How a few rogue operators are putting the telecoms industry at risk

Telecoms.com periodically invites third parties to discuss some of the major issues affecting the industry today. In this post, CEO of HAUD, Claire Cassar, explains some messaging fraud issues putting operator revenue streams at risk.

When considering the greatest threats facing the telecoms industry, two issues are commonly raised; fraud and consumer trust. With fraud having an impact on consumer trust, tackling this issue now will help to build positive customer relationships for the long-term.

Data from the recent Telecoms.com Intelligence Annual Survey data, produced in collaboration with HAUD, suggests there are nearly a fifth (17%) of industry experts that do not believe their organisations were handling fraud and revenue assurance well. When examined further, a third (33%) of those respondents also do not believe revenue assurance is important to their organisation. These findings should ring alarm bells for the wider telecoms industry, given how fraud operates on telecom networks.

Fraud can only occur, and remain lucrative, when the conditions allow it. This is especially pertinent for A2P messaging fraud caused by the utilisation of grey routes and other methods to bypass payment of network termination fees. If a telecoms operator understands the issue, and takes significant steps to allay the risks, the conditions for this kind of fraud are mitigated. Once a provider protects their network from fraud, the fraudsters will move to a network without such protection. Networks not taking sufficient steps to handle A2P messaging fraud are likely to find they are a magnet for it, and could be seen to be encouraging fraudsters to move in and take advantage.

The impact of this kind of fraudulent activity can be catastrophic for MNOs. Revenue loss will of course harm the network in the short term, however, over the long term, the more negative user experience owing to phishing of customer data through SMS or wangiri fraud could lead to customer complaints, subscriber churn and reputational damage. Once a consumer associates spam and fraud messages with a provider, it can be almost impossible to regain their trust. This has potential to not just undermine confidence in one MNO, or one brand, but of the telecoms industry as a whole – especially if more than one operator across a territory has lax security.

Considering this, serious questions should be asked relating to what the significant minority are doing to protect their networks – if anything at all. The group admitting that they are not taking sufficient steps have clear best practise to follow from other more proactive operators, from which they can learn and improve the experience on their own networks.

MNOs have a range of options on the market to help them deal with spam and fraud messaging. High-quality solutions will ensure all network access points are protected, effectively ring-fencing their network and preventing fraudsters from evading localised protection by using international routes. If a network takes advantage of this sort of service, they will quickly begin to capture spam messages and see a reduction in the threat of fraud.

Beyond simply installing a firewall, however, MNOs must ensure their network traffic is audited and the protection service, managed, to guard against new threats and vulnerabilities – that market leading providers will be able to offer. This is equally important to the deployment of protection measures as, in an ever-changing market, filtering and blocking is crucial to achieve quick results and long-term protection for customers.

This is not simply an issue of networks not doing enough – the 33% of respondents that do not believe fraud and revenue assurance is even a priority suggests there is a deeper lack of acknowledgement on fraud across the sector. This lack of awareness is also highlighted by the relatively small number of respondents that see grey routes (6%), SS7 (4%) and SMS spam (also 4%) as major causes of fraud and revenue assurance concern. Only by continuing to educate MNOs about the risks and lost revenue caused by fraud and security issues, will the industry see a shift in knowledge and attitude.

Responsibility for ensuring MNOs are better informed about the impact of fraudulent activity does not have to be based on self-education. Network groups such as the GSMA, CFCA or FIINA can play a key role by putting fraud and security issues at the front of their agendas – with a clear focus on the solutions and consequences if the issue is not dealt with effectively.

Knowledge about how fraud and vulnerabilities directly impact customer experiences and revenue is in many ways lacking amongst network experts, and should be seen as a greater priority across the telecoms industry. Organisations within the sector need to take collective responsibility. This means cooperating, where possible, to share knowledge and educate those that do not see fraud and revenue assurance as a priority for their organisation, and taking a serious look at the security packages available to protect their networks and prevent fraud and spam. If this does not happen, fraud will continue to take advantage of these more open networks, and consumers will lose confidence in the telecoms sector – which will be more damaging and difficult to rebuild than any lost revenue.

Dr Claire Cassar is CEO of HAUD, the go-to partner for MNOs that want to Stay in Control of their network quality, wholesale revenue and customer experience. With over 13 years of experience working with one of the world’s leading telecommunications operator groups, she is well versed in the legal, regulatory, and commercial aspects of the mobile and messaging industry.