By James Stewart, Fraud Product Manager
Machine-to-Machine (M2M) communications services differ in various ways from conventional Business to Consumer (B2C) subscriber-based services, nevertheless many of the considerations associated with conducting business in this sector remain the same. Operators of M2M services have to consider the potential for abuse and misuse of M2M SIMs, including fraudulent usage. These issues can include simple device tampering, but also extend to more sophisticated instances of fraud and misuse.
Analyst firm Berg Insight forecasts that the total number of cellular M2M connections, taking replacement business into consideration, is forecast to grow at CAGR ~27% between 2011 and 2016 to reach 359 million by the end of 2016 The potential of this M2M service opportunity needs to be matched by a focus on assuring M2M revenue.
Initially, M2M services involved using devices that were provisioned using the same standard SIMs as those used for consumer services. This means that SIMs can quite easily be removed from the M2M device and used in other devices. The solution to this issue is a move towards the use of embedded SIMs. As with many technology advances, this solves one problem but creates a new one; for most devices the device IMSI is programmed into the SIM card at the time of manufacture. M2M services are becoming increasingly international, not just for consumer devices, such as eReaders, but also for transportation, fleet management and international logistics applications. These sort of applications require support for roaming capabilities for M2M SIMs, creating potential security and revenue assurance process requirements.
Protecting an M2M service business from fraud, while assuring M2M revenue, presents a unique set of challenges. The older slotted SIM based devices are of course susceptible to SIM card theft, while host machines can be targeted by hackers going through individual devices. Human error in provisioning can also be an issue, leading to services not being provisioned or billed properly. Such issues can lead to significant revenue leakage for M2M service providers. M2M fraud protection requires multi-level protection, helping service providers to identify suspicious SIM activity very quickly, so that they can take action to intervene and block a particular SIM. From a revenue assurance perspective there is also a requirement to be able to analyse data and revenue flows to ensure that all services are being billed correctly and that no incorrect or fraudulent provisioning has taken place. By combining fraud management and revenue assurance disciplines, considerable savings can be achieved.
A comprehensive and customised approach is required towards M2M revenue protection, designed to align with the specific conditions of each of the end markets served with an M2M service. Such a customised approach helps service providers assure M2M revenue and reduce losses from fraud and malicious activity on their networks. In what is a relatively low ARPU and low margin business, this is important to help protect against losses from fraud as well as other forms of revenue leakage, to ensure an efficient and profitable M2M business can be developed and sustained.
 Berg Insight report ‘The Global Wireless M2M Market’ (pub 2012)