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Roaming Fraud Prevention in Telecom with Blockchain

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Roaming Fraud Prevention in Telecom with Blockchain

There is a silent revolution going on in the world of business: more and more industries are being fundamentally changed by the introduction of blockchain technology. One of the industries that is changing with blockchain is telecommunications. Big players in the telecom industry have already started adopting blockchain and are working on integrating it into their existing platforms.

The telecom sector is quite particular: Every day, more than 10 billion mobile phone and internet users worldwide entrust a huge amount of sensitive and personal information to their service providers. The provision of internet and communication services is fundamental to our every day life and work.

Telecom is a highly regulated, competitive and complex industry. Challenged by competition and legislation, it is an industry that has a unique opportunity to leverage new technologies, such as blockchain, and develop new business models, renew their offerings and become more efficient.

How blockchain can change the Telecom industry

There are several ways in which blockchain technology can be integrated in the telecom space. In this article, we provide a brief overview of some key areas where blockchain integration is already being tested in the telecom sector, as well as those where it might have the greatest impact in the future.

Overall, it could provide significant benefits to operators at an internal and external level, i.e., complement existing solutions and create new services offered by telco. For one, it can help to reduce operational costs by optimizing process inefficiencies, for example, through elimination of third party intermediaries and document duplication; at the same time, by using a decentralized register where all data transactions are permanent and can't be hacked or altered, blockchain technology can help to improve privacy issues which could lead to better fraud prevention, facilitate roaming services, and improve customer experience.

Roaming Fraud Prevention

One of the most important topics in telecom is fraud prevention, in particular roaming fraud.

Roaming fraud occurs when a subscriber moves from their home public mobile network to a visited public mobile network and uses services without intending to pay for them.

Fraudsters obtain SIMs (by stealing SIMs or through SIM cloning or through Subscription fraud) from CSPs home network and connect them to gain international roaming status to begin placing outgoing international calls. Once at an international location (VPMN), these SIMs are used for sending inflated traffic either to PRS lines or to other high-cost destinations.

When this happens, the home operator from where the call is triggered, also called the Host Public Mobile Networks (HPMN), has to pay the receiving party, called the Visited Public Mobile Networks (VPMN), even though the HPMN can't charge the customer for the provided service.

The key to preventing this is for the telecom operator to detect the fraud very quickly and block the outgoing calls from taking place. However, fraud detection time often takes longer than the exchange of data. Telecom operators involve third parties known as Data Clearing House (DCH), who act as intermediaries between the VPMN and the HPMN, and have the task of processing Call Detail Records (CDRs). As a third party is involved, the response time to detect fraud is longer than if the fraud would happen in a system owned by either the VPMN or the HPMN.

The inability to detect and prevent fraud has a major cost impact on operators. Seeming to have trouble finding a viable and effective strategy for fraud prevention, the application of blockchain technology offers a great opportunity to drastically decrease damages resulting from fraud and minimize costs with identification processes.

The blockchain-based approach would create a roaming agreement, called smart contract, between the HPMN and the VPMN. Independent nodes would then verify the righteousness of each transaction. Each node is unique and therefore easily identifiable. Once the roaming pact is triggered the visited network automatically sends the CDRs to the host network thus being able to calculate the billing amount and directly paying the VPMN for the service.

A blockchain adoption would bring the advantage to eliminate the need for third parties and reduce costs. At the same time, the identity verification occurs much faster, consequently leading to a faster fraud detection, whilst settlements can happen according to agreed terms in the smart contract.

Smart contracts can also help to improve service-level agreements, also known as SLAs, and enhance the customer experience. By defining SLAs in smart contracts, the automatic execution of rewards and penalties can happen accordingly.

3air as an innovator in the telecom industry

Blockchain technology has the potential to significantly impact the telecom industry. It presents many opportunities yet brings as many challenges. At the moment, it seems important for telco to understand how to best position themselves in order to develop a profitable operating model. The challenge lies in viably adopt blockchain technology into the core process in order to optimize them and reduce costs, whilst long term strategies need to be developed in order to add more value to their services.

Aside from using innovative technology to deliver high-speed internet wirelessly with K3 Last Mile technology, 3air is a major innovator in the telco space. While using our blockchain-based platform to deliver services to end customers, 3air will offer other ISPs the chance to develop their own blockchain-based solutions on a white-label platform to expand their service offering and solve some of the biggest challenges the telecom industry currently faces.