Will it be the Carl or will it be the Marc? Within the next few years, the wholesale telecoms industry might have its own cryptocurrency for international settlements. But what will it be called?
This will be a direct follow-on to the proof of concept, earlier this year, of the idea of using blockchain for inter-carrier settlements. Colt, headed by Carl Grivner, and PCCW Global, headed by Marc Halbfinger, tried the idea out earlier this year – and now the industry is ready for further trials.
The biggest use of blockchain at the moment is cryptocurrencies like Bitcoin – a fact that has led Grivner and Halbfinger to wonder whether the industry should have its own special currency, protected by blockchain, for all international settlements.
After all, it’s had one before. The regulations of the International Telegraph Convention of Saint Petersburg, published in 1925, specify: “The franc, which is the monetary unit taken as the basis of the international tariffs in the Regulations … is the gold franc of 100 centimes, of a weight of 10/31sts of a gramme and of a fineness of 0.900.”
In 1958 the rules still said the Swiss gold franc “shall serve as the monetary unit in the establishment of international telephone accounts.” But by 1973, though it was still possible to use the gold franc for payments, the rules had changed: “The payment of balances of international telecommunication accounts shall be made in the currency selected by the creditor after consultation with the debtor.”
Grivner believes carriers could use blockchain for a whole new range of services including a currency that companies in the industry can use to pay for the services they buy from one another. “Fifteen years ago people were talking about the cloud just as people are talking about blockchain today. But, now, people are starting to study blockchain and its impact.”
It’s early stages, said Grivner. “The settlement test with PCCW Global is a baby step.” What will follow? He already has a list of possibilities. “The most exciting of them is cyber security.”
Blockchain’s power for the wholesale carrier industry is that for decades the process of reconciling records and settling debts has been laborious. The technology, it now seems clear, can make inter-carrier settlements more efficient, reliable and scalable.
Raising the bar
Grivner and Halbfinger – along with the rest of the industry’s Global Leaders’ Forum (GLF) – are looking for ways to move beyond the first proof of concept. Grivner said that a cryptocurrency “could be used by telecoms carriers and maybe even by customers. Marc and a few others have talked about the creation of a cryptocurrency. There are a lot more examples. The idea is to enrol more applications in the blockchain – not just settlement.”
Because blockchain is a distributed ledger, it’s almost impossible for one individual or company to create fake entries. “Blockchain has raised the cybersecurity bar,” said Grivner. “It could be used for email, billing and other applications.” The mobile industry should find applications in roaming: “Ultimately I’d like to see the technology in our customers’ hands.”
I spoke to Mike Van Den Bergh, chief marketing officer of PCCW Global. For the real value of blockchain to be recognised, the entire industry needs to embrace the idea, he told me. “Right from the start we’ve got to be open and inclusive. We need to have minimum barriers to entry. The object now is to promote a new way of working. It has the potential to transform the whole industry. The value will be in inclusivity – so everyone is working on a common basis.”
In the trials, Colt and PCCW Global implemented a bilateral private blockchain to record transactions, which were then reported to a public blockchain. Smart contracts were used to rate call detail records, resolve disputes and record the settlement transactions.
The next stage is for more carriers, working through the GLF, to do further proofs of concept. “Everyone is already talking about blockchain and knows it is a good thing.” The project has already “captured the imagination of the industry”, Van Den Bergh said. “We have had more and more people knocking on our doors, even people from outside the GLF.”
For smaller players, “the real value will be created when the entire industry is working in the same way. Collaboration is a natural function of how the industry works. The key “will be to make it attractive enough, so that the amount of investment will be small. We are starting to think about the business model.”
And a cryptocurrency that the industry would use for its settlements? “It’s an obvious evolution of the model,” said Van Den Bergh. The currency would be convertible into standard – or fiat – currencies. But what would it be called? The Carl or the Marc, he smiled.
