The artful dodgers of telecoms

13 January 2015 | Dr Judy Reed Smith

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Dr Judy Reed Smith

Blog Author | ATLANTIC-ACM; CEO


Fraud – an ugly word for a painful and ever-lurking evil rampant in the telecoms industry – grows larger every year.


Fraud – an ugly word for a painful and ever-lurking evil rampant in the telecoms industry – grows larger every year.

As barriers to entry into the carrier world have fallen to levels that allow anyone with a little capital to enter the space, imaginative forms of fraud have risen across the board. In the wholesale world, artful frauds fall into both buyer and seller categories and account for an estimated 2% of revenue, or $6 billion (and change) annually. 

The very nature of our industry’s service – invisible to the naked eye, gone when it’s been used and frequently chosen on price – makes it a tempting target for fraud. From suppliers extending credit to questionable businesses to buyers jumping on too-good-to-be-true prices, and with internal departments writing down bills with cash paid to them under the table (such as Telstra’s experience with off-shore call centre fraudsters reaching out to users with large bills), margin-shrinking fraud schemes abound. And let’s not forget the expanding strengths of hackers.

Fortunately, with software able to work with increasing efficacy in digitised networks, more and more fraud-control solutions are entering the marketplace. Of course, combatting fraud is a race with no finish line. As Big Data – and Hadoop to manage it – multiply the information to review, fraud schemes and fraud-prevention schemes alike become increasingly complex.

A recent Subex/Capacity Media survey found that more than 80% of carriers worldwide report they use their own, internally developed software (think Telekom Austria’s SIM Box Detection Service to combat SIM box fraud). Yet many carriers also report that inadequate automation means less timely identification of issues or availability of data. Other service providers are looking to outside vendors.  

Subex, which offers a third-party system for detection, has innovated its ROC Fraud management product, which is tailored for wholesale issues. Subex claims that the “small time[rs] are evolving to organised crime”, and suggests the possibility of proceeds supporting terrorist activities. The Subex solution includes software to detect issues early in the cycle, investigation and timely protection. 

One imaginative approach to the problem, initiated by BICS and called “FraudGuard”, uses crowdsourcing of data from over 800 carriers to identify issues in near real-time. The solution uses the software of cVidya to serve the community of operators they have pulled together to confront the problem. This “united we stand” approach, employing continuously updating algorithms and the strength of sourcing the crowd, is an innovative alternative providing a broad and comprehensive approach to defending ever-changing targets under attack by ever-changing tactics.

Artful dodgers will always be present and will find ways to infiltrate and undercut both buyers and sellers. Wherever revenues flow, nefarious people will try to divert them for their gain, and changing technologies offer an ever-increasing number of ways to perpetrate these diversions. Fortunately, changing technologies also offer opportunities to pull ahead of the bums.  

Gang up, carriers. Pool information and resources to use technology more effectively than the perpetrators of the crimes. Just as Sisyphus kept trying to move the rock up the hill, fraud preventers must keep moving the algorithms ahead of the hackers and other thieves. At a time when it feels like hackers and fraudsters are running the tables across all industries, our industry is fortunate to have innovators addressing its own unique challenges. A possible $6 billion bill in 2015 should make it worth it.