How can Mobile Network Operators prevent SIM box activity from punching through their A2P business?

Mobile Network Operators are facing a plethora of challenges that are being triggered by the ever-evolving nature of their business, as this is shifting from a communication provider to a data platform and network business, with emphasis on the value chain. This change has brought about significant shift pains in the business model design, along with the investment required for more capable networks to cater to the looming hyper-connected future. GSMA reports that MNOs have invested more than $1 trillion globally for the advent of 5G and maintenance of the current infrastructure requirements.

Given these enormous CAPEX projects and the ever-increasing OPEX pressures, revenue assurance has become a priority for operators in any market. Aggressive programs and incentives like roam-like-at-home, or unlimited SMS and calls bundles have also added to the need for a sustainable business strategy, which includes protecting new revenue sources and innovative business models.

A case worth focusing on is SMS. Most of the revenues associated with Person-to-Person SMS, for instance, have been diluting at significant speed, thanks – in great part – to OTT services. It’s no secret that OTT applications have dominated the P2P messaging space which has and still is eroding a traditionally steady revenue stream for the MNOs. The infrastructure to enable SMS provision needs to be maintained by all MNOs, irrespective of the revenue it generates. Consequently, monetising A2P is the name of the game.

A2P Monetisation – and how Operators can protect it

A2P messaging is not a recent phenomenon, however. Application-to-person messaging is a new source of revenue for MNOs. Awareness is critical, and most operators are becoming more aware of the revenue potential and the risks it comports in revenue leakages. Typically, subscribers receive messages from different applications mostly for 2FA or MFA authentication. Other uses for this are marketing messaging; content and information notifications and other such services.

Albeit, SMS is declining as a pure person to person channel, the open rate of SMS is 98%, and therefore, it is highly impactful when utilised correctly. A2P revenues which according to Juniper Research, will reach $62 billion by the year 2023 could make for lost revenue from pure P2P messaging.

SMS open rate and A2P revenues forecast

This opportunity is not, however, without its challenges! A2P is prone to illicit activity and grey routing. Grey routing (which in common parlance implies the message is terminated using un-monetised routes for the MNO) comes in different forms: one such method is through SIM box – wherein malicious opportunists would channel messages through very accessible equipment (inexpensive modems and hundreds of SIMs) to quickly set-up a business raking millions of Euro. This is to the detriment of local operators which still need to maintain the infrastructure – and servicing – for A2P messaging to get delivered!

SIM boxes – A bane for revenues

The physical limitations of yesteryear – whereby fraudsters would have needed to construct racks, and buy GSM modems, place them in a location and move them about to ‘mimic’ (very badly) human behaviour is over. SIM boxes can call other SIMs in other locations, receive calls, check prepaid credit, and so on, effectively establishing a more human-like activity. This evolution – and increased intelligence from the part of the perpetrators – has made MNOs more vulnerable and targetable. The repercussion is not only revenue losses, but also credibility and trust dilution as afflicted MNOs become a victim for all sorts of illegitimate messaging and SPAM, which in turn, could cause churn levels to rise.

SIM box fraud is a challenge of global proportions. From Asia to Europe, MNOs are the target of organised crime, or even lone individuals, looking to capitalise on a very healthy – and growing – revenue opportunity. Capex crunching and other commitments have placed further pain onto operators to ensure that revenue assurance is the order of business.

SIM box diagram how to prevent simboxing sms firewall

Is Europe immune to this activity?

Europe is one of the most attractive areas for this malicious activity. SMS tariffs are still very high, and this provides ample margins for grey route operatives. Albeit, arguably, most of the SMS SIM box activity does occur in Asia (mainly due to the larger population), Europe is very much under ‘attack’.

Europe is home to over 500 million mobile internet users. Through studies conducted by HAUD in several countries which include Portugal, Italy, and France, the average MNO in these countries is leaking approximately between 50% and 80% of their A2P messages to grey routes, a good portion of which was due to SIM box activity. In simple terms, the revenue losses would be in the region of €2-3Mn per annum for the average MNO. This number – if scaled up to represent larger operators – and operator groups – would easily reach tens of millions of Euro lost revenues per annum.

SMS A2P leakage to grey routes diagram HAUD study chart

How can MNOs in Europe patch this leak?

Awareness is key. Most MNOs are ill-equipped to prevent and notice/identify this leakage, for this requires having a top-graded, machine-learning enabled, A2P Monetisation solution. Intelligent solutions can detect and control SMS P2P traffic without affecting subscribers by analysing different parameters and fingerprinting of the SMS message.

A dated solution would not be able to protect the operator (and its subscribers) from these leakages, as their only defence would typically be to block an identified SIM altogether if it generates high enough volumes to be detected. Such a legacy solution also brings about risks of false positives, effectively blocking high ARPU users rather than actual SIM boxes, especially in the context of distributed SIM boxes – whereby any user within the network can enable their phone through a specific application to become a SIM box.

Connecting A2P Monetisation with churn levels

Preventing SPAM and potential service interruption on your subscribers is key to managing churn levels. Acquiring an excellent partner to protect A2P revenue sources and maintaining service levels to prevent churn is a win-win move that any Telco player surely needs to make! Protect your A2P revenues. Protect your King!

Contact us to discover how HAUD can aid with preventing SIM box traffic from diluting your A2P SMS revenues

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