Call routing scam costs telcos $150m a year

Fraudulent call termination is costing operators huge amounts of money, though the victims are often unaware they've been tricked. The elaborate scam involves routing international calls onto local numbers, then using promotional offers offered by local telcos to connect the call without handing over the termination fee. UK …

[Jon Press]

OK, I'll bite...

So middleman M offers to deliver calls from Network A to Network B for a certain price. Middleman M fulfils this contract but is able to increase his margins owing to perverse tariffing by Network B.

How is this a scam?

A perfectly legitimate European network provider once bought a house in Baarle which straddled the Dutch-Belgian border in order to avoid being ripped off for international data connections.

Just sounds to me like an eminently sensible way to deal with entrenched telecomms providers ...

[Hayden Clark]

How is this a scam?

There is no fraud here. The source operator pays a fee, and gets call termination services. The destination operator provides service to some SIMS or land-lines, for which it gets paid.

In other words it's what VOIP providers are doing to provide cheap international calls to individual customers.

The only "loss" is that the called operator misses out on some tasty overcharging to foreign operators for inbound international calls. The call-handling companies have spotted a big dose of margin that the operators have been keeping to themselves!

[John Burton]

That doesn't sound like a scam

That doesn't sound like a scam, it seems everyone is being paid the amount they requested for the service they said they would provide?

[Anonymous Coward]

Where there's byzantine costing structures...

... there's arbitration. Because that's what this amounts to, minus the substituting of inferior line quality, which might not happen or even turn out to be a substitute of superior quality if the original would've been a leaky analogue cable, or somesuch.

That and the fact that phone routing was built on the idea that all operator type parties are known and trustable because they're practically if not legally part of the government anyway. Much like how old internetworking protocols relied for their security on the existence of a kinder network than we have now.

So the point is that not all of this is automatically scam even when some of it indubitably is. Some of it is equally well blameable on greedy telcos with tortuous tariff tables.

[Lee Dowling]

Change the system

If it's really that simple to scam, there's a problem with the way you pay for those things.

I.e. if Scams'R'Us can make transport that data, in-near-realtime, between an Haitian number and the UK for less than other operators, then you have a problem.

There are three stages - Caller to some centre of operations, centre of operations to remote country, remote country to recipient.

If Scams'R'Us can perform the middle end of the connection for free or for very-much-reduced cost then you have a BIG problem in charging so much for that part. Because any idiot could stroll up with a local broadband connection and pipe VoIP lines transatlantically and beat you at your own game by buying a T-Mobile phone and a computer at both ends, say. They're still paying for the phone calls at both ends, still paying for their Internet connection (which, in turn, must pay for the transatlantic connection to be profitable), and still providing the same service that you are.

If the call quality is not bad enough that people are complaining, there's NO reason why T-Mobile can't do the same - this is how Skype's entire business plan *works* and makes them money.

Either: increase the costs of the middle part artificially and throw out the scammers (which is almost impossible but apparently what the telco's want to do), or lower your termination costs to foreign countries using the same transports and techniques that the scammers were using. If I can send hundreds of Gigabytes of data to Australia in fractions of a second from a bog-standard home ISP line, then why would telco's have problems doing the same given the amount of infrastructure they own? Sure, there might be a tax or something in the middle but the problem stems from artificially-high termination fees for international calls, or so it seems.

It sounds like a synthetic economy to me, where people make money on the back of porting packets from one end of a cable to another and then charging FAR more than it costs to do so, and when someone else comes along and does the same a different way, without people or phone companies being able to even notice, for much, much less they all start shouting.

[BristolBachelor]

Nothing to see here, move along.

Presumably, Digicel has made the conscious decision to offer free calls between it's subscribers, rather than be forced to do it. It also has worked out that the subscription fees it charges covers it's costs for these calls (infrastructure, power, etc.).

Now when Scams R us does it's routing thing, the call goes onto the Digicel network from a Digicel subscriber (and the subscription has paid for the call). OK so maybe Digicel makes more money from termination fees, but that is down to how they structure their fees. It's like the telco saying "talk for free all weekend" and then complaining that people are scamming them by not paying for talking all weekend.

Presumably if the telcos didn't charge £4 per 70KB to route the data across the internet, there wouldn't be such an incentive for people like scams R us. (GSM used to run voice at 9600 baud with some redundancy. Assuming the same datarate for the call, 1mimute ≈ 70KB).

I have VOIP, and route my calls myself. Does that mean I am also "scamming" someone? After all, movistar would like to charge me 3€/min to call the UK, but I pay 1p/min

[edge_e]

scam? or business model

Sounds to me like it's now scams are us that are terminating the call in in the receiving country so they're entitled to the termination fee.

It does go to show that these fees are not only extortionate, they're completely unnecessary.

[Anonymous Coward]

Seems like perfectly normal call routing to me, how is this a scam?

I've done it myself using asterisk and a remote dial out.

[Mage]

Simple solution

End all termination charges. They are a throw back to dedicated circuit switching where the customers at each end used dedicated copper just for them for the whole route and whole time. "Modern" Telecoms doesn't work like that any more.

On average Telcos would be better off, assuming they all still charge the same as today for the same calls.

Both ends pay any intermediaries on a traffic basis.

[Anonymous Coward]

Simple solution

Digicell just need to add a "fair usage policy" to their free calls to other Digicell numbers offer!

N.b. I seem to recall there was a similar "problem" with free calls when years back 1-2-1 (what is now TMobile) launched their mobile service with a "free off peak calls to landline" offer - they assumed that this would entice people to choose their service seeing the free off-peak calls as a "perk" while still generating revenue from daytime calls .... however, what happened was a significant number of people with locaquatious teenage daughters (and possibly sons, though from evidence in my family this is unlikely) bought 1-2-1 phones so that they could spend all eveing chatting to their friends while (1) not running up a bill and (2) leaving the family phone free for other people to use. Again this wasn't a scam but wasn't what 1-2-1 intended.

[xj25vm]

I smell somebody lobbying for the big telcos here. I take it new and disrupting technology is not exactly tasty to big, entrenched operators, isn't it? By "scam" the article actually means "a practice which we don't like and reduces the amount of profits we *could* make otherwise".

Get over it and move on with the times. This is not 1950's, when the big telco's could charge whatever they wanted and get away with it. Internet, VOIP, sip, Asterisk and other technologies provide alternatives nowadays - move on with the times or be extinct. Not using a big telco's network in the most expensive way doesn't equate to scam. All participants in the scheme described pay for the services they consume. The article conveniently fails to mention the fact that phone calls between the two networks get routed through the Internet - and that is really the part that is itching the telco's, isn't it?

Tough.

[Anonymous Coward]

I don't see the scam either

If Vodafone think its cheaper to route calls to Scams R' Us, rather than negotiate/pay termination fees I don't see the problem.

If Digicell are willing to cell SIMs to Scams R' Us, and Scams R' Us pay for their SIMs & calls I don't see the problem either.

And if punters don't like Vodafone's service, there are other better operators, and other better options.

Who is being scammed?

[Kevin Johnston]

Wuh???

Did everyone else read a different article to me?

The termination charge bit is internationally agreed and as far as I recall was intended to cover the costs of the telco handling the far end of the call. What the article says in fairly clear terms is that the 'scammer' claims that charge from the originator but keeps it by dumping the calls through some funky box which maps them onto local SIMs.

That looks to me like obtaining money under false pretenses which gets labelled as Fraud round our way.

The article isn't saying it can't be done cheaper, rather that someone could break T&Cs to skim off some cash.

[James 100]

So, Digicel want to sell a product/service to local customers for almost nothing, but screw international ones by charging several orders of magnitude more; a helpful third-party defeats this by stopping them discriminating between locals and foreigners. As others have said, there is a scam being worked here, but it isn't by the third party!

A termination charge of 0, or very close to it, actually reflects the costs involved in providing that service. Try screwing people with much higher charges and you *deserve* to be bypassed, particularly if you only single out certain customers for that screwing. Shame on you, Reg: "smart call routing saves telcos $150m/yr" would have been much more accurate!

[Anonymous Coward]

This is a very old scam

This scam operated on terminating inbound international calls to UK mobile networks in the past decade. It has now largely been stamped out via contractual terms which prevent subscribers from deploying GSM gateways and judgement against GSM gateway operators and some nifty IT. Search for hearings in the competition comission on GSM gateways.

Countering the fraud as an operator is pretty easy- look for the footprints of the fraudulent activity and disconnect the offending SIMs- I worked on this in the past.

There are several issues in play here apart from revenue arbitrage- mainly call location and roaming issues, but also CLI obsfuraction. There may also be links to contract fraud in order to obtain SIMs and links to money laundering since it isn't impossible to operate a GSM gateway using 'dirty' cash to buy SIMs and airtime.

[Timothy Creswick]

Ummm

Umm this has been going on for as long as I've been visiting data centres.

In literally every multi-tenanted data centre that I've been in in the UK you'll see quite a few boxes hosting SIM cards with a bunch of GSM antennas on top or routed outside. Some of these purpose-built boxes hold hundreds of SIMs and can switch between them as the networks bar them individually.

Most of the guys doing this (and I've spoken to a few of them) are doing it because of the crazy-high termination rates on UK mobiles. There's a lot of money in it, and it's only slightly in breach of the GSM operators T&Cs, which frankly probably wouldn't be enforceable in court anyway.

[falsedan]

ah, grey routes

Glad someone mentioned carousels.

[JeffyPooh]

Somebody please set this 'scam' up into the Philippines ASAP!!

My local wired telco changes $0.22 to call the Philippines from Canada (on a plan). VOIP operator Skype charges $0.29 (plus per call fees). I assume that the discrepancy is related to these fees being charged to Skype - thus the stupidly uselessly high cost using Skype.

Will someone please set-up more of these SIM-card equipped VOIP portals into the Philippines!! ASAP!!

There ain't no way to detect them and there ain't no way to stop them.

Gawd bless the "scammers". Routing around outrageous fees. Yeah!

[Anonymous Coward]

Grey routes... sometimes better than white routes

Not "fraudulent", possibly a contractual issue for whoever bought and used the SIM cards.

This is the only reliable way to terminate mobile calls to some countries, where the "white routes" may be controlled by the incompetent, corrupt,, lazy incumbent who controls the satellite earth stations or submarine cable landing stations, and doesn't provision enough capacity to terminate calls onto its competitors' networks. Set up a "grey route" with a GSM gateway in a shed with an internet connection in the back, bish bosh Robert's your mother's brother.

[Anonymous Coward]

Hmm.. reg?

Sorry to say you dropped the ball on this one, old Reggie.

Revector makes a living from sniffing out GSM gateways so the operators can continue bilking customers.

Calling this activity a fraud or a scam is reprehensible; at worst it's breach of contract and everyone involved knows that.

This kind of thing has been done for decades. A while back the preferred way to wholesale cheap landline-to-mobile calls was tromboning - e.g. sending calls out of the originating country to a foreign country with a very cheap termination rate. Then the call is sent right back to the originating country, often for free or very cheap. The total cost of terminating 2x international calls was LESS than the cost of a domestic mobile call. Great while it lasted but the operators eventually clocked on and pulled the plugs. That wasn't fraud, and neither is this.

[N13L5]

Hay Bill Ray

You taking straight copy from the flaks at Telcos?

They are the ones perpetrating the scam and someone found a way to stop them.

I think everybody knows that after banks, the Telcos take the #2 spot as the most fraudulent scammers for decades, because of lawmakers incapacity to keep up, which is usually fueled by a mix of corporate political campaign contributions and blackmailing the government about impending job loss.