By Oscar Miranda, Regional Vice President Sales, CALA Region
As communication networks expand and smartphone usage increases, fraud and security threats intensify. Many operators are facing losses of almost six per cent of their annual aggregated revenue through fraud and revenue assurance errors, according to the International Telecommunication Union (ITU). Fraud represents approximately 14 per cent of overall global operator potential revenue leakage, with Rating / Call Detail Record (CDR) errors, incomplete customer information and bad debt each contributing to a greater proportion of revenue leakage. With this in mind, strategies aimed at minimising operating costs, maximising profitability and dealing with increased competition in regional markets require some re-evaluation.
Latin American operators are already working together with governments to block the use of stolen devices. Last year, thirteen mobile operator groups pledged to work together across the region to block the use of stolen SIM cards, making their trafficking and re-use more difficult. Although the telecommunications market in Latin America is set for excellent growth in the coming years, (Frost & Sullivan for example, projected that total data communication services will grow by 7.4 per cent CAGR by 2015 ) the presence of fraud and revenue leakage is still a very real threat to most mobile phone operators in the region.
Fraud Management or Revenue Assurance?
Within the communications industry, revenue assurance has typically been defined as a broad range of activities, encompassing fraud management, partner settlement processes and various aspects of billing and accounts receivable processes. However, by definition revenue assurance should be focused on the processes associated with reducing revenue leakage within an operators own technical infrastructure and business domain. For most operators the management of these functions has tended to develop as separate disciplines and departments, requiring specialist skills, knowledge, processes and even language. But this needn’t be the case when an alignment of revenue assurance, fraud management and partner settlement could produce a real cost advantage and efficiency gains.
As business processes become ever-more complex, there is a need to harness new techniques and developments to promote the possibility of a multi-function revenue protection platform. This requires an integrated cloud-based solution that can harness and align data capture, analysis, case management, workflows and data export requirements to consolidate separate processes within the single concept of revenue protection. It also provides an opportunity for operators to consider the future direction of revenue assurance, fraud management and partner settlement. Instead of multiple entities, each with its own application, operators can choose a unified revenue protection platform, to assure and improve revenue, increase margins and provide a valuable source of information for strategy development.
A hosted revenue protection platform ideally combines fraud protection with revenue assurance and third party settlement, as well as a multi-dimensional platform. This would encompass retail, wholesale, international and domestic dimensions, covering everything from subscriber-process fraud, to inter-company and international revenue assurance processes. Flexible delivery is also crucial.
Delivery of fraud management as SaaS in a cloud-based environment is an attractive prospect which eliminates capital expenses and accelerates the time to have the services up and running, while tying OPEX directly to operational requirements. Fraud detection in telecommunications networks also means being able to analyse large amounts of data in order to identify potential fraud scenarios, and to do so in a very short time period in order to minimise the potential loss from the fraudulent use of network services.
Conclusion
Revenue assurance and fraud management help operators reduce inefficiencies in their front and back offices. Both disciplines try to fix revenue loss, whether deliberate (in the case of fraud management) or unintentional (in the case of revenue assurance). Until recently, most operators had separate organizations that handled revenue assurance and fraud management, but new challenges such as the need for a real-time approach for both fraud detection and revenue assurance, and the ability to be able to detect and respond to new fraud patterns means that operators are increasingly looking for a more aligned way to manage their revenue assurance and fraud processes.
In increasingly competitive markets, revenue protection is becoming of tantamount importance, particularly regionally. Today, Latin America’s communications market—and its mobile services sector in particular—is recognised as one of the highest-potential growth markets in the world. The World Bank figures from 2012 estimate that 98 per cent of the Latin American population has a mobile cell signal and 84 per cent of households subscribe to some type of mobile service. Alongside Asia-Pacific, Latin America is projected to lead the global expansion in communication services over the next few years. Matters such as fraud management and revenue assurance must not be taken lightly if the Latin American market is to maintain its impressive growth and profitability into the future.