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Call Toll Fraud

46.3 Billion Reasons to Invest in Call Toll Fraud Prevention

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I remember the summer of 1972 as one hell of a hot summer. We were a bunch of kids on summer vacation without much to do. Our daily routine was mainly playing football in the deserted schoolyard and searching for other “exciting” activities the rest of the day.  One day we decided that it would be much “cooler” to stay indoors in the classrooms. So we broke the lock of one of the classroom and entered. I don’t remember exactly what we did in the classroom but what I do remember is that for some reason we decided to remove the blackboard (in those days it was really black and heavy) and take it with us through the window. But we had no clue of what to do with the loot! That took place more than 40 years ago and I still can feel the bitter taste of helplessness kids standing on the schoolyard with stolen blackboard

Call Toll FraudI have cool job in AudioCodes. Together with my colleagues, we are working on next generation products. A few months ago, I came up with a “revolutionary” idea as to how to prevent toll fraud using big data technologies.  I met with our security expert and presented my idea. He gave me an “offering my condolences” look saying – who cares about toll fraud? Who needs to fraud when calls are so cheap? And I felt again like I did 40 years ago, defeated, sweating, carrying a huge blackboard, and this time alone. But I didn’t give up, I decided to check the numbers.

The CFCA 2013 Global Fraud Loss Survey

The Communications Fraud Control Association (CFCA) published a fascinating report, “the 2013 Global Fraud Loss Survey”,  taken from fraud and security experts working within the industry who are directly involved in identifying and stopping communications fraud.  Responses were received from 93 Communications Service Providers (CSPs) located throughout the industry and around the globe. The CSPs included companies both small (<1K employees) and large (100K+), and covered wireless, wireline, broadband, and narrowband service providers. The CSPs reported providing service in multiple areas including: voice, data, financial services, and content distribution.

According to the survey, the estimated 2013 Global Fraud Loss was $46.3 Billion (USD) annually which is approximately 2.09% of total telecom revenues. Here are some interesting findings from the survey.

Top 5 Fraud Methods Reported

  • Subscription Fraud
  • PBX Hacking
  • Account Take Over / Identity Theft
  • VoIP Hacking
  • Dealer Fraud

 

Top 5 Fraud Types Reported

  • Roaming Fraud
  • Wholesale Fraud
  • Premium Rate Service
  • Cable or Satellite Signal Theft
  • Hardware Reselling

Top 10 Countries from which Fraudulent Calls Originate:

Ten countries account for 35% of the originating global fraudulent calls

Top 10 Countries from which Fraudulent Calls Originate

Top 10 Countries from which Fraudulent Calls Originate (CFCA)

 Top 10 Countries where fraud terminates:

I find this  graph to be amazing as many of these top ten are relatively esoteric countries (sorry for the non-politically correct language) and are the destination of more than 40% of the fraudulent calls!

Top 10 Countries where fraud terminates

Top 10 Countries where fraud terminates (CFCA)

 Estimated Fraud Losses by Service Type (in $USD Billions)

 

This pie chart shows that calls (PSTN & VoIP) comprise of more than 50% of the fraud service types

Estimated Fraud Losses by Service Type

Estimated Fraud Losses by Service Type (in $USD Billions) (CFCA)

 

According the survey, the companies that are subject to fraud don’t report this to law enforcement for the following reasons:

  • Debt recovery pursued through civil means
  • No faith in the judicial system to administer the right punishment to deter others
  • No perceived value to the business
  • Not referred due to lack of evidence
  • Perceived lack of interest by law enforcement to take the case
  • Perceived lack of understanding by law enforcement to pursue the case
  • Lack of resources

 

Conclusion

According to this survey, losses are huge and the fraud trend is definitely on the rise. From estimated total global revenues of $2.214 trillion (USD) in 2013, the estimated loss due to fraud is $46.3 Billion (USD), or 2.09%. The estimated total global revenue has been growing by 3.7% since 2011 where the Estimated Global Fraud Loss is growing by 15.4%!

So what do I hope are the main takeaways from this blog post?

Firstly, don’t write posts which can incriminate you or that you don’t want your kids to read. And, don’t break into school classrooms! And now seriously… Don’t give up on your ideas, even if the “experts” say they aren’t worth anything. Fraud detection applications are absolutely viable, According to the survey, toll fraud doesn’t occur often, but when it does hit, it can be financially painful.  And what’s amazing is that CSPs and other organizations prefer not to report to law enforcement since they don’t want to be tagged as low security firms. Additionally, they also lack the confidence that there is a real chance to expose the “faceless” net criminals.

Stay tuned for my next post on how to prevent toll fraud using big data tools.

The Value of Voice

Make it Short, it is Expensive

Determining the value of communications

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Mothers-in-law are a sensitive subject. Anyone who has a mother-in law knows this very well.

Now, don’t get me wrong. Most people would probably envy me for mine. She got into this post because she is a natural reserve for technology of the 60-70’s. She made a conscious decision to remain planted back in those days in many areas, technology is just one of them. It’s a long story and this isn’t the best place to go into details about it J. Last week I was in Spain with my wife trekking in the Pyrenees and our kids were left with our extended family. Two days during the week were with my mother-in-law at our house. When I called and my 6 years old son picked up the phone he started waffling his usual nonsense. In the background I heard my mother-in-law saying to him – “make it short, this is a very expensive call”.

The value of voice goes down to zero

This is something I heard many years ago and one I use myself. But this statement needs to be placed in the right context. When I call from my vacation, I have many means of making a free call or a call that is so cheap that practically puts it into the “free” category. My son can waffle for as long as he wants. I can call through a mobile application (called Bphone) provided by my local service provider that takes my home number with me and allows me to make calls from anywhere over WiFi at the cost of a local call, as if I was calling from home. This happens to be an application AudioCodes has provided Bezeq (the local service provider) for this service. I have plenty of other options for calling PSTN using Viber, Skype… or the AudioCodes enterprise mobility application. All these allow for calls from anywhere for a free/flat rate to a very low cost.

But this doesn’t mean that the value of voice goes down to zero. Voice is still the #1 revenue source for service providers. It has value for consumers and surely has value for enterprises, value that is far more than the call itself. There are services attached to calls in the enterprise environment.

A good post written by Yossi Zadah is scheduled for release next Monday that takes a look at the value of voice calls through the prism of call toll fraud, so stay tuned.

The value of communication is determined by the service in which it is embedded

The Value of VoiceThe value of voice as well as video, presence and messaging, is not in simply connecting such sessions but needs to be viewed in the context of the service in which it is embedded. If voice/video communication is embedded in an insurance company’s self-service website where a user can speak with an agent when running into issues purchasing his insurance, the value of the call is not the amount of cents it costs but rather the fact that the deal was closed instead of the customer going to the competitor. There is a multitude of examples of similar and other cases such as remote learning and group collaboration. In all these cases, the value of the call is the cost saved or the revenue earned. The value perceived by the provider of this specific service is higher than the value the Communications Service Provider (CSP) receives for the call. Therefore, packaging the calling service in a way that is easy to embed into other services will allow the communications service provider to extract more value from it. This naturally leads us to the web and to WebRTC.

WebRTC as a catalyzer

WebRTC makes communications ubiquitous across web services. It renders the world of VoIP communications accessible to web developers and not only to VoIP experts. WebRTC is a catalyzer for communication revenue as it allows combining communications with web services. Moreover, it allows connecting these services with the existing enterprise communications platforms through SBCs that reside within the enterprise domain or in the cloud. With WebRTC, communications become a web feature that allows for the increase of conversion rates and revenue from web-based services and therefore, its true value becomes the value of the service and not of the call itself.

Returning to the phrase “The value of voice goes down to zero” I would coin a new phrase “The value of voice is equal to the value of the service in which it resides.

What is your view on the value of voice? Feel free to express your views and comment to this post.

Cloud

Who is afraid of the cloud?

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Cloud“The Cloud” – everyone is talking about it. Studies, market reports and analysts refer to it as the “next thing” and as the opportunity that communication service providers (CSPs) must not miss. Well, it is not so easy!

Revenue opportunity for the service providers

There is no doubt that the telecom market is changing. The increased competition and the commoditization of traditional telecom services have negative impact on the CSPs revenues leading them to evolve beyond network connectivity and seek new revenue opportunities.

The good news is that the cloud trend that we are seeing for some years in the market has reached a point where CSPs can create “real” business value. According to Informa’s Telecom Cloud Monitor (http://www.informatandm.com/cloud-monitor/), the number of CSPs selling Cloud services has increased from around 60 in 2009 to about 230 in 2012 and there is a consistent growth in CSPs cloud spending.

CSPs active in cloud services by region

Cloud services allow the CSPs additional revenue streams with new value propositions that they can offer. For example, a CSP can leverage its key strengths in communication technologies to offer hosted unified communications (UC) services that combine data, voice, security and more, but at a lower cost as compared to on-site platforms. Another example is the provision of cloud applications such as business sales automation, invoicing and billing, and storage and backup in the cloud.

Why should businesses move to cloud-based services? Well, there are some good reasons for doing so including cost flexibility, business scalability and simplifying communication services.

Can we trust the cloud?

How can the CSPs deal with customers’ fears of the cloud? These customers, most of them being small medium business (SMBs), are scared of putting key business functions into the cloud because if something goes wrong, they fear it could stop their business in its tracks. So, CSPs need solutions that will enable them to allay these fears.

We need to remember that CSPs have a unique advantage over other cloud players such as Over-the-Top (OTT) providers, given their existing data and voice communication networks. This is the biggest asset differentiating them from others. Using their existing managed networks, the CSP can guarantee end-to-end Quality-of-Service (QoS) that is critical for SMBs that need to perform at an enterprise level. The CSPs are known for their existing secure networks, providing them with a strong brand advantage when dealing with SMBs that are concerned with putting their sensitive business data in the cloud. And of course, CSPs have the advantage of existing local footprints and existing customer relationships.

The SMB customers that move to the cloud, in most cases do not understand technology and products, but they do require solutions and services. From the CSP perspective, the most critical factor for the SMBs will likely be the quality of experience (QoE) – keeping customers satisfied and avoiding churn. As mentioned above, CSPs are in a unique position given their existing managed communication network including the on-premises access equipment. The on-premises equipment is the demarcation point to the CSP data and voice cloud services. Without QoE assurance in this equipment, it will be extremely difficult for the CSP to sell and deploy reliable and trusted cloud-based services.

SMBs and Cloud

Protecting the business

As part of my work in AudioCodes I meet regularly with leading CSPs and hear their perspectives regarding their SMB customers’ needs when moving to cloud-based services. One of the things that they are most wary about is the business continuity, meaning, how can they make sure that the data and voice cloud services are always available? Consider the implications of an unreachable business, even if it is just for few minutes. Of course this will reduce customer satisfaction and eventually cost the business money. Or consider the example of a small insurance company that cannot access to its customer data base in the cloud and how bad that would affect the business customer support service.

In the real world, failures happen, and yes, there will be cases when the voice or data services in the cloud will be unreachable. So the question is how can we protect ourselves from such a scenario?  And the answer is: Backup, Survivable & Resilience.

SMBs and Cloud Appliance

One solution is to use business routers with backup and survivability features. One of the great things about such a product is that it allows the CSPs to allay their customers’ fear of the cloud and provide them the confidence they need to place their key business functions in the cloud.

The approach is to use multiple WAN interfaces, backup PSTN interfaces and suitable software. With redundant WAN interfaces, you can make sure that in the case of a connection loss to the primary WAN the router will auto-switch to the backup network (for example the 3G/4G mobile network) assuring the SMB customer’s an “always on” Internet connection.

The router also ensures that critical business telephony services will continue to operate in the case of a connection loss with the hosted PBX. This is done using unique software features that will auto route the outgoing calls to the backup PSTN and will maintain internal business telephony operations.

So, the next time you are considering cloud-based services, ask yourself, are you protected in the case of a connection loss to the cloud? There is no reason why you shouldn’t be.

Image Credit: Flickr user Karen Ka Ying Wong

Small Businesses - Big Opportunity

SMALL businesses, BIG opportunity

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Small Businesses - Big OpportunityI recently read an article about the importance of small medium businesses (SMBs) and their benefits to countries’ local economies and wondered how this is reflected in local communication services deployed in those countries?

There is no doubt that VoIP technologies have changed the communications world and the way that Communication Service Providers (CSPs) do business. Still, looking at the SMB segment (I refer here to companies with more than 4 and less than 250 employees), it seems that out of a total of 75 million worldwide SMBs, only 12 million are connected to VoIP services and the rest are still using legacy TDM lines.  Clearly, there is huge opportunity here for CSPs as well as for VoIP equipment providers.

According to an internal analysis we conducted in AudioCodes, based on market research reports we expect that by 2017 the number of SMBs connected to VoIP services will more than double to 25 million with an average annual growth of more than 3 million every year!!!

Worldwide SMBs connected to VoIP Services

In the past, the needs of SMBs were quite modest in comparison to those of the enterprise. But this is changing – and fast. The communications needs of SMBs have grown far beyond a managed PBX and an Internet connection. The increasing awareness of the need for data and cloud services, together with the availability of affordable platforms, encourages SMBs to acquire advanced communication services that will help their businesses grow.

Win the SMB market with QoE Ingredients

When facing SMB customers, CSPs need to take into consideration that these SMB customers are limited in their budgets and do not have the technical resources as do enterprises. At the same time, CSPs understand that in order to succeed in the SMB space, they must offer a compelling service bundle for the right price, and probably, the most important factor will be QoE.

We need to remember that even if in most cases the SMBs let the CSPs manage their communication services, they are fully aware of the importance of these services and the critical impact they can have on their business.  Accordingly, they carefully evaluate these services when interacting with CSPs. SMBs expect their businesses to be always available, with no less than excellent voice quality and fast Internet service. They expect a productive environment for their employees with suitable and accessible data tools and they are very concerned about security. And, of course, the solution must be affordable.

Business Communications Needs

Faced with this significant opportunity, CSPs are challenged to provide SMB customers with the expected QoE starting with the on-premise business routers. Using the right business routers with features such as business continuity and consistent performance, will allow CSPs to deploy data and voice services with high QoE that will help them to capitalize on these opportunities.

More information can be found in the “Big Solutions for Small Business” white paper and at AudioCodes Multi-Service Business Routers Page (http://www.audiocodes.com/msbr)