“Blockchain will generate innovation and disruption”

Christoph Steck, Director of Public Policy & Internet, and Eusebio Felguera, Telefónica manager, are co-authors of the Blockchain book. In this interview, published originally by El economista Spanish newspaper, they give their vision regarding the future of the telecommunications industry and how Blockchain technology also constitutes a great change opportunity for this vital industry.

1) Why should a telecommunications operator be interested in Blockchain?

Christoph: Telecommunications operators have been the first companies to see their markets disrupted by new digital services such as WhatsApp, or new hardware such as smartphones. We’ve learned that it’s better to be disruptive with our own services than to wait for others to do it. But this statement is currently applicable to practically any other company in any other industry, be it banking, insurances, logistics, or energy.

Blockchain technology is going to generate the greatest wave of innovation and disruption in the way we business and provide services after the birth of the commercial Internet 25 years ago. In fact, I don’t think there’s any major company in any industry that isn’t researching or investigating how to take advantage of the capabilities offered by Blockchain.

2) What are those capabilities?
 

Christoph: Automation and programming. But not just to do the same things the same way quicker, but also automating actions and programming responses as a function of events that are out of our control or supervision, events that we don’t even know when will happen, nor who -company or individual- will generate them. However, if they occur, they will start a concrete reaction that we will have previously programmed, not needing any additional supervisory system.

Blockchain will allow the automation and standardization of any process in a company in such a way that we’ll be able to make our company’s processes or actions depend on both external and internal events without needing to control them and with the same level of trust as if we did control them. In fact, the interface we use for interaction is 100% reusable for other processes, meaning that we’ll be faced with a new wave of standardization in communication between companies, and between them and their clients.

Blockchain will provide us with that certainty necessary to act without any doubt. If anything appears in Blockchain, it’s true, no doubt about it. Blockchain is incorruptible.

3) Incorruptible. Sounds a bit scary when you say that.

Eusebio: On the contrary. Blockchain provides the system with certainty and reliability. That’s the basis of business! And all thanks to cryptography and the consensus method defined by Satoshi Nakamoto in 2008 for the bitcoin. Thrilling.
 

4) Which applications do you believe can be created for operators with Blockchain?
 

Eusebio: Well, before trying to find (or simultaneously find) the killer Blockchain based application Telecommunications companies, I’d begin with what’s most obvious, and that’s what it can help us improve within what we already have implemented in our normal operations.

For example, operators have many sales points for mobiles, and we don’t only send devices, but also SIM cards. However, we don’t manufacture them with a prior request, manufacture, provision, distribution, sales, and activation process. This is where Blockchain can optimize times and processes, making them more fluid, because even though they are hidden to the user, they consume a lot of an operator’s resources.
 

5) Interesting. When is this expected to become a reality?

Eusebio: Blockchain is already a reality. We have cryptocoins, bitcoin’s the most well-known, but there already are well-known and widely used diamond tracing and authentication processes all over the world. The thing is, Blockchain is the underlying technology and that’s why the average user doesn’t know it.

Practically all economic activities are currently in digitalization processes, and the adoption of Blockchain technology will be the natural step to follow as these processes are completed.

Countless start-ups are using this technology in businesses as diverse as intellectual property or industries fighting against the production of knock-off clothes. Through Wayra, Telefónica has assisted in the growth of start-ups that already offer their services from Latin America to the entire world.

If we also consider the current adoption time of new technologies, both by individuals and companies, it’s very likely that we’ll soon begin to see a serious boom of interest for Blockchain this very year.
 

6) What are other operators around the world doing?
 

Eusebio: It’s difficult to know because, except the banking industry, almost no sector has made public their activities regarding the use of this technology. But we’ll soon see the first innovative proposals with Blockchain behind them. We just have to be on the look-out for them!

7) What does a telecommunications operator have to do to remain competitive in a Blockchain environment?

Christoph: Well, the thing is, it’s going to be a race for survival: you either adopt this technology to automate and simplify your processes and take advantage of the opportunities it provides, or you’ll find yourself in an unfavourable competitive situation. Either you innovate with new business models allowed by this technology, or others will. And that’s a bad competitive situation.

A company’s current life expectancy has fallen in comparison to ten years ago due to the lowering of entrance barriers that technology has generally propitiated. Everyone’s motto today is “renew or die”.

One of the most well-known historical examples mentioned in schools is the Kodak case and how it went bankrupt due to the disruption of digital cameras even though they began the application of digital technology in photography.

Nowadays there are no business that aren’t threatened by a new way of offering services. Blablacar and Uber have put transportation service companies into difficult situations. Car2go and emov may end up disrupting the model of vehicle use and possession, AirBnB, Tripadvisor, etc., and so on. New start-ups proposing new business models appear every day.

Blockchain will definitely be part of telecommunications companies sooner or later.