How can Web3 reshape the traditional telecommunications industry?

Under the impact of the digital wave, the traditional business model of the telecommunications industry faces challenges. The promotion of 5G technology brings enormous investment pressure, while the business revenue model has not seen improvement, and value-added services have yet to break through, falling into competition in a saturated market. Data shows that while the revenue of leading telecommunications companies in the United States is higher than that of internet giants, their profitability and market value lag significantly behind, reflecting investors' lack of confidence in the heavy asset model and growth potential of the telecommunications industry.

The telecommunications industry is undergoing transformation. Previous attempts to engage in virtual operator business did not address the fundamental issues. It now appears that the originally envisioned global roaming scenario is well-suited to be realized in a Web3 manner, facilitated by a blockchain network to promote value-added services. This article will explore solutions based on the current state of the telecommunications industry, discussing the impact of blockchain and Web3 models, as well as analyzing the Roam case study on the upgrading of communication networks to value exchange networks.

1. Challenges Faced by Traditional Telecom Operators

Traditional telecom operators focus on communication infrastructure, profiting by providing connectivity services, value-added services, and industry digital solutions. Basic communication services remain the main source of revenue, but traditional voice and SMS businesses have shrunk due to the replacement by OTT applications. Operators enhance user stickiness through bundled sales while developing value-added services such as cloud services and the Internet of Things as new growth points.

In terms of costs, operators face dual pressures of heavy asset investment and refined operations. The construction of 5G base stations and spectrum auctions have driven up capital expenditures, with global operators investing over $300 billion annually. To reduce costs, measures such as co-building and sharing, as well as AI energy-saving, are widely adopted. At the same time, competition in the existing market is costly, with terminal subsidies and channel expenses accounting for an excessive proportion, prompting operators to shift towards digital direct sales.

Industry challenges mainly come from technological iterations and cross-border competition. Traditional business revenues continue to decline, 5G investment return cycles are long, and there is also the need to deal with emerging competitors such as satellite broadband and cloud vendors. Operators are shifting from "traffic pipelines" to "digital service engines," building content ecosystems, launching metaverse platforms, and at the same time, ESG strategies have also become a means of differentiated competition.

2. Competition in the Existing Market and Challenges in Overseas Expansion

The telecommunications industry has entered a stage of competition in the existing market, making it difficult to sustain the enormous investments and operating costs of 5G. Expanding overseas has become an option, but as a sensitive industry, telecommunications faces numerous obstacles:

1. Market access restrictions: Many countries limit foreign ownership ratios or require localized operations.
2. Different spectrum allocation rules: High costs for cross-border deployment
3. Data localization requirements: Restrictions on cross-border data flows
4. Local monopoly market structure: outsiders find it difficult to break user inertia.
5. Price Wars and Subsidy Culture: Intense competition in emerging markets, high profit pressure.

Operators are attempting overseas expansion through models such as equity investment, joint ventures, and virtual operations, but still find it difficult to break free from regional constraints. In the future, it may exhibit the characteristics of "global capability, local delivery": building a global backbone network while adhering to the rules of each country; taking sides on technical standards; and providing highly localized services.

3. The Direction of Web3 Restructuring the Telecommunications Industry

Web3's reconstruction of the telecommunications industry is not simply "blockchain +", but rather upgrading the communication network to a fundamental value exchange layer through globalization, token economy, distributed governance, and open protocols. The main directions include:

1. Infrastructure layer:

• Tokenization of physical network resources to achieve sharing
• DAO governance of spectrum resources enhances utilization
• Decentralized Identity ( DID ) solution protects user privacy
• The blockchain data market allows users to gain data revenue.

2. Cross-border services and settlement:

• Blockchain reconstructs international roaming settlement, significantly shortening the settlement cycle.
• The DeFi model introduces a fee system
• Blockchain + Edge Computing Gives Rise to Device Autonomous Networks

3. Economic Model:

• Atomic-level integration of communication and finance
• User consumption and production form a closed loop.
• DeFi mechanism derived innovative services

Case: Web3 Decentralized Telecom Operator Roam

Roam is committed to building a global open wireless network to ensure seamless connectivity for humans and devices. Through the OpenRoaming™ Wi-Fi framework and eSIM services, Roam has over 1.7 million nodes and 2.3 million users in 190 countries, making it the largest decentralized wireless network in the world.

Roam combines OpenRoaming™ technology and Web3's DID+VC technology to achieve seamless login and end-to-end encryption, significantly enhancing the user experience. Users can earn rewards by sharing Wi-Fi nodes while enjoying global eSIM services. Roam promotes rapid network development through a diversified incentive mechanism, providing users with stable income channels.

4. Communication-Based Value Exchange Network

The essence of blockchain and Web3 reconstructing the telecommunications industry is to upgrade communication networks into value exchange networks, realizing the three-in-one transmission of "information + value + trust". Historically, the evolution of communication technology has profoundly restructured the financial payment system, mainly reflected in three aspects:

1. Information transmission efficiency: Deconstructing the barriers of time and space. From telegrams to blockchain, communication technology continuously compresses cross-border payment times and enhances value transmission efficiency.

2. Connecting boundary expansion: Building the neural terminals of inclusive finance Mobile communication extends payment nodes to remote areas, and the Internet of Things creates new payment scenarios. The Web3 communication network can provide blockchain financial services worldwide, achieving inclusive finance.

3. Trust Mechanism Reconstruction: InTrustlessWeTrust Blockchain technology provides the foundation for a world without trusted intermediaries, but it still needs to explore how to build new trust mechanisms on blockchain networks.

The future may give rise to new forms such as a "global instant settlement network" and "AI autonomous financial entities."

Case Study: Orange Money's Mobile Payment Strategy in Africa

Orange Money relies on its telecom user base to launch mobile payment services in 17 African countries, adopting a differentiated competition strategy. The key to its success lies in vertical scenario binding, forming an "ecosystem of communication + payment + finance." However, it faces challenges such as profitability pressure, security investment, and political risk. In the future, it plans to build a super app and explore pilot projects for digital currency.

V. Conclusion

The telecommunications industry is undergoing transformation, and a hybrid model of "centralized infrastructure + decentralized services" may emerge in the future:

1. Basic telecom operators: control the physical layer infrastructure and open network capabilities through APIs.
2. Service Operators: Based on communication networks and blockchain technology, build a global value routing hub.
3. Users: From passive consumers to ecological co-builders

Decentralized telecom operators like Roam in Web3 are expected to become the digital foundation of the ideal Network State.