Many companies that provide anti-cloning products to analog cellular network operators are gearing up for the takeover of digital-based service in the coming years and are waiting to capitalize on problems digital operators will face.
Authentication systems are expected to be installed in all digital networks going forward, perhaps eliminating the need or sharply limiting the demand for other solutions like RF fingerprinting and roaming verification systems that many analog cellular carriers use today to combat cloning fraud.
Tampa, Fla.-based GTE Telecommunications Services Inc., which provides a line of fraud management services that includes authentication, said demand for these products most likely will phase out in the next five years. “Companies like us will begin shifting (except for its profiling product) to start developing subscription fraud solutions that help at that point,” said Ian deCone, fraud solutions manager with GTE TSI.
Though it is inevitable that the world’s carriers will someday operate all digital networks, it is unclear how quickly analog networks will phase out. Some analysts have predicted that analog service in the United States will continue for more than 10 years because second-tier cellular operators have ample capacity on their networks.
However, AT&T Wireless Services Inc. is targeting these operators and aims to sign various alliances with them to get digital service up and running in the missing links of its nationwide wireless footprint.
“We will have some really good system sales in 1998 and 1999, but we’ll be hard-pressed for tremendous demand [past 2000] … We’re migrating our technology toward digital solutions,” said Bill Zollner, president and chief operating officer of Seattle-based Cellular Technical Services, which provides a real-time radio frequency fingerprint-based cloning and fraud prevention service.
William Taliaferro, director of product marketing with Corsair Communications Inc., which also provides RF fingerprinting products, doesn’t see the analog market going away anytime soon, and believes demand for the company’s product will remain after 2000.
“There are still many analog systems growing rapidly in the U.S. and elsewhere,” he said. “Penetration even in the most saturated markets is still pretty low. We are by no means in nearly every cell site in the U.S. Those are arguments for the health of an analog fraud solution business.”
Some 30 percent of worldwide mobile phone subscribers are still using analog, and that figure does not include dual-mode handsets, said CTS’ Zollner. Handsets manufactured since January 1996 are required to support authentication, and it will take several years for all U.S. customers to get their hands on authentication-only phones, said deCone.
Dual-mode handsets also may keep the anti-cloning business alive for a few years. Most digital operators still will need additional fraud protection since they may be years away from filling out their footprint. Both CTS and Corsair say digital carriers are interested in deploying an RF fingerprinting solution to protect customers on analog networks.
International markets, too, are expected to produce big demands for analog fraud products in the coming years as many foreign carriers are just now addressing fraud.
“In 1998 and 1999, you will see bigger demand on the international front. There will be a migration of (cloning) fraud out of America,” said Zollner.
CTS has developed an Enhanced Total Access Communications System analog version of its product for carriers in countries like China, Malaysia, Italy, Spain, the United Kingdom and the Philippines. The product is in the testing phase.
Taliaferro believes international markets will become a bigger fraction of Corsair’s business going forward as well.
But all-digital networks are coming and fraud companies are preparing for the future. Zollner said CTS will step up its research and development efforts this year to prepare for the inevitable.
“We have the ability, because of real-time processing, to be able to do a number of things with carriers,” said Zollner. The possibilities include network monitoring, E911 solutions and other fraud solutions digital carriers are just now facing. For instance, Global System for Mobile communications carriers in China and Hong Kong are beginning to experience Subscriber Identity Module card fraud. Fraudsters have figured out how to steal SIM card numbers and duplicate them on new cards, he said.
Corsair is developing a version of its PhonePrint product for Interim Standard 136 Time Division Multiple Access systems.
“Carriers have expressed to us the desire to have a back-up solution to authentication,” said Taliaferro. “That gives the RF fingerprinting technology a leg up.”
Corsair hopes to migrate into other lines of business that will become attractive to digital carriers, like the wireless location business. The company also recently released a follow-on product, PhoneCheck, to its PhonePrint fraud product designed to target subscriber handset problems that could lead to churn.
“Having another application living on the platform is an argument for deploying it on digital networks. It’s a follow-on product. You need the PhonePrint system to have PhoneCheck,” said Taliaferro.
The future also most certainly will bring an influx of companies offering subscription fraud solutions. Subscription fraud, which affects all carriers, has increased substantially now that many cellular carriers have become highly successful at stopping cloning fraud. Fraudsters following the path of least resistance are returning to subscription fraud.
“Our friends in Europe have had authentication since day one,” said deCone. “There is a rabid problem with subscription fraud.”
