Decentralization in Telecom – How Hyperledger Fabric Can Optimize and Simplify The Inter-carrier Settlement Process

Telecom network operators worldwide open their networks to each other to enable their mutual customers to communicate across network boundaries. This practice, known as “Interconnect,” is being used among national and international operators for fixed, mobile, and Internet services.  Network operators cross-charge each other for the interconnect services they offer each other’s customers. It is done through invoicing/billing and settlements. 

Network operators collect and store detailed information in a record known as Call Detail Record (CDR) about every call ever attempted, whether completed or not. A typical CDR captures data such as calling and called party phone numbers, duration of the call, the timestamp for each activity, the ID of the equipment that handled the call, the result of the call, and so on.  Interconnect partners share CDRs for the purpose of “verifying” cross charges and settling balances. This verification process is cumbersome, inefficient, lengthy, costly, and error-prone. Missing CDRs and discrepancies in CDRs are very common problems. 

Due to the large number of network operators globally and the many-to-many relationships amongst them, the complexity and amount of cross charging and settlements data is exponential and very error-prone, causing Interconnect operations to be expensive. Typically, wholesale interconnect contributes to almost 30-40% of overall traditional telecom business for a telco, but with the declining margins, it has become essential to address the blocked revenue due to disputes and to optimize the overall cost involved in resolving these discrepancies.

To illustrate how the Linux Foundation’s Hyperledger blockchain projects can be leveraged to help Telecom operators solve the Inter-Carrier Settlement problem, the Hyperledger Telecom SIG formed a subgroup for the purpose of understanding the problem from a business and technical perspective, proposing a Solution Brief, and developed a Proof of Concept (PoC).  

Even though the main focus of the PoC is to provide a technical solution that simplifies and streamlines the settlement process, we believe the solution’s real value is in its potential to reduce the overall settlement process cost for all ecosystem participants.  Cost reduction would be attributed to two main factors, friction reduction and shortening the time cash is held inside the system.  

A POC has been created as a Hyperledger Lab project to identify the potential transactions to be considered in the ICS smart contract. This is an open source effort and anyone is welcome to contribute.

The proposed solution broadly addresses how a DLT-based solution can:

1. Create a single source of truth, which allows network operators to access and verify billing and cross-charging data in real-time.
2. Reduce overall costs by replacing tedious processes, reducing dependency on intermediaries such as clearinghouses with simple, near real-time and error-free reconciliation and settlement process.
3. Help in fraud detection and prevention.

The  Hyperledger Telecom SIG Inter-Carrier Settlement subgroup is successful in defining a solution based on Hyperledger Fabric as well as developing a working PoC which is available for demonstration for those who are interested.  The subgroup has also written a solution brief on how Blockchain-based solution could be used to simplify and expedite the Interconnect’s cross-charging and billing data-verification process. 

On the technical side, the solution brief covers the typical deployment architecture designed using Hyperledger Fabric for a Telecom Consortium. The whole idea is to bring multi Organization and multi-channel flavor supported by orchestration services to enable consensus between the collaborating parties for reconciliation.  

The solution brief serves as good educational material for explaining the Wholesale Interconnect problem from logistical and business perspective. It also explains the technical solution at a high level. 

The Telecom Special Interest Group is committed to collaborating with Telecom Operators, Researchers and Technical Organizations to evolve the Proof of Concept to a Production grade solution. The Telecom SIG team is also working with other Hyperledger groups to integrate solutions that can add value to the Intercarrier Settlement, which will eventually benefit the Telecom Operators.  If you are interested in this, join the group’s mailing list and regular calls and take part in the work of the group.

Below is the list of companies and research institutes in alphabetical order who have contributed to the Intercarrier Settlement Solution brief.