SMS vs OTT: has the match really started?

SMS is a $100+ billion business - Messaging is the biggest 'non voice' mobile service and it is growing. SMS accounts for almost half of the revenues generated by mobile messaging: it is a $100+ billion business for at least the next 3 years according to Portio Research. We now have 6.9 billion mobile subscriptions worldwide. The OTT messaging platforms, put all together, have a consolidated base of 2.3 billion users. WhatsApp, which is a massive success story, has “only” 450 million users!

SMS termination revenues are high - When wholesale revenues derived from voice termination keep on decreasing, SMS termination revenues remain high: the average SMS termination rate in Europe is €2.8 cents per terminated SMS; up to €7 cents per SMS for international SMS in some countries.

But the SS7 network is not so safe anymore - When used solely by trusted members, this network used to be a safe area. Nowadays many new players have an easy access to SS7 (MVNO, Hub providers, SMS aggregators, HLR lookup service providers...) while fraudsters / hackers have found new ways to get access to this network.

Conclusion: SMS termination should now be carefully monitored to tackle fraud and revenue assurance issues.

Why Araxxe managed services can help you maximizing your SMS termination revenues?

We design specific test campaigns focusing on the detection of the main fraud schemes (e.g. SIM box, SMS faking, SMS spoofing...) and revenue assurance issues (e.g. unbilled incoming SMS, wholesale arbitrage...).
You take advantage of Araxxe global test platform in 160+ countries: our international network of robots and our large portfolio of international telecom subscriptions.
We operate -on your behalf- test campaigns delivered in an industrialized way.
We deliver actionable reports enabling to quickly fix revenue leakages.
You leverage Araxxe unique expertise in test campaign design, interconnect fraud detection and revenue assurance.

Premium Rate Services (PRS) are high-tariff services which account for 2 to 4 % of the annual mobile operator revenues (European average). Surprisingly, PRS billing is hardly monitored today despite customer complaints due to the lack of tariff awareness and / or billing errors. PRS also squeeze the operator margin due to the high costs charged by PRS partners. Any error can be immediately turned into a cash machine by professional fraudsters that constantly monitors the market.

Retail billing of PRS requires special monitoring because the charging principles are more complex and may include: flat fee rates, time-dependent rates (including a minimum/maximum charge per call), variable rates (depending on options selected by the subscriber), fees for additional services, special VAT schemes, etc.

Moreover PRS are usually outside the core package rate plans which result in limited testing and in billing errors being undetected. This may have a huge impact, e.g. a mobile operator in Europe recently had to refund €1.9 million to subscribers who had been billed incorrectly for 3 years for calls made to third-party premium rate numbers.

Although the operator does not provide the service itself, the subscribers usually send their complaints to them - not to the premium rate service provider. These complaints may have serious financial impact: e.g. in North America, three mobile operators were required to stop misleading adverts promoting premium rate SMS and to compensate subscribers with refunds and penalties ranging between $1 million and $10 million.

Further to retail billing issues, the operators should also carefully address other risks impacting inter-operator revenues. Sometimes retail rates for PRS calls are lower than the interconnect cost charged by the wholesale carrier. On top of this, there is also a risk to manage unprofitable premium rate services as soon as the termination fee charged to the A-party is lower than the revenue share paid to the content provider.

Why Araxxe is the right partner to help you optimize your revenues derived from premium rate services?
While basic revenue assurance programmes are in place within most operators, the process improvements should keep pace with the changing telecom landscape. Araxxe monitoring services can help you to be deal with forms of leakage that are specific to PRS.
We design advanced test campaigns to premium rate numbers (both voice and SMS)
We operate -on your behalf- flexible test campaigns delivered in an industrialized way.
We check that each single transaction is properly billed: retail billing, interconnect billing and revenue sharing.
You select the monitoring mode addressing your business needs: in depth audit or recurring monitoring.
You leverage Araxxe unique expertise in both test campaign design and billing verification.

How do you effectively tackle bypass fraud today?

Bypass fraud is still a major concern for mobile operators worldwide. Far from having disappeared, fraudsters have developed new techniques to protect their 'business'. They have implemented tactical responses against the main detection methods: (a) Profiling analysis performed in Fraud Management System, (b) Tracking campaigns based on Test Call Generation.

Are you aware that the traditional Profiling thresholds are now seriously challenged by fraudsters?

Fraudsters are able to simulate human behaviour by using the SIM server technology and the advanced features of last generation SIM boxes: automated data transactions, automated calls to the voicemail, incoming call redirection to a human operator... This additional noise generated on top of the fraudulent traffic makes the profiling a much more difficult task.
In some countries, fraudsters simply lend SIM cards to genuine subscribers and are able to mix fraudulent and legitimate traffic by sharing the usage of these lines. They also sometimes directly clone the SIM cards of genuine subscribers.

Do you know that some fraudsters are able to counter-detect and block your Tracking campaign?

Basic Tracking campaigns, mainly based on a high volume of test calls, are no more efficient as fraudsters can now manage 'black-lists' and block the traffic to the test numbers of the Tracking campaign. Test numbers are black listed on the basis of well-known indicators: number of call attempts during a specific timeframe, number of short connects during a specific timeframe...
Reversely, other fraudsters manage 'white lists': they implement routing policies enabling them to route traffic through a SIM box only if the called number has been previously white listed; otherwise the traffic is routed through white routes.

So have the fraudsters won this war?
Definitely, the answer is NO!

First, because the techniques / technologies used by fraudsters are well-known by fraud experts; so it is possible to act accordingly.
Second, many operators have already successfully implemented best practices, such as: combine the main detection methods, keep aware of new trends and be as flexible as fraudsters, always challenge your existing solution and map it against up-to-date risks.

Why Araxxe is the right partner to help you optimize your bypass detection process?

We design advanced test campaigns optimizing bypass detection performance while addressing the risk of counter-detection.
You take advantage of Araxxe global test platform, including a large portfolio of routes and international telecom subscriptions.
We operate flexible test campaigns delivered in an industrialized way and optimized on a daily basis by Araxxe fraud analysts.
We team with you to further integrate all your bypass detection solutions in order to create new synergies out of them.
You leverage Araxxe unique expertise in both test campaign design and bypass fraud detection.

4G LTE: risk higher than ever for lost revenues?
4G LTE is now starting to drastically change the use of mobile data services. But, while mobile data traffic is growing exponentially, revenues paid by subscribers are either flat or declining due to intense competition. “How to price and bill for data services?” is still the most important issue which mobile operators are facing today!

Data transactions are currently usually rated and charged by volume; 'unlimited' data plans are still very popular even if operators are keen to phase them out.  Operators are also experimenting with alternative models e.g. pricing by event or by duration of usage. On top of this, they often also promote the use of data services passes for infrequent data users or roamers. More recently, other sophisticated data plans are emerging in the market, such as tiered-data plans, application-based models, service bundles, turbo boost, device-based plans, shared data bundles,...
As pricing and billing strategies are becoming more complicated and diverse in an attempt to maximise revenues from data services, new risks must be addressed by the operators:

When charging by volume, do you really know the actual size of your data transactions?
In which unit and where do you measure it? These strange questions do not look so techy anymore when it comes to properly charging your end-customers; or when you check roaming costs having a deeper look into the TAP files sent by your roaming partners.

How do you monitor -today- popular use cases such as data passes?
The data pass story looks simple (e.g. 60MB for a 24-hour period).

However what if the data services are not properly suspended once the data has run out?
And what about roaming data passes?
Are you ready to monitor and secure revenues derived from new data plans?
As new data plans and use cases are being launched, the need of active monitoring is also increasing. Sophisticated use cases require sophisticated monitoring.

Why Araxxe is the right partner to help you maximise revenues from data services?
Araxxe managed services can help you monitoring the main risks on data services billing.
We design specific test campaigns addressing your business objectives and focusing on data services billing errors detection.
You take advantage of Araxxe its global test platform: our international network of robots (last generation test call generators) and our large portfolio of international telecom subscriptions.
We operate -on your behalf- test campaigns delivered in an industrialized way.
We deliver actionable reports enabling to quickly fix revenue leakages.
You leverage Araxxe unique expertise in both test campaign design and revenue assurance.