Fraud leads to rising telecom operator losses in 2007: Subex Azure study

According to the 2007 Global Operator Attitudes to Revenue Management Survey commissioned by telecommunications software firm, Subex Azure Ltd, and conducted by telecom analyst house Analysys Research, average revenue leakage among global telecom operators has increased to 13.6 per cent, from 12.1 per cent in 2006.

The study cites external fraud, internal fraud and fraud by other operators as the number one factor in operator losses this year. According to results, average fraud losses have grown from 2.9 per cent of revenue last year to 4.5 per cent this year. In addition, mobile operators tend to lose more than other types of operators.

Analysys conducted the study for the fifth consecutive year. Analysys is an independent global advisor on telecom, IT and media. The report is based on feedback from almost 100 operators around the world to investigate attitudes to and levels of revenue loss.

Other key findings contained in this year''s report include:

• With the overall levels of revenue leakage rising again this year to 13.6 per cent , there are variations in the findings from different regions. For instance, the Middle East / Africa region experienced more than 20 per cent losses, Asia close behind at just below 20 per cent and CALA at more than 15 per cent. Western Europe ranked lowest in losses at about 7 per cent, following by CEE at 8 per cent and North America just about at the average at 13 per cent.
  
  
• When breaking losses down by operator type, mobile operators continue to lose the most at nearly 14 per cent , with mid-sized operators with between 100,000 and 1 million subscribers racking up the most loss at more than 18 per cent . For comparison, the largest operators are losing only 6 per cent of revenue per year.
• At the planning stage for new products most operators take into account most causes of loss as part of their preparation, although 32 per cent of operators do not use any third party help. The findings show that the operators who use third-party specialists for revenue assurance lose 30 per cent less compared to those who use no external help.
  
  
• In addition to fraud, the three primary sources of revenue leakage cited by respondents are poor processes and procedures, poor systems integration, and problems associated with applying new products and pricing schemes.
  
  
• The level of revenue loss that operators find ''acceptable'' has risen this year to 1.8 per cent, from 1.1 per cent in 2006. Operators in CALA reported the highest level of ''acceptable'' loss at 2 per cent.
  
  
• Significant growth in fraud losses and revenue assurance problems related to the launching of new products and prices has driven the overall increase in losses.

"One interesting factor uncovered in this year''s report is the fact that revenue management challenge posed by next generation network technology and applications is a key concern among almost all operators," explained Sanjeev Gadre, VP, marketing, Subex Azure.

"This, combined with increasing merger and acquisition activity within the industry, makes it highly imperative for operators to centrally manage and address the revenue management challenges. More than ever, revenue management needs to become a high-level strategic initiative in order for operators not only to successfully compete in the changing telecom marketplace, but, to sustain, and, more importantly, grow their current customer base. Those that choose not to will fall prey to more forms of revenue loss and the threat of more efficient strategic competitors."