Under the impact of the global wave of digitalization and informatization, the traditional business model of the telecommunications industry is facing unprecedented difficulties. The promotion and implementation of the next-generation 5G technology has brought huge initial investment pressure to operators, but their business revenue model has not been improved, and value-added services have not yet achieved an effective breakthrough. Instead, they are caught in the fight in the stock market.
According to the data, although the revenue of the top listed telecommunications companies in the United States is 50% higher than that of Internet giants, their profitability is only 30% of the latter. The profit margin of the telecommunications industry is only 20% of that of Internet giants, and the net income can only be maintained at around 5%, and the market value is only 30% of that of Internet companies. This situation reflects that investors have a serious lack of confidence in the heavy asset investment model and low growth potential of the telecommunications industry.
The telecommunications industry is also constantly changing. For those who participated in the virtual operator business in 2015/2016, the opening of the telecom operator industry to private enterprises did not solve the actual problems. Whether it was a fight for existing stocks or deepening the industry, this was not an essential reform plan. We also explored going overseas at that time and tried to cooperate with Lebara Mobile, the largest virtual operator in Europe, but it did not move forward for various reasons.
Reflecting now, the eSIM global roaming scenario that was built at the time is actually very suitable for implementation through Web3, and then promoting value-added services through the blockchain value transmission network. However, blockchain and Web3 technologies did not rise at that time, otherwise it would be a different picture.
Based on the current status of the traditional telecommunications industry, this article will look at the solutions provided by blockchain technology and the Web3 operating model to the current situation, and through the case of the Web3 decentralized telecommunications operator Roam, further explore the reconstruction of the telecommunications industry by blockchain and Web3 - what will it bring us by upgrading the communication network to a value exchange network?
The business model of traditional telecommunications operators is centered on communication network infrastructure. They make profits by providing 1) telecommunications connection services, 2) value-added services, and 3) industry digital solutions, and continue to transform in technology iteration and market changes. Its core logic can be summarized as the three-layer architecture of "connection + ecology + service" for communication.
Basic communication services are still the mainstay of revenue, including traditional businesses such as mobile data, home broadband, and enterprise dedicated lines. For example, the popularity of 5G packages and gigabit fiber has driven the growth of data traffic revenue, but traditional voice and SMS revenue has shrunk significantly due to the substitution of OTT applications such as WeChat. In response to this trend, operators have improved user stickiness through bundled sales (such as "broadband + IPTV + smart home"), and China Mobile's converged package user penetration rate has exceeded 60%. At the same time, value-added services have become a growth engine, covering cloud services, the Internet of Things, financial technology and other fields. Taking the Internet of Things as an example, the number of smart devices connected by operators worldwide has exceeded 2 billion, and China Mobile's cloud computing revenue has increased 25 times in three years, showing the potential of digital transformation.
In terms of cost structure, operators face the dual pressures of 1) heavy asset investment and 2) refined operation. 5G base station construction, spectrum auctions (such as the US C band auction cost US$81 billion) and data center investment have pushed up capital expenditures, with global operators investing more than US$300 billion annually. To reduce costs, the industry generally adopts co-construction and sharing (such as China Radio and Television and China Mobile's cooperation on 5G base stations), AI energy-saving technology (Huawei's solution helps China Unicom save 10% of electricity) and network virtualization (Open RAN saves 30% of equipment costs). However, the cost of competing for users in the current red ocean market remains high, with terminal subsidies and channel commissions accounting for more than half of marketing expenses, forcing operators to turn to digital direct sales, with App subscription packages accounting for more than 60%.
Industry challenges mainly come from technology iteration and cross-border competition. Traditional businesses have declined significantly, with global voice revenue declining by 7% annually, SMS revenue shrinking by 90%, and per capita ARPU falling by 40% in ten years. Although 5G users are growing rapidly, the payback period is long (estimated to be 8-10 years), and it is necessary to cope with the impact of emerging competitors such as Starlink satellite broadband and cloud vendor edge computing. For example, SpaceX Starlink has covered 500,000 rural users, and AWS has seized the enterprise low-latency market through Local Zones, forcing operators to accelerate their transformation.
The transformation path of traditional telecom operators focuses on technology upgrades and ecological reconstruction. On the technical level, network slicing, edge computing and Open RAN open architecture have become key. For example, Deutsche Telekom provides automakers with an autonomous driving network with a latency of 1 millisecond, and AT&T customizes a dedicated channel for remote surgery for hospitals. In terms of ecological construction, operators are shifting from "traffic pipelines" to "digital service engines": South Korea's SKT launched the metaverse platform Ifland, Jio integrated e-commerce and payment to create a super App, and China Mobile entered the content ecosystem through Migu Video. ESG strategy has also become a differentiation tool. Vodafone plans to achieve 100% renewable energy power supply by 2030, and Verizon has pledged to reduce carbon emissions by 40% in ten years, which not only reduces policy risks but also attracts socially responsible investment.
The previously wildly growing business model - huge stock market X basic communication service fees, can no longer support the current huge 5G capital investment and heavy operating costs. The market has entered a stage where several operators are fighting in the stock market and deeply integrating their respective market segments.
This is not only a dilemma for the telecom operator industry, but also a microcosm of the overall market economy. I remember listening to Luo Zhenyu's New Year's Eve speech a few years ago (he was very pessimistic about the market at the time, and it still applies now). The whole speech was just two words: going overseas. But for telecom operators, going overseas is not easy.
Since communications is a very sensitive industry in every country, the road to overseas expansion for telecom operators will certainly be extremely difficult:
1) Market access restrictions: Most countries have passed legislation to restrict the proportion of foreign shareholding (such as India's foreign telecom shareholding limit of 50%), require localized operations (such as Indonesia's "Data Sovereignty Law"), or even directly prohibit foreign participation (such as North Korea and Cuba);
2) Different spectrum allocation rules: 5G frequency bands are not unified in various countries (such as China mainly uses 3.5 GHz, Europe focuses on 700 MHz), and operators need to customize equipment, pushing up cross-border deployment costs;
3) Strict requirements for data localization: The EU's General Data Protection Regulation (GDPR) and Russia's Data Localization Law force data to be stored within the country, restricting cross-border data flows;
In response to the above difficulties, whether through equity investment (for example, Singapore's Singtel indirectly penetrates the Asian market by holding controlling stakes in local companies such as India's Airtel and Indonesia's Telkomsel), or through a joint venture model (for example, China Unicom and Telefónica established a joint venture to share Latin American market resources), or a virtual operator (MVNO) model (for example, Britain's Virgin Mobile entered markets such as Australia and South Africa by leasing networks to reduce infrastructure investment), it will still return to the origin of the problem - fighting for existing stocks in a limited market, huge investment in capital costs, and how to respond to the confusion of "where is the return".
So for going overseas, we see that telecom operators cannot completely get rid of geographical restrictions, but can achieve "limited globalization" through capital cooperation, technology alliances and vertical services. Based on this, telecom operators "going overseas" will present the characteristics of "global capabilities, local delivery":
Core network layer: Build a global backbone network through submarine optical cables, satellites, and cloud services, but must comply with the data sovereignty rules of various countries.
Technical standard layer: 6G R&D has shown "technical camps" in China, the United States and Europe, and operators need to choose sides in the standard split.
Service application layer: highly localized, relying on joint venture partners or local teams for operation, such as Orange's launch of M-Pesa mobile payment in Africa.
Obviously, limited globalization and survival in the crack market are not the answers we want. We can completely reconstruct the telecommunications industry through blockchain technology and the operating model of Web3. The reconstruction of the telecommunications industry's Web3 is by no means a simple "blockchain +", but through globalization, token economy, distributed governance and open protocols, the communication network will be upgraded to a basic value exchange layer to support the future digital civilization. If operators refuse to change, they may become "plumbers"; if they embrace reconstruction, they may become the routing hub of the next generation of value Internet.
At the infrastructure level, physical network resources are distributed and shared through tokenization - the Web3 decentralized telecom operator Roam model has verified the feasibility of users contributing to Wi-Fi hotspots and receiving token incentives. A decentralized communication network covering one million nodes and more than two million users has been built, challenging the traditional operator base station monopoly model; and the DAO governance of spectrum resources (such as the "5 4G spectrum NFT") allows idle frequency bands to be auctioned on demand, improving utilization and creating shared benefits through smart contracts; user identity management is also being innovated. The decentralized identity (DID) solution developed by Telefonica and Evernym allows users to independently control SIM card data, and operators only serve as verification nodes to reduce the risk of privacy leakage; data sovereignty is further returned to users. South Korea's SK Telecom's blockchain data market allows users to trade desensitized behavioral data and obtain token benefits, while operators transform into transaction matchmakers.
The automation of cross-border services and settlements has become another breakthrough. The CBSG alliance, in which AT&T and Orange participate, uses blockchain to reconstruct international roaming settlement, compressing the settlement cycle from 30 days to real-time account sharing, reducing costs by 40%; the DeFi model is introduced into the tariff system, and users can obtain communication discounts by staking stablecoins, while operators issuing special tokens (such as the envisioned Verizon VZW Token) may reshape the payment ecosystem. In the field of the Internet of Things, the combination of blockchain and edge computing has spawned an autonomous network of devices. The Internet of Vehicles protocol jointly developed by Deutsche Telekom and Fetch.ai allows smart cars to automatically bid for roadside base station resources and achieve low-latency communication; Ericsson uses blockchain to track the source of 5G base station parts and strengthen the credibility of the supply chain.
In addition, in the economic model, communications and finance are integrated at the atomic level: while users pay for services with cryptocurrency, they can earn income by sharing bandwidth, data and even exercise (such as Telefónica's "sports mining"), forming a "consumption-production" closed loop; the DeFi mechanism has also derived innovative services such as communications insurance and cross-chain roaming, and the on-chain smart contracts automatically execute cross-border settlements, reducing costs by more than 40%.
Globally, although traditional Wi-Fi still accounts for more than 70% of data traffic, its aging infrastructure and privacy and data security issues limit the exploration of its potential. To address these challenges, Roam collaborated with the Wi-Fi Alliance and the Wireless Broadband Alliance (WBA) to build a decentralized communications network by combining traditional OpenRoaming™ technology with Web3's DID+VC technology. This not only reduces the high upfront costs of building a global network, but also enables seamless login and end-to-end encryption similar to cellular networks. Users do not need to log in repeatedly and can connect to Wi-Fi as seamlessly as using cellular data, which greatly improves user experience and connection stability.
In fact, in addition to reconstructing the business model through Web3, the transformation of the blockchain communication network can be a major breakthrough. The reconstruction of the telecommunications industry based on blockchain and Web3 is essentially to upgrade the communication network to a value exchange network, and to transition from "information transmission" to a "information transmission + value + trust" trinity network, becoming the foundation of the next generation of digital society that integrates value transmission, data rights confirmation and trust collaboration.
Web2's Internet infrastructure has achieved frictionless and almost free information flow, but the value in it has not circulated. Web3's value Internet can provide a carrier for these values, allowing value to circulate as frictionlessly and almost freely as information. Among them, the essence of payment is the transfer of value (Exchange of Value).
From a historical perspective, the evolution of communication technology has profoundly reconstructed the development trajectory of the financial payment system, and every technological breakthrough has brought a qualitative leap in the payment form. From the ticking sound of Morse code in the 19th century to the instant settlement of modern blockchain payments, communication technology continues to promote revolutionary changes in the field of financial payments by improving information transmission efficiency, expanding connection boundaries, and reconstructing trust mechanisms.
The emergence of the earliest telegraph technology realized the transfer of value across time and space for the first time. After the opening of the transatlantic telegraph cable in 1858, the time for interbank remittances was shortened from weeks to hours, and the time and space barriers in the financial market were broken for the first time. The electronic message communication system established by the SWIFT system in 1973 shortened the cross-border payment cycle of the traditional Telex (Telex) from 3-5 days to T+1, and the communication capacity of processing 42 million payment instructions per day on average worldwide has built the infrastructure for modern cross-border payments. In the Internet era, the real-time communication capability created by the TCP/IP protocol has compressed the completion time of electronic payments to milliseconds. Blockchain uses P2P (peer-to-peer) communication networks to replace the centralized communication architecture of traditional finance, building a value transmission channel without intermediaries. Compared with the centralized message exchange that the SWIFT system relies on, the communication efficiency is increased by hundreds of times. The communication network based on blockchain Web3 can also achieve a significant increase in the efficiency of value exchange.
Cellular mobile communication technology extends payment nodes to every corner of the physical world. 2G network-supported SMS payment has given rise to an inclusive financial revolution in Africa. Ethiopia Telecom's HelloCash has achieved financial service penetration in areas where base station coverage is less than 40% through the USSD channel. Similarly, the global network built on Roam can provide bank-level financial services on the blockchain to all people who can access the Internet (especially the 1.4 billion people who cannot access banking financial services), whether they are in the Amazon rainforest or in the heart of Africa, truly achieving financial inclusion and financial equality.
In addition to the expansion of geographical boundaries, communication networks can also connect silicon-based civilizations. IoT communication technology is creating new payment scenarios. NB-IoT-supported smart meters realize automatic meter reading and deduction at ENEL in Italy, and LoRaWAN-connected vending machines complete more than 2 million unmanned payments per month at Lawson convenience stores in Japan. 5G network's ultra-low latency of 1 ms and the ability to connect millions of devices support the automatic charging and deduction system implemented by Tesla's V2 X communication. Similarly, with the outbreak of AI Agents, the interaction between AI Agents or between AI Agents and humans requires communication networks and value transmission on the networks.
The Bitcoin white paper depicts a world without trusting intermediaries, and cryptography and code provide us with a trustless foundation. However, when this idealistic encrypted world is intertwined with the extremely realistic real world, compromise is not the only option. How to build a trust mechanism on the blockchain network is what we need to think about.
Based on blockchain technology and Web3, "on-chain banks" can already realize many functions of current banking services in developed countries, such as savings (self-custody), investment and financial management (DeFi Stacking or RWA Product), transfers (blockchain peer-to-peer network), consumer payments (stable currency payment and collection), etc.
For users, these bank-level services can be achieved by anyone who only needs to be connected to the Internet, which can be a further derivative of the Roam project. With the reconstruction of the mechanism, more financial services based on blockchain communication networks will be built. In the future, new forms combining communication and payment may be born, such as "global instant settlement network" and "AI autonomous financial body".
Case:Orange Money's mobile payment layout in Africa
The Orange Money case profoundly reflects the path of telecom operators to deepen their localization strategy through financial technology. Although this is a path for traditional telecom operators, it may provide a reference for the new transformation of Web3 telecom.
The African market has become a blue ocean for mobile payments due to the low penetration rate of traditional banks (only 34% of adults in sub-Saharan Africa have bank accounts) but the high penetration rate of mobile phones (80%). Relying on its 130 million African user base, Orange has launched Orange Money in 17 countries, with over 40 million users, and adopted a differentiated competition strategy: in East Africa dominated by M-Pesa (such as Kenya), it competes for market share with low fees and high commissions, but in French-speaking West Africa (such as Senegal), it occupies more than 60% of the market share with language adaptability and village-level agent networks, and cooperates with M-Pesa in the field of cross-border payments. The key to its success lies in the vertical scenario binding - linking with agricultural cooperatives to issue procurement funds, accessing government public service payment, and innovatively launching microcredit (OKash instant loans) and low-cost cross-border remittances (handling fees reduced by 30%), forming an "communication + payment + finance" ecosystem. However, the market is significantly fragmented: M-Pesa monopolizes East Africa (monthly transaction volume of US$12 billion), MTN occupies West Africa, and local giants are in a melee with international players such as PayPal. Orange has increased its user ARPU by 20% through payment services and optimized risk control (bad debt rate < 5%) using transaction data, but faces profit pressure (net profit margin is only 3-5%), network security investment (accounting for 30% of IT budget) and the risk of political instability in the French-speaking region. In the future, Orange plans to integrate payment, e-commerce and content to build a super App, and explore the West African digital currency "Eco" pilot. Its model verifies that operators need to deeply integrate local scenarios, channels and culture in underdeveloped markets, but sustained growth depends on the balance between ecological synergy and compliance.
Transformation in the telecommunications operator industry is underway. In the future, a hybrid model of "centralized facilities + decentralized services" may be formed: a type of basic communication operators will continue to serve as "plumbers" and control the physical layers such as optical fiber and spectrum, but through APIs. Open network capabilities can be provided for DePIN projects, such as Vodafone's network slicing and Tokenization, and enterprises can use cryptocurrencies to purchase exclusive channels. Another type of service operator, similar to Roam, will reconstruct itself as a value routing hub in an open protocol based on communication networks and blockchain technology. This is not limited to local areas, but will develop communication-based ecological businesses around the world. Similarly, the user layer needs to shift from "passive consumers" to "eco-co-builders" in order to further promote the development of the entire Web3 communication ecosystem.
This collaboration purportedly opens new sales channels and revenue streams, offering a suite of services covering pay-ins, payouts, B2B cross-border payments, and invoicing for merchants.
DavinThe Financial Crimes Enforcement Network (FinCEN) has proposed a rule under the USA Patriot Act, designating cryptocurrency "mixing" transactions as a primary money laundering concern.
BrianOneCoin's ex-compliance chief pleads guilty to fraud, potentially 10 years in prison, amidst broader legal actions against the scheme.
Hui XinEthereum-based altcoin Tellor has taken the spotlight with a remarkable surge, soaring over 1,000% in just three months and reaching an impressive $131.
JasperThe inaugural STO, led by Grinnodot, the parent company of Sunnyfounder, introduces the loosely translated "Sunshine Green Benefit Debt STO."
DavinMuesliSwap, the Cardano-based decentralized exchange, faces growing discontent among users over prolonged delays in launching the refund claim site.
AaronBitdeer Technologies Group, a Singapore-based crypto mining platform, has marked a significant milestone by becoming the preferred cloud service provider (CSP) in the Nvidia partner network. This strategic move places Bitdeer at the forefront of AI development in Asia, providing customers access to the cutting-edge NVIDIA DGX SuperPOD with DGX H100 systems through its upcoming Bitdeer AI Cloud.
JoyMicrosoft briefly restricted ChatGPT access due to a security glitch, swiftly rectifying the incident and highlighting the complex AI landscape and global efforts to address evolving risks.
Hui XinMoisés Zamora, the creative force behind Netflix's "Selena: The Series," is steering away from the conventional avenues of Hollywood, embracing a groundbreaking move into the world of NFTs.
JasperAsset management giant BlackRock is set to venture into the Ethereum landscape with plans for an exchange-traded fund (ETF) focused on the cryptocurrency.
Jasper