If you work in revenue assurance, you surely need the instinct to spot numbers which look suspicious. I am often bemused by market ‘research’ reports which sell for several thousand dollars but present funny-looking numbers and questionable facts amongst the few snippets they give away for free. The latest example is from marketsandmarkets.com, who want your company to pay USD7150 to discover their predictions for the RA market from 2014 to 2019. The report covers all industries, which immediately begs a question of how easy it is to research the extent of ‘revenue assurance’ in banking, healthcare, and logistics… or even what counts as revenue assurance in these contexts. Nevertheless, the report tell us that:

The global revenue assurance market is expected to grow from $ 1.7 Billion in 2014 to $ 2.9 Billion in 2019

So the market is already worth USD1.7bn? Really? I have arguably the most popular website dedicated to revenue assurance, and I can assure you it does not feel like I am working in a USD1.7bn market. But I kept an open mind, and continued to read their press release. After all, it is very possible that when marketsandmarkets.com sized the market, they included revenues from lots of businesses that provide software and services which I would not include in the scope of revenue assurance. And then I noticed this…

The Global Revenue Assurance market consists of large players like Cvidya, Subex, Nec, Accenture, and others – which offer services and solutions in this market. The market has seen these players grab high amount of market share.

Let me pick one of these ‘large players’ and do some quick common sense maths to verify the reports’ claims. For my example, I will work with numbers from cVidya for no other reason than they were first in the list. ***ahem***

We can reasonably estimate that cVidya’s annual revenues are about USD40mn. They are smaller than Subex, a publicly traded company whose numbers are audited, and WeDo, whose reported numbers can be sense-checked by reviewing the performance of their division within their parent group’s accounts. Corroboration that cVidya is smaller than Subex and WeDo is available in the form of other reports from other research firms; for example, Stratecast recently reported that WeDo led competitors with a 14% share of the telco assurance market. But comparing cVidya’s revenues to the total pan-sector assurance market would give USD40mn/USD1.7bn = 2.3% market share. If cVidya has a 2.3% share of a USD1.7bn market, how can this be reconciled with the assertion that they are a “large player” with “a high amount of market share?”

If we assume Stratecast’s numbers are accurate, and use the thumbnail rule that WeDo told Stratecast that their annual revenues are around USD70mn, then that means Stratecast sized the telco assurance market at approximately USD500mn. For marketandmarket.com to have accurately sized the pan-sector assurance market, that would mean the non-telco market must be currently worth USD1.2bn. It then seems odd to me that marketsandmarkets.com start their list of “large players” with cVidya and Subex. Neither of these companies is the current market share leader in telco assurance, and neither firm generates significant revenues outside of telecoms. In fact, WeDo has made much more effort to diversify outside of telcos. And whilst WeDo are pleased with their non-telecoms growth, they still admit that the vast majority of their revenues comes from telco customers.

Not long ago, Subex CEO Surjeet Singh spoke to me about his hopes for his company, saying he wanted to grow Subex revenues to USD100mn within the next few years. But even USD100mn of revenues would only translate into a 5.9% share of what marketsandmarkets.com say is the total value of the pan-sector market.

In short, there is something very wrong with the research of marketsandmarkets.com. Either they have massively exaggerated the size of the pan-sector assurance market, or they have badly miscalculated the revenues of cVidya and Subex, or they have deliberately misrepresented cVidya and Subex as “large players” whilst choosing not to mention much larger players, or there are no large players because there is only a long long list of small players – which begs a question about the coherence of this market. Whatever the truth, it is not worth paying USD7150 to discover where they went wrong.

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Israeli assurance vendor cVidya has appointed a new exec to take responsibility for sales and marketing, though seemingly they have chosen not to make a formal announcement. John Gillespie is their new Executive VP in charge of Global Sales and Business Development; his Linkedin profile had not been updated at the time of writing.

Gillespie is a well-known salesman in the Big Data market. He joins cVidya from mobile analytics firm Zettics. Prior to Zettics he worked for IBM’s Big Data division, and for Netezza, the data warehouse appliance makers who were acquired by IBM in 2010. cVidya knew Gillespie during his Netezza days; the two companies developed an integrated revenue assurance solution which allowed cVidya’s software to run over Netezza’s appliance.

The appointment of an American probably signals a renewed emphasis on raising cVidya’s profile in the US market. Gillespie’s reasons for joining cVidya are less obvious. Zettics was reportedly a growing business. In recent years Zettics has raised new capital which it has used to fund the acquisition of other companies.

Gillespie replaces Amit Daniel, cVidya’s former EVP of Marketing and Business Development. Daniel left during the month of January, and has already taken a new position at Verint, a business which specializes in technology to monitor employee performance. The quiet nature of her departure contrasts with the press release issued to announce her appointment in July 2011, which stated it was cVidya’s long-term strategic goal to grow market share and enter new markets.

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If there’s simboxing in your neighbourhood
Who ya gonna call?

Wampamba!

Organized crime committing telecoms fraud
Who ya gonna call?

Wampamba!

Old buddy Nixon Wampamba is famous for many things: wearing pink designer shirts; being the most-travelled manager in revenue assurance; and waging fierce war against hordes of simbox fraudsters. Simbox fraud often generates headline news in Ghana, as previously reported on talkRA. The Ghanian government wants to crackdown on the crime, because it reduces the tax they collect. Their communications minister even claimed that illegal international bypass is more profitable than the drug trade. On the other hand, Ghanian telcos argue that the blame lies with government, because international call termination rates are set too high. Terminating an international call in Ghana costs USD0.19 per minute, compared to USD0.03 per minute for calls terminated in Nigeria or South Africa. Whilst the topic of simbox fraud is important to Ghana’s economy, the issues are difficult for a layman to understand. So when Ghana’s Joy News TV wanted to present a deep dive explanation of simbox fraud to their viewers, who were they gonna call? Wampamba!

Along with Nixon, the other guests were Kwaku Sakyi Addo, CEO of the Ghana Chamber of Telecommunications and a respected journalist in his homeland, and Kwame Baah-Acheamfour, a Principal Manager at Ghana’s communications regulator. The three discussed the issue of simbox fraud for an hour-long news special. From the very beginning it was clear that everybody looked to Nixon as the real expert on the topic. Though the debate started slowly and politely, it later became heated. Nixon made his views very clear, challenging the regulator to close the arbitrage gap between local and international prices:

Wampamba (to Baah-Acheamfour): You have not disproved the fact that the pricing is the problem. If you look at Ivory Coast, next door to us, they charge [international calls] around 22 US cents, and how much is the cost to call [local] on-net or off-net? 17 cents. The difference is very small, it’s 5 cents.

Baah-Acheamfour: So which approach are you choosing? Do we go the Nigerian way? Or we go the Ivory Coast way, where local calls are as expensive as international calls? Or where international calls are as low as national calls? Which way do you want us to go? Ghana has studied all these markets; it’s not just African markets. We are looking to be a developed country…

Wampamba: But you agree with us it’s a pricing problem. You’re agreeing it’s a pricing problem.

Baah-Acheamfour: I’m not saying it’s a pricing problem.

Wampamba: It is a pricing problem!

Great work, Nixon!

Though the program starts slow, taking time to explain the basics of simbox fraud, it is well worth watching for the final half hour. The participants engage in real debate about the intersection between government, pricing, law, enforcement and assurance. Whilst the focus is on Ghana, the same issues arise in many countries, and the panellists provide plenty of comparisons to other African nations. You can watch the entire episode below.

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The last talkRA poll asked whether you felt telco CEOs understand revenue assurance. Thanks to everyone who responded – and sincere apologies to everyone who wanted to respond but was unable, after I failed to notice that the maximum number of votes had been received! The final results were both fascinating and unexpected:

There was a tie between those who felt CEOs varied in their knowledge, and those who felt it was wrong to demand that CEOs understand RA because the topic is poorly understood in general. I was surprised but pleased by this outcome. To my mind, the result suggests a growing maturity and confidence amongst RA practitioners. We know that RA can seem mysterious to outsiders who are not familiar with its intricate workings. We also appreciate that some CEOs want to acquire a basic grasp of the key points, whilst others do not care.

Nearly a quarter of respondents felt that most modern-day CEOs understood RA. This suggests optimism for the future. This feeling of optimism was underlined by the very limited support for the most cynical options: that CEOs do not engage with the RA team, or that CEOs only care about the money generated by RA.

I was most intrigued by the votes for “CEOs have more important things to worry about”. Though it ultimately only garnered support from 11%, all those votes were received in the first week of the poll, meaning it was the early poll leader. We should not draw inferences from what may have been a statistical quirk, but this makes me wonder if talkRA’s most regular readers have different expectations for CEOs than more casual visitors of this website.

Thanks again for taking part in this poll, which made me rethink the relationship between CEOs and RA teams. And it demonstrated an appetite for opinion polling of RA practitioners, so expect more polls in future.

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The answer to LTT-13 was A = Yes. With relatively new products and service streams like mobile money remittance, there are a whole new set of non-traditional telecoms fraud risks. In summary, there are many types of fraud that can occur in the mobile money remittance domain that could lead to fraudulent transactions that would not be detected by the three controls proposed by the RAFM manager, namely:

  • Handset theft
  • Digital value smurfing
  • Fraudulent credits
  • Identity / Subscription fraud
  • Network employee collusion
  • Bank/Agent employee corruption
  • Mobile malware
  • Social engineering / Impersonation
  • Phishing / Smishing / Vishing
  • SIM swaps
  • Cashing out process.

Congratulations to Arun Rishi Kapoor and Herbert Galiano for providing a correct answer. The winning response came from Daniel Peter in India, with the following explanation:

Yes. It is possible to commit fraud as the mentioned controls — A daily cash-in reconciliation, A daily eWallet reconciliation and A daily balance reconciliation – only checks the completeness of the transactions.

The below list of frauds can still be committed when the mentioned 3 controls are in place:

  • Money Laundering: the process of making criminal assets appear legitimate. For example: proceeds from drug deals/ terrorists appear legitimate hence making the detection of the origin of these criminal money difficult for the law enforcement agencies.  There are a few stages to money laundering — Placement, layering and integration — where black money at first gets placed into an account without arousing suspicion, later moved around from account to account reducing the funds into smaller amounts by using different people disguise its original source, finally the same is put back into the legal financial system and appears to be legitimate funds or assets. Controls are required for these kind of frauds
  • Registration / KYC fraud: Illegitimate customers get to register for MM transactions. Customers can provide fake documents to register for the service or the agent can also fraudulently let an illegitimate customer register
  • Fraud during MM transaction such as unauthorized person receiving the money. This type of fraud is possible when the SMS is possessed by an unauthorized person
  • Agent deducting excess charges – over and above the rate published by the MNO — from the customer, and also paying lesser cash to the customer by claiming commission when they were not supposed to. Agent here takes advantage of consumers’ lack of education and ignorance about MM
  • Not repaying the outstanding amount to the customer on disconnection of service
  • Agents and consumers colluding together to defraud the system. For example: The agent can claim commission from MNO for adding subscribers whereas the added subscriber does not have any intention to avail the service but only to help the agent gain commission
  • Customers can also defraud the agent by obtaining access to an agent’s account and sending SMS messages to initiate cash-out transactions.
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