Carriers losing tens of millions of Euro to “grey routes”

Grey routes, or international links that can be used by unscrupulous operators to avoid paying local interconnect fees to their peers, are costing carriers tens of millions in lost revenue.

The revelation comes from revenue assurance specialist HAUD Systems, which has spent the last few years profiling operators to help them classify their network traffic – where it’s coming from and where it’s going.

A big chunk of this traffic, naturally, is person to person and operators already understand this type very well. But another large segment is characterised as “automation to person,” which might include many types of notifications, often from legitimate sources such as airline or travel alerts. But there is a significant portion of this traffic that comes from grey routes, from aggregators or third parties that are not paying to terminate traffic on the carrier’s network but are still making money themselves.

According to Claire Cassar, CEO of HAUD, operators know about revenue leakage from grey routes and typically accept a level of attrition to it of around five to ten per cent of international traffic. “But in our profiling this year we found that one major European operator was experiencing around 40 per cent of all international traffic coming via grey routes. That works out as tens of millions of Euros of lost revenue.”

Watch the video of Claire Cassar talking about grey routes

Watch the video of Claire Cassar talking about grey routes

Profiling techniques analyse network traffic and then allow operators to classify it in different ‘chunks’ with the aim of identifying such grey traffic routes. Operators can then either target the aggregators and approach them or block them directly. Or even go to the originators of traffic individually (airlines etc.) and get them to sign a contract to legitimately deliver traffic to the network.

“In Africa we found one operator was completely bypassing the local interconnect fees of our carrier customer by sending traffic over grey routes internationally,” said Cassar. “That’s not only illegal but also a regulatory issue. We fixed that issue quickly by blocking the operator in question from sending traffic to our customer via international routes.”

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According to Cassar, there is a sea change taking place in how operators address revenue leakage from such sources. “Two or three years ago the issue wasn’t really mature enough, there wasn’t enough awareness of it. But now it’s becoming more and more talked about. Operators know they have an issue with grey routes,” she said.


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