Wholesale Carriers – What if they go beyond protecting only their customers against fraud?

Fraudsters in telecom have always been attracted towards conducting cross border (international) frauds. Reasons such as lack of any country’s jurisdiction, anonymity, cross country non-cooperation and to top it inter operator & inter carrier competition have always provided the much exploited environment to conduct frauds.

Let us start with some industry recognized fraud loss statistics posted by CFCA. The top 4 fraud loss categories reported by CFCA in 2011 were:

  • $4.96 Billion (USD) – Compromised PBX/Voicemail Systems
  • $4.32 Billion (USD) – Subscription/Identity Theft
  • $3.84 Billion (USD) – International Revenue Share Fraud
  • $2.88 Billion (USD) – By-Pass Fraud

Considering a well accepted fact in telecom that “Subscription/Identity Theft” fuels other fraud types such as IRSF, all fraud types in the list somewhat end up generating (mostly) international traffic. Domestic traffic involvement in these frauds is found to be minimal.

Whenever an international fraud is identified by an operator at the source of traffic generation, it is generally followed by blocking the traffic to that destination as a preventive action. As an additional step, which is quite rare, a legal action is also carried out against some local goons involved in generation of the traffic identified as fraudulent. But, as we all know, the actual masterminds and the owners of the destinations identified as fraudulent remain free to explore another way of generating traffic to these destinations through any other operator, located anywhere in this world.

To make situation worse, a retail operator, sometimes is not even able to identify the root cause of the suspect spike or pattern seen to some of the non-risky or non-hot numbers/destinations as the traffic might be generated by exploiting certain arbitrage, FAS or other rogue interconnect revenue generation scenarios occurring down in the call transmission. Result, the operators give it a pass all because they do not detect any direct impact to their revenues.

But, what if the wholesale carriers, who carry traffic to these destinations also join this unending fight against fraud, with a goal of not even notifying and protecting their direct customers to avoid contractual disputes, but with a higher goal of sharing their intelligence with all of their customers, suppliers and standard fraud forums, whenever a potential fraud case is identified.

Let us see how a wholesale carrier is better placed than a retail operator in identifying and protecting against the overall fraud chain which flourish on inflation of traffic to cross border (international) destinations:

  • Wholesale operator sits in the middle of fraud source and fraudulent destinations which provide it a capability of having a holistic bird’s eye view over the fraudulent traffic from different customers (originations) to different suppliers (terminations) and can pin point the exact destination or number series which is receiving fraudulent traffic.
  • Carrier can block the traffic to that destination or a specific number series within that destination, thereby not only protecting one customer to which the traffic belonged to, but all of them who may push a similar traffic anytime in future.
  • Post blocking, the wholesale carriers are also capable of pressurizing the suppliers (other carriers or operators) to take action on the fraudulent parties or number series involved in the fraud racket by stopping the payments or the whole traffic to that supplier rather than individual series. Sharing information and risks against a rogue supplier in the wholesale market can also help avoid supplier to switch the partnership with other carrier.
  • A wholesale carriers is also better placed than retail operators in identifying any specific suspect international traffic for fraud and fraud proofing the entire customer/supplier base through feedback. Intelligence collected through any fraud case identified over any customer traffic can be seamlessly passed on to all customers and suppliers in order to protect them from similar threat. This will specially empower the customers who are retail operators by helping them stop or reduce generation of fraudulent traffic at the source itself.

The following figures will help understand how the intelligence flow will help fight cross border telecom frauds:

Presence of a fraud identification and analysis mechanism in the wholesale carrier hands will also help the carrier meet the “anti fraud” clauses present in modern RFP requirements posted by the potential customers and will also help develops confidence to get into anti fraud amendments and best efforts based loss repayment contracts with the customers/suppliers, thereby earning more customers.

Said that, the approach will only be successful when there is enough participation from the wholesale carriers around the world, who because of the current telecom scenario, are also suffering from diminishing margins and dropping profits due to the cut throat competition.

This approach requires investment in order to empower the carriers with fraud analysis capability, which is not going to be made by medium and small players until and unless there is a huge value add shown to them or there is a direct pressure from majority of the customers and suppliers to act against frauds. And this can only happen when all the parties involved are determined for a fraud free environment and are able to create an environment of seamless intelligence sharing.

Abhijeet Singh

Abhijeet is currently working as Principal Consultant with Subex.

He specializes in Telecom Fraud Management and his 360 degree experience in this field includes extensive exposure in Fraud Operations Management, Consulting & Advisory, Risk & Health Assessments, Business Development – Product & Managed Services and Analytics.

Out of professional life, he is a blogger, tech enthusiast and a traveler.

Subex Tweetup Series 1. Internal Fraud

Subex Tweetup Series is a initiative for Subexians to share their knowledge and experience in the field emerging telecom trends and practices through Social Media interactions.

Today, Mr Rohit Maheshwari (Sr Director Business Consulting APAC) shared interesting insides on Internal Frauds. Internal Fraud has been a key area of concern for telecom operators since long. With the advent of new services like IP Services, Mobile Money and others operators will stand more exposed than ever. Below link contains more information on the conversation with Rohit. Please feel free to comment and add more inputs…


Subex provides holistic revenue assurance coverage in a traditional circuit-switched as well as next generation packet-switched landscape, streamlines integration during a merger, and navigates a technology shift such as Internet of Things (IoT). Our solution meets the revenue assurance needs of mobile and fixed line communications service providers (CSPs), analog data networks, digital data service providers and triple / quad play enterprises. It drives revenue growth by extracting unbilled revenue, leveraging automation to identify revenue leakage, and safeguarding revenue streams from potential losses.

What kids can teach about Outsourcing??

Let’s deal with the difficult one first – Managed Services and outsourcing is here to stay and grow. So, what does this have to do with kids? Well nothing direct, except that kids can help resolve one of the biggest barriers to outsourcing – asking for HELP!

One thing I often notice, while meeting some of the prospects, is their reluctance to ask for help. The acknowledgement comes blatantly or subtly – there is a need to improve. The pressure of efficiency, productivity, reducing costs (or justifying with equal or exceeding returns) is mounting up on each one of them.  So, why hesitate to ask for help when there is a need? The top 3 inhibiting reasons are:

a)      Asking for help is considered a sign of weakness/failure

b)      Trust deficiency in the person who offers help

c)      Waiting for someone else to do it, so I cannot go wrong

There have been many management theories propounding kids’ psychology. Without surprise, it holds well when it comes to breaking these barriers too. Let me explain how, with typical kids’ perspective and how business could go about doing it.

Asking for help is a sign of weakness/failure

  • Kids view: Why? Why? Why? The ubiquitous question that drives every parent crazy is a Childs’ natural way to learn the world around her and develop cognitive skills. The kid sees it as an opportunity to be inquisitive, seek assistance (from someone who knows), learn something new and expand their horizon. The child doesn’t hesitate to ask for help  in its quest to face the world
  • Business way: Today while businesses appreciate hard work and diligence, they expect efficiency. Asking for help is a sure-fire way to achieve it. Seeking assistance is a fun way to solve a problem together and learn something new

  Trust deficiency

  • Kids view: Kids learn whom to trust and who not, either from the parents or slowly over a period of time
  • Business way: If past experience is something to go with and the trusted partner has delivered before, then entrust them with a new challenge. Else, if you are just starting, then start small, build confidence, before entrusting with bigger responsibilities

 Waiting for someone else to do it

  • Kids view: Walk into a classroom and ask for volunteers to try out something new – you will be amazed to see the numbers of tiny hands go up. Kids yearn for new things
  • Business way: Years of conditioning to be extremely risk averse has led to this state of mind. A well-planned and executed engagement will manage & mitigate the risks. Besides, many businesses have seen success the outsourcing way – there is enough precedence available. Go and get one for your benefit

After all, kids do continue to teach us a vital lesson or two…

Press & Analyst Contact

Sandeep Banga
E-mail : sandeep.banga@subex.com