Synergis: Analyzing the Potential Disruption of the Traditional Telecommunications Business Model from Roam, a Decentralized Telco, Surpassing One Mi
Roam will expand to new application scenarios such as smart home and AI integration, providing users with a more convenient network connection through community collaboration and innovative services. It is expected to become a typical example of how Web3 and blockchain are transforming the telecommunications industry.
Driven by the global wave of digitization, the traditional business model of the telecommunications industry is facing unprecedented challenges. On one hand, the upfront investment pressure brought by 5G continues to increase, while on the other hand, the transformation of its revenue model has not been realized, leading to a lack of improvement in value-added services. The traditional user communication service fee revenue continues to decline under peer competition pressure. As shown in the data below, among the top companies listed in the United States, although the revenue of the telecommunications service industry is 50% higher than that of Internet giants, its profitability is only 30% of the latter. The profit margin of the telecommunications industry is only 20% of that of Internet giants, and the net income remains around 5%. Compared to Internet companies, the market value of telecommunications operators is only 30% of theirs, showing a severe lack of investor confidence in the heavy asset investment model and low growth potential.
Limitations of the Traditional Telecommunications Operator Model
The traditional telecom company model relies on users signing long-term contracts and paying fixed fees to gain network access, a so-called "pay to use" model that is highly inefficient in today's digital age. Users usually can only choose one service provider, such as AT&T, Verizon, or T-Mobile, and cannot freely switch or enjoy services from multiple providers simultaneously. This limitation not only fragments the user base but also overlooks the user experience, making it difficult to attract new customers.
In stark contrast, Internet services such as search, social media, e-commerce, etc., are almost all freely open to end-users. It is difficult to imagine Google and Bing each serving half of the fixed customers in the United States, or Alibaba, Baidu, and Tencent each only serving one third of the fixed customers in China; this would be a very limited and small-scale application. Operators are increasingly reduced to a "pipe" role. Although all Internet traffic flows through their infrastructure, they are excluded from the most valuable services.
To break free from the "pipe" dilemma, telecom operators must shift from paid access to free access, covering the entire network of consumers, enhancing their network effect, and directly providing high-value services to users rather than charging limited fixed "pipe" fees. However, this transformation is a huge challenge for large and bureaucratic telecom companies.
The Innovative Model and Implementation of Decentralized Telecom Operator Roam
We have observed that in this transformation, Roam has rapidly risen through its innovative free usage model, becoming an industry challenger that combines Web3 technology with telecom services. Over the past year, Roam has achieved remarkable growth in user numbers and node numbers without significant marketing investment, surpassing a million users, garnering the attention and support of many traditional operators, and becoming a leading project in the Decentralized Physical Infrastructure (DePIN) sector. As shown in the figure below, Roam ranks second in the DEPIN data analysis website depinscan.io.
Deep Dive: How Roam Utilizes Communication Technology and a Decentralized Model to Build a New Telecommunications Operator Model
Roam is the Only One to Build a Decentralized Communication Network by Upgrading OpenRoaming Infrastructure
On a global scale, WiFi and mobile networks are the two main pillars of wireless broadband access. Almost all mobile interactions rely on these two. Because WiFi is usually free to use, it carries over 70% of the data traffic (as shown in the figure below). In the era of 5G, the trend of convergence between WiFi and mobile networks is becoming increasingly apparent. Due to the insufficient deployment density, high power consumption, and high operating costs of 5G networks, operators tend to use WiFi networks to offload traffic and reduce operating costs. However, this also means that the old WiFi networks are no longer competent, and a comprehensive upgrade of WiFi is imperative. This includes upgrading from WiFi 4, WiFi 5 to the new communication protocols WiFi 6 and WiFi 7 (it is worth mentioning that Roam's self-developed WiFi routers are among the first batch of consumer routers that support the WiFi 6 protocol), as well as transitioning from traditional username/password login and Captive Portal web login to secure certificate-based automatic login backend based on Passpoint and OpenRoaming. According to Market and Markets' market analysis report, the relevant market is expected to quadruple in the next five years.
Roam collaborates with the WiFi Alliance and the Wireless Broadband Alliance (WBA) to support the access transformation of OpenRoaming. Compared to ordinary public WiFi, the OpenRoaming network is a qualitative leap. Ordinary public WiFi users often need to log in through a web page click, in which case the login process is not automatic, and the communication is often unencrypted. In contrast, OpenRoaming network WiFi automatically logs in like mobile cellular networks and ensures secure end-to-end encryption for communication. This strategic partnership enables Roam to provide unified network access services globally, allowing users to seamlessly roam between cellular and WiFi without having to repeatedly log in to different networks. Through this collaboration, Roam not only expands its network coverage (with over 4 million OpenRoaming WiFi hotspots globally), but also significantly enhances the user experience, meeting users' high demands for convenience and continuity.
New Telecommunications Operator Business Model: Driving Decentralized Network Construction with User-Free Access
The key to Roam's ability to attract a large number of users lies in its disruption of the traditional telecommunications entry barrier by providing free wireless network access. Leveraging the global trend of WiFi network upgrades and with the support of industry standard organizations, Roam has attracted users to participate in the enhancement of the OpenRoaming network. Participants can not only upgrade to more secure and convenient WiFi but also receive global eSIM free data as an incentive. This approach allows users to access the network for free whether through WiFi or mobile eSIM. Additionally, users can earn Roam points through network co-construction and other means to redeem goods and services. Furthermore, Roam achieves shared CDN bandwidth through hardware network nodes (such as the Rainier MAX60 router), providing users with additional incentives. By participating in the construction and verification of the OpenRoaming network, users can receive free global data rewards usable in 200 countries. This novel model not only significantly reduces network usage costs but also allows users to deeply engage in revenue sharing from operating the network, creating an incentive for users to further invest in network construction.
This incentive mechanism not only enhances user participation but also helps Roam quickly establish an active user community. Currently, there are over 600,000 daily user participations in network quality validation and feedback, a high-frequency usage scenario that is difficult to achieve in traditional telecom applications. Roam has found a path that is no longer just a "channel" but a network service co-construction community that benefits both users and relevant businesses. Additionally, Roam emphasizes communication between the community and the operations team, with users contributing numerous suggestions for network improvements. We once participated in an AMA event on App design and found that within just one hour, community members provided over 300 App improvement suggestions. This community-driven model enables Roam to rapidly respond to market demands and user expectations, maintaining a competitive edge in the industry. User active participation not only drives network optimization but also strengthens user loyalty and brand stickiness.
Technical Foundation: Web3 and Blockchain
In addition to using telecommunications technologies such as OpenRoaming, Roam's telecommunications network also relies on the support of Web3 technology. The decentralized nature of blockchain provides security for data transmission and storage, ensuring the privacy and security of user data. MetaBlox Labs Inc., the entity behind Roam, has become one of the top ten root identity issuers for global OpenRoaming (the only web3 company), alongside Cisco. Unlike other issuers, Roam has innovatively developed an upgrade solution for OpenRoaming based on the W3C decentralized digital identity standard to address the challenges faced by small and medium-sized merchants in the deployment of OpenRoaming, effectively overcoming technical and cost barriers in implementation.
In addition, Roam also allows non-WiFi operators (such as credit card issuers, game publishers, schools, etc.) to easily integrate the OpenRoaming framework based on decentralized digital identity, helping their users to enjoy secure, free WiFi roaming at no cost. This approach not only expands the application scenarios of OpenRoaming, but also increases Roam's influence, allowing more users to experience convenient network access services.
Roam Poised to Become the First Widely Adopted WEB3 Telco Network
Within less than a year, Roam has rapidly grown to over a million users and covers nearly 200 countries and regions globally in an industry where WEB3 awareness and acceptance are limited in society. It has over 820,000 self-owned nodes, with network nodes even appearing in sparsely populated areas such as the Siberian Plateau, northern Canada, and Alaska.
Users using Roam will also easily notice that through participating in Roam network check-in validation, they can receive 1-2GB of global free eSim data every month. If the data is insufficient, the prices for further purchase are also very competitive. In the traditional world, users often lose their remaining eSIM data when switching countries or regions, while Roam's data automatically converts to local data. For frequent international travelers, monthly communication expenses can be significantly reduced. Therefore, Roam has the opportunity to quickly become the preferred provider of traveler data traffic.
Furthermore, a comparison reveals Roam's potential to become a major data traffic provider for users' local life. Statista (left bottom graph) and OECD (right bottom graph) statistics show that the average American currently spends around $30 per month, consuming about 10GB of data. Combined with Roam users in non-roaming situations, through participating in OpenRoaming construction, monthly wireless access costs could be reduced by 50% or more. In addition to cost savings, Roam's community-driven model greatly enhances user stickiness and creates new revenue opportunities.
This real and effective application is poised to become a core product transforming people's lives through blockchain and Web3 technologies.
With the continuous development of communication and artificial intelligence technologies, the WiFi OpenRoaming technology based on security certificates is expected to expand to more application scenarios. Especially in the smart home field, it can optimize device security and seamless access, supporting AI agents' integration into smart homes. This not only improves the user experience but also provides powerful technical support for smart living. In this context, Roam has also shown tremendous potential.
Looking ahead to the next five years, we hope that Roam can delve deeper into more industries and application scenarios, from individual users to enterprise needs, positioning itself as a bridge to connect everything, achieving seamless integration of users, devices, and AI, and driving true intelligent connectivity.
Through multifaceted efforts, Roam is redefining the telecom industry's new business models, bringing users a richer network experience. It is not only a typical case of how Web3 is changing the industry landscape but also an important guide for the future development of the telecom industry.
Disclaimer
This article is only intended to share a case study of the companies we have invested in, aiming to provide in-depth research and understanding of the company's business model, technological foundation, and other aspects. While we believe the information provided is reliable, we make no representation as to its continued accuracy or suitability for specific circumstances. Therefore, you should not rely solely on the content of this article when making investment decisions.
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The specific list of investments made by funds managed by Synergis Capital can be viewed here. Please note that this list does not include undisclosed investment projects. This article does not constitute investment advice or an offer to sell, nor does it constitute a solicitation to purchase any equity in any investment vehicle managed by Synergis Capital. Any investment offers or solicitations regarding Synergis Capital investment instruments should be made solely on the basis of providing private placement memoranda or relevant legal documents, and decisions should rely solely on the information in these formal documents.
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Disclaimer: The content of this article solely reflects the author's opinion and does not represent the platform in any capacity. This article is not intended to serve as a reference for making investment decisions.
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