Web3 Revolution in the Telecom Industry: From Communication Networks to Value Exchange Networks

Under the impact of the global digital wave, the traditional business model of the telecommunications industry is facing huge challenges. The deployment of 5G technology brings enormous investment pressure, but the revenue model has not seen breakthroughs, instead falling back into competition within the existing market. Data shows that while leading telecommunications companies in the United States have higher revenues than internet giants, their profitability is far inferior, with a market value only 30% of the latter. This reflects investors' lack of confidence in the telecommunications industry's heavy asset, low growth model.

The telecommunications industry is exploring a path of transformation. Early attempts by virtual operators have failed to address fundamental issues. Looking back, innovative concepts such as eSIM global roaming may be better realized through a Web3 approach, leveraging blockchain to enhance value-added services. This article will discuss the current state of the telecommunications industry, explore solutions based on blockchain and Web3 models, and how to reconstruct the industry by upgrading communication networks into value exchange networks.

Challenges Faced by Traditional Telecom Operators

Traditional telecom operators center around communication infrastructure, achieving profitability through connectivity services, value-added services, and industry solutions. Basic communication services remain the main source of revenue, but traditional voice and SMS businesses are impacted by OTT applications. Operators enhance user stickiness through bundled packages while also expanding into emerging fields such as cloud computing and the Internet of Things.

In terms of costs, operators face dual pressures from heavy asset investment and refined operations. 5G construction and spectrum auctions have driven up capital expenditure, with global operators investing over $300 billion annually. To reduce costs, measures such as network sharing and AI energy saving are commonly adopted. The competition for the existing market has also led to high marketing costs.

The challenges in the industry mainly stem from technological iteration and cross-border competition. Traditional business revenue continues to decline, and the return cycle for 5G investments is long. At the same time, there is a need to cope with the impact of emerging competitors such as satellite broadband from Starlink and edge computing from cloud vendors. Operators are transforming from "pipes" to "digital service engines," exploring new models such as the metaverse and super apps.

Competition in the Stock Market and Exploration Abroad

The telecommunications industry has entered a stage of competition in the existing market, making it difficult to support the huge investment in 5G. Going overseas has become an option, but it faces many obstacles:

1. Market access restrictions: Many countries limit foreign ownership ratios or require localized operations.
2. Spectrum allocation rules differ: There are significant differences in 5G frequency bands across countries, increasing the cost of cross-border deployment.
3. Data localization requirements: Many countries require domestic data storage and restrict cross-border flow.
4. Local monopoly pattern: Most markets are dominated by 2-3 local operators, making it difficult to break.
5. Price Wars and Subsidy Culture: Emerging markets rely on low-cost packages, which is disadvantageous for newcomers.

In response to these difficulties, operators have tried models such as equity investment, joint ventures, and virtual operations, but still find it hard to break free from regional limitations. In the future, there may be characteristics of "global capabilities, local delivery": achieving connectivity through a global backbone network, but needing to comply with the rules of each country; there may be a need to take sides on technical standards; and the service level will be highly localized.

The Possibility of Web3 Restructuring the Telecommunications Industry

Web3 provides a new approach for reconstructing the telecommunications industry, not merely a simple "blockchain +", but by upgrading the communication network to a fundamental value exchange layer through globalization, token economy, and decentralized governance.

At the infrastructure level:

• Tokenization of physical network resources to achieve sharing, such as the feasibility of the Roam model validating user contributions to Wi-Fi for token incentives.
• Spectrum resource DAO governance, improving utilization and creating shared benefits.
• The decentralized identity (DID) solution allows users to have control over their SIM data, reducing privacy risks.
• The blockchain data market allows users to trade behavioral data for profit.

Cross-border services and settlement automation become the breakthrough point:

• Blockchain reconstructs international roaming settlement, compressing the cycle from 30 days to real-time.
• The DeFi model introduces a fee system, allowing users to stake and receive discounts.
• The combination of blockchain and edge computing gives rise to device autonomous networks.

In terms of economic models, communication and finance achieve deep integration:

• Users can earn profits by sharing bandwidth, data, etc., forming a consumption-production closed loop.
• DeFi mechanisms have derived innovative services such as communication insurance and cross-chain roaming.
• Smart contracts automatically execute cross-border settlements, significantly reducing costs.

Roam: A Case Study of a Decentralized Telecom Operator in Web3

Roam is committed to building a global open wireless network that ensures free, seamless, and secure connections for humans and smart devices. Unlike traditional operators with regional limitations, Roam leverages the global advantages of blockchain to create a free open wireless network through the OpenRoaming™ Wi-Fi framework and eSIM services.

In just over two years, Roam has over 1.7 million nodes and 2.3 million users in 190 countries, with an average of 500,000 network verifications per day, becoming the largest decentralized wireless network in the world. Roam combines OpenRoaming™ technology with Web3 DID+VC technology to achieve seamless login and end-to-end encryption similar to cellular networks.

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

By diversifying incentive mechanisms such as check-ins and inviting friends to earn data traffic or tokens, Roam promotes the rapid development of decentralized networks and creates stable income channels for users.

Communication-based Value Exchange Network

The transformation of blockchain communication networks may bring significant breakthroughs, upgrading communication networks to a "trinity network of information + value + trust," becoming the foundation of the next generation digital society. From a historical perspective, the evolution of communication technology has profoundly restructured the financial payment system, with each technological breakthrough bringing a qualitative leap in payment forms.

1. Information transmission efficiency: Deconstructing the barriers of time and space value transfer From telegrams to blockchain, communication technology continues to enhance the efficiency of cross-border payments. The Web3 communication network is expected to further improve the efficiency of value exchange.

2. Connecting boundary extension: building the neural terminal of inclusive finance Mobile communication extends payment nodes to the corners of the physical world. Web3 networks like Roam can provide blockchain financial services to 1.4 billion people who cannot access traditional banking services, achieving financial inclusion.

3. Trust Mechanism Reconstruction: In Trustless We Trust Blockchain provides a foundation for a world without trusted intermediaries, but how to build trust mechanisms as it interweaves with the real world still needs exploration. Blockchain-based "on-chain banking" has already achieved various traditional banking functions, and in the future, it may give rise to new forms such as global instant settlement networks and AI autonomous financial entities.

Future Outlook

The telecommunications operator industry transformation is underway. In the future, a "centralized infrastructure + decentralized services" hybrid model may emerge:

• Basic telecommunications operators: continue to control physical layer infrastructure, but open network capabilities through APIs.
• Service operators: Such as Roam, restructured as the global value routing hub based on communication networks and blockchain technology.
• User role: Transitioning from passive consumers to ecological co-builders, promoting the development of the Web3 communication ecosystem.

Web3 decentralized telecom operators like Roam are expected to become the digital foundation of the Network State utopia, laying the groundwork for future communication and value exchange networks.