SIMBOX Fraud; A Threat to Telecos in Ghana

The author, Raphael McClure Adomey is ICDL Coordinator, Savana Signatures

There are frustrations everywhere. How will you feel if you are unable to call or return a call to a business partner outside the country or reach a doctor surgeon to book a surgery appointment so critical to the life of your loved one as a result of unnecessary congestion on the telephone network?

Well, when next your calls to a friend outside this country failed to go through, know that there might be somebody behind the scene redirecting your calls or causing unnecessary congestion on your network. This is the work of IT fraudsters whose act is called SIM BOX Fraud.

The SIM box or interconnect Bypass Fraud is one of the most prevalent frauds today that cost the telecommunication industry some millions of cedis. Calls made via the internet are sent to SIM boxes (machines that house SIM cards) which redirect this illegal VOLP traffic onto mobile networks. This process causes congestion and sometimes call termination on the network.

SIM box fraud is among the top 5 emerging threats to Operators and MVNOs worldwide and cost the industry over USD 3 billion per year, according to the Communications Fraud Control Association (CFCA report 2013).

Fraudsters effectively bypass the interconnection toll charging points to exploit the difference between the high interconnect rates and the low retail price for on-network calls, thus avoiding payment of the official termination fee of an operator.

The illegal business does severely harm both revenues and reputation of the operator. It is a global multi-billion dollar business. Globally there are several efforts to check the business however, their mode of operation as “Anonymous” makes it extremely difficult to easily trace their locations.

There are two unavoidable reasons for the surge and persistence of this type of fraud. The first is the use of pre-paid SIM cards. Most commonly used by fraudsters, their ownership and address are much harder to trace compared to the easily traceable post-paid SIMs. The problem is particularly serious in countries where the incoming international traffic rates are high and controls are lax in terms of availability of SIMs and law enforcement according to experts in .

The second issue is the subscriber churn rate between Operators in the market. The telecommunications industry operates in a low customer loyalty environment. Fraudsters usually take advantage of cheap packages including bundled offers, which earn lower per-minute revenue to the operator than the interconnect rate they can earn from the international carriers. Due to this highly competitive market and the low customer loyalty phenomenon, the cost of all-inclusive bundles is driven down. And disposing of bundle offers and cheap packages is not an option.

Voice traffic termination fraud, often referred to as Subscriber Identity Module box (SIMbox) fraud, is a common illegal practice on mobile networks. As a result, cellular operators around the globe lose billions annually. Moreover, SIMboxes compromise the cellular network infrastructure by overloading local base stations serving these devices. It processes hundreds of millions of anonymized voice call detail records (CDRs) from one of the main cellular operators in the United States. In addition to overloading voice traffic, fraudulent SIMboxes are observed to have static physical locations and to generate disproportionately large volume of outgoing calls.

In simple terms a SIM box is a device that maps the call from VoIP to a SIM card (in the SIM box) of the same mobile operator of the destination mobile. So that international call terminating as home call to subscriber country are usually cheap compared to the cost of terminating the international call. This is to just bypass international traffic. SIM box fraud is driven by the easy availability of GSM gateway hardware and the range of different offers available from mobile network operators.

The threat to the country could be Annual Revenue Loss, majority of these network operators buy revenue to the government, if illegal bypasses are made to divert calls it affect the overall revenue of a country. The Telecommunication operators will also suffer a great deal of low income, redundancy and this could lead to the liquidation of those operators.

Recently the approach of using broadband links has become more and more popular as Sim boxes are widely available and sold at lower prices.

Fraudsters are smart, technology aware and know how to manipulate local operators. Experts at masking themselves, they host their equipment where their calls can reach multiple cell sites and get widely dispersed and they send out artificial SMS messages or accept a few incoming calls. They have even been known to use moving vehicles to mask their true intent.