The telecommunications industry is undergoing a transformation, which may lead to a hybrid model of "centralized infrastructure + decentralized services" in the future.
Written by: Web3 Xiaolu
Under the impact of the global wave of digitalization and informatization, the traditional business model of the telecommunications industry is facing unprecedented challenges. The promotion and implementation of next-generation 5G technology have brought significant upfront investment pressure to operators, but their business revenue models have not improved, and value-added services have yet to achieve effective breakthroughs, instead becoming embroiled in competition within the existing market.
From the data, although the revenue of leading telecommunications companies listed in the United States is 50% higher than that of internet giants, their profitability is only 30% of the latter. The profit margin of the telecommunications industry is only 20% of that of internet giants, with net income barely maintaining around 5%, and market capitalization is only 30% of that of internet companies. This situation reflects investors' severe lack of confidence in the heavy asset investment model and low growth potential of the telecommunications industry.
The telecommunications industry is also undergoing continuous transformation. For those who participated in the virtual operator business in 2015/2016, the opening of the telecommunications operator industry to private enterprises has not solved the actual problems, whether in terms of competition in the existing market or deep integration into the industry; this is not an essential transformation solution. At that time, we also explored going overseas and attempted to cooperate with Lebara Mobile, the largest virtual operator in Europe, but for various reasons, it did not progress.
Reflecting now, the eSIM global roaming scenario we initially built is actually very suitable for implementation through Web3, and subsequently promoting value-added services through a blockchain value transfer network. However, blockchain and Web3 technologies had not emerged at that time; otherwise, it would have been a different scenario.
This article will examine the current state of the traditional telecommunications industry and explore the solutions provided by blockchain technology and Web3 operational models, further discussing the case of the decentralized telecommunications operator Roam to understand what the reconstruction of the telecommunications industry through blockchain and Web3—transforming communication networks into value exchange networks—will bring us.
I. Challenges in the Traditional Telecommunications Operator Business Model
The business model of traditional telecommunications operators is centered around communication network infrastructure, achieving profitability through providing 1) telecommunications connection services, 2) value-added services, and 3) industry digitalization solutions, while continuously transforming amid technological iterations and market changes. Its core logic can be summarized as a three-layer architecture of communication "connection + ecosystem + service."
Basic communication services remain the revenue pillar, including traditional businesses such as mobile data, home broadband, and enterprise dedicated lines. For example, the popularity of 5G packages and gigabit fiber has driven growth in data traffic revenue, but traditional voice and SMS revenues have significantly shrunk due to the replacement by OTT applications like WeChat. To respond to this trend, operators have enhanced user stickiness through bundled sales (e.g., "broadband + IPTV + smart home"), with the penetration rate of China Mobile's integrated packages exceeding 60%. Meanwhile, value-added services have become the growth engine, covering areas such as cloud services, the Internet of Things, and fintech. For instance, globally connected smart devices by operators have exceeded 2 billion, and China Mobile's cloud computing revenue has grown 25 times in three years, demonstrating the potential of digital transformation.
In terms of cost structure, operators face dual pressures of 1) heavy asset investment and 2) refined operations. The construction of 5G base stations, spectrum auctions (e.g., the U.S. C-band auction cost $81 billion), and data center investments have driven up capital expenditures, with global operators investing over $300 billion annually. To reduce costs, the industry commonly adopts co-construction and sharing (e.g., cooperation between China Broadcasting and China Mobile for 5G base stations), AI energy-saving technologies (Huawei's solution helped China Unicom save 10% on electricity), and network virtualization (Open RAN saves 30% on equipment costs). However, in the current saturated red ocean market, the cost of user acquisition remains high, with terminal subsidies and channel commissions accounting for more than half of marketing expenses, forcing operators to shift towards digital direct sales, with app subscription packages accounting for over 60%.
Industry challenges mainly stem from technological iterations and cross-industry competition. Traditional business declines are significant, with global voice revenue declining by an average of 7% annually, SMS revenue shrinking by 90%, and per capita ARPU value dropping by 40% over the past decade. Although 5G users are growing rapidly, the return cycle is long (expected to be 8-10 years), and operators must contend with emerging competitors such as Starlink satellite broadband and cloud vendors' edge computing. For example, SpaceX's Starlink has covered 500,000 rural users, while AWS is seizing the low-latency market for enterprises through Local Zones, forcing operators to accelerate their transformation.
(The Future of the Telecommunications Industry: A Dual Transformation)
The transformation path of traditional telecommunications operators focuses on technological upgrades and ecosystem reconstruction. On the technology front, network slicing, edge computing, and Open RAN open architecture have become key, such as Deutsche Telekom providing a 1-millisecond latency autonomous driving network for car manufacturers, and AT&T customizing dedicated channels for remote surgeries in hospitals. In terms of ecosystem building, operators are shifting from being "traffic pipelines" to "digital service engines": South Korea's SKT launched the metaverse platform Ifland, Jio integrated e-commerce and payments to create a super app, and China Mobile entered the content ecosystem through Migu Video. ESG strategies have also become a differentiating focus, with Vodafone planning to achieve 100% renewable energy supply by 2030, and Verizon committing to a 40% carbon reduction over ten years, reducing policy risks while attracting socially responsible investments.
II. Competition in the Existing Market and Exploration of Overseas Opportunities
The previously rampant business model—huge existing market X basic communication service fees—can no longer support the current massive 5G capital investments and heavy operational costs. The market has entered a phase where a few operators are competing in the existing market and deeply integrating into their respective niche markets.
This is not only a dilemma for the telecommunications operator industry but also a microcosm of the current overall market economy. I remember a few years ago listening to Luo Zhenyu's New Year's Eve speech (which was very pessimistic about the market at the time and is still applicable now), and the summary was just two words: go overseas. However, for telecommunications operators, going overseas is not easy.
Since communication is a very sensitive industry in every country, the path for telecommunications operators to go overseas is bound to be fraught with difficulties:
Market access restrictions: Most countries legislate to limit foreign ownership ratios (e.g., India has a 50% cap on foreign investment in telecommunications), require localized operations (e.g., Indonesia's "Data Sovereignty Law"), or even directly prohibit foreign participation (e.g., North Korea, Cuba);
Different spectrum allocation rules: The 5G frequency bands are not unified across countries (e.g., China mainly uses 3.5 GHz, while Europe focuses on 700 MHz), requiring operators to customize equipment, increasing the cost of cross-border deployment;
Strict data localization requirements: The EU's General Data Protection Regulation (GDPR) and Russia's Data Localization Law mandate data storage within the country, restricting cross-border data flow;
Local monopolistic market structures: Most countries are dominated by 2-3 local operators (e.g., South Korea's SKT, KT, LG U+ hold 98% market share), making it difficult for newcomers to break user inertia;
Price wars and subsidy culture: Emerging markets (e.g., Southeast Asia) rely on low-priced packages and mobile subsidies, putting high cost pressure on multinational operators (e.g., Vodafone exited India due to losses from low-price competition).
To address the above difficulties, whether through equity investment (e.g., Singapore's Singtel indirectly penetrating the Asian market by holding local companies like India's Bharti Airtel and Indonesia's Telkomsel), joint ventures (e.g., China Unicom and Spain's Telefónica established a joint venture to share resources in the Latin American market), or the virtual operator (MVNO) model (e.g., the UK’s Virgin Mobile entering markets like Australia and South Africa by leasing networks to reduce infrastructure investment), the issue will still return to the original point—competing in a limited market, the massive investment of capital costs, and how to respond to the confusion of "where is the return?"
(SK Telecom accelerates AI push via alliance with more partners)
Therefore, regarding going overseas, we see that telecommunications operators cannot completely escape regional restrictions but can achieve "limited globalization" through capital cooperation, technological alliances, and vertical services. Based on this, telecommunications operators "going overseas" will exhibit characteristics of "global capabilities, local delivery":
Core network layer: Building a global backbone network through submarine cables, satellites, and cloud services, while adhering to each country's data sovereignty rules.
Technical standards layer: The R&D of 6G has shown a "technological camp" formation among China, the U.S., and Europe, requiring operators to take sides in the standard split.
Service application layer: Highly localized, relying on joint venture partners or local teams for operations, such as Orange launching M-Pesa mobile payments in Africa.
III. How to Reconstruct the Telecommunications Industry with Web3?
Clearly, limited globalization and survival in a squeezed market are not the answers we seek; we can completely reconstruct the telecommunications industry through blockchain technology and the operational model of Web3. The Web3 reconstruction of the telecommunications industry is not simply "blockchain +", but rather through globalization, token economies, distributed governance, and open protocols, elevating communication networks to a foundational value exchange layer to support future digital civilization. If operators refuse to transform, they may become mere "pipeline workers"; if they embrace reconstruction, they could become the routing hub of the next generation of the value internet.
(The "Internet of Value": 8 Top Sectors Being Transformed by Blockchain)
At the infrastructure level, physical network resources are distributed and shared through tokenization—Web3 decentralized telecommunications operator Roam has validated the feasibility of incentivizing users with tokens for contributing Wi-Fi hotspots, establishing a decentralized communication network covering millions of nodes and over two million users, challenging the traditional operator base station monopoly. Meanwhile, the DAO governance of spectrum resources (such as the "5G Spectrum NFT" trial by British Telecom) allows idle frequency bands to be auctioned on demand, enhancing utilization through smart contracts and creating shared revenue; user identity management is also being innovated, with the decentralized identity (DID) solution developed by Spanish Telecom in collaboration with Evernym allowing users to control their SIM card data, with operators acting only as verification nodes, reducing the risk of privacy leaks; data sovereignty is further returned to users, as South Korea's SK Telecom's blockchain data market allows users to trade anonymized behavioral data and earn token rewards, while operators transform into transaction facilitators.
The automation of cross-border services and settlements has become another breakthrough. The CBSG alliance, involving AT&T, Orange, and others, utilizes blockchain to reconstruct international roaming settlements, compressing the settlement cycle from 30 days to real-time accounting, reducing costs by 40%; the DeFi model has also been introduced into the tariff system, allowing users to obtain communication discounts by staking stablecoins, while operators issuing dedicated tokens (such as the envisioned Verizon VZW Token) may reshape the payment ecosystem. In the Internet of Things sector, the combination of blockchain and edge computing has given rise to autonomous device networks—Deutsche Telekom's collaboration with Fetch.ai has developed a vehicle networking protocol that allows smart cars to automatically bid for roadside base station resources, achieving low-latency communication; Ericsson is using blockchain to trace the origins of 5G base station parts, enhancing supply chain credibility.
Additionally, in terms of economic models, communication and finance have achieved atomic-level integration: users can earn income by sharing bandwidth, data, or even physical activity (such as Telefónica's "exercise mining") while paying for services with cryptocurrency, forming a "consumption-production" closed loop; DeFi mechanisms have further derived innovative services such as communication insurance and cross-chain roaming, with on-chain smart contracts automatically executing cross-border settlements, reducing costs by over 40%.
Case Study: Web3 Decentralized Telecommunications Operator Roam
Roam is dedicated to building a global open wireless network, ensuring that humans and smart devices can achieve free, seamless, and secure network connections whether stationary or in motion. Compared to the geographical limitations of traditional telecommunications operators and the homogeneity of their services, Roam leverages the inherent global advantages of blockchain to construct a decentralized communication network based on the OpenRoaming™ Wi-Fi framework, while also integrating eSIM services, creating a globally open and free wireless network.
In just over two years of development, Roam now has 1,729,536 nodes and 2,349,778 application users across 190 countries, conducting 500,000 network verification activities daily, making it the largest decentralized wireless network in the world. Additionally, Roam users can earn free eSIM data while building and verifying Wi-Fi nodes, allowing Roam to operate as a telecommunications service provider using an internet model.
（depinscan.io/projects/roam）
Globally, while traditional Wi-Fi still accounts for over 70% of data traffic, its outdated infrastructure and privacy data security issues limit its potential. To address these challenges, Roam has partnered with the Wi-Fi Alliance and the Wireless Broadband Alliance (WBA) to combine traditional OpenRoaming™ technology with Web3's DID+VC technology, constructing a decentralized communication network. This not only reduces the high upfront costs of global network construction but also achieves seamless login and end-to-end encryption similar to cellular networks. Users do not need to log in repeatedly and can connect to Wi-Fi seamlessly, just like using cellular data, significantly enhancing user experience and connection stability.
Roam's decentralized deployment solution provides an innovative approach for the industrial upgrade of OpenRoaming™ Wi-Fi. Leveraging the natural entry point of Wi-Fi, Roam bridges the gap between Web2 and Web3 ecosystems, redefining industry standards for telecommunications services in terms of user experience and data standards through decentralized technology.
Roam encourages users to participate in network co-construction through the Roam App, sharing Wi-Fi nodes or upgrading to the more secure and convenient OpenRoaming™ Wi-Fi. Users can enjoy seamless connections across four million OpenRoaming™ hotspots globally and find Roam's self-built network nodes in remote areas like Siberia and northern Canada, significantly expanding network coverage and enhancing user experience.
At the same time, Roam's eSIM provides crucial support for its vision of a global open wireless network. Users can activate data plans directly on their devices without needing a physical SIM card, greatly simplifying the usage process. Roam's eSIM covers over 160 countries, providing flexible and cost-effective network connectivity solutions for travelers and business professionals.
Through global free access via Wi-Fi+eSIM and diverse incentive mechanisms, Roam promotes the rapid development of decentralized networks. Additionally, through innovative mechanisms, users can earn global data traffic or Roam points tokens by checking in, inviting friends, or interacting with Roam's social media, providing users with a sustainable and stable income channel.
（weroam.xyz/）
IV. Value Exchange Network Based on Communication
In fact, beyond reconstructing the business model through Web3, the transformation of blockchain communication networks can be a significant breakthrough. The reconstruction of the telecommunications industry based on blockchain and Web3 essentially upgrades communication networks to value exchange networks, transitioning from "information transmission" to a triadic network of "information + value + trust," becoming the foundation of the next-generation digital society that integrates value transmission, data rights confirmation, and trust collaboration.
The infrastructure of the Web2 internet has already achieved frictionless, nearly free information flow, but the value within it has not circulated. The value internet of Web3 can provide a carrier for these values, allowing value to flow as frictionlessly and freely as information. In this context, the essence of payment is the transfer of value (Exchange of Value).
From a historical perspective, the evolution of communication technology has profoundly restructured the development trajectory of financial payment systems, with each technological breakthrough bringing qualitative leaps in payment forms. From the beeping of Morse code in the 19th century to the instant settlement of modern blockchain payments, communication technology has continuously driven revolutionary changes in the financial payment field by enhancing information transmission efficiency, expanding connection boundaries, and reconstructing trust mechanisms.
4.1 Information Transmission Efficiency: Deconstructing the Barriers of Value Transmission Across Time and Space
The emergence of telegraph technology first achieved cross-temporal and spatial value transmission. After the transatlantic telegraph cable was opened in 1858, the time for interbank remittances was reduced from weeks to hours, breaking the temporal and spatial barriers of financial markets for the first time. The SWIFT system established an electronic messaging communication system in 1973, shortening the traditional telegraphic (Telex) cross-border payment cycle from 3-5 days to T+1, with a communication capacity to process an average of 42 million payment instructions daily, laying the foundation for modern cross-border payment infrastructure. The real-time communication capabilities created by the TCP/IP protocol in the internet era compressed the completion time of electronic payments to the millisecond level. Blockchain replaces the traditional centralized communication architecture of finance with a P2P (peer-to-peer) communication network, constructing a value transmission channel without intermediaries, enhancing communication efficiency by hundreds of times compared to the centralized message exchange relied upon by the SWIFT system. Similarly, the communication network based on blockchain Web3 can also achieve a significant increase in value exchange efficiency.
4.2 Expanding Connection Boundaries: Building the Nerve Endings of Inclusive Finance
Cellular mobile communication technology extends payment nodes to every corner of the physical world. SMS payments supported by 2G networks have sparked a revolution in inclusive finance in Africa, with Ethiopia Telecom's HelloCash achieving financial service penetration in areas with less than 40% base station coverage through USSD channels. Likewise, the global network built on Roam can provide bank-level financial services on the blockchain to all connected individuals (especially the 1.4 billion people who cannot access banking financial services), whether they are in the Amazon rainforest or deep in Africa, truly realizing financial inclusion and equality.
In addition to expanding geographical boundaries, communication networks can also connect silicon-based civilizations. IoT communication technology is creating new payment scenarios. Smart meters supported by NB-IoT in Italy's ENEL company enable automatic meter reading and billing, while LoRaWAN-connected vending machines in Japan's Lawson convenience stores complete over two million cashless payments monthly. The 1 ms ultra-low latency and million-device connection capability of 5G networks support Tesla's V2X communication for automatic charging billing systems. Similarly, with the explosion of AI Agents, interactions between AI Agents or between AI Agents and humans require communication networks and the value transmission above the network.
4.3 Reconstructing Trust Mechanisms: In Trustless We Trust
The Bitcoin white paper paints a picture of a world without trusted intermediaries, where cryptography and code provide a foundation for trustlessness. However, when this idealistic cryptographic world intertwines with the incredibly realistic real world, compromise is not the only option; how to build trust mechanisms on blockchain networks is something we need to consider.
Based on blockchain technology and Web3, "on-chain banks" can already achieve various functions of banking services in developed countries, such as savings (self-custody), investment and wealth management (DeFi Stacking or RWA Product), transfers (blockchain peer-to-peer networks), and consumption payments (stablecoin payment receipts), among others.
These bank-level services allow anyone with internet access to utilize them, which could be a further derivation of the Roam project. With the reconstruction of mechanisms, more financial services based on blockchain communication networks will be built. The future may give rise to new forms of "global instant settlement networks" and "AI autonomous financial entities" that combine communication and payment.
Case Study: Orange Money's Mobile Payment Layout in Africa
The case of Orange Money profoundly reflects the path of telecommunications operators deepening localization strategies through financial technology. Although this is a path of a traditional telecommunications operator, it can provide a reference for the new transformation of Web3 telecommunications.
The African market, with a low penetration rate of traditional banks (only 34% of adults in Sub-Saharan Africa have bank accounts) but a high mobile phone penetration rate (80%), has become a blue ocean for mobile payments. Orange, leveraging its 130 million African user base, launched Orange Money in 17 countries, with over 40 million users, adopting a differentiated competitive strategy: in East Africa, dominated by M-Pesa (such as Kenya), it competes for market share with low fees and high commissions, while in French-speaking West Africa (such as Senegal), it occupies over 60% market share due to language adaptability and a village-level agent network, and collaborates with M-Pesa in the cross-border payment sector. The key to its success lies in vertical scene binding—linking with agricultural cooperatives to distribute procurement funds, accessing government public service payments, and innovatively launching microloans (OKash instant loans) and low-cost cross-border remittances (with fees reduced by 30%), forming an ecosystem of "communication + payment + finance." However, the market is significantly fragmented: M-Pesa monopolizes East Africa (with a monthly transaction volume of $12 billion), MTN dominates West Africa, and local giants are in fierce competition with international players like PayPal. Orange has increased user ARPU by 20% through its payment business and optimized risk control using transaction data (with a bad debt rate of 5%), but faces profitability pressure (with a net profit margin of only 3-5%), cybersecurity investments (accounting for 30% of the IT budget), and political instability risks in French-speaking regions. In the future, Orange plans to integrate payments, e-commerce, and content to build a super app and explore the pilot of the West African digital currency "Eco." Its model verifies that operators in underdeveloped markets need to deeply integrate local scenes, channels, and culture, but sustained growth relies on ecological synergy and compliance balance.
（Orange Money: Fintech is proving a game changer in Africa）
V. Conclusion
The transformation of the telecommunications operator industry is underway. In the future, a hybrid model of "centralized infrastructure + decentralized services" may emerge: one type of basic communication operator will continue to serve as the "pipeline" responsible for controlling physical layers such as fiber optics and spectrum, but will open network capabilities through APIs for DePIN projects to utilize, such as Vodafone tokenizing network slicing, allowing enterprises to purchase exclusive channels with cryptocurrency. Another type of service operator, similar to Roam, will reconstruct itself as a value routing hub based on communication networks and blockchain technology through open protocols. This is not limited to local operations but will expand globally to develop communication-based ecological businesses. Similarly, the user layer needs to shift from "passive consumers" to "ecological co-builders" to further promote the development of the entire Web3 communication ecosystem.
The ideal state of a Network State needs to be built on communication networks, and decentralized telecommunications operators like Roam may become the digital foundation of this ideal state.
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