FRAUD & SECURITY BUSINESS BRIEFING 2013: Trial and error – BT’s payment system reforms
There is a degree of apathy that pervades the payments system in the wholesale arena – a sense that the carrier-always-pays model is just too big and too complex to overhaul. BT’s experiences in attempting to tweak that model show on the one hand just how convoluted the process can be, but on the other, how perseverance can pay dividends.
Responding to a surge in revenue share fraud, internal investigators decided in 2002 that BT would redraft its standard interconnect agreement in order to make it easier to choke off payments to suspected fraudsters.
The company already had a clause in the contract for dealing with what it called “artificial inflation of traffic” (AIT). But fraud experts at the company wanted to broaden the scope of what might legally be defined as AIT, as well as embrace new processes to stop payments where AIT was suspected, BT’s specific involvement in that process and the way any resulting disputes might cordially be resolved.
After a staggering six years of consultation with the industry, BT was ready to go for broke. In May 2008, it asked every one of the 122 communications providers who are signed up to the group’s interconnect agreement to approve the changes. Every signatory was required to approve the measures for the changes to take place.
A year later, seven had refused to sign up, while another four simply had not responded to repeated requests to negotiate. Among the issues that the communications providers objected to was that the principle of withholding payments in frauds favoured the originating network operator above pretty much anyone else in the chain. However, BT countered this worry by placing a far greater burden of proof on the originating carrier.
Other objectors specifically demanded that calls made as a result of hacking into a private branch exchange should be excluded from the withholding process, to reinforce the message that the owner of the phone system is ultimately culpable for its security. There was also concern that BT, acting as either a transit operator, an originating carrier or a terminating carrier, could effectively control all points of the network by halting payments as and when it saw fit.
In July 2009 – seven years after BT first began the process, Ofcom upheld the reforms as “fair and reasonable” and ordered the remaining objectors to sign up to the new interconnect agreement. In March 2010, BT finally launched the new AIT regime. It updated the process in 2011, following another round of consultations with the industry.