Mobile

Mobile operators lost $58B in 2011 from faulty billing systems

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Mobile operators across the globe lost more than $58 billion last year because of deficient billing systems, according to a new study from Juniper Research.

As carriers now support a wider array of devices than ever before, including iPhones, Android devices, BlackBerrys, and Windows Phones, and manage a crazy amount of traffic from these devices, the billing systems carriers use can’t keep up. With so many people with devices in hand and so many ways to process transactions, the scale of loss for operators has increased because there’s a much greater opportunity for fraudulent activity and bad debt.

“The systems in place now can’t identify accurately how this traffic is being processed,” study co-author Windsor Holden told VentureBeat.

The $58 billion in revenue lost last year equals out to more than 6 percent of the industry’s total revenue. Under a “nightmare scenario” presented by the report, in which operators fail to implement any serious reforms during the next five years, the losses could rise as much as five times by 2016.

So what can carriers do to help remedy this problem? Juniper says they need to implement automated system solutions to “minimize the outflows resulting from next-generation connectivity.” Carriers also need to create a single repository of data to better track customer activity and integrate applications that can better track data on devices. With key investments, the report says that leakage will decline to 4 percent of revenue in 2016 from today’s 6 percent.

Holden suggests that as the mobile industry moves aggressively to deploy 4G LTE networks, carriers risk undermining revenue from value-added services by not investing in solutions to track data in real-time. However, regardless of how many reforms are put in place, revenue leakages will almost certainly continue to be higher in Africa and the Middle East more so that the rest of the world.

“In emerging markets, the emphasis has been on rapid expansion and not on things like preventing leakage,” Holden said.

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