Telecoms fraud costing operators $40 billion annually

31 July 2012 |


Telecoms fraud is costing operators an estimated $40 billion a year, with better tools and procedures needed to address the problem, according to a report from research firm Heavy Reading.

The $40 billion total is the equivalent of nearly 2% of the $2 trillion annual telecoms revenue worldwide with additional services like mobile-based offerings increasing the fraud risk for operators.

The report found that long-established fraud problems continue to drain service provider resources, with PBX hacking techniques for stealing telecoms services remaining the main issue. But more recent advancements, like M2M connectivity, are also now being hacked.

"Telecoms fraud is an ever-present drain on operator profitability, and operators and their vendor partners have long tried to limit theft," said Susan McNeice, senior analyst at Heavy Reading and author of the report. "Despite their best efforts and recent improvements, the bill for fraud is growing and now stands at $40 billion a year – which is equal to the annual revenue of the Walt Disney Company."

McNeice suggests that networks have become less secure as a result of mobility and IP. Less centrally controlled, well understood and well managed IP networks in comparison to old circuit-switched wired infrastructure are blamed as well as internal fraud by employees, dealers and even other operators.

Decreasing vigilance is considered one of the root causes for operators failing to get hold of the situation, compounded by increasing number and complexity of networks, devices and service types in the market.

Among the means of addressing telecoms fraud include augmentation of classic fraud management systems, and use of advanced data analytics to help identify emerging threats.