Preventing Mobile Fraud WP 2010

8/6/2019 Preventing Mobile Fraud WP 2010

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By enhancing global dialing inormation management, mobile operators can reduce

unoreseen raud-related expenses and capture additional revenue that would otherwise

be lost, helping to improve their overall fnancial perormance.

Access to authoritative and accurate global dial code and number portability data is crucial

to this eort, since this inormation addresses the root cause o many types o raud

and interconnection-related revenue leakage, including international revenue share raud,

misclassifed service types during billing, incorrect rating, and non-optimal routing

resulting rom number portability.

Due to the complexity and large volumes o data involved, and the absolute requirement

or accuracy and data normalization, it is oten most efcient and cost-eective or service

providers to outsource global dialing inormation management.

Preventing Mobile Fraud andRevenue Leakage

Abstract



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Revenue Assurance Is More Important Today than

Ever BeforeFraud and revenue leakage are putting increasing pressure on mobile operator prots, leading

to a renewed ocus on cost reductions and revenue assurance to maximize returns on existing

sales and to maintain protability. In its 2009 worldwide telecom raud survey, the U.S.-based

Communications Fraud Control Association (CFCA) estimates that global telecoms raud costs

operators up to $80 billion annually, which is a signicant blow as they ace tough competition,

increasingly saturated markets, and regulatory pressure to reduce mobile termination rates and

international roaming charges.

The gures or revenue leakage do not make any better reading. KPMG recently estimated

that, worldwide, revenue leakage is around 1% to 3% o total revenues, and in some developing

countries the gure could be as high as 10%. This is costing the global telecommunications

industry an estimated $40 billion annually based on KPMG’s 2010 Global Revenue Assurance

Study covering 74 operators in 46 countries across the globe. However, KPMG cautions that this

gure could be even greater due to a lack o available data, especially the contribution rom

raud-related leakages, showing that this is indeed a sensitive concern or operators.

There are technology challenges, too — billing, rating, and charging systems are all coming

under scrutiny in the drive to tighten deenses against revenue loss.

The Challenges of Fraud and Revenue LeakageDespite having had dedicated revenue assurance and raud departments in place or many

years, raud and revenue leakage continue to threaten mobile operators’ prot margins.

This is mostly due to the complexity and value o the mobile services oered, and the dynamic

nature o the raud itsel. Criminals are constantly looking or new ways to exploit weaknesses

in services and the underlying networks, particularly in a time o downsizing and requent

mergers and acquisitions that may disrupt operations and quality control. In some cases, the

nature o the raud is not apparent until a signicant amount o time has elapsed since it was

perpetrated — especially with services that involve international roaming. These services rely

on timely exchange o subscriber authorization and billing inormation between multiple service

providers and networks located across dierent continents, countries, and time zones. Tracking

and resolving raud issues is made more complex because o the number o dierent types o

raud involved.

Premium rate services fraud and roaming

Although there are numerous legitimate premium rate services that oer value-added

inormation and entertainment services, there are also premium rate numbers that are exploited

by raudsters, especially in combination with prepaid or postpaid roaming. These services,

which are provided by third parties, can cost more than $15 per call, and by articially infatingtrac to certain service numbers, raudsters can benet rom revenue sharing agreements that

they set up in advance. In act, unless the home network provider can quickly identiy and block

these raudulent roaming calls beore they are set up, they will be acing a huge bill rom the

visited network provider. In some cases, this bill can be in the order o hundreds o thousands o

dollars within just a ew hours o raud activity, placing even more pressure on the provider to

nd the source o the raud. In act, some providers have experienced damages reaching millions



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o dollars over a single weekend, especially in combination with cloned SIM cards, highlighting

just how opportunistic the raudsters have become and how important a short time to resolution

is or providers. It’s no surprise, then, that the CFCA recognizes premium rate services raud as

one o the top three causes o revenue loss.

Premium rate services raud is just one part o a wider class o rauds that rely on generating

large volumes o trac. These rauds, called International Revenue Share Frauds (IRSF), allowcriminals to articially boost trac volumes to high-tari international number ranges, oten

using roaming SIM cards that have been cloned, and then receive signicant revenue share rom

the incoming trac.

Trade associations, such as the GSM Association (GSMA), have put their weight behind

initiatives to help mobile operators nd solutions to the growing risk o raud. The Near-Real

Time Roaming Data Exchange (NRTRDE) is one such ramework that addresses roaming raud

by reducing the time it takes to exchange roaming Charging Data Records (CDRs) between the

operator in the visited country and the subscriber’s home operator. This reduction in CDR

processing rom about 36 hours down to our is a positive move, but NRTRDE is still a relatively

reactive solution in the sense that it reduces the time it takes to detect and stop the raud —

rather than preventing it in the rst place. A reactive approach that analyzes CDRs looking orhigh usage also alls short since the raud is only uncovered ater it has happened, and by then

the damage is already done.

Revenue leakage

Revenue leakage is caused by a whole range o complex industry billing practices, incorrect

interconnect charges, varying termination rates, and misclassied service types. Although this

type o revenue leakage may oten be based on relatively small discrepancy amounts, thereby

not causing dramatic and noticeable losses rom single incidents, the sheer aggregate volume

o the billions o calls that pass through operators’ networks every day magnies the eect and

results in a signicant amount o lost revenue. While revenue leakage can occur anywhere

across the revenue cycle rom sales to network conguration to rating and billing, it is the

technical areas associated with networks, rating, and billing systems that are the most vulnerable

to revenue leakage. A typical cause o leakage can be incorrect rating including international

destinations being congured as local destinations, or identiying a called number as a landline

when it is actually a mobile number with a higher termination rate.

The actual calling rate depends on what type o number is called — which can be a mobile, xed,

domestic, international, or non-geographic special number such as a premium rate service —

as well as what network the called number is associated with. The called number can belong

to the same network (on-net calling), or another network (o-net calling). O-net calling results

in additional interconnect and termination charges that can vary substantially among dierent

service providers or regulatory and commercial reasons, and incorrect inormation in the

interconnect agreements between service providers invariably results in revenue leakage.

The ability to address many common types o revenue leakage and raud relies on having access

to correct dial code inormation so that all calls can be correctly classied, rated, and billed —

or blocked, in the case o raudulent calls to premium rate services. However, having knowledge

o which network a called number belongs to is also important.



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Impact of number portability on revenue leakage

Number portability is a complicating actor that can cause not only revenue leakage rom

incorrect rating and service quality degradation, but also additional costs associated with

non-optimal routing and extra transit charges.

Once numbers have been ported, it is no longer possible to determine which mobile operator a

number is associated with and how it should be rated by looking at its prex and number rangealone. This means that the number range holder data can no longer be trusted or routing and

rating purposes, since the number may have been ported to another network that requires

dierent routing and dierent rating.

This signicantly aects international trac since the originating network, or its interconnect

partner, needs number portability-corrected routing inormation in order to deliver voice and

data trac to the right network in the most optimal way — both in terms o cost and quality.

Routing to the original range holder network or the incumbent network is oten an option,

but it will invariably result in additional transit charges and orwarding ees, as well as possible

service degradation and even dropped calls, undelivered messages, and lost revenue in the

worst case.

Although number portability has been available or quite some time in many mature Asian,

European, and North American markets, and service providers have deployed solutions that

deal with the impact o it, number portability is now being rapidly implemented in many high-

growth countries across Arica, Asia, the Middle East, and Latin America. As more trac is

terminated in these newer locations, revenue leakage will rise again i it is not properly dealt

with through accurate number portability-corrected routing inormation.

Blended rates do not compensate for incorrect routing and rating information

A common argument posited by the industry is that the use o blended interconnect rates

addresses the problems o properly rating calls that have been ported to other networks with

potentially dierent termination rates and correctly identiying the associated type o service,

as mobile calls are generally more expensive to terminate than landline calls.

However, this assumes that the chosen blended rate corresponds to the actual call distributions

ound in the eld. Unless the originating operator has exact knowledge o call volumes that

terminate to ported numbers, as well as their associated networks and the volumes o calls to

mobile versus landline numbers, then it is not able to accurately rate the call. There is a good

chance in this scenario that the mobile operator will be overpaying, rather than underpaying,

its interconnect partner, and it would be better o paying the true per minute rate or each

call rather than a ‘blended’ rate or all calls. This would also provide the mobile operator with

inormation on the true costs and associated margins on all its interconnect trac, resulting

in greater operational visibility and accuracy.

Preventing Fraud and Revenue Leakage with Improved

Global Dialing Information Management

Targeting the root cause

We have seen how raudsters take advantage o premium rate services by setting up their

own revenue share numbers, articially infating trac to these numbers oten in combination



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with roaming and SIM cloning, and then having the originating service provider oot bills that

can exceed hundreds o thousands or even millions o dollars ater only a ew hours o

raudulent calling.

Figure 1: Fraud Involving Prepaid Customer Roaming Abroad Calling Premium Rate Service Number

This type o raud can be prevented with access to accurate worldwide dial code inormation.

The dial code inormation enables the mobile operator to proactively identiy high risk premium

rate service numbers and other high tari international number ranges commonly used in

international revenue share raud, and then take appropriate action such as blocking calls to

these numbers.

The root cause o the dierent types o raud and revenue leakage discussed in this paper is

essentially incorrect or insucient dial code inormation on domestic and international number

ranges including premium rate numbers, as well as unavailable inormation on the port statuso individual telephone numbers. So, the way to prevent these rauds is to use accurate

worldwide dial code inormation to identiy high risk premium rate service numbers and other

high tari international number ranges, and then manage calls to these numbers in a proper

and proactive manner.

Access to accurate worldwide dial code inormation and number portability-corrected routing

data also enables mobile operators to accurately classiy each number and ensure that every call

is routed in the most optimal way, rom both a service quality and a cost perspective, and then

properly rated to eliminate any revenue leakage.

The complexities of obtaining and managing worldwide number information

There are more than one million dial codes and about ten thousand special high level number

ranges used or premium rate services across hundreds o countries and territories around the

world, which makes creating and maintaining a database o them no simple task. Additionally,

obtaining global dial code and number portability inormation, continuously maintaining and

updating it or accuracy, and interacing with regulators around the world to resolve numbering

discrepancies is a complex process. There are oten tens o thousands o changes in global dial

code data every month as millions o mobile subscriptions are added every year and new services

are introduced.

Home Network Visited Network

Visited CountryHome Country

Invoice

Prepaid account incorrectly debited atstandard roaming rate by home network

(perhaps at $0.50 per minute)

Premium rate service invoice:up to $15 per call

Fraudulent Domestic orInternational Premium

Rate Service



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Monitoring all these changes and correctly updating the dial code database to maintain accuracy

requires a substantial investment in resources, time, and money. And the eort required to

obtain and maintain inormation on the millions o telephone numbers that have been ported

in the more than 55 countries that support number portability adds to the complexity; it involves

time-consuming interactions with hundreds o national regulators and operators, as well as

extensive processing and ormatting o the number portability data itsel since dierent

countries represent the data in dierent ways.

In-house versus outsourced dialing information management

In principle, mobile operators could gather and continuously update dialing inormation in-house

by interacting with all the worldwide national regulators and counterpart operators, but it is

more ecient to outsource this activity due to its complexity, the amount o inormation and

processing involved or data normalization, the need or accuracy and speed, and the

consequences o erroneous data in terms o raud and revenue leakage.

The laborious and time consuming nature associated with in-house gathering and management

o global dialing inormation also takes up valuable employee time that could be better spent on

other important tasks.

What to look for when outsourcing number management

When outsourcing management o dialing inormation it is important to obtain access to a

uture-proo and trusted source or both global dial codes and number portability routing data

that covers all services, including voice, messaging, and next generation IP based services.

Each country is dierent in how it structures numbers, how it handles portability, and how

it denes numbering policies and procedures. This means that each country’s data must be

obtained and mapped into a common database to ensure a consistent and uniorm ormat that

is easy to work with.

Also important are access to continuously updated inormation and fexible delivery methods

or the inormation itsel based on open and congurable interaces that allow easy integrationwith the service provider’s own billing and Intelligent Network (IN) platorms. Delivery methods

should include Secure FTP with both complete downloads o the entire data set and incremental

downloads that only refect changes since the prior download, an XML/SOAP interace or near

real-time incremental data downloads, and ENUM or customized on-demand queries. Finally,

the provider o the outsourced numbering management services needs to ensure that its data

distribution is based on a secure and highly reliable platorm with redundant data centers and

disaster recovery capabilities that guarantee continuous operation.

SummaryPreventing raud and revenue leakage is vital to mobile operators’ eorts to improve their

nancial perormance by reducing unoreseen raud-related expenses, capturing additionalrevenue that would otherwise be lost, and maintaining prot margins.

Access to authoritative and accurate global dial code and number portability data is crucial

since this inormation is addressing the root cause o many types o raud and interconnection-

related revenue leakage. This includes premium rate services raud and lost revenues due to

misclassied service type, incorrect rating, and non-optimal routing caused by number

portability.



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While global dial code and number portability data can be gathered and maintained in-house,

it is oten ar more ecient to outsource this number management task. This is due to the

complexity and large volumes o data, the need or accuracy and data normalization, as well as

the time and attention it requires rom employees, who could spend their time developing the

service provider’s core business instead.

Copyright ©2010 Telcordia Technologies, Inc.All rights reserved.

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Preventing Mobile Fraud WP 2010