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December 17, 1997


Wrong numbers

Rising billing fraud means India's cell phone operators are
sitting on a ticking bomb - their large subscriber base!

Thanks to the over-enthusiasm shown by cellular operators in garnering a huge subscriber base, India will soon overtake other Asian nations in the percentage of revenue being written off as bad debt because of billing frauds.

If an international consultant is to be believed, India is already at par with the other Asian nations with 15 per cent of revenue being sacrificed to frauds
Wrong numbers
Sun's subsidiary
ALIT's overseas tie-up
and would soon cross 20 per cent.

"If this growth goes unchecked, it will just be a matter of months before India leaves other Asian nations behind,'' Andrew Woo, Computer Security Consulting Group partner in Price Waterhouse said in New Delhi this week.

In the United States, he said bad debts as a percentage of revenue is between 3 and 5 per cent. With the recent introduction of cellular phones in India, telecom fraud is likely to increase dramatically because many of the conditions, which give rise to telecom frauds, are present in India, he said.

Operators need to take action now when their subscriber base is relatively small to prevent the ''disaster and embarrassment'', which have taken place in countries like the Philippines.

''In India, people are far more concerned about how to increase numbers, add on quantity and perhaps a little less aware of the quality issue which is engaged. The operators are sitting on a time bomb which is ready to burst,'' Woo warned.

The fault lies with the operators for not having adequately screened subscribers at the entry point. Lack of awareness about running the cellular business, according to him, is another factor which has led to this high rate of frauds.

Meanwhile, speaking on condition of anonymity, a senior official with Airtel, one of the cellular service providers in Delhi, said operators are well aware of the problem. ''But the small duration of license period and getting an upper hand over the competitor led to the operators taking in subscribers without proper screening.''

Citing the example of Singapore Telecom, he said the company used to accept subscribers only after proper screening and verification, which used to take around three days. But once competition came in the form of M1, which stated that services would be provided within two hours, Singapore telecom had to change its stand and offer services within one hour which meant lesser or even no verification at all.

The operators, Woo said, should now wake up to the fact that they have an alarming situation on hand. Otherwise, the losses would turn the already bad situation worse.

Telecom frauds, he said, are one of the fastest growing industries in the world and have been valued at several billion dollars per year.

The exploitation of weaknesses in telecommunication products, services, systems and processes for financial benefit have been a problem for several decades. A significant evolution of telecommunications fraud came with the introduction of value-added products and services.

The basic issues and loopholes have to addressed first by creating awareness about them, he said adding, ''once that awareness is created, the rate of frauds can be brought down considerably. Indian operators have the advantage of being one of the latest to open up their markets. They can learn from the bitter experience of other nations rather than having to learn from their own experiences.''

Competition, he agreed, is another factor, which has led to the high growth in telecom frauds. ''With competition coming in, companies are pressed to increase their subscriber bases. If you have less or no competition then it is easier to screen and verify the people but with heavy competition, it is just not possible.''

As a first step to checking this, he suggested operators should have a proper protection network in place and start monitoring the high usage calls.

"They should start monitoring those numbers which have been showing high usage for some time. Such calls in maximum number of cases amount to frauds.''

The network, he said, has to be created in close cooperation between the various operators and the government. ''They have to work hand-in-hand towards this end.''

Earlier: Cellular operators want a stay on MTNL's mobile venture


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