Direct & lesser known indirect impacts of bypass fraud

Presence of Bypass Fraud, ON-NET or OFF-NET is known to have negative impacts on operators, regulators and customers alike.

While the impacts are generally tied to direct revenue losses, there are others which are lesser known, but impose their own set of consequences and are equally important to be taken into consideration while the effects of bypassed calls are talked about.

Few major direct or indirect impacts of bypass fraud are found to be the following:

Revenue loss due to call redirection

International calls are intercepted, redirected and terminated whilst being re-conducted via the fraudulent route, creating a cost / revenue shifting along the way.

In the most extreme cases it is claimed that bypass fraud can account for a 50% reduction in international termination revenues. Reductions of $250K/month in revenues are certainly commonplace, and reported losses up to $200M per annum have been known at a single operator and regulator.

On-Net Bypass Revenue Loss

For On-Network terminating calls (connections used for Bypass Fraud belong to the home operator), the revenue loss per call is directly related to the difference between the international interconnect termination price and the retail price of on-network call.

Off-Net Bypass Revenue Loss

For Off-Network terminating calls (connections used for Bypass Fraud belong to competitor), the revenue loss per call is directly related to the difference between the international interconnect termination price and the local interconnect termination price of off-network calls.

Revenue loss due to service inaccessibility & missing call backs

Bypass Fraud has the negative effect that multiple popular services, e.g. voice mailbox, may not be available. Revenue loss and unhappy customers is the consequence. Also, due to the redirection of calls, none or wrong CLIs will be displayed at the recipient’s side; immediate impact is the inability to “call back” resulting in high opportunity loss of retail revenue.

Call Hijacking and lack of Lawful Interception

Bypassing involves hijacking call traffic and routing them over unauthorized channels. This act is identified as illegal in many countries not only in terms of route bypassing, but also in terms of possible national/personal security intrusion.

Also, due to the lack of the original CLI, Lawful Intercept (LI) of the bypassed call is not completely possible. This leads to a failure in terms of national regulatory compliance.

Additional Investment

Sometimes traffic hot-spots and congestion caused by bypassed traffic can lead to substantial unnecessary site acquisition and roll-out costs for new radio access equipment (BTSs, Node Bs, and even BSCs).

Image loss due to bad QoS

Bypass Fraud generally is based upon redirecting calls over inadequate, highly compressed IP connections, resulting in poor voice quality and increased call failure rates because of congestion caused through use of a bypass. Call setup time or routing delays are extended which also leads to the impression of an overall bad service quality by the home network operator.