Reconstruction and Innovation of the Telecommunications Industry in the Web3 Era

Under the wave of digitalization, the traditional business model of the telecommunications industry faces severe challenges. The 5G technology brings enormous investment pressure, but the revenue model has not improved, and value-added services have yet to break through, falling back into competition in the existing market. Data shows that while the revenue of leading telecommunications companies in the United States is 50% higher than that of internet giants, their profitability is only 30% of the latter, profit margins are only 20%, and market value is only 30%. This reflects investors' lack of confidence in the telecommunications industry's heavy asset investment model and low growth potential.

The telecommunications industry is undergoing constant transformation. Previous attempts to engage in virtual operator businesses failed to address fundamental issues. Whether it is competition in existing markets or deepening the industry, it is not a substantial change. The global roaming scenario envisioned at that time is actually very suitable for implementation using Web3 methods and can promote value-added services through blockchain networks. Unfortunately, the Web3 technology had not yet emerged at that time.

This article will explore solutions based on the current state of the telecommunications industry, discussing the impact of blockchain and Web3 models, and analyzing the influence of blockchain and Web3 on the reconstruction of the telecommunications industry using the decentralized telecom operator Roam as an example—what changes will occur when the communication network is upgraded to a value exchange network?

1. Challenges Faced by Traditional Telecom Operators

Traditional telecom operators focus on communication network infrastructure, achieving profitability by providing telecom connectivity services, value-added services, and industry digital solutions, continuously transforming amidst technological iterations and market changes. Their core logic is a three-layer architecture of "Connection + Ecosystem + Services."

Basic communication services remain the main source of revenue, including mobile data, home broadband, enterprise leased lines, etc. The popularity of 5G packages and gigabit fiber has driven the growth of data traffic revenue, but traditional voice and SMS revenues have significantly declined due to the substitution by instant messaging applications. Operators enhance user stickiness through bundling sales, with China Mobile's integrated package user penetration rate exceeding 60%. At the same time, value-added services have become a growth engine, covering areas such as cloud services, the Internet of Things, and financial technology. The number of smart devices connected by global operators has exceeded 2 billion, demonstrating the potential for digital transformation.

In terms of cost structure, operators face dual pressures of heavy asset investment and refined operations. The construction of 5G base stations, spectrum auctions, and investments in data centers have pushed capital expenditures to over $300 billion annually for global operators. To reduce costs, the industry commonly adopts co-construction and sharing, AI energy-saving technologies, and network virtualization. However, competition for users in the existing market keeps costs high, with terminal subsidies and channel commissions accounting for more than half of marketing expenses, forcing operators to shift towards digital direct sales.

The industry challenges mainly come from technological iteration and cross-border competition. The decline of traditional business is significant, with global voice revenue decreasing by an average of 7% per year, SMS revenue shrinking by 90%, and the per capita ARPU value dropping by 40% over the past decade. Despite the rapid growth of 5G users, the return cycle is long, and it is necessary to cope with the impact of emerging competitors such as satellite broadband and cloud vendors' edge computing.

The transformation path of traditional telecommunications operators focuses on technological upgrades and ecological reconstruction. At the technical level, network slicing, edge computing, and open architecture have become key. In terms of ecological construction, operators are shifting from "traffic pipelines" to "digital service engines": launching metaverse platforms, integrating e-commerce payments to create super apps, and entering content ecosystems, among others. The ESG strategy has also become a differentiated approach, reducing policy risks while attracting socially responsible investments.

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

The previously rampant business model—combining a massive existing market with basic communication service fees—can no longer support the huge investments and high operating costs of 5G. The market has entered a stage of competition over existing resources, with operators focusing on niche markets.

This is not only a dilemma for the telecommunications industry but also reflects the overall economic situation in the market. For telecom operators, expanding overseas is not easy. Communication is a sensitive industry in various countries, and telecom operators face numerous challenges on their path to internationalization:

1. Market access restrictions: Many countries have legislated to limit the proportion of foreign investment, require localized operations, and even directly prohibit foreign participation;

2. Spectrum allocation rules differ: the 5G frequency bands are not unified across countries, and operators need to customize equipment, increasing the costs of cross-border deployment.

3. Strict requirements for data localization: Many countries mandate that data be stored domestically and restrict cross-border data flows;

4. Local monopolistic market structure: In most countries, 2-3 local operators dominate, making it difficult for outsiders to break user inertia;

5. Price Wars and Subsidy Culture: Emerging markets rely on low-cost packages and mobile subsidies, and multinational operators face high cost pressures.

In the face of these difficulties, whether through equity investment, joint ventures, or virtual operator models, it is difficult to escape the stock competition of a limited market, huge capital investment, and the dilemma of returns.

Therefore, telecommunications operators cannot completely escape geographical restrictions, but can achieve "limited globalization" through capital cooperation, technological alliances, and vertical services. In the future, telecommunications operators will exhibit the characteristics of "global capabilities, local delivery:"

• Core Network Layer: Build a global backbone network through submarine cables, satellites, and cloud services, but must comply with the data sovereignty rules of each country.
• Technical Standard Layer: 6G research shows a trend towards technological camps, and operators need to choose a stance amid standard splits.
• Service application layer: highly localized, relying on joint venture partners or local teams for operation.

3. New Ideas for Restructuring the Telecommunications Industry with Web3

Clearly, limited globalization and survival in niche markets are not the ideal answer. We can reconstruct the telecommunications industry through blockchain technology and Web3 operational models. This is not just a simple "blockchain +", but rather upgrading the communication network to a foundational value exchange layer through globalization, token economies, distributed governance, and open protocols, supporting the future digital civilization. If operators refuse to change, they may become mere "pipe workers"; if they embrace reconstruction, they can hope to become the routing hub of the next generation value internet.

At the infrastructure level, physical network resources are shared in a distributed manner through tokenization. The Web3 decentralized telecom operator Roam has verified the feasibility of incentivizing users with tokens for contributing Wi-Fi hotspots, building a decentralized communication network covering a million nodes and over two million users, challenging the monopoly model of traditional operator base stations. The DAO governance of spectrum resources allows idle frequency bands to be auctioned on demand, improving utilization through smart contracts and creating shared revenue. User identity management is also innovating, with decentralized identity (DID) solutions allowing users to have control over their SIM card data, with operators acting only as verification nodes, reducing the risk of privacy leaks. Data sovereignty further returns to users, who can trade anonymized behavioral data and earn token rewards, while operators transform into transaction facilitators.

The automation of cross-border services and settlement has become another breakthrough. Blockchain alliances utilize blockchain to restructure international roaming clearing, compressing the settlement cycle from 30 days to real-time distribution, reducing costs by 40%. The DeFi model is introduced into the pricing system, allowing users to obtain communication discounts by staking stablecoins, while operators issuing dedicated tokens may reshape the payment ecosystem. In the field of the Internet of Things, the combination of blockchain and edge computing has given rise to autonomous device networks, achieving low-latency communication.

In addition, communication and finance achieve atomic-level integration: users can earn profits by sharing bandwidth, data, or even physical activity while paying for services with cryptocurrency, 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, reducing costs by over 40%.

Case: Web3 Decentralized Telecom Operator Roam

Roam is committed to building a global open wireless network that ensures human and smart devices can achieve free, seamless, and secure network connections in any state. Compared to the geographical limitations and business homogenization of traditional telecommunications operators, Roam leverages the globalization advantages of blockchain and has constructed a decentralized communication network through the OpenRoaming™ Wi-Fi framework, while also integrating eSIM services, creating a globally open and free wireless network.

After more than two years of development, Roam currently has 1,729,536 nodes and 2,349,778 application users in 190 countries worldwide, performing 500,000 network verification activities daily, making it the largest decentralized wireless network in the world. Roam users can also receive free eSIM data while building and verifying Wi-Fi nodes, enabling Roam to operate as a telecommunications service provider using an internet model.

Roam has collaborated with the Wi-Fi Alliance and the Wireless Broadband Alliance (WBA) to integrate traditional OpenRoaming™ technology with Web3's DID+VC technology, creating 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 as effortlessly as 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 inherent gateway nature of Wi-Fi, Roam bridges the gap between the 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 App, sharing Wi-Fi nodes or upgrading to the more secure and convenient OpenRoaming™ Wi-Fi. Users can not only enjoy seamless connections across four million OpenRoaming™ hotspots worldwide, but also find Roam's self-built network nodes in remote areas, significantly expanding network coverage and enhancing user experience.

At the same time, Roam's eSIM provides key support for its vision of a global open wireless network. Users can activate data plans directly on their devices without the need for a physical SIM card, greatly simplifying the usage process. Roam eSIM covers over 160 countries worldwide, providing travelers and business professionals with flexible and cost-effective network connectivity solutions.

Roam promotes the rapid development of decentralized networks through global free access via Wi-Fi + eSIM and a diversified incentive mechanism. 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 way to create sustainable and stable income channels.

4. Communication-Based Value Exchange Network

The reconstruction of the telecommunications industry with blockchain and Web3 essentially upgrades the communication network to a value exchange network, transitioning from "transmitting information" to a trinity network of "transmitting information + value + trust." This becomes the foundation of the next generation digital society, integrating value transmission, data ownership, and trusted collaboration.

The infrastructure of Web2 has achieved frictionless, almost free flow of information, but the value within it has not circulated. The value internet of Web3 can provide a carrier for these values, allowing them to flow as frictionless and nearly free as information. The essence of payment is the transfer of value.

From a historical perspective, the evolution of communication technology has profoundly restructured the development trajectory of the financial payment system, with each technological breakthrough bringing a qualitative leap in payment forms. From the Morse code of the 19th century to the instant settlement of modern blockchain payments, communication technology has continuously driven revolutionary changes in the financial payment sector through three dimensions: enhancing information transmission efficiency, expanding connection boundaries, and reconstructing trust mechanisms.

4.1 Information transmission efficiency: Deconstructing the barriers of space-time value transfer

The telegraph technology first realized the transmission of value across space and time. After the transatlantic telegraph cable was opened in 1858, the time for interbank remittances was shortened from several weeks to a few hours. SWIFT system