Fraud: A total drag (on revenues)

Telecom operators around the world are losing more and more cash to various types of fraud-and in some cases the shortfalls amount to as much as 5% of revenues, according to a new survey of operators.
The study, conducted by Analysys and commissioned by operation support systems provider Subex Azure, concluded that overall
revenue leakage-which includes fraud and other issues-for global telecom operators increased to 13.6%, up from 12.2% last year. Operators on average said they would be satisfied with losses of around 2%.
The No. 1 factor in revenue leakage was external or internal fraud and fraud by other operators. Other factors in revenue leakage that operators cited included poor processes and procedures, poor systems integration and problems associated with applying new products and pricing schemes.
This is the fifth year of Analysys’ survey, which included feedback from nearly 100 operators.
Globally, the Middle East/Africa region had the highest rates of revenue leakage, with losses of more than 20%. Conversely, Western Europe had the lowest losses with about 7%, while North America hit at just about the average, with 13%.
In general, the survey found that wireless operators tend to have slightly higher rates of revenue loss than wireline providers. Respondents also underestimated the percentage of revenue that they were actually losing, with North American wireline and wireless operators pegging their losses at just above 4%-when they were actually losing about 13%.
According to Analysys, U.S. carriers suffer from higher rates of loss than their peers in other developed markets because of their interest in uncovering and addressing sources of revenue loss (perhaps because of the impact of the Sarbanes-Oxley legislation). Another factor may be the presence of a number of mid-sized U.S. operators, as Analysys’ research suggests that mid-sized operators-those counting 100,000 to 1 million subscribers-have the biggest problems with revenue assurance.
Patterns of loss among North American operators “show that operators (fixed and wireless) tend to suffer more than the average from problems with accuracy of usage data coming off the network, and with rating or prepaid charging system errors, and less than average from system integration challenges,” according to Danny Dicks, principal analyst with Analysys. However, Dicks noted, the differences were small.