Seizing the opportunity
Jad Hajj, Dr. Daniel Diemers, Imad Atwi, Ramzi Khoury
May 9, 2019
Blockchain has the potential to transform the public and private sectors, with significant impact on the national economy. For telecom operators, blockchain is an opportunity to use their in-built strengths to lead this transformation. Blockchain is a decentralized register that maintains a permanent and tamper-proof record of transactions data. By vesting authority in the consensus decisions of many participants rather than in a single third-party intermediary, blockchain builds the trust that is needed for an economy to function smoothly and more efficiently. The blockchain model accelerates verification and confirmation. Moreover, due to its encryption technology and the dispersal of information, it is very difficult to hack and is not susceptible to a single point of technical failure. It can also greatly reduce transaction costs by removing unnecessary middlemen and document duplication.
Telecom operators in the Middle East and North Africa (MENA), with their developed digital infrastructure and strong customer relationships, are positioned to gain internally and externally from blockchain by creating additional services and revenue streams through greater efficiencies in handling data or through new business models.
Internally, blockchain can streamline telecom operators’ storage of customer identities, reduce the costs of number portability, and facilitate roaming services between multiple operators. Externally, there are four main opportunities for telecom operators. They can: use their infrastructure to host clients’ blockchains; employ their existing cloud infrastructure to manage clients’ blockchain software; offer industry-specific, blockchain-based applications; or supply blockchain professional and advisory services.
The success of these approaches depends on several factors. Telecom operators must carefully analyze their own capabilities before selecting their value proposition and a target market. A portfolio of relevant use cases for each target market is needed for more effective marketing and business development. Telecom operators should engage with regulators to ensure a supportive regulatory system for blockchain adoption. Furthermore, telecom operators can enable national blockchain ecosystems by, for example, engaging in national and global blockchain alliances and partnerships.
Telecom operators must craft their value propositions in line with the following success factors:
Telecom operators must carefully analyze their capabilities against the potential value proposition and target markets, and choose the positioning that offers the best fit for them. In those areas where the chosen value proposition requires enhanced capabilities or talent development, telecom operators should weigh the market opportunity against the necessary investment, and ensure that their decisions are based on a solid business case.
Telecom operators must identify their target market, define their value proposition, and craft a go-to-market strategy to penetrate that market.
A thoughtfully designed operating model is crucial to success. Developing a compelling blockchain value proposition involves major new technologies, skills, and processes. The operating model should include the required organizational structure, talent acquisition strategy, and decision rules and tools.
Undesirable or outmoded regulations could pose a risk to entrants and players in the blockchain market. Telecom operators must therefore proactively engage with regulators to ensure that suitable regulations are applied to support blockchain adoption, and that they meet the needs of the overall market.
Use case portfolio
Investing in focused development of use cases is a key determinant of success. A telecom operator must have a portfolio of relevant use cases for its target market segments, which will assist active marketing and business development.
Telecom operators must overcome the lack of blockchain business models by finding effective working models for each application or market segment. This is critical for the early adoption of use cases and then large-scale deployments.
Blockchain technology is likely to have a tremendous impact on many industries and companies, with potentially large effects on the national economy. Telecom operators should respond by developing the right strategy, operating model, partnerships, and capabilities for their selected blockchain value proposition. In this way, they can position themselves as key players in this fast-developing market, enhance their internal operations, and diversify their revenue. By entering the market early, MENA telecom operators can become blockchain pioneers, thereby realizing their ambition to become the enablers of the region’s digital ecosystem.