Mobile operators lost $58 billion from poor fraud management in 2011: research

The mobile telecoms industry lost more than $58 billion last year – over six percent of global revenues – due to inadequate fraud management and revenue assurance processes, a research paper has claimed.

The grim predictions of a Juniper Research report suggest mobile firms face a “nightmare scenario” as a result of operators failing to implement any remedial measures over the next five years, and the scale of losses rising five-fold by 2016.

Unless companies act to invest in technology to protect their revenues, says Juniper, they will lose even more when 4G mobile technology starts to take hold in the market.

The report, “Mobile Revenue Assurance & Fraud Management: Business Strategies & Forecasts 2012-2016”, finds that as operators have been obliged to integrate an ever-expanding array of devices and to simultaneously manage a surge in cellular network traffic, billing systems have failed to keep pace.

As a result, says Juniper, operators are increasingly unable to accurately or efficiently capture the large volume of transactions that occur on their network. The complexity has magnified the scale of revenue loss, resulting in bad debts and a greater opportunity for fraud.

With sustained fraud management and revenue assurance technology investment, says the report, “leakages” would decline to 4 percent of revenue in 2016, representing a net reduction of nearly $15 billion per annum compared with 2011.

Windsor Holden, the report co-author, said: “As the industry moves more aggressively into a 4G/LTE environment, telcos risk undermining any revenue actually earned from value-added services by continuing to not invest in appropriate business support systems.

“Despite their initial costs, revenue assurance and fraud management systems demonstrate a strong case for return on investment,” he added.

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