In the past 30 years, telecommunication service providers have evolved dramatically from analogue fixed-line telephony to digital quad+ play mobile communication services offering innovative disruptive services. This brought competition as well as inevitably consolidation through this period.
It was no different for the risk management software vendors that supported these telecommunication businesses, consolidation has continuously occurred over the last 30 years culminating with the recent WeDo Technologies and MDS Global acquisitions. In July 2019, Mobileum acquired WeDo Technologies, the leading fraud and business assurance solution provider had dominated the telecom risk management market for many years, headed up by the charismatic Rui Paiva. WeDo Technologies was not alone, not long after, another acquisition announcement, this time MDS Global purchased by Volaris Group.
But let’s start by looking way back, 30 years ago to 1990…
Some of the founding companies in telecommunication risk management software/hardware offerings started before 1990, including the likes of Roscom, Equinox, and Sigos. Thirty years later, these businesses are still going strong. Equinox founded in 1986 has worked with over 300 businesses in the past 30+ years with many of the North American carriers using or have used Equinox. Roscom with its grounding in engineering measurement has been offering test and measurement offerings to the telecommunications industry since 1982 from its base in the North of England. Sigos is now offering end to end quality of service (QoS) and quality of experience (QoE) as well as their traditional fraud management solutions in nearly 150 countries.
As well as the vendors and service providers, organisations started to pop up, CFCA – Communications Fraud Control Association was founded in North America in 1985, recognising a collaborative approach was required to support carriers in mitigating fraud and risk. Today it is still hosting events and seminars and providing risk management insights to the telecoms industry.
It was in the late 1990’s when large telecom organisations such as Nortel, BT, Deutsche Telecom, General Telephone & Electronics Corporation which had initially developed their own internal FMS systems to support their customers spun of their proprietary technology out. Cerebrus Solutions was spun out of Nortel in 2001 focused on fraud management. Cerebrus was eventually merged with Neural Technologies (founded in 1990) who shared common investors in 2005.
Azure was spun out of BT with its own fraud management technology in 2003 (the FMS technology can be traced back to BT in the early 1990’s). The next year it purchased what probably is regarded as one of the first cost and revenue assurance product companies – Connexn Technologies, based in the US.
During the decade between 1990 and 2000, fraud management was the major business requirement, fraud was a recognised revenue loss for telecommunication providers, as fixed and mobile businesses grew and expanded their businesses. North America, saw the deregulation of the telecoms industry and the former ‘Baby Bells’ found competition with an explosion of Competitive local exchange carriers (CLECs).
In the latter half of the decade, the recognised ‘big 4’ – Subex, Ectel, Neural Technologies and Compaq, battled it out for fraud management solution deployment opportunities around the world.
2001 saw the ‘dot.com bubble’ burst in spectacular style, the fantastic growth of telecom service providers and dot.com companies running of the internet, saw corporate values dramatically realigned, the days of corporate values based on subscriber acquisition suddenly focused on margins and probability.
Subex founded in 1992 purchased Alcatel’s and Lightbridge’ fraud management assets ten years later and increased their customer footprint and went onto acquire BT’s spun out fraud management technology, Azure Solutions in 2006. Subex overstretched themselves in 2007, when it acquired Syndesis in an all-cash deal worth $165 million, for which it had to leverage itself. Unfortunately, the acquisition coincided with a global stock markets collapse in the same year. It took another ten years to be debt free. Today Subex has widened its focus to IoT and security as well as incubating a separate company called CrunchMetrics focused on anomaly detection with AI and machine learning.
cVidya Networks Inc. was acquired by Amdocs in 2015 and has a long history, founded in 1990 in Israel as ECI Telesystems Ltd, it changed its name to ECtel Ltd. in 1998. In 2010, ECtel, Ltd. operated as a subsidiary of cVidya Networks Inc. In early 2016 Amdocs announced the purchase of cVidya and it has since been absorbed into this $4.0 billion turnover software and services company.
Hewlett Packard’s (HP) merger with Compaq in 2002 meant that Compaq’s fraud management system which had a widely recognised acronym of ‘CFMS’ and a substantial global footprint in particular Latin America, would eventually fall under the HP brand and continued in the telecom fraud management space for many years, only really losing impetus in the last decade.
The ten years before the beginning of this century, saw the founding of several industry forums and bodies joining CFCA, including the GSMA Fraud Forum, TM Forum and the UK Fraud Forum (TUFF). The need to work collaboratively and share ideas and insights to fight fraud was recognised.
In the early part of this century, people did not just talk about fraud, departments started to talk about revenue assurance. The ‘big 4’ became the ‘big 5’ and every Request for Quotation, Information and Proposal that involved telecom fraud management or revenue assurance now saw Wedo Technologies, Subex, Ectel, Neural Technologies and HP regularly battle it out.
Wedo Technologies founded in 2001 acquired Cape Technologies (founded in 2000) in 2007 to strengthen their RA offerings and Praesidium Services (founded in 1996) in the same year to strengthen their fraud management capabilities. As part of the Sonae Group, and the Sonaecom business group and ever-increasing customer acquisitions and a strong marketing strategy, Wedo Technologies went from strength to strength acquiring over 200 customers with a workforce of over 600 people in all continents.
During 2005 and 2010, the emerging term revenue assurance become more prominent, with every telecom service provider having a revenue assurance function in some form. Fraud and revenue assurance departments slowly and steadily started to merge and consolidate responsibility, people and processes. This in parallel drove the risk management vendors to look at integrating their own fraud and RA offerings into a combined solution.
Of course, apart from the ‘big 5’ there were a number of vendors looking to compete in the same playing field with the likes of Connectiva and Xintec showing their mettle and increased their presence with wins with tier 2 and 3 service providers in Africa and Middle East.
There were also start-ups, niche players and small businesses that competed for the risk management business; some focused on specific issues such as roaming fraud, simboxing, PABX abuse, etc. Companies like Revector who joined Sigos and Roscom in offering test call generation (TCG) services, reached well over a hundred carriers at their peak to detect bypass and simbox fraud. Revector who one of the first to foray into sim box detection was joined by the likes of Meucci, Bluegem, Araxxe and latterly in the last decade Latro and Fraudbuster.
Revector once a big fish in a small pond became a small fish in a big pond. Today with CLI Spoofing and security/proximity solutions, Revector has diversified their product portfolio and customers to include government agencies and regulators. Latro is looking at revenue assurance and IoT and broadening their offerings. Sigos are hard at work on building a M-IoT testing network across the globe. Blugem has focused on quality of service. Sigos acquired Meucci in 2014 to consolidate the market. Recent start-up CallTic, founded in 2017 by ex Meucci founder, successfully achieved a €1.5 million series A funding in 2020.
We also saw some changes in the industry forums with Risk & Assurance Group (RAG) being founded in London by Cartesian. The GSMA Fraud Forum after twenty years supporting the industry merged with the GSMA Security Group to become the GSMA Fraud and Security Group (FASG). Today the RAG has extended its reach from purely a UK based organisation with events hosted around the world, focusing on both fraud and revenue assurance.
Today, in 2020 we are left with only Subex and Neural Technologies from the original ‘big 5’ companies. Subex as previously mentioned has had its issues, with atmospheric expansion and a number of risky acquisitions that stretched themselves a little too far financially, today Subex with its large customer base has started to focus on risk management in the IoT and Smart City arena. Subex Secure IoT security solution leverages a honeypot network that combines physical devices and device emulations to generate IoT / ICS signatures. The honeypot, a computer security mechanism set to detect, deflect, or, in some manner, counteract attempts at unauthorized use of information systems.
Neural Technologies who have predominantly grown organically with a couple of acquisitions of distressed assets, but have never really competed with the revenues and customer base of Subex or WeDo Technologies and today are focusing their intentions on data integration more than risk management. A very late adopter of revenue assurance capabilities, their customer base is predominantly fraud management installations. Today we see the move to a solely IP based infrastructure, the CSP becoming the utility provider with the likes of Over The Top providers (OTT) like Netflix, Facebook, etc. reaping the rewards on top of their considerable investments.
5G deployments are becoming more and more prevalent around the world, Internet of Things (IoT) after a false start has grown steadily, virtual sims/eSIMs, connectivity will flourish as 5G networks steadily launch. 5G infrastructures will be different from the more traditional past generations of telecommunications. Voice will be over IP and a by-product; data will be king.
Who will be responsible for fraud in this new paradigm?
What will the revenue assurance issues be?
Will security become a necessity with all fraud and assurance providers?
What is the future of Fraud,
revenue or is it business assurance?
Will there be further consolidation in the industry?
Will new players appear, will legacy providers disappear?
We are seeing different companies attending, sponsoring industry forums, like Teoco, Neustar, Mavenir, Tomia, Threatmetrix who have expanded their offerings through acquisition and innovation.
Niche players, new and old such as Symmetry Solutions, GBSD and start-ups like Orillion are finding customers looking for quick and efficient deployments to show tangible benefits and value. Are the days of large ‘do it all’ solutions that can do everything except make the tea, but cannot be deployed quick enough to meet the fast-paced changes in the telecoms industry?
Could competition and consolidation turn to consortium and collaboration?
Will collaboration, consortiums be a common theme to ensure vendors can provide a comprehensive offering to meet the needs of the telecommunications service providers tomorrow and in the future?
Thirty years have flown by, there have been significant changes within the industry, dramatic changes in technologies and bigger expectations from the end-user.
Today we see consolidation within the industry, what will occur in the next year, next 5 years, the next decade, the next thirty years?