Well, it is all too clear that despite all the highly encouraging signs from the developing countries revenue losses are continuing to increase over last year due to what Analysys calls "the increasing complexity of new service rollouts and various forms of fraud. There is much to do to plug the leaks from abuses of the revenue process and thereby not only increase revenues and profits but also to enhance the reputation of the developing countries as good places to do business for investors. This year, Subex Azure Ltd, a global provider of Operations Support Systems (OSS) for telecom operators, commissioned Analysys to compile its 2007 Global Operator Attitudes to Revenue Management survey.
Fraud losses grow
Average revenue leakage among global telecom operators increased to 13.6% this year to date, well up from 12.1% in 2006. In broad terms the study cites external fraud, internal fraud and fraud by other operators as the number one factor in operator losses this year. According to results, average fraud losses have grown from 2.9% of revenue last year to 4.5% this year. The study makes no attempt to disguise the effects that the shadow of fraud is casting over telecoms. As if that was not bad enough for the mobile sector, the report comments that in addition mobile operators tend to lose more than other types of operators.
"Interesting trends continue to unravel each year," notes Danny Dicks, Principal Analyst at Analysys. "While Revenue Assurance and improved overall OSS programmes have made great strides within all types and sizes of organisations, the dynamics of the industry are still presenting operators with greater challenges to address. Because of this, revenue assurance is commanding senior-level attention – all the way up to the board level."
Developing regions hit hardest
The Analysys report is based on feedback from almost 100 operators around the world to investigate attitudes to and levels of revenue loss. Other key findings contained in this year's report include variations in findings from different regions. This is usually the time for developed-world operators to blame everything onto newcomers. For instance, MENA region experienced more than 20% losses, and Asia followed close behind at just below 20%. Central and Latin America comes in at more than 15%. Western Europe ranks lowest in losses at about 7%, followed by CEE at 8% and North America at just about the average of 13%. In other words there is little difference between losses in the newly emerging countries of the European continent when compared with the older nations. And North America is no angel! When breaking losses down by operator type, mobile operators continue to lose the most at nearly 14%. Mid-sized operators (100,000 to 1 million subscribers) racking up the most loss at more than 18%. For comparison, the largest operators are losing only (the Analysys word not ours) 6% of revenue per year.
At the planning stage for new products most operators take into account most causes of loss as part of their preparation, although 32% of operators do not use any third party help. The findings show that the operators who use third-party specialists for revenue assurance lose 30% less compared to those who use no external help. In addition to fraud, the three primary sources of revenue leakage cited by respondents are poor processes and procedures, poor systems integration, and problems associated with applying new products and pricing schemes.
New services create greatest losses
The level of revenue loss that operators find "acceptable" has risen this year to 1.8%, from 1.1% in 2006. Operators in CLA reported the highest level of "acceptable" loss at 2%. Significant growth in fraud losses and revenue assurance problems related to the launching of new products and prices has driven the overall increase in losses. "One interesting factor uncovered in this year's report is the fact that revenue management challenge posed by next generation network technology and applications is a key concern among almost all operators," explained Sanjeev Gadre,VP Marketing, Subex Azure. "This, combined with increasing merger and acquisition activity within the industry, makes it highly imperative for operators to centrally manage and address the revenue management challenges. More than ever, revenue management needs to become a high-level strategic initiative in order for operators not only to successfully compete in the changing telecom marketplace, but to sustain and, more importantly, grow their current customer base. Those that choose not to will fall prey to more forms of revenue loss and the threat of more efficient strategic competitors."
