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Bigger Than Disney: Telecom Fraud Tops $40 Billion a Year
Telecom fraud is an ever-present risk to operator profitability, and for decades operators and their vendor partners have built software systems and business procedures to limit theft. In spite of their best efforts and recent improvements, insiders say the problem is still almost 2 percent of global industry service revenues. Current global losses are estimated to be $40 billion, but industry practitioners worry aloud and in unison that the rush to cut costs is leaving vulnerabilities unchecked. At the same time, as we connect everything in our lives to mobile networks, we expand the risk simply by virtue of the number and complexity of connections.

Newer, more mobile people and things add to the list of current and future concerns. Mobility has enriched consumers' lives with new ways to transact commerce and banking, but the annals of fraud are already racking up case studies of loss from financial crimes. Machine-to-machine (M2M) connectivity is also starting to be hacked, and in some cases outright theft of equipment adds to the losses. Estimates of fraud are still in the formation stages, but if the two percent figure from the current environment holds, one should easily expect incremental nine-figure losses at a minimum over the next three to five years.

Experts say networks have become less secure, too. While the old circuit-switched wired environment is considered pretty well buttoned-up, mobility and IP are still wild cards. IP, by design, is less centrally controlled, but less well understood and less well managed, argue security consultants. And as if that weren't enough, internal fraud by employees, dealers and even other operators is adding risk to the total business as they bypass established norms and abuse business relationships.

Why can't we get control of this situation? Telecom managers and their vendors point to decreasing vigilance as one of the root causes. Another is the ability of fraudsters to ply their trade across multiple operators. These sources are compounded by the increasing number and complexity of networks, devices and service types in the market.

Industry insiders agree on one thing: it's time to re-commit to fraud prevention and redouble our efforts. Today we have at least 40 billion reasons, and it is clear that in the era of m-everything, our best defense will truly be a good offense.

To be sure, there is no one approach to guard against fraud of any vintage old or new. But operators have many resources at their disposal to rekindle their thought processes and actions about risk reduction. Some of this is procedural, some technical. But because the costs are already borne before the services are stolen, reducing fraud delivers savings direct to the bottom line of the operator's income statement.

Bigger Than Disney: Telecom Fraud Tops $40 Billion a Year examines the telecom fraud market, covering the current types of loss due to fraud. Further, it discusses how the industry is tackling the challenges it's facing, including platforms that fight fraud. Finally, the report profiles 11 leading vendors in the market.

Sample research data from the report is shown in the excerpts below:
Table of Contents (spiti0712toc.pdf)
It has been said that revenue assurance (RA) with nefarious intent is fraud. And in many cases it may be, as open-loop processes that create differences between what is billed and what is delivered give fraudsters opportunities to ply their surreptitious trade. So it makes sense that the individual fraud, commercial abuse, security and RA functions would start to overlap. Moreover, as fraud types become more complex and involve multiple risk areas, analysts require knowledge in multiple domains.
[click on the image above for the full excerpt]
Companies profiled in this report include: Agilis International Inc.; cVidya Networks Ltd.; Equinox Information Systems Inc.; Hewlett-Packard Co. (NYSE: HPQ); MACH S..r.l.; Neural Technologies Ltd.; Neustar Inc. (NYSE: NSR); SAS Institute Inc.; Subex Ltd. (NSE: SUBEX; BSE: 532348; LSE: SUBX; SGX: 4AFB); Teoco Corp.; and WeDo Technologies.
Total pages: 17
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