Revenue Assurance and Fraud for Resellers and Service Providers
MVNOs and switchless resellers occupy a strange world. They provide targeted services aimed at specific markets for specific customer bases. Because of this, many of the traditional revenue assurance and fraud systems are not suitable (and in some cases not even available), yet they are just as vulnerable to mistakes by the network operator, losses associated with different fraud types.
It need not cost much to implement some basic revenue leakage protection.
We can help design and implement some controls using tools that you probably already have within your business, or open source software if you prefer.
– Some worrying statements from CFO’s in MVNOs
1. “There isn’t an issue with revenue leakage, we (the Reseller) don’t get billed for it any way.” The assumption made by the speaker is that the Reseller does not incur the costs of the service if the Network Operator does not invoice the Reseller for it.
Given that the business model for a reseller includes both fixed and variable costs, and the revenue is variable cost plus mark-up, if we reduce this statement to its logical conclusion, there is no revenue but still fixed costs at the bottom end. It therefore follows that the Reseller does have an interest in ensuring that all traffic his customers generate is billed.
2. “The Network Operator’s interest and ours (the Reseller’s) coincide, therefore he is always likely to act in our best interest.” The assumption made by the speaker is that the Network Operator’s revenue and costs are linked to the Resellers revenues and costs.
The Network Operator has his own objectives, some of which are directly opposed to those of the Reseller. For example, provisioning a customer migrating from one reseller to another, if both resellers are on the same network, the operator incurs cost but no additional revenue for the Network Operator. There is no incentive for him to migrate this customer, and if the customer is already live on his network, many of the not-provisioned alerts will not operate.
3. “We (the Reseller) don’t have a cash-flow problem because we bill monthly and are invoiced monthly.” The assumption made by the speaker is that all invoices from Customers will be paid in full and on time and the invoices from the Network Operator will be paid on time.
Cashflow is the lifeblood of any organisation, all parties within the supply chain will be looking to maximise their cashflow. The difficulty arises when customers delay payment through raising queries on their invoices, resulting in an outpayment to the Network Operator occurring before the customer settlement has been received.
4. “Fraud management is not an issue, we (the Reseller) rely on the Network Operator to handle the problem.” The assumption by the speaker is that the Network Operator will absorb and losses incurred by the Reseller as a result of fraudulent use of the services.
And all this before we saw Subscription Fraud, Roaming Fraud, International Revenue Share Fraud and bypass / SIMboxing taking off.
There is confusion between having a fraud management strategy and a fraud monitoring system. The Reseller needs a strategy of which part is the use of a fraud management system, which is where the Network Operator fits in. The Network Operator will have a system that utilises the traffic on the network to generate alerts against traffic irregularities. The Network Operator is not responsible for the customer vetting and approval process or the bad debt that arises, particularly if an End-User’s PBX is hacked, arbitrage frauds, poor promotions (including those with no end date).
There is an absolute certainty that the fraudsters will be looking at your network – how much they cost you depends on how well prepared you are.