Unfortunately, these incidents are not uncommon. In fact, these companies were lucky to have someone catch the fraud in a matter of hours. Most enterprises who are victims of VoIP fraud don’t ever realize that they have been hacked, and the problem isn’t caught by VoIP providers sometimes for days. According to Jim Dalton, CEO of leading VoIP management software provider TransNexus, a single fraud event can cost a VoIP provider anywhere from $5,000 to upwards of $50,000. Revector, a U.K.-based fraud management company, recently reported that some telcos are losing up to $150 million per year in fraudulent calls. The ACCC reports that just in Australia, fraud losses have increased a stunning 35% from 2010.

Why are VoIP providers suddenly being targeted for fraud? There are several contributing factors. First, hackers have become more sophisticated as the VoIP industry has grown into a major player in the telecommunications field. Rather than breaking into trunk lines, hackers are targeting individual customers’ PBXs. Once they gain access to a PBX, they begin calling international premium-rate services to generate revenue.

Hackers take advantage of lax international communications standards and regulation. In many third world countries, it is relatively easy to set up a conference server and strike a deal with the local telephone company. Because VoIP does not require much specialized equipment, there is little barrier to entry for a potential scammer.
Finally, scammers have learned that there is often little to no security oversight for many VoIP customers. “The fraud occurs Friday and they don’t know it until Monday, when they come in and see a million calls to Ivory Coast,” or some other location, Dalton said. An alarming number of companies never even realize that they have been the victims of VoIP fraud until they see the bills. Few enterprises are willing to pay for the fraudulent charges, so SIP providers are left to pay for the damage.

In a widely publicized incident last fall, the FBI arrested four hackers in the Philippines in connection with an organized attack on the clients of US telecom giant AT&T. According to the New York Times, the group’s efforts cost AT&T over two million dollars – charges that the telecoms giant likely passed onto the smaller provider telcos.
New solutions are being developed to stop VoIP fraud. TransNexus has pioneered fraud detection software for VoIP in the past year. In January, TransNexus announced the addition of a fraud detection module in its flagship NexOSS product, already an industry leading solution for least cost and quality of service routing. This module works by detecting spikes in customers’ call traffic, and automatically blacklisting suspicious routes – temporarily suspending them from the routing table. “We live and die by our fraud detection reports” said Jay Cox, Director of Telecommunications Management at Appia Communications, a recent NexOSS customer. Since implementing the new system, Appia has not experienced a single fraud event.

TransNexus unveiled a new version of its popular SDReporter product with new fraud detection features at the COMPTEL PLUS Spring 2012 Convention & EXPO, held in San Francisco, CA. SDReporter is a comprehensive reporting package designed to analyze quality of service (QoS) statistics and Call Detail Records (CDRs) reported by an enterprises’ SBC or PBX. With the latest release, SDReporter will also be able to recognize potential fraud events in near-real time, and send automatic email or SNMP alerts, stopping potential scammers in their tracks.

SDReporter is a comprehensive reporting package designed to analyze quality of service (QoS) statistics and Call Detail Records (CDRs) reported by an enterprises’ SBC or PBX. SDReporter already monitors 24 different call quality statistics (including packet latency, packet jitter, packet loss) and can detect and isolate call fidelity quality of service issues in the source network or destination network or based on end to end packet flow received by the calling and called party. With the latest release, SDReporter will also be able to recognize potential fraud events in near-real time, and send automatic email or SNMP alerts, stopping potential scammers in their tracks.

SDReporter works with the Acme Packet Net-Net Session Director SBC by controlling service provider access and interconnect borders, as well as the routing of sessions between service providers. Acme Packet Vice President of Business Development, Mark Vella, explains, “As VoIP traffic enters the service provider network, the SBC aggregates statistics and dial code information from each endpoint and sends the information to SDReporter for real-time analysis. If the information exceeds configured thresholds or violates a policy, SDReporter generates a “trigger” for the SBC, which in turn will block the call or caller who is in violation.”

In January, TransNexus announced the addition of a fraud detection module in its flagship NexOSS product, already an industry leading solution for least cost and quality of service routing. “We live and die by our fraud detection reports” said Jay Cox, Director of Telecommunications Management at Appia Communications, a recent NexOSS customer. Since implementing the new system, Appia has not experienced a single fraud event.

SDReporter software is available for free download from http://www.transnexus.com/index.php/sd-reporter. The free version may be used for evaluation or commercial use for networks with 50 simultaneous calls or less.

Session Border Controller and Session Delivery Network Market Growth

Two of the primary growth areas for the SBC market are the enterprise and mobile segments. Enterprises often face incompatibility, security, and quality challenges due to complex, multivendor networks with several generations of PBXs using unique protocols and configurations. According to Mark Vella, “IT departments are looking for ways to consolidate their networks, improve employee productivity, increase customer satisfaction, and lower costs. Some IT department heads are looking to simplify their networks, which can result in multivendor interoperability, regulatory compliance, and improved customer experience. By normalizing the systems over an IP transport, IT departments can achieve these goals with interoperable, secure, and reliable real-time communications over IP.” Today, these enterprises can utilize a simplified, interoperable network with unified communications for increasing productivity, advanced customer service through real-time, multimedia communications, and cost savings by transitioning away from traditional TDM voice to voice over IP.

Similarly, mobile communications are becoming more complex as smartphones become more sophisticated. As mobile phones improve, mobile broadband is more capable of handling richer applications. Next, when voice moves to the service provider’s LTE, 4G, or mobile WiMAX networks, the companies providing IP connections will want to build out the same functionalities as Internet services like Facebook; where for example, you can accept or reject phone calls based on advanced phonebook features. Forward-thinking service providers are moving towards services like RCS and RCS-e with SIP-based communications over IP Multimedia Subsystem (IMS). “As IMS deployments grow, Acme Packet session delivery networks will enable service providers with a range of products built for increasing revenue through interoperable, reliable, and secure next-generation communications to mobile subscribers,” said Vella.

SIP Trunking and Acme Packet

“SIP trunking is a win-win for enterprises and service providers alike,” said Vella. “With SIP trunking, enterprises realize cost savings through consolidation of their real-time communications environments to SIP. At the same time, new applications made possible through the use of SIP are revolutionizing internal business processes, B2B interaction and customer service. The movement by enterprises to SIP-based communications translates to obvious benefits for service providers who offer SIP trunking services.” Beyond basic trunking for PSTN-terminated and originated calls, SIP trunks sold to enterprises create new revenue streams for SIP trunking providers as well as increased customer “stickiness” through value-add services such as hosted video conferencing and IP toll-free.
In spite of these very real benefits, however, the transition to SIP trunking carries a number of challenges, particularly in the areas of security, interoperability and reliability. Fortunately, SBCs address these challenges for both service providers and enterprises. By solving the issues inherent in SIP trunking, Acme Packet is helping service providers move confidently to transition customers from traditional TDM trunks to next-generation SIP trunks.

Fraud Prevention and Detection with Acme Packet and TransNexus

Fraud detection and prevention is another major issue facing communications service providers. A recent report from watchdog group the Australian Competition and Consumer Commission (ACCC) detailed over 83,000 fraud complaints in 2011, nearly double the number of complaints from 2010, and quadruple the number from 2009. Of those complaints, the ACCC estimates that nearly 20% involved the hacking and/or fraudulent use of telecommunications services, a startling number for VoIP service providers.

This month, TransNexus will be releasing version three of their popular SDReporter product for Acme Packet SBCs with new fraud detection features. SDReporter works with the Acme Packet Net-Net Session Director SBC by controlling service provider access and interconnect borders, as well as the routing of sessions between service providers. With the new fraud prevention features included with SDReporter V3 from TransNexus, service providers stand to gain new levels of protection for themselves as well as their customers and VoIP subscribers.

Acme Packet’s Mark Vella explains, “As VoIP traffic enters the service provider network, the SBC aggregates statistics and dial code information from each endpoint and sends the information to SDReporter for real-time analysis. If the information exceeds configured thresholds or violates a policy, SDReporter generates a “trigger” for the SBC, which in turn will block the call or caller who is in violation.” The combined TransNexus/Acme Packet solution can save service providers up to $150 million per year in fraudulent calls, a number that was recently cited by Revector, a U.K.-based fraud management company.

Acme Packet Interconnect 2012

Next month, Acme Packet will host its eight annual worldwide user conference. Acme Packet Interconnect will be held on May 16-18 at the Eden Roc Renaissance Miami Beach in Miami, Florida. Interconnect 2012’s rich agenda focuses on the latest business and technical trends, such as unified communications and SBCs, IMS and RCS, security, session delivery networks, mobile LTE, and the evolution of the IP contact center. Live product demonstrations throughout the event and discussions with Acme Packet engineers, product specialists, and executives make Interconnect 2012 a unique opportunity to build relationships and share the value of end-to-end IP communications.

Speakers and panel discussions will focus on the evolution of IP communications technologies for fixed line, mobile, and the enterprise. The sessions include presentations, debates and interactive panel discussions from customers, technology ecosystem partners, and Acme Packet executives. Thought leaders will discuss industry best practices and the future of interactive IP communications.

So if HD voice is so great and can generate longer calls that will increase revenue, why do not service providers offer HD voice today?  The problem is because we are still burdened by the legacy Pubic Switched Telephone Network (PSTN) that will never support HD voice.  If any leg of an HD voice call touches the PSTN, its HD voice quality is reduced to standard phone quality.  Today, HD voice calls are limited to single VoIP networks, such as Skype to Skype calls or calls with in a single enterprise or service provider IP network.

A number of efforts have been made to enable HD voice as a service offering that can be used by any person with a IP phone.  The challenge is enabling end to end IP interconnection between different service networks so HD voice quality can be transmitted.  These efforts have been led by businesses with the hope of becoming the single interconnect solution for all HD voice calls.  It would be a great business, but all these initiatives have failed because it concentrates too much business leverage to the operator who enables the end to end HD voice calls.  BT is joing the ranks of those who want to enable the benefits of HD voice.  The BT offer is described in the BT_High_Definition Voice_White_Paper.  It is a well written white paper, but the proposal to enable ubiquitous HD voice service will probably languish like all the others.

Global HD voice service does require a centralized party to provide routing and service discovery among HD voice enabled networks.  But the central party must be non-threatening to service providers.  It is a job that could never be fulfilled by a telecom operator.  The banking industry had a similar networking challenge 40 years ago.  They solved the problem in 1973 through a cooperative business model and created Society for Worldwide Interbank Financial Telecommunication (SWIFT).  Since SWIFT is owned by the banks it cannot be a threat.  Any profits earned by SWIFT are paid as dividends back to the member banks.  The SWIFT model may be the solution the telecom industry needs to unlock the promise of full HD voice and other IP enabled services such as video calls.

Unfortunately, these incidents are all too common today, and most aren’t caught right away. An average single fraud incident can cost anywhere from $5,000 to $50,000. Learn more about how TransNexus can help with fraud detection solutions.

This year, TransNexus is giving away five guest passes to one of the top communications conferences of the year – COMPTEL PLUS Sping 2012 Convention & EXPO! To enter, simply complete the survey on our website and five lucky participants will be selected to attend this outstanding conference compliments of TransNexus.

*Guest passes are valid for both Monday, April 16, and Tuesday, April 17 for exhibit hall entrance only. Deadline for entry is April 5th. Winners will be announced April 6th. Official Rules

In 1999, TransNexus became the first company to offer secure peer to peer VoIP clearinghouse services. Its ClearIP ® service operated as trusted certificate authority for secure routing authorization and accounting of direct VoIP peering among Internet Telephony Service Providers. In 2001, in response to encouragement from major customers, TransNexus changed its business model from a service provider to a developer of software products for wholesale VoIP carriers.

As a software development company, TransNexus is focused on delivering innovative new features to the rapidly changing IP communications market. “Customers found TransNexus because they needed solutions for their VoIP network that did not exist,” said Jim Dalton, CEO and founder of TransNexus. “Keeping up with new customer requirements is our biggest challenge and the best part of our job.” As an innovator in the field of VoIP peering, TransNexus has been awarded fourteen patents for unique features offered by the TransNexus software.

Dalton attributes his company’s longstanding success to a combination of innovation and customer service. According to Dalton, “Customer service is our first business goal. We start every business relationship with a free evaluation trial that includes solution design, implementation and training. We want our customers fully satisfied with the TransNexus solution in production before they have to commit to purchase.”

Going forward, TransNexus will continue to focus on bringing new VoIP solutions to the market. Recent developments include VoIP fraud detection, Quality of Service routing and alerts, and an upcoming new release of the freely available OSPrey-32 routing server. “We think the industry is on the verge of creating new business models that will drive adoption of fresh services, such as high definition audio and video services,” said Dalton. “We are eager to provide the software that will enable those new business models.”

About TransNexus
TransNexus is a software development company specializing in applications for managing wholesale VoIP networks. Important carrier features offered by TransNexus are dynamic least cost routing and quality of service routing, number portability, fraud detection, profitability analysis and wholesale billing. TransNexus is located in Atlanta, Georgia and is a privately held Delaware C corporation. For more information, visit http://www.transnexus.com.
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