Reconstruction and Innovation of the Telecommunications Industry from the Web3 Perspective

In the global digital wave, the traditional telecommunications industry faces unprecedented challenges. The rollout of 5G technology has brought immense investment pressure, yet the revenue model has not seen significant improvement, and the breakthrough of value-added services is limited, resulting in competition in a saturated market. Data shows that while leading telecommunications companies in the United States have revenue exceeding 50% of internet giants, their profitability is only 30% of the latter, with a profit margin of only 20% and a market value as low as 30%. This reflects investors' lack of confidence in the telecommunications industry's capital-intensive, low-growth model.

The telecommunications industry is undergoing constant transformation. Previous attempts to participate in the virtual operator business failed to fundamentally solve the problem. The global roaming scenario envisioned at that time is actually very suitable for implementation through Web3, leveraging blockchain networks to promote value-added services. Unfortunately, these technologies had not yet emerged at that time; otherwise, the industry landscape might have been very different.

This article will explore the solutions of blockchain and Web3 models based on the current state of the telecommunications industry, using the decentralized telecom operator Roam as an example to analyze the impact of blockchain and Web3 on the reconstruction of the telecommunications industry - upgrading communication networks to value exchange networks, what transformations will this bring to the industry?

The traditional telecom operator model faces challenges

Traditional telecom operators are centered around communication infrastructure, achieving profitability by providing connectivity services, value-added services, and industry digital solutions, continuously transforming amidst technological iterations and market changes. Their business model can be summarized as a three-layer structure of "Connection + Ecology + Services."

Basic communication services remain the main source of income, including mobile data, home broadband, and enterprise dedicated lines. The popularity of 5G packages and gigabit fiber has driven the growth of data traffic revenue, but traditional voice and SMS revenues have significantly shrunk. Operators enhance user loyalty through package bundling while vigorously developing value-added services such as cloud services, the Internet of Things, and fintech.

In terms of cost structure, 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-construction and sharing, AI energy-saving, and network virtualization are widely adopted. However, the competition for existing markets keeps costs high, with terminal subsidies and channel commissions accounting for more than half of marketing expenses, prompting operators to shift towards digital direct sales.

Industry challenges mainly stem from technological iteration and cross-border competition. Traditional business revenue has significantly declined, with the per capita ARPU value dropping by 40% over the past decade. Although 5G users are rapidly increasing, the return cycle is long, and operators face new competitors such as satellite broadband and cloud providers, forcing them to accelerate their transformation.

The transformation focus is on technological upgrades and ecological reconstruction. On the technical level, network slicing, edge computing, and open architecture have become key. In terms of ecological construction, operators are transitioning from "traffic pipelines" to "digital service engines," venturing into areas such as the metaverse, content, and payments. ESG strategies have also become a means of differentiated competition.

Competition in the Stock Market and Challenges in Overseas Expansion

The telecommunications industry has entered a stage of competition in the existing market, where the enormous investment and operational costs of 5G are difficult to support solely through basic communication services. The market landscape has evolved into competition among several major players in the existing market, each focusing on specific segments.

This predicament also reflects the current overall economic situation. For telecom operators, overseas expansion is not an easy task. The telecommunications industry is quite sensitive in various countries, and telecom companies face numerous obstacles when going abroad:

1. Market access restrictions: Many countries have legislation that limits foreign ownership ratios, requires localized operations, and even directly prohibits foreign participation.

2. Spectrum allocation rules vary: There are differences in 5G frequency bands among countries, increasing the cost of cross-border deployment.

3. Data localization requirements: Regulations such as the EU GDPR mandate data to be stored domestically and restrict cross-border data flow.

4. Local monopoly pattern: Most countries are dominated by 2-3 local operators, making it difficult for outsiders to break through.

5. Price wars and subsidy culture: Emerging markets rely on low-cost packages and mobile subsidies, putting cost pressure on multinational operators.

In response to these challenges, operators have adopted various models such as equity investment, joint ventures, and virtual operations, but still find it difficult to escape the predicament of limited market competition, high investment, and uncertain returns.

Therefore, the overseas expansion of telecom operators presents the characteristics of "global capability, local delivery": building a global backbone network at the core network level, but needing to comply with data sovereignty rules of various countries; at the technical standards level, it may face choices of technical camps; the service application layer is highly localized, relying on partners or local teams for operation.

The Path for Web3 to Reshape the Telecommunications Industry

Web3 is not a simple "blockchain +" for restructuring the telecommunications industry; rather, it upgrades the communication network to a fundamental value exchange layer through globalization, token economy, distributed governance, and open protocols, supporting the future digital civilization. If operators refuse to change, they may become "pipe layers"; embracing reconstruction, they are expected to become the hub of the next generation value internet.

At the infrastructure level, physical network resources are distributed and shared through tokenization. The Roam model has validated the feasibility of incentivizing users to contribute Wi-Fi hotspots with tokens, challenging the traditional base station monopoly model. DAO governance of spectrum resources can improve utilization and create shared profits. The decentralized identity (DID) solution allows users to have control over their SIM card data, reducing privacy risks. Users can trade anonymized behavioral data to obtain tokens, while operators transform into transaction intermediaries.

Cross-border services and settlement achieve automation. Blockchain reconstructs international roaming clearing, compressing the settlement cycle from 30 days to real-time. The DeFi model introduces a pricing system, allowing users to stake stablecoins for discounts. In the Internet of Things field, the combination of blockchain and edge computing gives rise to autonomous device networks, such as smart cars automatically bidding for base station resources.

In terms of economic models, communication and finance achieve atomic-level integration: users can earn profits by sharing bandwidth, data, or even physical activity, forming a "consumption-production" closed loop. DeFi mechanisms give rise to innovative services such as communication insurance and cross-chain roaming, with on-chain smart contracts automatically executing cross-border settlements.

Roam: A Case Study of a Web3 Decentralized Telecom Operator

Roam is committed to building a global open wireless network, ensuring that humans and smart devices can achieve free, seamless, and secure network connectivity anytime and anywhere. Compared to the geographical limitations of traditional operators, Roam leverages the globalization advantages of blockchain to create a globally open and free wireless network through the OpenRoaming™ Wi-Fi framework and eSIM services.

In just over two years, Roam has established over 1.7 million nodes in 190 countries, with more than 2.3 million users and an average of 500,000 network validations per day, becoming the world's largest decentralized wireless network. Users can also obtain free eSIM data, making Roam a telecommunications service provider operating in an internet-based model.

Roam combines OpenRoaming™ and Web3 DID+VC technology to build a decentralized communication network, reducing construction costs, achieving seamless login and end-to-end encryption. Users can connect to Wi-Fi without repeated logins, significantly enhancing experience and stability.

Roam encourages users to participate in network co-construction, sharing Wi-Fi nodes or upgrading to OpenRoaming™ Wi-Fi. Users can seamlessly connect among 4 million hotspots worldwide, even finding self-built nodes in remote areas. Roam eSIM covers over 160 countries, providing users with flexible and efficient connectivity solutions.

Through Wi-Fi + eSIM global free access and a diverse incentive mechanism, Roam promotes the rapid development of decentralized networks. Users can earn traffic or tokens through check-ins, invitations, or social interactions, creating stable income channels.

Communication-based Value Exchange Network

The essence of the transformation of blockchain communication networks is to upgrade the communication network to a value exchange network, transitioning from "transmitting information" to a triad network of "transmitting information + value + trust," becoming the foundation of a digital society that integrates value transmission, data confirmation, and trusted collaboration.

From a historical perspective, the evolution of communication technology has profoundly restructured the financial payment system. Each technological breakthrough has brought about a qualitative leap in payment forms, continuously driving innovation in the payment field through three dimensions: enhancing information transmission efficiency, expanding connection boundaries, and reconstructing trust mechanisms.

1. Information transmission efficiency: Deconstructing the barriers to the transmission of value across time and space.

From telegrams to blockchain, communication technology continuously compresses payment time. The SWIFT system reduces the cross-border payment cycle to T+1, the internet achieves millisecond-level payments, and the efficiency of blockchain P2P networks is hundreds of times greater than that of SWIFT. The Web3 communication network can also significantly enhance the efficiency of value exchange.

2. Connecting Boundary Expansion: Building Inclusive Financial Neural Endings

Mobile communications extend payments to every corner. The global network based on Roam can provide blockchain financial services for 1.4 billion unbanked individuals, achieving inclusive finance. IoT communication creates new payment scenarios, such as automatic deductions from smart meters and unmanned payments at vending machines.

3. Trust Mechanism Reconstruction: Trust Without Trust

Bitcoin depicts a world without the need for trusted intermediaries. Blockchain-based "on-chain banking" has already enabled various traditional banking functions. With the restructuring of mechanisms, more financial services based on blockchain communication networks will emerge, potentially giving rise to new forms such as "global instant settlement networks" and "AI autonomous financial entities."

Future Outlook

The telecommunications industry is undergoing transformation. In the future, a hybrid model of "centralized facilities + decentralized services" may emerge:

1. Basic telecommunications operators: continue to act as "pipeline workers", controlling physical layer resources, but open network capabilities through APIs for DePIN projects to call upon.

2. Service operators: Similar to Roam, based on communication networks and blockchain technology, reconstructing into the global value routing hub using open protocols.

3. User Role: Transitioning from "Passive Consumer" to "Ecological Co-builder", promoting the development of the Web3 communication ecosystem.

The Network State ideal nation needs to be built on communication networks. Decentralized telecom operators like Roam in Web3 may become the digital foundation of the ideal nation.