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December 2016

Global Interconnect Specialist iconectiv Ramps up its Fraud & Identity Solutions in Bypass & A2P Messaging

Global Interconnect Specialist iconectiv Ramps up its Fraud & Identity Solutions in Bypass & A2P Messaging

For many years, the fraud management (FM) solutions market has been dominated by small and mid-sized software developers.

Recently we’ve seen certain industry veterans playing a substantially larger role behind the scenes and driving the development of fraud management solutions.  Last year came the acquisition of cVidya by BSS giant Amdocs.  And now — as discussed in this story — some significant FM products are being deployed from telecom leader iconectiv, a wholly owned subsidiary of Ericsson, with its own independent board of directors.

US based, iconectiv has long been a key innovator and leader across a broad range of telecom sectors: messaging, network management, illegal handset fraud, global telecom number databases, number porting, and industry registry administration.

iconectiv is the leading numbering solutions player worldwide: it manages and provisions number portability in 20 countries.  Long active on the provisioning side of North American number porting, in 2015 the FCC approved the recommendation of the North American Numbering Council to award iconectiv the contract to serve as the Local Number Portability Administrator in North America, a contract Neustar had held for over 18 years.

We were recently briefed on iconectiv’s fraud and identity solutions by Bojan Andelkovic, Senior Product Manager.

Dan Baker, Editor, Black Swan: Bojan, I understand iconectiv has rolled out a fraud and identity solution for detecting and mitigating IRSF, bypass, and SMS fraud.  First things first, what are you doing in the SIM box bypass area?

Bojan Andelkovic: Dan, as you know, the fraudulent bypass of international voice is a persistent problem.  It’s been going on for many years, which means previous solutions were unable to tackle the problem. iconectiv now offers a managed service, Asset Protect, to effectively target the problem.

In 2015 the CFCA estimated SIM box bypass accounted for about $6 billion in annual losses worldwide.  And we figure that translates to about $2 million a month for your average operator.

We know that fraudsters exploit cheap IP pipelines to terminate traffic on mobile networks, allowing them to avoid interconnect carrier fees where the terminating operator makes no revenue.  Since bypass fraud is enabled by the illegal use of SIM cards, the fraudsters also take advantage of unlimited or higher volume calling plans that exploit both voice and SMS messages.

In the last few years, operators have experienced a recurring trend of stagnant revenues; declining margins and lowering of interconnect revenues, which force them to take a closer look at potential revenue leaks.  They also lack an effective and automated system for detecting the illegally used SIM cards.  Their subscribers experience poor quality of service because the fraudsters cut corners to the point where the service is terrible.

Fraudsters are also increasingly using SIM boxes for SMS termination: A2P (Application-to-Person) SMS popularity is on an increase globally, so additional revenue leaks and potential SPAM issues occur.  Of course, the dynamic nature of bypass is you can never achieve 100% success, but you can get to a point where you frustrate the fraudster and take away their profit margin.

iconectiv’s solution to SIM box bypass is a managed service that automatically monitors the behavior patterns of SIM cards, and uses various algorithms, thresholds and big data analysis adapted to the specific types of SIM cards being used.

Our service detects the rogue SIM cards and also automatically notifies the BSS to block this traffic immediately.  Then later, we run big-data analyses on the traffic to discover fraudulent SIM IDs that we missed on the first pass.

A managed service is a great way to go because SIM box fraud is so specialized, human talent trained in SIM box FM is scarce, especially in regions of the world where most SIM box fraud is occurring.

Exactly.  Hiring and training new people is time-consuming and costly.

Our own trained experts monitor the product, set the thresholds, tweak the algorithms, check the reports, etc.  Today we’ve involved in several proof of concepts with operators in Latin America and the results are very promising.  We found high volumes of illegal SIM box activity there, so we are hoping we’ll win our first project in that area soon.

We are also active in Asia Pacific and working with a couple of mobile operators in Europe.  So we think this new service has great potential as an add-on product for the many operators iconectiv serves worldwide.

And the second key FM area you’re addressing is SMS traffic — the gray route area.  What’s that about?  And can you explain why A2P SMS is the focal point.

Well, tackling gray routes in SMS traffic is a huge issue and that’s what our Defender Shield solution solves.

The distinction between P2P (Person-to-Person) and A2P (Application-to-Person) is an important one to understand.

Across the whole telco world, 90% of P2P SMSs are being blasted with a thought (or premises) of being replied to and the volumes are so huge that operators have decided there’s no point  in billing for the multitude of P2P messages.  For example, a Vodafone sends P2P to an AT&T and vice versa.  So with P2P traffic it’s all bill-and-keep and nobody charges the other operator.

But A2P SMS traffic is quite different.  A2P originates usually one-way traffic coming from enterprises, banks, airlines and other businesses who send important or time critical messages to customers, and operators are eager to monetize that — its big revenue for them.

Now the popularity of A2P traffic varies quite a bit by region.  In the US and Europe, for example, it’s not so popular, but in markets like Latin America, Africa, and Asia Pacific, it’s one of the main means of communication, so the revenue loss is substantial if it’s not monitored for gray route fraud.

How big is the global A2P SMS fraud problem?

We feel A2P SMS traffic is rapidly increasing — in the range of 15% growth per year.  Now at iconectiv we estimate that from 2015 to 2020, mobile operators stand to lose $22 billion in revenue losses from the gray routing of A2P SMS traffic.

Here’s the key issue: operators lack an effective means to monitor the A2P SMS terminating in their network.  The nature of SMS traffic routing is that SMS aggregators often opt for the cheapest prices, so corners are cut and low quality gray routes are chosen that are less reliable or are terminating at almost no cost and no revenue for the terminating operator.

Before you know it, the mobile operator is losing big money.  An average-sized operator can easily lose millions of dollars per month.

Wow, the monetary losses are substantial.  So what’s the solution to the problem?

We estimate that only about 15% of operators have actually invested in a next generation SMS revenue assurance solution to attack this problem.

Individual mobile operators have very basic systems to monitor fraud, but for sophisticated SMS aggregators and fraudsters, those defenses are child’s play to defeat.  So more sophisticated fraud cases are very hard for operators to detect without great system sophistication.

So once again, a managed services product, deployed in the operator’s data center, makes a lot of sense.  A dedicated solution is needed to look at A2P SMS traffic going in and out, and to decide what to block, what to monitor, and what to white list.

Since iconectiv is also an SMS aggregator, we’re in an ideal spot to assist mobile operators not only with monitoring their A2P SMS traffic, but also with monetizing it.  Usually, just by deploying our SMS filtering solution, 50% of the problem is solved because you’ve blocked traffic going through gray routes.

But merely blocking SMS gray route traffic alone is not enough, because you also need to find ways to redirect traffic to legitimate routes.  This is crucial to keep money flowing to the mobile operator — and everyone else in the messaging routing chain.  This is the other 50% of the A2P SMS puzzle.

iconectiv Defender Shield

There are other SMS aggregators out there offering A2P FM.  How do you differentiate from them?

To be honest, the aggregator you choose makes all the difference.  Let me explain.

Many SMS aggregators grew up as relatively small companies in a highly competitive business.

However, in order to survive in a highly competitive business, they often resorted to using gray routes at some point.  Operators are well-aware of this legacy issue, and are very cautious about who they work with as a result.  So having a trusted SMS aggregator is crucial.

Another factor to consider: most companies offering SMS revenue assurance and fraud checks are only technology providers.  Now if all you do is block illegitimate SMS traffic, for the first three to six months everything looks promising, as you’re blocking gray routes.  However, you soon realize that the revenue stream you were expecting from A2P SMS is not there because no effort is made to get new legitimate routes established.

Remember, the big banks and other enterprises themselves don’t generally know the quality of their A2P routes.  They also don’t realize when their SMS quality has been vastly degraded: all they know is they are using a certain aggregator for their SMS traffic and that’s it.

Merely blocking SMS gray route traffic, then, is not a complete solution.  You also need to help the operator monetize its A2P traffic by rerouting to legitimate routes.  Since iconectiv is an SMS aggregator, we offer both blocking and re-aggregating the traffic in one shop — a major convenience.

So to summarize, you must not only block the gray routes, but also approach the brands that use the SMSs and make sure they can continue to send and receive SMS traffic from the mobile operator.

I see... you seem to have a solid system in place that can steer customers to the right SMS aggregation points and partners.

That’s right.  There are the international brands and also local players that we connect with.  Remember, most of them are terminating in countries where there’s a need for reliable local connections.

Bojan, thanks for this informative briefing.  The existence of an interconnect expert like iconectiv in the FM space is very much welcomed.

Copyright 2016 Black Swan Telecom Journal

 

About the Expert

Bojan Andelkovic

Bojan Andelkovic

Bojan Andelkovic is Senior Product Manager at iconectiv.  With over 6 years of experience working in the Telco sector, he specializes in anti-fraud and revenue assurance solutions and has worked with a number of service providers, SMS aggregators and enterprise businesses worldwide.

Bojan is an active member of GSMA and MEF organizations and his goal is to further integrate iconectiv in the growing Anti-Fraud and Revenue Assurance market.  He also seeks to help service providers regain control over their networks and increase monetization efforts, particularly through SMS traffic and preventing SIM Box fraud.   Contact Bojan via

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