Reclaiming Revenue from Network Fraud

Mobile network operators run some of the most critical infrastructure in modern society, contributing $6.5tn to the global economy according to the GSMA. Yet a persistent share of the revenue generated by telecom infrastructure never reaches the operator’s books. Telecom fraud is a large and growing drain on operator revenue. The Communications Fraud Control Association estimates that telecom fraud cost the industry roughly USD 38.95 billion in 2023, and in operator conversations the revenue lost specifically to data charging bypass has been put as high as one to two percent of total revenue. At the scale of a national operator, a single percentage point is tens of millions of dollars a year.

The mobile network operator sector has struggled to increase revenue and profit as rapidly as other technology-driven industries. Despite substantial investments in newer network equipment, growth has not materialized. Instead, the average revenue per user (ARPU) has decreased over the past two decades. In such a market environment, losing 2-3% of revenue to fraud, which is a figure supported by most estimates, is not sustainable.

Fraud takes many forms across all three main revenue-generating areas of mobile communication: data, voice, and messaging. Overall, we can classify fraud into two main categories: money flowing out that should never have been paid, and money never collected that should have been earned. Both are revenue leakage. In the first category, money out, the operator actively disburses cash to a fraudster on the basis of traffic that is fraudulent, inflated, or entirely manufactured. The money leaves the business. Because settlement happens after the fact and frequently across borders, recovery once the cash has gone is difficult or impossible.

In the money uncollected category, the operator delivers a real service, but the corresponding charge is bypassed, misrated, or routed around. No bill is raised, or it is raised at a fraction of the correct value. The operator absorbs the network cost and the opportunity cost, while a third party captures the margin.

Running underneath all three traffic domains — data, voice, and messaging — is a single theme: the operator’s ability to secure, optimize, and monetize its network depends on seeing and understanding its own traffic in real time and acting on it. Encryption and interconnect complexity have eroded that visibility, making its restoration the foundation of revenue protection.

This guide highlights the most harmful type of fraud causing direct losses to operators in each domain. User-targeted scams such as smishing and vishing fall outside its scope. Two of the highlighted fraud categories are money never collected: data charging bypass and grey routes. One is money out: international revenue share fraud. The guide also addresses the challenges of detecting and combating fraud across all domains, and suggests strategies to plug the leaks.