A recent study from Juniper Research highlights that global roaming fraud traffic is forecasted to surge by an astonishing 700% over the next five years, as fraudsters evolve and exploit the expanding market.

Roaming charges were abolished in the EU in 2017 with the implementation of the EU Regulation IV, extending and improving roaming services for subscribers Europe-wide. Also known as ‘roam-like-home,’ this policy has dramatically increased fraud for European telcos since its first implementation in 2017. Although initially popular with subscribers, the move was less welcome for wholesale departments facing further revenue erosion and increased exposure to arbitrage and revenue share fraud.

Although the legislation expired on 30 June 2022, a new regulation extending roaming at national rates until 2032 has been put in place. The policy updates from 1 July 2022 around wholesale charges for regulated roaming services entail:

  • The charge for calls is limited to €0.022 per minute, reducing to €0.019 on 1 January 2025 until 30 June 2032;
  • The charge for SMS messages is limited to €0.004 per SMS, reducing to €0.003 on 1 January 2025 until 30 June 2032;
  • Charges for data are limited to €2.00 per gigabyte, gradually reducing to €1.00 in 2027, applying until 30 June 2032.

Research from 2018 had already shown that, the expected increase in subscriber usage following roam-like-home had not necessarily been sufficient to offset the loss from roaming revenues, with almost 1 in 4 telcos reporting a major deficit, particularly IRSF (International Revenue Share Fraud). Even though IRSF was nothing new, the newly created arbitrage between wholesale interconnect rates for international calls terminating to EU vs. low retail tariffs in certain EU countries ended up creating an obvious loophole for fraudsters to exploit.

Recent studies from Juniper Research indicates that data roaming fraud such as SIM card swapping and SIM-box fraud, continues to be an increasing concern among telcos worldwide. Their findings project that by 2028, global data roaming fraud will incur a staggering cost of approximately $8 billion (~R152 billion) annually. Presently, this already constitutes roughly 80% of global operator roaming-based losses, driven primarily by bilateral roaming agreements for data-intensive applications over 5G networks.

Case Scenario

A roaming agreement with (E.g.) an Italian operator is ‘Roam-Like-Home’ where the Visited Operator gets only a few cents per minute. However, the visited operator must pay 0.56 / min to terminate on (E.g.) Lithuania Mobility Services.

The fraudster, using an Italian SIM roaming outside Italy (E.g. Belgium), deliberately makes an inflated number of calls to Lithuania to exploit this roam like home agreement.

In the final step, the fraudster collects a revenue share through a third party, typically about 25% of the termination rate.

This is not illegal and exploits arbitrage potential between roaming revenue and termination cost.

Widening The Wholesale Fraud Conversation

Telco fraud teams traditionally focus on subscriber behaviours as the prime source for detection. However, in the post-‘ roam-like-home’ world, understanding fraud increasingly becomes a three-way internal conversation involving Fraud teams, Wholesale interconnect and Roaming teams, and Networks, all acting in concert to spot both the fraud attacks and the arbitrage opportunities that are driving the abusive parties to target them.

A Robust, Reliable Solution Powered By AI

With many years of experience in profiling wholesale data streams for unusual attacks and suspicious occurrences, plus proven expertise combatting arbitrage, cherry-picking and CLI Manipulation frauds, iCONX is expertly placed to help you.

iCONX bold Wholesale Telecom Fraud Solution has been designed with the latest AI technologies for telco fraud prevention in international wholesale voice traffic. It allows you to identify telco fraud attacks much sooner in their lifecycle. Prevent network flooding, fraud losses, and subscriber fraud response activity.

For more information, fill out our contact form or contact our experts at info@iconsolutions.com.

References:

  1. http://telecoms.com/opinion/the-early-impact-of-roam-like-at-home/
  2. https://eur-lex.europa.eu/EN/legal-content/summary/roaming-charges-within-the-european-union.html#:~:text=Roaming%20charges%20were%20abolished%20in,regulation%20is%20valid%20until%202032.
  3. https://www.juniperresearch.com/press/data-roaming-fraud-to-accelerate-reaching-8bn/