Note: This is a whitepaper, originally published on my website here.
With the world becoming more and more transparent and businesses being more open, there is a greater need to use technology to make people more powerful. And telecom, which now has greater and broader role to play in our lives, more than just making and receiving calls, demands for innovative insights to make it more affordable and inclusive for everyone.
This whitepaper describes a new concept of ‘Data Exchange’, (similar to a stock exchange), which creates a transparent real time marketplace to enable the customers of telco (used for Telecom Operator) network, to freely buy and sell data. Telco will benefit by monetizing unused bandwidth and data and exposing various other services such as Digital TV, Music, etc to its customers. This shall be enabled by the blockchain technology, which has been considered by many at the forefront of technological revolution, through the usage of Etherium Blockchain and Smart Contracts. By building a truly open network, shifting power of monetizing unused data, telco’s brand shall also acquire trust and positivity, and the same time maintain its leadership in innovation in the telco space, apart from finding new revenue opportunities.
The Data Exchange, referred to as product in this document, proposed here, shall address the following:
- Peer to Peer Data Exchange – Each user in the telco’s network, shall be able to buy and sell data with each other, which may be unused from their already bought data packages. Also, the data which is up for sale, can be bought by the user, at the following validity options: existing validity or +24 hours validity.
- Real-time Data Marketplace – The buying and selling transactions shall be in real time and shall work like a stock exchange.
- Security and Anonymity – Each user shall be transacting in this marketplace, without revealing their own identity. The identity shall, however, be maintained and secured by the telco.
- Innovative Revenue Opportunities – Telco shall benefit from this concept by effectively utilizing unutilized bandwidth and unused data. Revenue opportunities such as charging a small commission from the buying and selling transactions, charging a small fee for extending the validity shall be the initial ones. Going forward, the users can be rewarded for buying and selling transactions in telco’s own currency, which can then be used to barter for other services such as data packages, ecommerce, music, movies, IoT, etc.
Phase 1: Development of the Product
- High level and low level architecture to be charted
- Product testing
Phase 2: PoC for small number of Users
- Launch the product for a small group of users, enabling them to buy and sell unused data to each other in real time. Each user transacts through telco’s currency.
- Iron out the issues and defects.
Phase 3: Launch of Service
- Launch the product for public, enabling them to buy and sell unused data to each other in real time. Each user transacts through telco’s currency.
- Add users to exchange, by incentivizing them with various schemes.
Phase 4: Enrichment of Offerings through Integrations
- Integrate more and more services, within the ecosystem, to enable users to use the telco’s currency to buy and sell units of those services.
Phase 5: Future Alignments & Monetizing Options
- Far-off monetizing options such as using collected data, IoT use cases and international expansion are not discussed here, which are possible if the above product is matured and stable
What is it?
Telco Currency’s form can be decided at a later planning stage. However, the basic idea is to enable users to buy and sell unused mobile data. Let’s say, if a user has 400 MB of data, and the value of 1 MB data is 1 TelcoCoin (say that currency is called TelcoCoin), then the intrinsic value (inside the Telco ecosystem) of that 400 MB data is 400 TelcoCoins. This is to be noted that the Telco currency can also be in the form of ‘MB’. So, if a user sells 400 MB of data, say 10 MB are credited to him with future validity for his extended use.
The idea in contention is that there has to be a reward for the user who sells unused data, and that reward can be decided by aligning it with telco’s business objectives and future roadmap.
What can users do with it?
If a user has accumulated Telco Currency, following can be done with it,
- Users will be able to use the currency to buy data packages from Telco (Phase 2 and beyond)
- Users will be able to exchange their unused data with other products from the telco ecosystem such as buying movies, music, etc.
There shall be a separate mobile app and a web platform for users to buy and sell data.
Legal and Regulatory
The legal and regulatory aspects of maintaining Telco Currency (reward system) have to be explored and its scope shall be limited keeping in mind the regulatory and legal compliance.
Benefits and Key Drivers
With more and more people becoming aware on how to use data by streaming content, surfing social media, etc, this serves as a key driver to implement this concept.
With smartphone devices becoming more and more affordable to the Indians, a vast number of people need to use data and at the same time, use it cost-effectively. This is a perfect case of monetizing unused data for the end user.
Reduced Margins for the Operators
Telecom in India is at a crucial stage, where cost pressures due to stiff competition are high and operators are on the lookout of new revenue streams. Finding new ways of revenue generation is a way to earn more.
Disruption with Blue Ocean Strategy
Indian telecom space has been disrupted recently with per GB cost coming down significantly. The traditional revenue streams have been challenged and the OTT players have made the telcos think on how they operate and run their business with the existing models and technologies. This implementation will keep telco at a leading position, by creating a new space for competition and not competing on existing models.
New Technologies such as IoT
With upcoming technologies such as IoT (Internet of Things), this concept has interesting and futuristic use cases and will drive higher usage and network optimisation.
The product shall be based on the concepts of a stock exchange. However, it can be a business-driven decision to let the price be fluctuating, as in an exchange, or be fixed by telco, or based on certain other criteria.
The high-level architecture is shown below for reference
The following is a brief functional description of the components shown in the above figure. The components shown are only segregated based on their possible functions, which are as follows.
Web Interface & Mobile app
The web interface, which can be a part of the telco’s portal, allows users to view live feed of buy and sell streams, with quota of data and validity, place orders, view order history, manage Currency balance, etc. Each user can login using their mobile number and password on the portal.
This is the main component which carries the trading capabilities. The various sub-parts or functionalities of this component are:
Subscriber Identity Manager
This component maintains the identity mapping of all the telco’s customers registered on the product. As soon as a user registers here, a public ID shall be allocated to it and will be used for all future transactions, avoiding the exposure of the user’s mobile number on the exchange.
This component contains the commission structure charged by telco on the transactions performed by its users. Also, it contains complex algorithms to calculate the price of the data put on sale. Since, it may be a legal hurdle to use data as a tradable commodity, whose price is determined on demand and supply, the price of the data put on sale could be calculated based on the time remaining for validity of the data pack, amount of data and other such factors. This algorithm formation has further scope of discussion.
The order executor component handles all the buy and sell orders on the data exchange and handles interactions with the telecom network.
This component in contention may be required to interact with the Etherium blockchain and shall serve as a translator, if required.
The Etherium blockchain contains a ledger of buy and sell transactions placed by the users of the platform and is visible to all users. There are smart contracts on this blockchain which are triggered based on fulfilment of certain events and lead to execution of data transactions.
Use Cases and Workflows
A user shall be required to download a separate app, or operate from web interface, if the user wishes to buy or sell data. On downloading the app or visiting a relevant section on the portal, the user is required to register for the service.
The user shall be asked to input their mobile number. After an OTP verification, the user is asked to generate its password for future login. Now, this user has access to the real time market for buying and selling data and can see the live feed.
Let us understand the sequence of events proposed in the above flow diagram. A user registers on the product, using the mobile number and is verified with an OTP. This request is then sent to the telecom network to validate if this user exists on the network. Once validated, this user is provided with a Public ID and a first time password.
The public ID helps to maintain anonymity of the user and does not expose the mobile number on the exchange.
User to User Data Transaction
When a user places an order to sell and another user buys data, it is a valid transaction. When selling unused data, the user needs to put the unused data on sale on the exchange, which means that this unused data has to be split in parts from the data package offered to the user by the telco. Once the user puts the unused data on sale, making an offer, the buying party will offer its funds to buy this data.
In the above proposed flow diagram, let us understand each step, one by one. User A wants to sell a part of the owned data. A request is submitted for the same to the product through the portal/app. This request shall have details such as amount of data, user’s public id and the current validity of the data put on sale. The product then, validates with the network, if this user has the required quota to be put on sale. Also, the product calculates the price at which this data can be sold, using the algorithms on the Pricing Platform component. Once validated and submitted by the user, the sell order is placed on the platform.
Now, when a user (User B) wants to buy data, its buy order is placed on the exchange, with input as the amount of data required, the validity (optional) and the proposed buy price. The user shall also be able to see the live stream of buy orders to know the lowest buy price and highest sell price. As soon as the order is placed, the amount is blocked from the available funds. Upon matching the proposed price with the lowest buy price, the order is sent for execution on the blockchain, returning the commission of the transaction to telco and providing User A with the sale funds. The request is then placed to the telecom network for modifying User A’s & User B’s data packages. Both the users are then notified by the exchange about the status of the transaction.
‘Thing’ to ‘Thing’ – A Futuristic Use Case
This is a futuristic use case, specifically for IoT or the Internet of Things. Let us assume a scenario where your assistant, such as Amazon Echo or Google Home is using up data. For an ideal scenario, we assume that the assistant is interacting with various devices inside your home. It also keeps track of the amount of data that is being used by the various devices at your home. The assistant is integrated with the telco data exchange in such a way that as soon as the remaining data reaches a certain threshold, the assistant inputs request to the data exchange and buys more data automatically at a cheap price.
Another similar use case could be from connected cars, where the car which when runs out of data (due to consumption from GPS, apps, etc), orders it automatically from the market and buys from the exchange. The process flows will be similar to the one shown in earlier section, however, the user will replaced by a ‘device’.
This proposed whitepaper attempts to throw light on a very relevant use case, especially for the Indian Telecom market, looking to create a win-win situation for the telco and its customers and at the same time, empowering its customers to monetize their unused data. This also marks the introduction of blockchain on the telco’s network with the simplest of use cases and has a very futuristic approach.