the blockchain network of the telecom industry, supporting all the above automation and simplification ideas, through a consortium blockchain model.

Consequently, the setup takes away the problem of multiple sources of truth and seamlessly enables the execution of smart contracts amongst network participants. Thus, solving the issue of independent calculations leading to disputes

Additionally, the GSMA eBusiness Network is a multi-party and multi-vendor environment. Therefore, allowing operators to either use the GSMA Settlement service, another BaaS provider, or run their inter-operator settlement process in-house on the network.

GSMA eBusiness Network supports all inter-partner settlement use cases

Here are some different inter-partner settlement use cases the industry is experimenting with:

  • Settlement amongst carriers for international voice
  • Settlement amongst inter-working partners
  • Also Wi-Fi roaming players
  • Affiliates belonging to the same group across use cases
  • Supply chain partners for an operator or a carrier
  • Carriers with shared repositories across different services like fixed-line voice, data etc.

Since GSMA eBusiness Network facilitates a shared network economy model, there are many opportunities to benefit from the cross-partner integration potential of blockchain technology. For example, automating the end-to-end settlement process so it includes all the inter-partner settlement use cases, as per the above.

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

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