ELIMINATING - WISE ATHENAIntroduction Telecom fraud: a persistent challenge wise athena Telecom...

ELIMINATING TELCO FRAUD WITHSELF LEARNING MACHINES

READ THIS WHITEPAPER TO UNDERSTAND:

• What is required to reduce fraud levels in a Telecom company• HowWiseAthenadeliverseffectiveTelecomfraudprotectionusingmachinelearningandcognitivevisualization• HowtheSaaSmodelisstraightforwardtointegrate,requiresnoendusermaintenanceanddelivers a ROI measurable in days

”They made me see in ten minutes whatIhadnotrealizedaboutmyfraudin twelve years.”FRAUD MANAGER, FORTUNE 500 COMPANY

Introduction - Telecom fraud: a persistent challenge 4

Fraud use case: SIMbox 6

Self learning machines for detecting fraud in near real time:

a perfect combination 6

Fraud in the Telecom industry: is it really that bad? 8

The inner workings of SIMbox Fraud 10

The need 12

How Wise Athena improves your fraud detection 13

What is missing in existing solutions? 14Fundamentals of our solution 15

How cognitive analytics eliminates SIMbox fraud 15

Finding the sources of fraud 17

Machine learning results for your Telco 19

How smart visualizations improve your business decisions 22

Business Results in Four Weeks 24How it works for you 25

It only gets better with time 26

Your savings with Wise Athena 27

The next step for your fraud 28

Table of Contents

www.wiseathena.com | [email protected] 3


Introduction

Telecom fraud: a persistent challenge

wise athena

Telecom industry efforts to address the growing problem of fraud

fall short. Successful fraud detection requires huge data-processing

and fast reaction time. These are challenges in themselves. However

many companies are still not aware of the new –and more effective-

technologies that are now available.

Wise Athena applies cognitive analytics to bridge the gap between

current fraud solutions and the most effective technology available.

We make Machine Learning and smart visualizations work together

to deliver an 800% increase in human perception. We answer

questions as yet unimagined. Our results are actionable and visual.

Very complex data can be understood at a glance.

A Wise Athena’s smart visualization of a telecom cellular network

IMEI

Called SIM

Calling SIM

www.wiseathena.com

Although Telecom fraud can take myriad forms, we will examine one

variety that remains a significant challenge: SIMbox.

SIMbox fraud is considered one of the most serious types of fraud for

telecommunications operators globally. Consequences range from

billions in financial losses to the straining of cellular networks caused

by increased fraudulent traffic.

Despite having allocated significant resources to prevention,

conventional rule-based SIMbox fraud prevention has consistently led

to incorrect outcomes. The industry needs a new solution.

• Traditional detection methods identify leaks in revenue, but

make it hard to accurately pinpoint the source.

• False positives can lead to the operator taking action on

legitimate users.

• Fraudsters break even at twenty three minutes of fraudulent

calls. They understand traditional detection methods and change their

patterns accordingly.

Wise Athena uses machine learning, cognitive analytics and smart

visualizations to bring a new solution to the Telco sector. Our

technology maps the essential behavior of network data to identify

anomalies. It brings celerity and accuracy to fraud detection.

Our cognitive system learns by understanding relationships in large

volumes of data points. This ever-learning capacity allows our data-

processing infrastructure to automatically keep itself up-to-date. It

learns the fraudsters’ new ways to conceal fraud.

This combination of cognitive technology and smart visualizations

Fraud use case: SIMbox

Self learning machines for detecting fraud in near real time: a perfect combination


produces actionable graphs. Hidden patterns are revealed, making

data exploration a breeze. No longer is a team of data analysts

required to know what is happening in your network. You will actually

be able to see the shape of fraud.

At Wise Athena we have harnessed the inherent power of

visualizations. Because we tailor them to your data, our visualizations

will increase your perception eight times over traditional methods. It

becomes easy to action clear, complete, and correct results.

And what are the results?

SIMbox fraud is neutralized and no longer profitable for illicit

operators. With as little as seventeen minutes of fraudulent calls, false

positives are reduced with an accuracy 10,000 times greater than the

traditional methods (from 1% to 0.001%.) Our 24x7 platform returns

results in one minute, so SIMbox fraud can be seen happening in near

real time.

Because this is provided as a service (SaaS), you benefit from our

responsiveness. Economies of scale and agility provide results at a

tenth of the cost, and a sixth of the time compared to other providers.



Fraud in the Telecom industry can cause great damage to an

organization’s image and operations. The different illicit activities

targeting operators can lead to significant increases in costs, worsened

brand image and customer dissatisfaction.

In the Telco industry, the lack of effective fraud detection tools has led

in many cases to the loss of control over fraudulent behaviour, allowing

the fraudsters to create a sustainable business model at the companies’

expense.

SIMbox fraud (Subscriber Identity Module box), also known as bypass

fraud or voice traffic termination fraud, rates among the top five fraud

types globally in the Telco industry. That is both in impact and speed

of growth1. Illicit use of cellular networks is one of the most lucrative

varieties, and it is very costly to mobile operators.

These schemes appropriate international voice calls and reroute them

over the Internet to a box with multiple prepaid SIM cards. This SIMbox

subsequently transforms the incoming signal back into a mobile call

that is charged at a local rate on termination. Legitimate operators

Fraud in the Telecom industry: is it really that bad?

wise athena

1. CFCA 2013 Global Fraud Loss Survey - http://www.cfca.org/fraudlosssurvey/

involved in the connection are then unable to apply charges for the

international routing.

Every year, operators incur in losses calculated in $40Bn worldwide2

as a consequence of this type of crime. Moreover, networks are put

under increased strain due to the high level of traffic that targeted

nodes support. Ultimately, quality and reliability are compromised.

Use of a SIMbox to bypass international gateways is categorised as a

crime by Telecommunications Authorities in many countries. These

activities remain not only a serious problem for telecommunications

operators but also for governments and authorities:

• Providers of this bypass connectivity are usually not licensed.

• They can be a threat to national security, given the lack of

control of operators and authorities over their actions.

• Substantial losses on tax revenue.

For all these reasons, detection and prevention of SIMbox fraud

is now a priority for operators. However, conventional solutions

consistently fail at accurately locating and isolating the occurrences of

this phenomenon.

The solution presented in this paper helps eliminate SIMbox

fraud by applying machine learning, cognitive analytics and smart

visualizations. Our experiments using data from a major operator in

a market with a high prevalence of SIMbox have shown that these

technologies succeed. They correctly identify and isolate fraud

occurrences. Moreover, our cognitive algorithm systematically learns

from every outcome. The system becomes more effective with every

interaction.

Wise Athena uses accurate, efficient and evolving technologies to

identify fraudulent calls that bypass your gateways and cause lost

revenue.

2. Fraud Survey Report 2010, KPMG, 2010



SIMbox fraud takes advantage of the difference in price between local

and international calls. Fraudsters use the Internet to send one call from

one country to another thereby avoiding the legal international inter-

connection gateway charges. This bypass normally occurs by routing the

calls via VoIP to a SIM in the country where the receiver resides.

The fee callers pay is higher than that for a local connection; yet conside-

rably lower than the legitimate one. This difference is a source of reve-

nue to the fraudster.

Legitimate network operators suffer sizeable losses of revenue as a

consequence.

The inner workings of SIMbox Fraud

wise athena

In the figure above, there are two possible paths when a call is

initiated. In the legitimate scenario, the call is routed through the

operator’s network in the country of origin. Then it is sent to the

network of the country of destination where a second operator

delivers the call to the receiver. On termination, the relevant charges

are made and revenue is distributed among the operators accordingly.

In the fraudulent scenario, once the call is made, the illegitimate

operator misappropriates the signal. They then send it to a SIMbox

in the country of destination using the Voice over Internet Protocol

(VoIP). The SIMbox injects the signal back into the cellular network

and finally it reaches the receiver’s end in the form of a local call

charged at a significantly lower rate.

The setback for the operator is not only financial. The fraudulent

service usually carries a substantial reduction in the quality of the

connection resulting in a call of substandard quality. In addition, the

rerouting implies a lack of transparency for the users e.g., the calling

number on the receiver´s display does not correspond to the real user

originating the call.

SIMbox fraud is more prevalent in countries where international

calls are considerably more expensive than local calls, e.g. where

the gateways are monopolised by the government. It is especially

common in Africa, Middle East, Latin America and parts of Asia.



The Telco industry needs to move on from a reactive model to a

predictive model that not only detects existing fraud but also creates

a deterrent for future. It must completely neutralize the fraudster’s

business case.

Traditional approaches to SIMbox fraud detection have showed limited

effectiveness. This is due to their inability to prevent future fraud.

Existing methodologies (e.g. Fraudview) involve the manual update of

SQL queries by a team of analysts. This occurs every time new instances

of fraud are discovered. Updates are effective at neutralizing existing

fraud but the system as a whole has no capacity to prevent future

varying occurrences.

The shortcomings of this approach are many; a team of experienced

analysts available 24/7 represents a big expense for operators. In

addition, the reactive nature of the methodology means that fraudsters

are always one step ahead. They evolve new ways to evade control.

There is a need to completely neutralize the business case of the

fraudster; reactive methodology does not fulfill it.

The Needwise athena

Our system uses machine learning, cognitive analysis and smart visualizations to identify variables that will

accurately pinpoint the SIMbox fraud you are suffering.

These technologies allow us to deliver a superior solution that makes big improvements in performance,

maintenance and scalability. Ease of implementation means that you can start enjoying the benefits without

delay.

YOU DON’T PROGRAM

IT, IT LEARNS

Machine learning

eliminates manual query

updates and constant re-

programming. With only

a small amount of data

to train, the system then

starts producing results.

DATA EXPLORATIONWise Athena uses smart visualization technology for producing a graphical representation of your data. These powerful images stimulate data discovery and reveal properties in your data that remain hidden for traditional data visualization tools (static pie charts, spreadsheets.)

EASE OF SETUP

Wise Athena’s suite

of analytics tools run

on external dedicated

servers and do not

require installation by the

operator. Money and time

are saved.

SPECIFIC FOR TELCOS

Wise Athena’s tools are

specifically designed for

Telcos while conventional

Telecom fraud prevention

tools have generally been

part of generic packages.

NO LEARNING CURVE

The system is accessible

to multiple user

types and skill levels.

Actionable insights

extracted from data are

easy to understand and

implement. A dedicated

team of data analysts is

not required.

TRANSPARENT PRICING

Wise Athena uses a

transparent and results-

based pricing system.

The operator is charged

proportionally to the

results achieved. This

avoids the hefty license

fees of traditional

solutions.

NO NEED FOR OWN

INFRASTRUCTUREWise Athena uses the SaaS (Software as a Service) model. This means that Wise Athena takes care of time-consuming and expensive hardware and software maintenance costs.

THE SYSTEM ADAPTS

TO YOU

Wise Athena adapts

to the structure of the

operator’s data and not

vice versa. The system is

ready to start processing

data as soon as it is made

available.

How Wise Athena improves your fraud detectionwise athena

Advantages of Wise Athena’s solution:


Traditional detection of SIMbox fraud requires monitoring calling

patterns and using test calls to find a leak in revenue due to bypass.

These efforts are effective for acknowledging the issue, but insufficient

for identifying and addressing it.

The volume of services and technologies available to fraudsters makes it

a constantly evolving and multi-faceted issue. Actions taken to eliminate

fraud modify the fraudsters’ behaviour, leading to ever-changing

patterns and renewed threats to operator revenue.

In some markets existing solutions are so ineffective and costly, it is

easier to accept the losses than resolve the problem.

Another issue that compromises the operators’ ability to effectively

addressing fraud is the serious commercial implications of a false

positive. A legitimate customer may see their line cancelled for no

apparent reason. This compromises the reputation and reliability of the

operator. Accuracy is critical.

The challenge is predicting what new fraud patterns will emerge , then

quickly acting to stop them before they become profitable. Telecom

companies face major difficulties when confronted by the exponential

growth of data. Fraud detection can become an immense task.

What is missing in existing solutions

wise athena

Wise Athena uses advanced analytics supported by quantitative

methods to produce insights that traditional approaches to fraud

detection are unlikely to discover.

No matter the fraudsters’ constantly evolving patterns, there are

some elements that escape their control:

• Their past behavior

• Legitimate SIMs behavior

• Duration of fraudulent calls

• Time of the calls

• Location of the base stations

Wise Athena uses these fraud-defining features as classifiers to

detect fraudulent use of the network. Legitimate users are filtered

out, even if their patterns are comparable to those of the fraudster.

Illegitimate users are also limited by a lack of control over other

elements, such as the cost and structure of their business model.

Actions taken for evading fraud-detection measures bring added cost

to their operations and greatly reduce their ability to remain hidden.

Wise Athena’s system integrates all this knowledge into a SIMbox

fraud-detection tool that is accurate, efficient and self-improving.

A system that identifies current fraud and its defining patterns places

a big hurdle for the fraudsters’ business model. They must step up

efforts to evade control and see how changes in the pattern are

discovered before reaching breakeven point. Ultimately, the goal of

making fraud unprofitable is reached.

Use case data has been trained on to a Tier 3 operator operating in a market where SIMbox fraud was unresolved.

Wise Athena employed five hundred decision trees to characterize

the SIMs with high probability of being used for SIMbox fraud.

Fundamentals of our solution

How cognitive analytics eliminates SIMbox fraud



Looking at multiple dimensions we identified markedly different

behavior in non- fraudulent SIMs vs. SIMs suspected to be used in a

SIMbox. Here are a few examples:

These graphs show the same data with different dimensions and

perspectives. They are analyzed until a clear picture of the fraud

occurrences emerge.

In this case, the operator sent its network data for processing to

Wise Athena’s engine. Our algorithms mapped the structure of the

network and then represented fraud occurrences with red circles

and legitimate users with black circles. The observation of data

from multiple different perspectives and using multiple dimensions

ensures that fraud is clearly identified after a comprehensive refining

of results. This keeps false positives to a minimum while unearthing

more SIMbox than any other tool on the market.

Each graph represents a different dimension. For example: percentage

increase in calls during weekends, calls between 23:00 and 23:59, call

activity during weekdays compared to weekends, etc. All dimensions

are abstractions of customer behaviour that allow for a cumulative

refinement of results. By putting the most significant ones together,

we gain a clearer understanding of the validity of the results.

www.wiseathena.com

The best way of identifying fraudulent users is by comparing it with

legitimate behavior of normal customers.

Human interactions can be traced very accurately using mobile call

data.

Consider a simple network of people as depicted below, with a mix of

personal and professional relationships.

From the operator’s point of view – i.e. that of its data – the picture

is a bit more complex. E.g.: users make calls from different locations,

sometimes using different numbers – from the work phone or from

the personal one – perhaps using different devices, etc.

Finding the sources of fraud


We could consider one more level of human interactions: Illegitimate users behave differently; they are physically located in

one static point and connect to very few base stations. They also have

a disproportionally high rate of initiated calls to received calls.

This conceptualization is easy to understand at a small scale.

However, the depiction of these relations from a technical point of

view would look very complex for a human mind.

Making a decision based on interpreting this information would be

even harder.


We can identify fraud with a high level of accuracy and provide the

tools to make this information actionable using smart visualizations.

Wise Athena depicts the information in a graphical manner that:

• Conveys large amounts of information,

• Is accurate and intuitive to the reader, and

• Supports decision-making.

Our Machine Learning algorithms combined with smart visualizations

identify relations among data points and provide results such as these

shown below.

These results are for actual Telco companies3.

Machine learning results for your Telco

3. Results from actual Telco company. Name cannot be disclosed due to confidentia-

lity agreements. References can be provided upon customers’ request.

In this image each green dot represents a number called from one SIM,

and each orange dot at the end of each orange line represents the IMEI

(device identifier) for that SIM.

These globules are easily identified as non-fraudulent behavior.

www.wiseathena.com


www.wiseathena.com

In the case of SIMbox fraud, the visualization of the results yields a

remarkably different image.

This is an example of graph which identifies abnormal activity at a

glance.

We can clearly see a pattern that differs from non-fraudulent behavior.

IMEI

Called SIM

Calling SIM

www.wiseathena.com

In these smart visualizations the size of the green dots is proportional

to the volume of traffic on that SIM; likewise, the size of the orange

dots is proportional to the number of SIMs using an IMEI. The image

depicts orange dots in non-fraudulent behavior so small that they

cannot be even seen as such – i.e. non-fraudulent IMEIs do not have

heavy traffic.

The abnormal area, however, shows some distinct large orange dots

– remarkably larger than those in the non-fraudulent globules. These

are IMEIs being accessed from different SIMs – as many as orange

lines end in the dot.

Like the IMEI of a SIMbox, housing several SIMs.


How smart visualizations improve your business decisions

Revenue Assurance staff need access to data to make important

decisions and meet their objectives. This poses a challenge for

organizations because information is normally spread across multiple

locations and systems. Visual data exploration is the answer to this

challenge. It enables decision makers to explore data to find and

comprehend information in unified form.

Smart visualizations of data are the best tool to uncover enhanced

new insights where traditional methods fail.

Wise Athena understands the value delivered by visualizations,

and provides them to customers customized to suit their needs.

Following the defining principle of the system, visualizations adapt to

the operator data and not vice versa. That is why we call them smart.

There is no need for the customer to structure data in a certain way to

produce the graphical representation.

Wise Athena’s visualization technology stimulates data exploration

and discovery. Operators are provided with a big picture of their data

that opens doors to new insights.



www.wiseathena.com

Behavioral Segmentation

VIP Prospects Identification

Competitors Geolocalized

Perfomance

New Subscriber Profitability

Prediction

Cross-sell Opportunities

Fraud Identification

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www.wiseathena.com www.wiseathena.com

www.wiseathena.comwww.wiseathena.com


Wise Athena offers an on-demand delivery of Telco Fraud Service Detection

on the Internet with pay-as-you-go pricing. Our system requires no setup

or maintenance. Results are produced in just four weeks compared with the

long setup periods required by traditional tools.

Business Resultsin Four Weeks

wise athena

How it works for you

With our Software as a Service (SaaS) product, all we need is your

data. Simply use an intuitive interface to upload your files.

Wise Athena automatically processes the information and performs

the analysis needed to locate and neutralize the SIMbox fraud

schemes that are taking advantage of your network.

Our team of expert Data Scientists and Business Analysts take care of

all the work required for the system to produce the relevant results

for your organization. And they also make sure that these results are

fully actionable.

Wise Athena delivers all the information the operator needs to tackle

its SIMbox fraud problems and also the smart visualizations of data

that allow for further analysis of the network and its behavior.

The use of machine learning and the fact that the tools are specifically

designed for Telco fraud mean that the data needed to accurately

train the algorithm and produce results is significantly smaller than

other methods.

You will be able to support your Revenue Assurance staff and

executive decision-makers; only paying for revenue-generating

services consumed on a variable basis.


It only gets better with time

Wise Athena’s fraud detection service is trained to learn from the

interactions and multiple outcomes of your network. The system finds

and evaluates relationships in large volumes of data-points. It builds a

solid data-backed foundation for crucial fraud decision-making.

Benefits of the SaaS model in the cloud reduce your overall fraud-

detection costs in multiple ways. With our service you benefit from:

• Economies of scale

• A team of leading Data Scientists and Business Analysts working

for your organization

• Efficiency improvements to continually lower prices

• A tenth of the cost and a sixth of the time required by other

providers

• No costly, time-consuming, upfront infrastructure investment

• No order, delivery, installation, and configuration of software

• No training your staff on yet more new software

As Wise Athena drives down up-front and ongoing IT labor costs, its

algorithms keep learning to provide ever-updated results.

This way you have access to a highly distributed, full-featured

platform that always yields current and relevant results – at a fraction

of the cost of traditional infrastructure and software.

With Wise Athena Cloud Computing Fraud Service you can finally

shift your valuable resources away from data center investments and

operations, into your innovative, revenue growing new projects while

you hold fraud in check.


Your savings with Wise Athena

SIMbox fraudsters’ business model breaks even at twenty-three

minutes of call time. Currently operators can detect the fraud at 134

minutes of use – but by this point SIMbox fraud has already been

profitable for fraudsters.

Wise Athena enables detection at seventeen minutes of call time

from the first processing iteration.

For this early detection we assume an eleven-minute delay in

accessing the data, and that the SIM credit is set to zero.

The system’s self-learning capability ensures a quick reaction to

fraudsters’ new methods of concealing their activities. It further

reduces detection time every iteration.

On these premises, the fraudsters’ business case is completely

neutralized.

And we provide these results with an accuracy of 0.0001% false

positives where operators have 1% false positives.

In other words, one ten-thousandth fewer chances of mistaking a

legitimate SIM for a fraudulent one.

Our platform is operational 24x7 and it returns results in under one

minute. You can practically see the fraud happening in real time.



In just four weeks, you will see that fraud is not an unavoidable –and

uncomfortable- part of running a business. To the contrary, fraud is

something that you can locate, isolate and get rid of once and for all.

Because if it changes form, the self-learning system will be able to find

it before it reaches profitability. And the more the data, the better the

results so your system will be more secure for your customers and more

hostile for fraudsters.

The next step for your fraud is to stop.

Just upload your network data to our cognitive analytics system and see

near real-time actionable results coming back to your decision-makers.

The next step for your fraud

wise athena

Wise Athena was assembled around one

common belief: the traditional path that

led from data to new revenues was overly

complicated and ineffective. Our pursuit of a

better way laid the foundation for this company.

Our team is made up of highly specialized

data scientists with a track record

in delivering business results and

technological excellence across a wide

range of industry sectors. We come

from Stanford, MIT, Wharton, IBM,

PriceWaterhouseCoopers, HP, Telefónica,

the Higgs Boson research team and several

start-ups.

Our combined experience comprises

the delivery of cloud services processing

more than 150M customers’ data and the

management of systems supporting up to

90M customers.

Other services offered by Wise Athena:

• CUSTOMER BEHAVIORAL ANALYTICS

• CHURN PREDICTION

• DEALER PERFORMANCE

• IDENTIFICATION OF VIP PROSPECTS

Contact us:

Wise Athena USA

Suite 400

71 Stevenson Street

San Francisco

California

Email: [email protected]

Wise Athena EUROPE Oficina 14

Av. de la Victoria 25

28023 Madrid

Email: [email protected]

About Wise Athena

The Telco industry needs to move on to a predictive model. Don’t stop at detecting existing fraud.

Be proactive: create a deterrent for the future, andneutralize the fraud business.

ELIMINATING - WISE ATHENAIntroduction Telecom fraud: a persistent challenge wise athena Telecom...

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