small telco or large. everyone!...revenue > usd 100 million ebitda higher than most oss vendors...

Small Telco or LargeLarge.

Fraud Affects Everyone!

October 6, 2010Fraud Management

Webinar

COMPTEL WEBINAR PROGRAM POWERED BY:

www.subexworld.com

The Speakers

Matt WilkinsonVP of Global On-Demand Solutions at Subex

D l YDale YoungsHead of Fraud Product Development at Subex

2Subex - Proprietary and Confidential

Agenda

Subex at a glance

What is telecommunications fraud?

Wh d d t f d?Why do we need to manage fraud?

How do we manage fraud?

Subex solution … ROCcloud

What are the challenges to managing fraud effectively?


About Subex

Industry Leadership Financial StrengthIndustry Leadership

Comprehensive OSS/BSS portfolioMarket leader in Business Optimization (2007 & 2008)W ld' N b 1 id f f d t

Financial Strength

Revenue > USD 100 MillionEBITDA higher than most OSS vendors

World's Number 1 provider of fraud management and revenue assurance solutionsMarket leader in service activation solutions

Global Presence

Development centers in India, US, Canada and UKOver 200 customers and 300+ installations across

People

Global workforce with local presenceOver 1,200 Subexians dedicated to technology

70+ countriesCustomers include 36 of world’s top 72 service providers (from Forbes 2009 list)

gyleadership and customer commitment


Subex Portfolio

S bSubex Product Portfolio

New ProductHosted Environment

5

Product Platformfor Fraud Management

Industry Recognition

Rocware 2.0 Operational Excellence Tech Fast 50 India 2007

Tech Fast 500 APAC 2006

Most Promising TMF Operational

Excellence Award 2003gCompany 2005

Excellence Award 2003Leader of TMF Fraud Management group

Active Contributor to GSMA Fraud Forum

Best Provisioning System

Customer Service

Customer Service Excellence


Subex Fraud Management Solution: 100+ Operator InstallationspAmericas Europe, Middle East and Africa Asia Pacific

Representative List


Subex at a glance







Definition of Fraud

The procurement or use of a

telecommunications product ortelecommunications product or

service with intent to avoid payment with

respect to that product or service.


Types of Fraud and their Impact

The 2009 CFCA* Survey observed the following fraud types and their corresponding losses:

Fraud Loss % of TotalCardholder Not Present

2% Calling

Fraud Loss (in $Billlions)

Fraud TypeFraud Loss

(in $Billlions)% of Total Fraud

Subscription & ID Theft 22.3 29%PBX/ Voice Mail 15.1 20%Premium Rate Service 4.6 6%Hacking 3.2 4%Arbitrage 3 4%

Social Engineering

Theft of Equip2%

Roaming2% Dealer

Pre‐Paid2% Call Sell

2%

2%

Content1% Call Forward

1%Clip‐on1%

SS7 Manipulation

1%

Calling Card0% Cable

0%

Bypass0%

Arbitrage 3 4%Other 2.6 3%Carrier Interconnect 2.5 3%Internet 2.1 3%Internal/Employee 2.1 3%SIM box 2 3%Theft of Service 2 3%

Subscription & ID Theft29%

SIM box3%

Theft of Service3%

Engineering3% Technical

2%2%

Theft of Service 2 3%Social Engineering 2 3%Theft of Equip 1.7 2%Technical 1.6 2%Roaming 1.6 2%Dealer 1.5 2%Pre Paid 1 4 2%

PBX/ Voice Mail20%

Internet3%

Internal/Employee3%

Pre‐Paid 1.4 2%Call Sell 1.4 2%Cardholder Not Present 1.4 2%Content 0.8 1%Call Forward 0.7 1%Clip‐on 0.6 1%SS7M i l ti 0 4 1% Premium Rate Service

Arbitrage4%

Other3%

Carrier Interconnect3%

SS7 Manipulation 0.4 1%Calling Card 0.3 0%Cable 0.2 0%Bypass 0.2 0%

Premium Rate Service6%Hacking

4%

4%


*CFCA (Communications Fraud Control Association)

Fraud Types

Subscription FraudIdentity theftR i

Content FraudIRSFRoaming

Call Forward / Call BackPayment Fraud

IRSFBad debtBill spreading

Network &Technical FraudPBX / VoicemailSpoofingClip-on

Prepaid FraudSIM Card CloningGateways Clip on

Virus AttacksInterconnect

yBypassIntrusion

Insider & Dealer FraudSystem HackingUnauthorized provisioning of services

IT data theft, ghostingCommissions on fraudulent salesBox SplittingSubsidy Abuse Box Splitting


Motives for Committing Fraud

To make money – professional fraudsterProfit by selling the airtime to others (call selling)Profit by selling the airtime to others (call selling)A competing business, offering calls at a cheaper price than the network

To save money – casual fraudsterP fit b t i f th i i tiProfit by not paying for their own airtime usageFree / reduced cost communications

For anonymity – criminaly y

For kudos – hacker

To cause loss or damage – vandal

Provision of a public service – Robin Hood!p


Subex at a glance


Wh d d t f d?


Why do we need to manage fraud?




The Impact of Fraud

Direct CostsUncompensated payments to other terminating, interconnect carriers and roaming partnersUncompensated payments to content providersUse of network resourcesUse of resources in Sales, Provisioning, Billing, Collections, Customer Services, etc

Indirect CostsDecreased customer satisfactionN ti bli itNegative publicityReduced credibility amongst partners/investors


The Size of the Problem?

Fraud loss statistics are staggering:*Approx. 4.5% of annual telecom revenues lost due to fraudEstimated global fraud loss: $72 -$80 billion (USD) annually91% say global fraud losses had increased or stayed the sameThese are only the reported lossesy p

Top 3 Fraud Types:Subscription Fraud and Identity TheftSubscription Fraud and Identity TheftCompromised PBX and Voicemail systemsPremium Rate Service Fraud

These fraud types affect all telcos- large, medium and small


*All figures from 2009 CFCA Global Fraud Loss Survey

Rationale for implementing a Fraud Management Solutiong

Return on Investment (RoI) Illustration:Assume operator has 100K customers and ARPU $25/monthTurnover ~ $30MSmall Fraud Management Operation without comprehensive FMSIndustry standard figures suggest that ~ $1.35M is lost to fraud

Using typical figures for the number of alarms, percentage of positive alarms & analyst productivity, the expected benefits of employing an effective FMS can be calculated:

200% analyst team productivity improvement due to prioritization of alarms$0.75M reduction in losses due to earlier fraud detection $ 0.7M operating cost saving per year

* Comprehensive RoI evaluation tool is available


Subex at a glance








Fraud Management Lifecycle

DetectFlexible rules for known fraud scenarios Behavioral profiles and patterns for existing and new fraudBehavioral profiles and patterns for existing and new fraud typesAnalytical techniques to optimize detection and prioritization of threats

CorrectInvestigation tools to allow rapid fraud determinationCapabilities for rapid response to terminate fraudulent

Fraud Management Approach

Capabilities for rapid response to terminate fraudulent behavior

EnsureCapability to prevent re entry of known fraudsters into theCapability to prevent re-entry of known fraudsters into the network Capability to scale and expand for future service monitoring requirements Flexibility to adapt to manage future threatsBusinesses processes to protect against future attacks


General Business Process

1. Identify risk

Check subscribers’ credentials during activation phase e.g. subscription fraud and other re-offenders

2. Define usage

controls6. Prevent recurrence Monitor subscribers’ behavior

e g volumes and value

Take steps to prevent re-occurrence pro-active business change and/or Fraud Management changes controls e.g. volumes and value,

destinations, and any other suspicious or abnormal patterns

g ge.g. policy, process, config., system

General Business Process

3. Monitor service usage

5. Take corrective

action

Generate alarms when unusual or suspect behaviour is observed

Take the necessary corrective action to stop any fraudulent or malicious activity e.g. barring, hot-listing, etc.

4. Present and

analyze reports

Present end-users with unified alarms, supporting information and intelligence to permit rapid assessment

Subex - Proprietary and Confidential 19

to permit rapid assessment

Sources of Information

IP P k t S

External Partners

IP Packet ScrapersVirus Scanners and Firewalls

Switches & SS7

Billing &

and Firewalls

Other Fraud Management Mediation

Service Providers

Networks

System Logs

Solution

Content and GGSN Nodes IP Routers

y g

IN Platform


Case Management

How do we investigate suspect behaviour?Assess alarm details to determine the likelihood of fraud – Look at all of the available informationWho’s doing it e.g. a new customer or an established customer?Wh t i th i P i t l l tWhat services are they using e.g. Premium rate local on-netAre the destination number ranges or services ‘hot’?What is the exposure to the business - What is the outstanding balance on their account?Take action e.g.

Close as non-fraudClose as non fraudCall the customer and ask for paymentPlace an outgoing Premium rate barDisconnect the customer


Integration within the business

Effective Fraud Management cannot work in isolation. It requires close working relationships across the businessg pA typical example:

Customer Care – contacting or barring customersProduct Development assessing and correcting product and systemProduct Development – assessing and correcting product and system weaknessesFinance & Executive – business reporting and sponsorshipIT s stem s pport and data miningIT – system support and data mining Engineering/Technical – technical investigation supportMarketing/Sales - assessing and correcting product portfolio and policy weaknessesHuman Resources – Managing internal fraud


Subex at a glance


Wh d d t f d?






Evolving Business Model


Typical Challenges forSmall and Medium Telcos

Upfront investment in softwareProduct licensesImplementation service feesDedicated infrastructure

Management attention to invest in (what are generally perceived to be)Management attention to invest in (what are generally perceived to be) non-core functionsBandwidth to engage with vendors Absorbing new BSS solutions into existing organization


…More Challenges forSmall and Medium Telcos

Domain expertise for operating complex systemsPressure on managing with available human resourcesDifficult to justify dedicated resourcesDifficult to stay up to date with domain

Maintenance costsMaintenance costsOngoing support costsProduct enhancementsInfrastructure upgradesInfrastructure upgrades


Subex at a glance




Subex Solution … ROCcloud



Subex ROCcloud Value Proposition

We offer small and medium telcos the ability to identify and prevent the same complex fraud attacks that large telcos are protected against

ROCcloud provides stronger control over your operations with full visibility to your fraud threatsy y


ROCcloud Fraud Management

Low monthly costsMinimal capital outlay, low subscription feesNo need for dedicated infrastructureNo maintenance

Intuitive & Easy to useSimple user interface built-in tutorials and wizardsSimple user interface, built in tutorials and wizardsSubexLive! online community for direct support

Greater control over revenue and costsGreater control over revenue and costs

Q i k ROI & L I t t th O i ti & F t P f

29

Quick ROI & Low Impact to the Organization & Future Proof

ROCcloud Hosted Environment

ROCcloud Security Details

Compliance and Controls in placeSAS-70 Type II Audit - conducted annuallyComprehensive security controls independently auditedRegular Security Vulnerability ScanningPenetration testing quarterly and before application change rollouts

S it d O ti B t P ti

SAS 70 Type II

Security and Operations Best PracticesIntrusion detection/preventionFIPS-140 compliant data transferWeb UI secured by 128bit SSLWeb UI secured by 128bit SSLPhysical and logical security between platform application tiers Host based security

Local firewalls , active local security monitoring of local processes, constant change monitoroca e a s , ac e oca secu y o o g o oca p ocesses, co s a c a ge o oCentralized loggingComplete service levels with 99.9% uptimeBackups encrypted end-to-end

Request ourwhite paper on

Media is encrypted “at rest” and during network transport

31

p pROCcloud Data Security

How is ROCcloud different?

Implementation

License Model Hosted Custom Model Managed ServicesStandard Industry offerings

I l t ti I l t ti

Fraud

Implementation / Professional

Services(Vendor)

Infrastruct(Telco)

Operation(Telco)rg

e Te

lcos O

peration(Telco)

Infrastruct(Vendor

Operation(Vendor

Support(Vendor


Services(Vendor)

Fraud

Infrastruct(Vendor

Support(Vendor


Services(Vendor)

Fraud

Support(Vendor

ROCcloud Fraud Management Service Features:

Fraud Management

Product

ure

ns

Lar ns ure

) ns)

N L h

t) Fraud Management

Product

ure) t) Fraud

Management Product

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ROCcloud Fraud Management Service Features:• Addresses most common fraud threats• Pre-configured user types and detection rules• Rule management capabilitiesed

ium

Practically NO Implementation / Professional

Infr O

New Launch

• User notifications for suspect alarms• Alarm and case management• Robust suite of operational and management reports• All aspects fully configurable and customizableSm

all a

nd M

eTe

lcos

ROCcloud Service

Services

rastructure(Subex)

Operations(Telco)

Support(Subex)


All aspects fully configurable and customizableS

Vendor Scope

Telco ScopeLegend :

Selecting a Fraud Management Solution

What to look for in a Fraud Management provider?Company reputationRobust offeringEstablished customer baseSecure and auditable – SAS 70 & ISO 27001

Why a hosted solution?Pre config red for q ick deplo mentPre-configured for quick deploymentFully web-enabled and secureNo setup fees and minimal installation effortEasy to engage / disengage

It is much easier to hold a solution provider accountable to their service levels than it is to manage internal staff that may have


service levels, than it is to manage internal staff that may have conflicting priorities

Thank YouThank You

Any Questions?y

[email protected]

COMPTEL WEBINAR PROGRAM POWERED BY:

www.subexworld.com

small telco or large. everyone!...revenue > usd 100 million ebitda higher than most oss vendors...

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