Simboxing refers to the activity of routing traffic via illegal termination devices which channel national or international calls away from being terminated on mobile network operator networks and delivering them as local calls.
SIMbox fraud was identified in the Communications Fraud Control Association’s Global Fraud Loss Survey Report, 2013 as one of the top five fraud types facing the global mobile telecommunications industry, and costs the industry over US$3 billion per year.
MTN estimates it loses approximately GHs 34 million annually to SIMboxing. The related annual loss for Government of Ghana would be approximately GHs 16 million for international incoming traffic that should have been terminated on MTN’s network alone.
In addition to direct financial losses, SIMboxing compromises cellular network infrastructure by overloading local base stations and causes customer dissatisfaction as call quality can be degraded and subscribers who receive SIMBox calls are unable to identify the caller prior to answering the call.
How SIMBoxing Works
International voice traffic termination fraud (SIMbox fraud) occurs when international traffic that should be routed through a legitimate international gateway is routed to bypass those gateways and is terminated via SIMboxes as local calls.
The call path described in green is the legal route by which an international call coming to Ghana would terminated through the international gateway of a service provider and be recognised as an international call and charged at US$0.19/minute. The call path in red demonstrates how the traffic is channelled through a SIMbox and terminated as a local call, hence avoiding the US$0.19/minute charge and charged instead at local call rates.
Root Cause of SIMbox: Greed Plus Opportunity Minus Integrity Equals Fraud
SIMboxing occurs because fraudsters recognise an opportunity to make money and seize that opportunity because it is lucrative, even though it is illegal.
Global fraud experts agree that differentials between international call rates and local rates create an opportunity for SIMBox fraudsters. Latro Services Inc., an anti-fraud solutions company, has stated that, “International bypass fraud is a prolific and costly fraud in today’s mobile industry..
Fraudsters take advantage of the rate differentials between international and local calls to profit from calls that should be billed by the local mobile operator at higher international rates but instead get billed at local “on-net” rates. In a similar vein, researchers at global telecom company AT&T, in a report titled, Analysis and Detection of SIMbox Fraud in Mobility Networks, state that, “SIMbox voice fraud occurs when the cost of terminating domestic or international calls exceeds the cost of a local mobile-to-mobile call in a particular region or country.”
In Ghana, fraudsters exploit the arbitrage between a compulsory 19 US cents (i.e. ~63 pesewas)-per-minute charge mandated by law for international incoming calls and the low cost of local calls.
The telecom network explains if a SIMboxer is paid US$0.10 per minute for the traffic he has agreed to terminate in Ghana, and instead of paying the mandatory international incoming traffic rate of US$0.19 per minute to the mobile operator in Ghana he pays, say 10 pesewas (approximately US$0.03) per minute because he completes the call as a local call, he stands to make US$0.07 per minute (US$0.10 received from international transit carrier minus US$0.03 paid to mobile telco in Ghana for local call equals US$0.07).
If the fraudster can bring in ten million minutes, they will make over US$700,000. For those ten million minutes, Government would not receive its US$0.06 and would lose US$600,000 plus taxes/fees that would have been paid by the mobile operators.
How MTN Fights SIMboxing
Like many mobile operators, MTN experiences significant revenue losses from SIMbox fraud. The company has processes in place to fight this fraud through its Revenue Assurance Department. Three main methods of bypass fraud detection and prevention include call generation, data mining, and automated tools. MTN’s Revenue Assurance Department uses a combination of all three methods to fight SIMboxing. On a monthly basis, MTN spends approximately US$100,000 on systems, processes and other resources to prevent bypass fraud. Some of the measures that MTN Ghana has employed to combat bypass fraud include the following:
- Active Detection – MTN Ghana is utilizing the services of two international vendors (SIGOS, and RAPTOR) that make test calls that help the MTN detect SIMboxes.
- Passive Detection – MTN Ghana uses an analytical system (FraudBuster). This analytical system has intelligent algorithms that are able to identify if the call behavior is from a SIMBOX or not.
- SIMBOX Location – MTN Ghana has employed the services of an external vendor (LATRO Systems) to locate and disable SIMBOX operations.
- Automated Blocking – MTN Ghana has employed automated systems that interface with the detection system to block detected SIMBOXes within 5 seconds for on-net (MTN to MTN call) and within 5 minutes for off-net (Other Network to MTN call).
- Simplified Fraud Reporting – MTN Ghana participates in the industry fraud reporting arrangement that allows the public to SMS suspected SIMBox numbers to operators through the shortcode 419. Customers can also email RAFraud@mtn.com.gh to report incidents of fraud, including bypass. Once a customer or internal employee reports the incident, it is immediately acted upon by the MTN Ghana Fraud team.
MTN’s Role in SIMBox Arrests
Together with other operators, MTN is on a cross-functional task force aimed at fighting SIMboxing. The task force also includes relevant government agencies such as National Communications Authority and Ministry Of Communications as well as security services such as the Criminal Investigation Department of the Ghana Police Service. The collaborative efforts have contributed to the clamping down of several SIMBOX operations within the country. In the recent swoop that led to the arrest of six persons in Accra, MTN provided telemetry information and call records that assisted in identification of the location of SIMboxers. MTN also played an active role in the major arrest that took place in September 2014.
Commenting on the recent swoop, Nixon Wampamba, Revenue Assurance Senior Manager said, as the leader in the telecoms market we remain focused on the fight against SIMBOX fraud. “With 50% market, our share of SIMBOXes is less than 1% and this is as result of the stringent measures we have put in place to fight the menace.
However, we will not rest until this menace it totally eradicated.” Mr. Wampamba added,”SIMbox fraud is a major drain on the country and it is in our interest to support the government to minimize it. As a company whose core values include integrity we will continue to collaborate with the relevant government agencies to ensure that we eliminate this problem.”
Revenue Loss from SIMBoxing
As Diagrams 2 below demonstrate, following implementation of the surcharge on international incoming traffic MTN experienced a severe drop in international incoming minutes. The minutes disappeared, not because all those people abroad were no longer calling Ghana; they were still calling Ghana, but those minutes were disappearing onto grey routes — SIMbox routes, which deprived both MTN and government of rightful revenues. On a linear basis, MTN has been steadily losing traffic to SIMboxers, in spite of our steps taken proactively by the company to stem the tide of SIMboxing.
MTN estimates that in 2014 alone the value to MTN of minutes lost to SIMboxing was GHs34, while the value lost to Government of Ghana was approximately GHs16 million.
Table 1 below demonstrates how removing the price differential removes the SIMboxing opportunity. In countries like Nigeria and South Africa where there is little to no differential between international termination costs and local call rates, SIMBoxing is non-existent; in countries like Ghana, Rwanda and Tanzania where there is significant differential between the two rates, SIMboxing exists. If Ghana were to adopt an approach similar to these countries, we believe that the rise in international incoming traffic resulting from the cheaper rates would make up the loss from reduced rates.
Table 1: Effect of Arbitrage on SIMBoxing
| Country | Intn’l Term Cost | Local Call Rate | Arbitrage | SIMBOX Fraud |
| Nigeria | $0.03 | $0.07 | -$0.04 | No |
| South Africa | $0.04 | $0.04 | $0.00 | No |
| Ghana | $0.19 | $0.03 | $0.16 | Yes |
| Tanzania | $0.22 | $0.03 | $0.19 | Yes |
| Rwanda | $0.22 | $0.09 | $0.13 | Yes |
| Uganda | $0.26 | $0.10 | $0.16 | Yes |
| Benin | $0.18 | $0.12 | $0.06 | Yes |
Eliminating SIMBoxing
MTN believes that only when a root cause resolution is implemented will SIMboxing be eliminated. Any solution that does not address the root cause simply amounts to putting out fires. Worldwide, experts agree that price differential is what creates the opportunity exploited by SIMBox fraudsters. As demonstrated in Diagrams 2 and Table 1 above, the evidence bears this out. Removal of the US$0.19 mandatory charge would allow operators to offer pricing that would remove the opportunity exploited by SIMbox fraudsters.
The so-called monitoring solution that is practiced by many countries in Africa is one that attempts to treat the problem after the fact, in other words, attempt to put out the fire after it has started. By its very definition monitoring is aimed at detecting the fraud while it is already in progress.
Due to the lucrative nature of the business, SIMboxers are able to employ highly skilled technicians adept at detection avoidance. They are also able to side-step controls instituted by telcos to streamline SIM registration.
MTN believes steps must be taken to stop the illegal practice altogether. If the US$0.19 mandatory pricing is removed SIMBox fraudsters will have no commercial reason to even practice SIMboxing in Ghana.
African eyenews.com