Illegal Bypass – a major threat to Mobile Operators and Licensed
Gateways in Africa
Written by Robert Wiesheu CSG
International
Fraud is
a huge problem for mobile operators around the world, estimated to cause
revenue losses of $46.3 Billion (USD) annually of total telecom revenues,
according to the 2013 Global Fraud Loss Survey by the Communications Fraud
Control Association (CFCA).
Illegal
bypass termination is the single largest interconnect fraud issue, and in many
countries, the international termination rate (ITR) is considerably higher than
the local (retail) termination rate to a mobile number in the country. This
makes it profitable to bypass the licensed international operator when
terminating calls in the country so that the lower local rate is paid instead
of the ITR. This practice is illegal in most countries and causes significant problems
for many operators due to lost revenues.
For
fraudsters, it’s only too easy to get started. Setting up a SIM Box (GSM
gateway) is simple; standard equipment can be acquired easily enough over the
internet. The calls are typically routed via an internet connection to the SIM
Box residing in the terminating country that converts the call into a local
mobile call. Another variant of illegal bypass is when fixed line equipment, a
so called Leaky PBX, is used to convert the call to a local call.
Illegal Bypass - The scale of the problem in
Africa
Fraudulent
‘SIM Box Termination’ of international incoming calls, also referred to as
'Carrier Bypass Fraud', is a major challenge for Mobile Network Operators
(MNOs) and licensed International Gateway Operators (IGW), resulting in poor
customer experience and consequent churn as well as lost revenue. It is
estimated that in some countries as many as 70% of all incoming international
calls are terminated fraudulently. The CFCA estimates in its report that USD $2
Billion are lost yearly due to SIM Box fraud alone. This not only impacts
operators but also the tax authorities of the affected countries as taxes due
on international traffic cannot be collected.
In Kenya,
it is estimated that the government and operators lost in 2013 alone an average
of US $440,000 per month due to fraudulent bypass activities. A similar picture
can be painted in Ghana, where the government reported
that SIM box fraud has cost them US $5.8 million in stolen taxes per year. Only in January 2015, an alleged SIM Box fraudster was arrested in
Ghana who had 21,232 SIM cards from one of local operators in possession. The
activities of the fraudsters had led to a revenue loss of $33 million dollars
within a five to seven month period, police
told the media.
Beyond
direct revenue loss, other consequences of SIM Box Fraud include missing or
incorrect Calling Line Identifier (CLI) as well as degraded voice quality both
of which will lead to further revenue loss for the licensed operator.
Illegal Bypass – Fightback strategy
Bypass fraud is more prevalent
in the countries where the cost of terminating an international call is higher
than that of a national call. The most effective way to eradicate illegal
bypass is therefore to harmonize international and national termination rates. However,
this solution is as obvious as impractical, so operators are beginning to
deploy solutions that tackle the problem from different angles: either
pro-actively with test-call based systems or by capturing live traffic data in
order to identify suspicious call patterns.
The most effective way to combat
bypass fraud is to combine these solutions in a way whereby SIM Box numbers
identified by the test call solution are used by the live traffic analysis tool
to fine-tune the search patterns and to cut off any illegal numbers.
Using this technique, an
operator in Northern Africa was able to make significant strides towards
minimizing illegal bypass fraud in their network. The operator estimated that
around 3% of their international incoming voice traffic was terminated
illegally as a local call, and that their monthly losses accumulated to around
$350k. Proactively identifying and blocking the illegal traffic therefore
helped to halt revenue leakage in excess of $4 Million per year.
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