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Private & Confidentialwww.subex.com
Sim Box Fraud
Private & Confidentialwww.subex.com
Agenda
 What is Gateway Bypass?
 Gateway Effect?
 What is Sim Box?
 Routing.
 Revenue gain v/s Revenue Loss.
 Problem with Sim box fraud.
 Detection Method.
Private & Confidentialwww.subex.com
Gateway Bypass
Country BCountry A
International Carrier
Internet GSM
Gateway
VOIP
Gateway
Grey routing, Toll bypass, Simboxes
GSM gateways or Hedgehog operator
Private & Confidentialwww.subex.com
Gateway Effect
Bottom line revenue
Capital Losses
Management Time
Quality
-Miss
direction
-Delays
-Voice
-CLI
Mobile
Operator
International
gateways
Fixed line
operator
Customers
Other Mobile
Providers
Government
Private & Confidentialwww.subex.com
A Typical Sim Box Operator
Infrastructure needed
An internet connection
-1Mb allows for +- 60
concurrent calls
-DSL
-VSAT (satellite)
-Datacenter
Router to connect to internet
GSM Gateway to convert calls
into mobile calls
SIM cards
Typical companies
Small 2 person operations
Carriers sometimes also deploy
SIM Boxes
Some companies use PBX also
for terminating traffic
Private & Confidentialwww.subex.com
Sim Box
Your network
SIM Box operator
0,15€
0,10€
0,14€
0,16€
?
Interconnect
Termination
Air interface
Bob
Regular Transit
Transit
Retail
SIM Box operators exploit the difference between
-Termination Rate, eg 0,15€ per minute (often regulated)
-Cheapest retail rate, eg 0,10€ per minute
-SIM Box operator sells just below termination rate
SIM Boxes bypass the regular interconnect
SIM’s are used to terminate third party traffic
Corporate SIM Boxes use SIM cards in PBX to terminate
corporate traffic
Private & Confidentialwww.subex.com7
Routing
InternetTransit
carrier VoIP
Originating
Operator
 Fix
 Mobile
 VoIP
Transit
carrier
Destination
How does a SIM Box operator collect traffic?
-Many transit carriers connect to the internet for low cost internet
VoIP routing
-SIM Box operator presents himself as carrier
-Many transit carriers do least cost routing
Private & Confidentialwww.subex.com
Revenue gain (Sim Box Business)
Costs Revenues
Capacity of GSM Gateway 60 channels Sales capacity per month 540.000 monthly
Max # simultaneous calls 60 channels # Channels 60
Capacity per call 16 Kb/s Average usage per day per channel 5 hours
Bandwidth required 960 Kb/s Total traffic per day 18.000 minutes
Traffic per SIM per month 9.000 minutes
Internet connection € 1.000 monthly
Capacity 1 Mb/s Revenues € 75.600 monthly
Fee € 1.000 monthly Revenue per minute € 0,14
Revenue per mth € 75.600 monthly
Equipment € 3.333 month
Gateway + router € 40.000 one off Cost of sales € 54.000,00 monthly
Depreciation 12 month Cost per minute € 0,10
Cost per mth € 54.000 monthly
SIM Subscription cost € 900 monthy
# SIM's 60 Gross margin € 21.600 monthly
Subscriptions € 15 monthly
Total monthly fixed cost € 5.233 monthly
Margin € 16.367 monthly
•In case of 25euro/mth flat rate subscription with 0,10 euro revenue per
minute, margin becomes 50.000 euro/month!
•In specific cases, a 24 month contract for a flat rate subscription turns out
profitable for the SIM Box operator in less than 2 weeks
•A 0,03 euro delta between Mobile Termination Rate and best available retail
rate is the minimum to make a profitable case
Private & Confidentialwww.subex.com
Revenue Loss (Mobile Operator)
Fraud management approach Interconnect approach
# SIM's used in GSM Gateways 1000 Terminating interconnect traffic 180.000.000 min. per mth
Average usage per day per SIM 5 hours
Total traffic per month 9.000.000 minutes % from domestic mobile or incumbent 75%
(assumed terminated correctly)
Retail revenues € 900.000 monthly % from other destinations 25%
Revenue per minute € 0,10 % of that terminating via GSM Gateway 20%
Revenue per mth € 900.000 monthly % of total traffic terminated via SIM box 5%
Missed interconnect revenues € 1.350.000 monthly Traffic terminating through GSM Gateway 9.000.000 min. per mth
Cost per minute € 0,15
Cost per mth € 1.350.000 monthly Termination rate € 0,15 per minute
Total loss € 450.000 monthly Interconnect revenue loss € 1.350.000 monthly
•SIM Box operators are great retail customers!?
-High traffic
-Always pay on time
•In case of flat rate retail offer, loss can run as high as 1 million euro per
month
•Losses due to quality issues or additional radio network costs not included
•Direct bottom line loss
Private & Confidentialwww.subex.com
Problem with Simbox Fraud
•Loss of revenue
•Call Line Identification Presentation (CLIP) is turned off
•Gateways have limited capacity (rejection of calls)
•Longer time to setup the call
•Gateways are placed geographically on the same cell-site
•Radio planning is made difficult
•Police investigation is not possible
Private & Confidentialwww.subex.com
Detection & Solution Method
•A-numbers with calls to many different B-numbers and other
characteristics
•Matching of Roaming call and Sim Box call to the same B-number
•Call from different countries to SIM-card where the CLIR is removed on the
HLR
Private & Confidentialwww.subex.com12
Thank You!

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Sim box

  • 2. Private & Confidentialwww.subex.com Agenda  What is Gateway Bypass?  Gateway Effect?  What is Sim Box?  Routing.  Revenue gain v/s Revenue Loss.  Problem with Sim box fraud.  Detection Method.
  • 3. Private & Confidentialwww.subex.com Gateway Bypass Country BCountry A International Carrier Internet GSM Gateway VOIP Gateway Grey routing, Toll bypass, Simboxes GSM gateways or Hedgehog operator
  • 4. Private & Confidentialwww.subex.com Gateway Effect Bottom line revenue Capital Losses Management Time Quality -Miss direction -Delays -Voice -CLI Mobile Operator International gateways Fixed line operator Customers Other Mobile Providers Government
  • 5. Private & Confidentialwww.subex.com A Typical Sim Box Operator Infrastructure needed An internet connection -1Mb allows for +- 60 concurrent calls -DSL -VSAT (satellite) -Datacenter Router to connect to internet GSM Gateway to convert calls into mobile calls SIM cards Typical companies Small 2 person operations Carriers sometimes also deploy SIM Boxes Some companies use PBX also for terminating traffic
  • 6. Private & Confidentialwww.subex.com Sim Box Your network SIM Box operator 0,15€ 0,10€ 0,14€ 0,16€ ? Interconnect Termination Air interface Bob Regular Transit Transit Retail SIM Box operators exploit the difference between -Termination Rate, eg 0,15€ per minute (often regulated) -Cheapest retail rate, eg 0,10€ per minute -SIM Box operator sells just below termination rate SIM Boxes bypass the regular interconnect SIM’s are used to terminate third party traffic Corporate SIM Boxes use SIM cards in PBX to terminate corporate traffic
  • 7. Private & Confidentialwww.subex.com7 Routing InternetTransit carrier VoIP Originating Operator  Fix  Mobile  VoIP Transit carrier Destination How does a SIM Box operator collect traffic? -Many transit carriers connect to the internet for low cost internet VoIP routing -SIM Box operator presents himself as carrier -Many transit carriers do least cost routing
  • 8. Private & Confidentialwww.subex.com Revenue gain (Sim Box Business) Costs Revenues Capacity of GSM Gateway 60 channels Sales capacity per month 540.000 monthly Max # simultaneous calls 60 channels # Channels 60 Capacity per call 16 Kb/s Average usage per day per channel 5 hours Bandwidth required 960 Kb/s Total traffic per day 18.000 minutes Traffic per SIM per month 9.000 minutes Internet connection € 1.000 monthly Capacity 1 Mb/s Revenues € 75.600 monthly Fee € 1.000 monthly Revenue per minute € 0,14 Revenue per mth € 75.600 monthly Equipment € 3.333 month Gateway + router € 40.000 one off Cost of sales € 54.000,00 monthly Depreciation 12 month Cost per minute € 0,10 Cost per mth € 54.000 monthly SIM Subscription cost € 900 monthy # SIM's 60 Gross margin € 21.600 monthly Subscriptions € 15 monthly Total monthly fixed cost € 5.233 monthly Margin € 16.367 monthly •In case of 25euro/mth flat rate subscription with 0,10 euro revenue per minute, margin becomes 50.000 euro/month! •In specific cases, a 24 month contract for a flat rate subscription turns out profitable for the SIM Box operator in less than 2 weeks •A 0,03 euro delta between Mobile Termination Rate and best available retail rate is the minimum to make a profitable case
  • 9. Private & Confidentialwww.subex.com Revenue Loss (Mobile Operator) Fraud management approach Interconnect approach # SIM's used in GSM Gateways 1000 Terminating interconnect traffic 180.000.000 min. per mth Average usage per day per SIM 5 hours Total traffic per month 9.000.000 minutes % from domestic mobile or incumbent 75% (assumed terminated correctly) Retail revenues € 900.000 monthly % from other destinations 25% Revenue per minute € 0,10 % of that terminating via GSM Gateway 20% Revenue per mth € 900.000 monthly % of total traffic terminated via SIM box 5% Missed interconnect revenues € 1.350.000 monthly Traffic terminating through GSM Gateway 9.000.000 min. per mth Cost per minute € 0,15 Cost per mth € 1.350.000 monthly Termination rate € 0,15 per minute Total loss € 450.000 monthly Interconnect revenue loss € 1.350.000 monthly •SIM Box operators are great retail customers!? -High traffic -Always pay on time •In case of flat rate retail offer, loss can run as high as 1 million euro per month •Losses due to quality issues or additional radio network costs not included •Direct bottom line loss
  • 10. Private & Confidentialwww.subex.com Problem with Simbox Fraud •Loss of revenue •Call Line Identification Presentation (CLIP) is turned off •Gateways have limited capacity (rejection of calls) •Longer time to setup the call •Gateways are placed geographically on the same cell-site •Radio planning is made difficult •Police investigation is not possible
  • 11. Private & Confidentialwww.subex.com Detection & Solution Method •A-numbers with calls to many different B-numbers and other characteristics •Matching of Roaming call and Sim Box call to the same B-number •Call from different countries to SIM-card where the CLIR is removed on the HLR