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February 2015

Making the Retail Operator Case for Anti-Fraud Protection via Wholesalers

Making the Retail Operator Case for Anti-Fraud Protection via Wholesalers

Small retail operators are highly vulnerable to fraud, so enlisting the anti-fraud assistance of wholesalers is a great idea.

But will the idea gain critical mass?  Is the idea strong enough to overcome the powerful vested interests of the status quo?  And what can retail operators do to persuade their wholesalers to help them?

Well, attending the Capacity Wholesale Fraud Forum in London, I met Jan Dingenouts, an industry consultant with a proven record of helping retail operators win the anti-fraud support of wholesalers.  At the conference, Jan was a vocal and persuasive advocate for retail operators.  You can bet that many of the wholesalers in the audience sat up and listened when Jan challenged the audience to take greater responsibility.

Shortly after the conference, I held this interview with Jan over the phone.  Jan gives some great examples here of tactics that work for the smaller operator.  He explains the trouble fraudsters are causing them, why retail operators often fail in systems implementation, and how wholesalers can lend support and grow their business at the same time.

Dan Baker: Why are you so passionate about anti-fraud and the cause of helping the smaller operators defend themselves?

Jan Dingenouts: Dan, for one thing, I just hate fraud.  To me, it’s as if a burglar came into my home and stole my television.  They are supposed to stay off my belongings and my customers, because they’re precious.

Plus, I’ve seen the damage fraud can do at mobile operators.  And I’ve worked for pure retail operators — and before that I worked for iBasis (when it was KPN Wholesale).  And you can see how defenseless the small to mid-sized operator really is.

When I worked for a large mobile telecom group, I always said: don‘t touch my OpCo’s because I am responsible for them.  I have to defend them.

The goal of an anti-fraud operation then is to make it simply not worthwhile for the fraudsters.  And you do that by creating a protected loop traffic stream.  Sooner or later the fraudsters have no choice but to attack someone else.

What is it about the way small operators work that makes them so vulnerable?

A retail operator looks around, buys some equipment, and thinks they are now covered, but they often don‘t have the proper procedures in place.  If you put the wrong things into the system, you get the wrong things out.

That’s the main issue and frankly most operators don‘t have a clue.  The secret is to do a combination of things well.  That’s why I’m happy with iBasis.  I have spoken to BT.  I spoke with Tata.  It seems these wholesale players are trying to work out something that is beneficial to smaller retail operators.

When you look at small operators, they have one or two people in the revenue assurance team.  But if it’s Vodafone UK, there are perhaps 15 or more people in the revenue assurance team, so they can afford to dedicate several persons to manage fraud in international traffic.

But a smaller carrier with one or two staff is over-loaded and can forget important things.

What steps should retail operators take in negotiating with wholesalers?

A retail operator should carefully look at his interconnect partners and try to add an addendum into the existing interconnect contract covering him for fraud.  Now if the wholesale operator refuses to sign it, you might rethink your relationship with that wholesaler.

If a wholesaler operator is smart, it will accept this responsibility and take the necessary steps to protect the retailer in their own network or help close down specific number ranges.

One measure that can be taken, for example, is to allow call traffic to fixed and regular mobile network numbers, say to Latvia, but block all calls to Latvia Special Services numbers.

But today, many of a retailer’s end users are being hurt because the retail operator or their wholesale supplier is blocking legitimate traffic.  Their fraud screen is not specific enough.

What can a retail operator do if its number ranges are being blocked?

Well, let me give you an example.  When I was at Cable & Wireless we had the OpCo Sure South Atlantic (now part of Batelco) who serves the Falkland Islands, Ascension Island, and St.  Helena.  And CYTA Cyprus was blocking traffic to Saint Helena.  In fact, relatives living abroad in Cyprus who tried phoning family back home couldn‘t get through because the number range was closed.

When I got word of that, I contacted CYTA and was told, “Yes, we had some fraud problems so we shut those numbers down.” And I said, “If we guarantee you that by routing through iBasis there won‘t be any further fraud problems, will you open those routes?” Later iBasis sent a formal email to CYTA to that effect, CYTA agreed, and the problem was solved.

On a larger scale you’ve got a country like Estonia which has three main mobile operators: Estonia Elisa, Estonia Tele2, and EMT.  In addition there is Estonia Top Connect, a mobile operator who has worldwide customers because they sell a travel SIM: people traveling abroad can avoid high roaming charges by using their travel SIM.

But all these Estonia operators and their customers are hurt because operators block their number ranges for fear of fraud.  So how do they get around this issue?  Well, it starts by finding wholesalers to help.  Three wholesalers have stepped up to help Estonia: iBasis, Elisa International in Finland, and BT.  So these core operators are ensuring no fraud can happen if the traffic is sent to Estonia through them and they terminate it with either Elisa and/or Top Connect in Estonia who have access to the numbering plan database in Estonia and can block all calls to fraudulous ranges or numbers .

Now it’s true that Estonia has a lot of dodgy number ranges, but if carriers route their traffic through these wholesalers, the problem is solved.  And the beauty is that if something does happen, the underlying carrier doesn‘t have to pay for it.  So this is the way to get the chain working for you.

All of this sounds reasonable.  So what’s preventing wholesalers from moving forward with such programs?

There are many reasons, but often the problem is obscured by having high level discussions.  People need to be willing to put their feet in the mud and pursue easy fixes to issues.  And one of the biggest aids is getting a wholesale operator to commit to protecting the retail operator.

Now I know there are details to be worked out.  For instance, I’ve spoken a lot to the iBasis people and understand their reservations about not committing too much.  For instance, routing management could make a mistake that causes fraud to get through.  So it’s a sensitive problem.

My worst experience in fraud was in 2011 when I worked at Monaco Telecom and we had some PBXs hijacked.  We discovered it within 2 hours and raised a ticket with iBasis.  I think iBasis split the loss 50/50 with us, so we ended up paying only 50% as they already paid their supplier.

On the other hand, we had a dispute with Telia Sonera for almost 9,000 Euros for traffic going to Latvia.  And we knew Telia Sonera routed this traffic onwards.  When we got the invoice, we disputed it, but they just said we had to pay although we alarmed them 2 days after the fraud happened with all the required police reports.

Well, that made me furious.  So what we did is remove Telia Sonera completely from our routing.  And I told them the reason we did this.

Maybe my approach sounds harsh, but this is the only way a retailer can move forward.  It must call its wholesaler to task for fraud.  I see now a positive trend is happening that the wholesalers have begun to change.

When you come in as a consultant to advise operators, how do you work?

I just present myself as someone not writing 5-year plans.  I make a visit to your carrier department, your routing department, and your quality and technical department.  I see what is good and I see what is not so good.  Then I write a white paper describing my observations including a SWOT analysis, recommendations, and specifics on how to make changes.

So it covers routing, numbering plans, quality of traffic, interconnect partners and the like.  But the big item, of course, is fraud — both inbound and outbound traffic.  So this is how I work.  To get known, I go to conferences such as the Capacity Fraud forum because as an independent consultant, you can‘t sit on your hands.

Thanks, Jan, for your valuable advice.  One final question: do you think we can really make progress against the kind of fraud that small to mid-size operators are experiencing?

Yes, we definitely can make significant progress, but retail operators must get their act together and start being more firm towards their wholesale suppliers.

If that happens, then wholesalers will then see the wisdom of not trying to make quick money on fraud business, and start protecting their retail operator customer instead.  The bonus is they’ll build long-standing relationships.

I see that Tata, BT and iBasis are moving in that direction.  So the word should get out around the world that there are a few good wholesalers with whom a retail operator can safely work.

Of course, a retail carrier cannot eradicate fraud 100%.  But by collaborating with a wholesaler it can at least greatly minimize it.

And it all begins by having a frank discussion between every carrier relationship manager (together with the revenue assurance director) and their wholesale supplier.  Something like, “Instead of talking about rates Mr.  Wholesaler, please bring your fraud expert because we want to make a deal that covers our back.  What can we do as a retail operator and what can you, as our wholesale supplier, do to help us?”

If this discussion starts happening, then it can lead to a big leap forward.

Copyright 2015 Black Swan Telecom Journal

 

About the Expert

Jan Dingenouts

Jan Dingenouts

Jan Dingenouts is an independent consultant with an in-depth anti-fraud expertise.  He has 27 years of experience in Telecom Sales and Business Development.  His most recent 14 years were in International Voice and Carrier Relations.

Jan also has a successful track record coaching highly motivated teams to exceed their revenue, margin and cost targets.  His consulting and negotiating skills leverage the excellent contacts he has with International Carriers across the Voice & Mobile Data Business.  He also has experience working in multi-cultural organizations.

Jan operates out of his home in Monaco.   Contact Jan via

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  • Converging Criminal and Technical Intelligence: Secret to Combating the Explosion in Telecom Fraud and Security Threats interview with Mark Johnson — A fraud and security expert gives a big picture talk on why industry convergence is driving the need for a broader “revenue risk intelligence.”  His prescription?  Yes, telecoms surely need to excel in technical  infrastructure such as traffic usage data, IP intrusion appliances, and physical barriers.  But just as important is the need to pair that knowledge with the real-life lessons of fighting criminals in general.
  • Gratifying Ghana: Why Listening to Operators Trumps Vendor Technology and Size interview with Ludvig Lindqvist — The value of technically excellent software is negated if the solution is not implemented right.  This article makes a strong case that vendors need to focus on first things first — get in full synch with a service provider’s business, capabilities and unique needs before you recommend or implement any software.  Topics discussed include: the benefits of retaining in-house expertise, implementation challenges in Africa, and the meaning of “thorough engagement” with the client.
  • Roaming Fraud: The Importance of Real-Time Data Exchange and Analysis interview with James Stewart — The Near Real Time Roaming Data Exchange (NRTRDE) is a GSM standard allowing operators to gain fast access to the roaming records of service providers half way around the world.  The article explains how 65 carriers are using this data to combat fraud through a service bureau.  Learn about the dangers of international roaming fraud and the value a roaming service bureau brings to the table.
  • Is the M2M Device in Your Refrigerator a Telecom Fraud Threat? interview with Simon Collins — Machine to machine (M2M) technology is being applied in hundreds of monitoring apps, such as smart metering and health diagnosis.  It’s even being used to monitor driving patterns tied to auto insurance rates.  But this article shows the serious M2M fraud and security threat that stem from the theft of the SIM/USIM device used in every M2M device.  The article discusses the RA and fraud strategies operators need to employ to manage the risks that will come from wider M2M deployments.
  • “Fraud Is a Wind that Always Blows” and Other Wisdom From a 28-Year Old Software Firm interview with Gary Beck — Here’s the amazing story of how Beck Computers was pulled out of a Tier 1 account only to be brought back in a few months later.  The article explores software vendor service and support challenges, real-time computing requirements, advanced fraud management functions, and ways to educate management on the value an FMS investment.
  • Insider Fraud: Detecting Criminal Activity in the Telecom Sales Process interview with Tal Eisner — One of the biggest problems telecoms now face is fraud done inside their offices, dealer stores and firewalls.  This type of fraud is especially dangerous because it’s performed by people fully authorized to transact for the company.  The story dicusses the major causes of insider fraud, presents a case study, and explains basic techniques that software uses to detect insider fraud.
  • Fraud & Credit Risk Software: Setting the Client Free to Innovate interview with Luke Taylor — Not every operator wants the freedom to configure its own fraud management solution, but certain providers wouldn‘t live without such a “framework” approach .  This article discusses: the reasons why operator choose this strategy as it covers many other fraud and credit software implementation issues.
  • Why Selling to Business Customers Makes You a High Risk Target for Fraud by David West — There’s a saying in the fraud business: “It’s not a question of whether you’ll be hit by fraud — only when, how bad, and from which direction.“  Citing four recent cases where operators were hit by fraud, this article explains why investing in a fraud soluiont — and keeping up-to-date — are so critical.  The article gives several examples of vulnerability points that fraudsters commonly exploit.