Telecom’s Future Lies in Decentralized Networks

The telecommunications industry stands at a critical juncture. As global data consumption skyrockets, traditional telecom operators face a perfect storm of challenges: stagnant subscriber growth, costly infrastructure maintenance and an insatiable demand for bandwidth. This capacity crunch is not just a problem for carriers; it’s a looming crisis for consumers who increasingly rely on seamless connectivity in their daily lives.

In 2024, AT&T projected $4.7 billion in site lease costs. Add in Verizon and T-Mobile, and the annual cost of leases for wireless coverage in the US approaches a staggering $15 billion. As infrastructure costs rise, margins on internet access are projected to rise more slowly for telecom companies. Meanwhile, demand continues to explode, with global data consumption over telecom networks projected to grow by almost 2x by 2027.

The industry’s attempts to find new revenue streams, such as through fixed wireless access, which is used to connect home internet users via cellular connections, will exacerbate the problem by placing additional strain on cellular capacity. As a result, consumers face the prospect of degraded service and rising costs.

Enter the decentralized physical infrastructure network (DePIN) — a solution that promises to address the capacity dilemma head-on. In a decentralized model, infrastructure is owned, deployed and maintained by multiple parties rather than by a central authority like a big telco operator. In return for sharing in the cost and work of deploying new network capacity, infrastructure owners are rewarded with blockchain incentives.

By leveraging distributed resources and blockchain technology, carriers can see:

1. Rapid coverage creation: DePIN networks can create coverage/capacity where it’s needed most, and deploy that coverage faster than with the traditional model.
2. CAPEX-free scalability: Expansion is no longer limited by capital-intensive infrastructure projects.
3. Reduced OPEX costs: By distributing deployment and maintenance work, operators reduce operational expenses and consumers benefit from the savings.
4. Improved performance: Decentralized networks can give operators the ability to choose which radios serve which users for specific geographies and times of the day.
5. Increased trust: By providing an immutable and transparent ledger, blockchain ensures visibility of the quality of experience metrics in a distributed system.

For many telecom executives, embracing decentralization represents a significant cultural shift. But they’d be wise to consider history as they look to the future of their industry. For example, when the initial switch from analog to digital networks began in the 1990s, consumers and industry executives were hesitant to upgrade their systems. But once implemented, 2G cellular technology improved capacity and efficiency, and also enhanced voice quality, SMS messaging and data services that would lay the foundation for subsequent generations of mobile services.

Concerns about quality of service, control and security no longer need to deter a transition to a decentralized network. Each of these issues can be satisfactorily addressed through standards-based implementations and robust governance models to achieve the long-term benefits of adopting decentralized models, as well as set the stage for future innovation and improvements. By collaborating with DePINs, telecoms can position themselves at the forefront of a new era in connectivity.

One of the most promising entry points for DePIN is via coverage creation and carrier offload. Decentralized telecom networks can create coverage where it didn’t exist before. Currently, carriers identify regions where connectivity is needed, and business development teams engage with local real estate owners to lease and develop sites for expanded coverage. It’s a time- and resource-intensive process with considerable costs attached.

DePINs, however, can deliver a new “point-and-shoot” model where carriers indicate directly to the decentralized builder community where coverage is needed. Carriers can use tools such as the Helium Planner to mobilize communities to create coverage where they know it will be used, benefitting both the builders and the mobile customers, and instantly enhancing the operator’s network.

Helium stands as a prime example of a decentralized telecom network that is successfully being used by traditional carriers. The network already collaborates with several telcos, both in the US and Mexico, the latter via its partnership with Telefónica — a testament to the growing acceptance of decentralized solutions by major industry players.

By incentivizing individuals and businesses to operate Hotspots, over 400,000 subscribers of U.S. telco carriers connect to the Helium Network daily to access the internet through Hotspots. With over 500 terabytes of data transfers into Helium, the Network has proven that traditional telcos can embrace the capacity, security and effectiveness of decentralized networks.

Decentralized network expansion will become even more critical as 6G rolls out nationwide in the coming years. As stated in the recently released 6G Vision Statement from the Wireless Broadband Alliance (WBA), we will need more robust and intentional collaboration across the industry to “achieve ubiquitous connectivity” to overcome costly cellular infrastructure upgrades. The industry needs cost-effective offloading solutions to roll out this next generation of wireless technology efficiently.

As the telecom industry grapples with unprecedented challenges, decentralized networks offer a path forward. By leveraging blockchain technology, embracing innovative partnerships and reimagining the very nature of connectivity, telecom leaders will be able to thrive in the coming decades.