SIM Box, OTT Bypass Growing Threats to Mobile Operators

SIM box fraud and over-the-top (OTT) hijack remain two of the major threats to mobile operator revenues, new research has revealed.

According to a survey from Revector, more than 80% of operators said they are experiencing SIM box fraud, which is a setup in which fraudsters install SIM boxes with multiple low-cost prepaid SIM cards. The fraudster then can terminate international calls through local phone numbers in the respective country to make it appear as if the call is a local call.

The survey also showed that three-quarters are victims of OTT hijack, which is recognized in the survey as the single biggest future threat. OTT hijack happens when a call originates on the A-party’s traditionally networked device, but fraudsters hijack the call and terminates it on the B-party’s device via the OTT software it runs. The person who originates the call may think they are paying for a call to an ordinary telephone number, but the receiving person’s data allowance is being hit.

In all, mobile network operators have lost 20% of termination revenues to OTT hijack in the last 12 months on average, with some operators losing more than 70%.

The survey was sent to every mobile operator in the world and completed by 150 fraud and revenue protection professionals across all continents. Of the 70% of operators experiencing OTT hijack, the average loss of revenue compared to 12 months ago has increased 21% with some operators experiencing losses exceeding 60% of interconnect revenues.

“This survey demonstrates the impact that fraud and call hijacking is having on mobile operator revenues,” said Andy Gent, CEO of Revector. “If operators do not address issues such as SIM box fraud and OTT hijack, revenues from interconnect will have effectively disappeared by 2020.”

The operators were also asked about customer complaints, with half of respondents experiencing increased customer issues in the past 12 months. Issues around call quality were cited by almost 90% of respondents as the primary driver of customer complaints.

Worse, despite the revenue losses and increased customer complaints, less than 15% of operators surveyed had increased revenue protection budgets in the last 12 months.

“Simple revenue protection measures against SIM box fraud can reduce revenue losses within a week and the service will pay for itself several times over in terms of revenues retrieved,” said Gent. “Mobile operators face the most challenging environment: customers are churning from one service to another; there is increased pressure on pricing and new scams and frauds are being deployed against networks, not to mention the challenge from voice over IP providers.  In this environment protecting current revenues and addressing fraud issues head on is critical to shareholder value.  Operators can address the primary revenue protection issues with simple but effective measures that will return millions in revenues monthly.”

Photo © Massimiliano Marino

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