The Telco DAO (TDAO): Does it represent the future of telco business models?

In recent articles, we’ve discussed how Private Equity (PE) could help to reshape the struggling telecommunications business models and how OSS/BSS stacks touch almost every part of a telco business model without most people even realising it (as per the diagram below).

We’ve also discussed how the pragmatism of Tier-2 telco thinking could be a great starting point for designing the next-generation telco business model.

Part of the challenge facing the Tier-1 telcos (aka “Mammoths,” both for their huge size and risk of extinction), is that they’re so large, bureaucratic and difficult to change. We equate this size with the inertia principle. Force equals Mass x Acceleration (F = ma). In other words, the greater the mass (of people, systems, red-tape, etc), the more force must be applied to reach a given acceleration (ie to effect a change). Our Mammoths require enormous force (and resource investment) to bring about any form of significant change (technical, cultural, procedural, etc). That’s why I have grave concerns for the traditional customers of our OSS/BSS products.

What if we considered the opposite? What if the “mass” of a telco were negligible? How different would an OSS/BSS look then? How would a telco look then? To an extent, that’s where most super-ISPs started out life – as a rack of modems in a garage with spreadsheets as an OSS/BSS. But what if we shrunk things even smaller than a “Garage ISP” whilst still thinking about a larger service delivery footprint than just a modem-bank? Could anything be smaller but still be substantial?

Yes, actually. How about the concept of a Telco Decentralised Autonomous Organisation (DAO)?

The concept of a DAO comes from a world of blockchain and smart contracts. It challenges traditional organisational and governance models by offering an algorithmic way to coordinate resources, almost eliminate administrative overhead and provide democratic / transparent decision-making.

What might a TDAO (telco DAO) look like?

For a start, the TDAO model could introduce radical changes in how telco services are managed, operated, and consumed. Here’s a possible outline:

Governance and Operation

• Decentralised Management: Traditional centralised decision-making bodies are replaced with a DAO, where stakeholders (e.g. subscribers, service users, developers, investors) make decisions collectively. Governance would need to extend to cover network upgrades, pricing models, services offered, investment in infrastructure, etc, etc. The gamut of governance is wide!
• Token-based Incentives: Subscribers / Stakeholders might be incentivised with tokens that grant voting rights (and a share in profits if the TDAO is for-profit). These tokens could also be used to pay for services, creating a closed-loop economy within the ecosystem. This elicits many other incentivisation possibilities, but we won’t go down that rabbit-hole!
• Algorithmic Operations (via Smart Contract Automation): Contracts would automatically execute actions like billing, service provisioning and even allocation of network maintenance tasks based on predefined conditions. This massively reduces overheads and improves decision-making speed / efficiency. This requires AIOps-type thinking, considering how the algorithms engage humans – i.e. workers to perform field activities, design network capacity expansion, perform system transformations, navigate fall-outs / disputes, etc

Service Delivery and Access

• Stakeholder-driven Network Expansion: Expansion decisions, such as deploying new towers, new fibre loops or upgrading technology, could be voted on by the community, focusing on genuine demand rather than corporate benefit / profit motives. Perhaps expansion could even be algorithmically decided rather than requiring human votes
• Dynamic Pricing Models: Prices for services could be dynamically adjusted based on demand, considering network congestion or user consensus, potentially offering more competitive rates than traditional models. This could also incentivise usage that smooths busy-hour (peak capacity) effects, thus reducing capital outlay
• Peer-to-peer Connectivity Solutions: Innovations like community, mesh or het-net networks could be more widely adopted, with individual users being incentivised to host small-scale infrastructure (eg Wi-Fi hotspots) and being rewarded with tokens for contributing to network coverage and offload

A DAO-based telecommunications service provider would not only revolutionise business, operational and governance models but drastically reduce the cost-base (arguably one of telco’s biggest problems today).

You can probably already predict where this article is going next. What are the tools that are fundamental to operationalising this TDAO concept? Yep. OSS/BSS.

OSS/BSS would be indispensable for managing the complex, dynamic environments of telecommunications networks, ensuring heavily automated operational efficiency and delivering customer-centric services of course.

Here’s just a short example of how OSS/BSS would underpin the TDAO ecosystem:

1. Automated Network Operations with OSS

OSS tools are crucial for the automated management of network operations within a DAO. They enable the seamless provisioning of services, maintenance of network health and optimisation of resources (where digital and non-digital resources like field-work activities are optimised through smart contracts). These automated processes ensure that the network can adapt in real-time to the collective decisions of the DAO’s algorithms / stakeholders, maintaining high standards of service quality and reliability.

2. Dynamic Service Delivery and Billing with BSS

On the customer-facing side, BSS systems handle billing, customer relationship management, delivery partners and revenue distribution — all vital in a telco DAO’s operation. Through blockchain integration, BSS facilitates tokenised billing, payments and collections, thus allowing for innovative pricing models and microtransactions. Moreover, decentralised identities managed within BSS frameworks could assure secure and private customer data management, fostering trust and personalisation in customer service.

3. Transparency and Trust through Blockchain Integration

Integrating OSS/BSS with blockchain not only enhances operational and billing efficiency but also has the potential to imbue the entire telecom ecosystem with unprecedented levels of transparency and trust. Every transaction, network performance data-point and customer interaction is recorded on the blockchain. Not only does this become the basis for providing essential operational insight, but also provides an open-book for stakeholders.

4. Regulatory Compliance and Innovation

Navigating the regulatory complexities of the telecommunications industry is another area where OSS/BSS systems already prove indispensable. They ensure compliance with local and international standards, managing everything from workflows, service-level traceability and quality of service to privacy protections. It also provides full transparency of interpretation of regulatory frameworks as well as community reporting.

The non-DAO Summary

At this stage, I should clearly point out that I’m not proposing a TDAO. Instead, this is a thought-experiment into what OSS and BSS might look like if they only had machine to machine interfaces. Today’s OSS/BSS are designed with human-first interfaces. The OSS/BSS of the future will  be designed to only have humans handling fall-outs where the machines have messed up or can’t decide what to do next. The concept of the TDAO is purely intended as a re-framing exercise for OSS/BSS product designers. Perhaps it’s also useful as a re-framing exercise for telco business model designers too.

Here’s the thing I find really interesting – the T2 market is seriously underserved in terms of vendor offers, attention and thinking. I completely get it. If you’re an OSS/BSS vendor that has a limited amount of human resources, you want them applied to the customers with the biggest budgets and consistency / recurrence of cashflow to you (the Mammoths). However, I have this really strong feeling that the pragmatism and reduced complexity of the T2 market actually provides us with a line of sight into the evolution / disruption of the telco business model.

Not only that, but there are plenty of other reasons why the T2 market is highly attractive (in my humble opinion anyway):

• There are a lot more T2 than T1s (ie a lot more potential customers)
• T2 procurement processes tend to be far shorter (ie time to contract is much shorter)
• There’s a greater level of standardisation between T2 providers (ie repeatability and continual improvement)
• There’s less bespoke customisation, meaning the long-tail of product features is smaller
• The complexity (technical, political / cultural, process, etc) tends to be far smaller and easier to untangle (not suggesting it’s simple, but certainly simpler than the Mammoths)
• T2s tend to have a culture of having to get stuff done quickly, compared with the inherent procrastination of Mammoth organisations
• It’s much easier to move the needle – less force required to get an acceleration / change
• There aren’t many OSS/BSS that have been designed specifically for the needs of T2s (ie less competition)

What do you think? Do T2 business models provide the business models for future telco? Are T2s attractive for the reasons mentioned?

PS. TDAO Challenges and Considerations

Actually building a TDAO would require overcoming significant technical, regulatory, and adoption hurdles.

• Smart Contract Complexity: The complexity of any telco, even a garage-based ISP, is simply too large to consider implementing as a TDAO. There are too many possibilities that could never be foreseen when drafting the contract. Too many grey areas that need nuanced human decisions, that can’t be accommodated by the black and white nature of algorithms
• Complexity in General: We talk a lot about minimising telco complexity-trees or variant-trees. Just as the Pyramid of Pain causes down-stream impacts on a manual telco today, it would impact a wholly-digital telco of tomorrow even more heavily
• Regulatory Compliance: Telecommunications is a heavily regulated sector, and a DAO structure must navigate these regulations, including spectrum rights, data privacy and service standards amongst other things. There’s a lot of grey in this area!!
• Universal Quality of Service (QoS): Maintaining a fair and standardised approach to high QoS standards would be crucial, especially in a decentralised model where infrastructure investment is algo or community-driven
• Gaming the Systems: There’s a real possibility of a transparent system to be gamed and/or for some people/groups to be inadvertently left behind. This could be in the form of service delivery, or allocation of field-work, or any other number of skewed outcomes
• Dispute Resolution: Mechanisms for resolving disputes between users, or between users and the DAO, would need to be established, likely leveraging blockchain-based arbitration systems. Again, this is likely to have too many grey areas to be solved algorithmically