Illegal Bypass - CSG

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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“Innovation and customer experience are what keeps us relevant” Interview of Patrick Benon, CEO Orange Botswana

Patrick Benon is CEO of Orange in Botswana. He will be joining a keynote panel on targeting underserved communities at AfricaCom next month, alongside representatives of Facebook, Mozilla, Atlantique Telecom and Vodacom. 

He shares his experience of the challenges and opportunities in Botswana’s market ahead of the event.

AfricaCom: What is Orange’s position in Botswana’s market?

Patrick Benon: Orange Botswana is the leader in mobile money (Orange Money) in the country, commanding 65% of the mobile money market share. In totality, Orange has more than 1 million subscribers, occupying the second position in terms of voice and data market share. We believe in addressing and answering the ever changing needs and expectations of our customers by being at the forefront of cutting edge innovation and technology which is evident from the following;

·                     Being the first to introduce  4G technology in 2015

·                     Introduction of a Visa Card linked to Orange Money account in 2013,

·                     Being the only Operator  in Botswana to offer  airtime credit  

·                     And the latest innovation which is the launch of the Orange Money mobile application which allows easy access and management of Orange money account.

A: What makes Botswana a unique market to work in compared to others in Africa?

PB: In a lot of African markets, the mobile industry is still growing, however, in Botswana the mobile penetration stands at more than 150% of the population. The mobile market is mature with little to no prospects of growth and the voice revenue and traffic is on the decline. Even though the mobile penetration rate is high, the data market is only starting to grow, with penetration still below 50% of the population. In this sense the market presents a unique challenge which requires the operators to adopt both a growth strategy for data and a mature/declining strategy for Voice. Operators also have to seek alternative sources of revenue as data revenue is not yet growing to the extent to which it can replace the decline in voice revenue.

This has resulted in all the operators shifting their focus towards investment in high speed data and Value Added Services. The good news is that Botswana has an enabling regulatory environment which supports the operators’ ambitions of diversifying their business. The regulators have been able to allocate operators the required spectrum for them to launch high speed internet such as 3G and LTE as well as authorise the introduction of mobile money when other markets were still hesitant to embrace these technologies.

A: What have been you biggest challenges and best rewards since joining Orange Botswana?

PB: Clearly the biggest challenge is maintaining and growing the business profitability in a highly saturated market and finding alternative avenues of revenue to replace the legacy mobile business.

The country has been experiencing power shortages which affect the quality of the network. This has prompted operators to find alternative sources of energy to keep the services working during the power outages.

Rewards: Orange deployed LTE in record time with excellent quality of service.

A: How important is staff management in your business? 

PB: Creating a sustainable and conducive environment for staff is top priority for operators. As our biggest asset and productivity drivers, employees need the right frame of mind to deliver the best possible customer experience to our customers. They need to be motivated to understanding the importance of delivering excellent service, the impact it has on the business and to love what they do and be excellent brand ambassadors on a daily basis. Operators can easily achieve this through not only adapting to the right organisational culture but also through skill improvement and motivation for employees. It is why becoming an employer of choice is a top priority for us at Orange.

We experience skills shortages mainly on the IT and VAS side of business. As technology evolves it is important to re-skill our people through consistent training for them to be able to adapt to the new technology skill trends. Therefore, consistent, relevant, timely training is critical to maintain skills levels in the company. It is also important to establish training Partnerships with universities and colleges to create a pool of potential employees. 

A: What new technologies will bring most benefits to consumers and to operators?

PB:

-          Mobile money: 80% African population is said to be unbanked, so expanding services for mobile money by building a wider ecosystem and agent network will greatly benefit the consumers. Mobile money continues to prove its ability to close the financial inclusion gap and eradicate poverty amongst low income households. It’s an affordable, safe and convenient method through which the unbanked can fully enjoy financial services.  Even though opening up mobile money too many players needs firm regulation and monitoring to prevent fraud and money laundering I am of the view that this approach provides a profitable diversification strategy for operators with potential for growth and creation of highest stakeholder value.

-          Improved data speeds: Governments are striving for accessibility and affordable internet connectivity for citizens, more so that the traditional way of communication is rapidly shifting from voice and sms to data. It therefore becomes imperative for operators and government to review bandwidth capabilities as well as re-alignment of costs for data. The improvement and investment in data speeds and capacity such as LTE 4G will address needs of the modern African who heavily relies on data to function on a daily basis (for work, simple communication, productivity and even trade). Operators in turn will also benefit from this new revenue stream.

A: What are your priorities in terms of delivering excellent customer experience in Botswana?

PB: Delivering excellent customer service is a strategic priority for Orange Botswana. In this industry, it’s all about customer experience; from the moment a customer enters our service points to the quality of network coverage. In fact, both innovation and customer experience are what keeps us relevant, but best customer experience will help us keep our current customers and acquire new ones. It is for this reason therefore that we have deliberately put customer experience at the forefront of our 5 year organisation strategy.  

The new organizational strategy, simply termed Essentials 2020 is a global strategic plan for the Orange Group which kick-started this year and will run until 2020. To ensure delivery of this strategy, we have introduced a new Customer Experience Department, whose sole mandate is to look into ways of improving and enhancing customer experience within the whole company.

A: How can telecom operators support innovation within their company and within the wider ecosystem?

PB: Given the popularity and penetration for mobile phones, the world is now looking to telecom operators to support and cascade innovation to the population. Mobile devices have become important vehicles that can be used to provide innovative services. And operators have the right infrastructure and connectivity to facilitate innovation.

The opportunity here exists in various ways;

·                     Leadership through innovation by developing value added services that bring convenience and solve people’s everyday life challenges

·                     Partnering with innovators to provide inclusive technology for innovation

·                     Supporting and nurturing technology incubators with potential to completely shift way of doing things especially for service delivery

Some of the immediate technical assistance that operators can offer to bolster innovation is to provide integration into systems such as billing platforms for e-commerce and sms exchange platforms for those using sms to reach their clientele.  

 A: What do you think will be this year’s most game-changing development in Africa’s telecoms?

PB: The launch of LTE in African countries will change the African telecom landscape as more people will experience new internet speeds and capabilities that previous technologies couldn’t reach.

In terms of supporting other industries and having precise and personalized services, telecoms operators could take advantage of big data available to them for social behavior campaigns and marketing. 

On sustainability, I foresee e-waste management policies and reforms being implemented

A: In your opinion what are the most interesting debates to expect at AfricaCom this year?

PB: Customer experience, Mobile money, Data Security, Data for Productivity

Hear more from Patrick Benon in the Vision for Africa keynote on Thursday 19^th November. To view the programme click here.

Role of Big Data by Aliasgher Dalal, Director of Architecture – Data Analytics, Sigma Software Solutions

Big Data is garnering a lot of attention these days. The long-term value of big data with analytics is well understood and promises to capture a larger and larger share of business services. The billing systems appear to similarly benefit from the advent of big data. In fact, telecommunication systems, where large volumes of data are generated, are well suited for big data. Analytics play an important role in billing systems by providing insights into the operational, marketing and financial performance of the operator’s system, allowing executives to make data driven decisions.

Marketing needs ways to generate a wide array of analytical insights rapidly on the fly and cost effectively. Traditional approaches using Data marts or Data warehouses fall far short of meeting these expectations.

The traditional analytics approach poses several challenges. For one, the traditional approach is bound by rigid data models requiring extensive data definitions. A typical process to obtain useful analytics in a traditional data mart solution is as follows:

·        Define use case(s),

·        Identify associated data source(s)

·        Define data model

·        Develop ETL solution to ingest and populate

·        Develop queries to obtain analytics

In summary, the traditional analytics approach is inflexible, cost prohibitive (i.e. resource intensive), time consuming and out of synch with present day demands.In addition, it is not suited to manipulate large amounts of data, especially if the analytics must be obtained on streams of real-time data compared to archived data. 

On the other hand, big data offers capabilities that promise to handle these challenges effectively.

·         Ability to handle large  volume of data – data approaching tera, peta, exa and zeta bytes are handled using big data technologies

·         Ability to handle real-time analytics – big data technologies like Spark can perform useful analytics on data in real-time.

·         Flexible and dynamic – non-traditional database with dynamic schemas and flat structures allow data from varied sources to be ingested and made available for analytics without having a clear understanding of specific use cases. The analytics can be run on data as use cases are identified. This is a very flexible and inexpensive approach to generate analytics.

·         Cost effective – initial data preparation work is substantially reduced thereby making the big data approach cost effective.