Fraud and new service rollouts continue to pose challenges to operator profitability

LONDON and WESTMINSTER, CO., Azure Solutions, the global revenue-assurance company, today revealed that global telecoms operators are losing an estimated 11.6 percent of revenue (over $170 billion) through fraud and other types of revenue leakage in 2005, compared to 10.7 percent in 2004. The study also shows that North American operators experience more loss than the global average, with an estimated 15.5 percent of total revenue leakage ($70 billion), compared to 14.3 percent in 2004. These are key findings from the annual research Azure conducted in conjunction with telecoms analyst firm, Analysys, into global telecoms revenue losses.

In particular, the ‘Operator Attitudes to Revenue Assurance 2005’ report attributes increased North American losses to several factors, including:

· Higher revenue leakage from call routing,

· Losses arising from carrier interconnect settlements or payments to other partners (e.g. content).

· Leakages caused by poor systems integration.

One common factor behind each one of these losses is the complexity of North American networks and support systems. The requirement to cost effectively route calls over multiple networks and to settle with a large number of partners is less of a challenge in many regions of the world where they have fewer operators. In addition, the Systems Integration problem may also be caused by the requirement to integrate a larger number of state-of-the-art systems to create new services for the North American market.

On the upside, North American operators scored better in stemming internal fraud and with overall credit management.

“The speed and market necessity of rolling out new products and services continues to add to the complexity of OSS programs around the globe and, in particular, in North America,” said Steven Bruny, president of Azure’s North and Latin American operations. “We see an increase in focus and resources being allocated to stem these losses and expect these percentages to decrease in the coming years as carriers take a more enterprise-centric approach to revenue-assurance and fraud prevention.”

The report surveyed more than 100 operators from different regions of the world to investigate levels of revenue loss. The major sources of revenue loss continue to be fraud, credit management, least-cost-routing errors, interconnect/partner-payment errors, and poor processes and systems. The report reveals that fraudulent activity, in particular, has risen since last year and is now the single largest area of revenue leakage (2.7 percent).

Other findings reveal that fixed-line operators continue to lose less than their mobile counterparts and once again there were strong regional differences. Operators in North America, Central and Latin America, the Middle East and Africa, in particular, suffered more revenue leakage than the global average. However, the report did reveal the importance of revenue assurance is continuing to grow. For instance, more than 60 percent of respondents believed revenue assurance to be more important than in previous years.

Azure is the world’s largest revenue-assurance company. It enables operators to reduce losses and safeguard profits from malicious and unintentional revenue leakage, such as billing errors, poor processes and fraud. Azure has more than 65 customers across the world comprising fixed-line and mobile telecoms operators and cable TV companies amongst others. Its heritage can be traced back to BT (British Telecommunications plc), one of the world’s best telecoms revenue-assurance performers.

Danny Dicks, principal analyst at Analysys, said: “This is the fourth year we have carried out the research and it is clear that operators are becoming more realistic about loss levels. Consequently many operators now have dedicated revenue-assurance teams and are investing in external help, in order to reduce their losses.”

John Cronin, CEO and president of Azure Solutions, said: “While revenue assurance is moving up the agenda for many operators, research figures show that there is still a long way to go. The higher value and added complexity of emerging next-generation services mean that operators need to plan for and implement revenue assurance now, otherwise they risk losing significant due revenue.”

The full ‘Operator Attitudes to Revenue Assurance 2005’ report is free to operators. To receive a copy of the report please go to www.azuresolutions.com/survey05