ByPass Fraud

Executive

Summary

Interconnect and GSM Gateway Fraud

Bypass Fraud is one of the latest and most severe threats to a telecom operators
revenue. It is often thought to be under control but never underestimate
the creativeness of 1 billion subscribers!

What is it?
Bypass Fraud is an unauthorised manipulation or exploitation of an operators network. This problem has been evidenced in two areas: the rst is the
more commonly known Interconnect Fraud and the second is the newer, and less familiar, GSM Gateway Fraud.

Interconnect Fraud

GSM Gateway Fraud

has a clear business model that you are likely already familiar with. It
requires a legal entity to have interconnect agreements, plus a high
investment in equipment. But the return is high too. Your company can
lose millions of Euros through one fraudulent partner.

activity, to the contrary, requires a very small investment. Any of your

private or corporate subscribers can do it with inexpensive and easy-touse devices. Your loss on one account is likely to be moderate, but do you
realise how widespread this problem is?
Even if your Fraud Management or Interconnect Billing system is able to
handle Interconnect Fraud, a new mindset is required to combat GSM
Gateways.

GSM Gateway
Fraud Illustrated
International Bypass Example

GSM Gateway Fraud

is a new problem evolving new business models.
The very low level of set-up costs permits to
deploy it almost anywhere from small village
communities to large corporate accounts.

How does it work?

Gateway bypass has different forms
international vs. national, incoming vs. outgoing,
border bypass etc. but the idea is simple:
bypassing interconnect points via cheaper routes
such as the Internet.
Figure 1 | International Bypass scenario
A call via a legitimate route would normally cost
a termination fee of

In case of a bypass call via VoIP the initiation fee is

The mobile operator in country B loses

83% loss.

0.8 with an initiation fee of

0.5 in country A and

0.3 in country B.
0.15 and the termination fee is

0.05.

0.25 (0.3-0.05) in termination fees, which results in an

A GSM Gateway

National Bypass Example

is a device containing SIM cards. By interfacing

with landline telephone equipment such as PBX
or the Internet it provides instant access to a
GSM network.

GSM Gateway Fraud

occurs when call resellers use GSM Gateway
devices to transform xed-to-mobile calls to
mobile-to-mobile calls. The affect of this
activity is that trafc delivered to GSM operators by unlicensed carriers is billed as internal
rather than interconnect trafc. GSM operators
only receive the value of on-net calls and do
not receive the interconnect fee for call termination, which results in revenue loss.

Figure 2 | National Bypass scenario

A regular xed-to-mobile call would cost
of

Is it illegal or not?

0.25 with a call initiation fee of

0.15 and a termination fee

0.1.

A bypass route via a GSM Gateway allows for the same call to be terminated at a rate of
the mobile operator loses

0.05 (0.1 - 0.05) in termination fees, which is a 50%

0.05, therefore

loss.

Regulations can vary from country to country,

but as a rule of thumb: legal if users belong to
the same subscriber account and illegal if service is provided for a fee to others.
A usual mistake is to underestimate the impact
of Gateway Fraud on your revenue. The loss on
one call is minimal but the number of gateways
is rapidly increasing all over the world. And of
course, not only international call cases are
bypassed.

Interconnect Bypass Detector

no one will pass you by

ALLROUND

PUTS YOU IN CONTROL

E-mail: info@allround.net
www.allround.net

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