Worldwide, telecom service providers are under pressure to ensure a secure, reliable and high-performing digital infrastructure at all times. This challenge is compounded by growing network complexity, surging data consumption, and shrinking profit margins.
The traditional revenue streams from voice and legacy data services continue to decline as consumers embrace digital-first experiences and OTT apps. Even so, service providers need to continuously invest in upgrading network infrastructure, such as 5G, to deliver the seamless connectivity users expect and ensure customer satisfaction. To remain competitive and profitable, especially against tech giants that now dominate the digital landscape, operators are exploring new use cases and technology solutions to enhance operational efficiency and unlock new revenue opportunities.
In this scenario, it’s not surprising that service providers are turning to Artificial Intelligence (AI) not just to tackle these challenges but also improve customer experience, optimize networks with intelligent automation, and unlock new revenue streams. Around 65% of service providers have already implemented an AI strategy, according to GSMA Intelligence.
AI provides a remarkable opportunity for service providers to accelerate the transformation from a telco to a techco and go beyond offering voice and data services. Telcos that leverage advanced responsible AI practices can potentially capture up to $250 billion in value by 2040 across the globe.
While there are several ways in which telcos have started using AI to improve operations and efficiency, its role is indispensable in combating growing fraud and security threats. As the telecom landscape becomes increasingly complex, fraudsters are evolving just as fast, if not faster, than the systems designed to prevent them.
Telecommunications fraud increased by 12% in 2023, leading to an estimated loss of around $38.95 billion, according to the Communications Fraud Control Association (CFCA). Apart from financial loss, fraud leads to reputational damage for the service providers and can potentially lead to the loss of subscribers as well.
Traditional rule-based systems and reactive approaches are no longer enough to safeguard the network infrastructure, as the growing sophistication and intensity of fraud-related incidents continue to wreak havoc. The growing dependency on digital infrastructure to carry out our personal and business tasks, coupled with the growing trend of real-time services and borderless connectivity, means that service providers must leverage AI-powered solutions to proactively detect and prevent fraud.
A few of the most prominent types of fraud include SIM Box fraud, eSIM subscription fraud, social engineering schemes like Robocalls and Scam calls, and identity fraud, among several others.
AI’s Growing Role in Strengthening Telecom Fraud Defenses
AI and Generative AI (GenAI) are transforming how service providers approach fraud prevention and mitigation. For instance, by modelling complex threat scenarios and stimulating attack vectors, GenAI allows security teams to anticipate emerging risks and prepare accordingly, thus improving resilience.
While educating end users is crucial to preventing phishing and smishing attacks, AI gives operators the power to fight fraud that’s invisible to customers. Here’s how AI is helping telcos address some of the most pervasive fraud threats:
1. SIM Box Fraud: Also referred to as bypass fraud, SIM Box fraud is used by fraudsters to benefit from the disparity in international call termination rates in different countries. Typically, fraudsters use low-cost SIMs to route international calls as local ones, leading to significant revenue loss for operators.
Mobileum helped an African service provider reduce revenue loss from SIM Box-related fraud from $30,000 per month to less than $1,000 by combining strategic insights with advanced detection. What makes it especially hard to detect this type of fraud is its ability to mimic legitimate traffic. In addition, fraudsters continuously evolve their methods, making identification even more challenging.
AI-powered fraud management systems are equipped to analyze data from Operational Support Systems (OSS)/ Business Support Systems (BSS) and signalling layers to discover anomalies, such as unusual call durations, traffic volumes, or SIMs reused across multiple locations, indicating SIM Box fraud in real time.
2. Phone Verified Account (PVA): This type of fraud involves malicious elements using automated systems to bypass traditional verification methods, leading to account takeovers or fraudulent activations. AI and Machine Learning-powered solutions can help combat this by analyzing historical data and identifying subtle irregularities and patterns, such as unusual usage behavior, that traditional systems typically overlook.
Apart from revenue loss, PVA fraud can lead to compliance and regulatory issues, besides eroding subscriber trust, making it imperative for the telcos to address this.
3. eSIMs-related fraud: The growing adoption of eSIMs has made it easier for fraudsters to create fake or fraudulent subscriptions by manipulating authentication and identity verification processes and bypassing security controls.
AI-powered fraud management systems are geared to address the risks associated with eSIM-related fraud, thus enabling service providers to promote the adoption of eSIMs without endangering customer accounts or increasing the risk of financial losses.
Securing the Future with AI
AI-enabled fraud management systems give telecom service providers a crucial edge to proactively defend against threats and fraud. As communication networks expand and digital ecosystems grow more intricate, the service providers who harness AI’s capabilities to secure their digital infrastructure will be better equipped to protect their customers and to add new revenue streams confidently.
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