Mobile operators lose millions to SIM boxes

January 12th, 2007, 17:41 Posted By: wraggster

via register

If you're getting poor quality on calls to mobile phones at home or abroad, it's probably because of the operator's poor business strategy, not the quality of its wireless network.

That's according to Conrad Tuytte, the CEO of network testing specialist Meucci Solutions. He claimed that mobile operators across Europe could be losing call revenue worth millions - and earning themselves an undeserved reputation for poor line quality into the bargain - because they insist on setting their interconnect fees too high.

"A big part of the problem is mobile operators are charging too much for connections from other networks," he said. "They concentrate on offering cheap on-net calls instead - including free minutes, or in some countries, flat rate voice calls - so clever people use those to bypass the interconnect fees."

They do this using devices called SIM boxes, or GSM gateways - essentially two phones on different networks, rigged so that a call arriving on one is routed out again on the other. To the networks involved - which can be mobile or fixed - each call appears to start and end on its own network, so no interconnect fee is payable.

Tuytte said that Meucci detected 50,000 SIM boxes around Europe last year, and claimed that each box could represent as much as €3500 in lost interconnect revenue. On some mobile networks, calls through SIM boxes could be as much as three percent of the total traffic, he added.

These gateways are run by third-party carriers who sell their services on to mobile and fixed line operators, offering them connections to other networks for less than the usual interconnect fee.

"Most of them are poor line quality - you have a large concentration of modems and SIM cards in one location, and the networks aren't designed to handle that, plus with a SIM box you never get caller-ID," Tuytte said.

Other uses of the technology include adding a SIM box to a PBX or VOIP system to cut the cost of calling out to mobiles. This presents less of a quality issue because it's less of a concentration of lines and SIMs, Tuytte claimed.

Belgium-based Meucci detects SIM boxes using its own SIM-equipped probes which it connects to the various telcos in each country. These continually dial each other and measure the call quality to determine how the call was delivered.

It's not the only way to detect SIM boxes, though. Others on the trail include US company Sevis Systems, which analyses network usage data to detect SIM boxes via on their characteristic usage patterns.

Tuytte said that SIM boxes are legal in most (though not all) countries - they are legal in the UK for one's own use, but not for providing commercial services, for example - so they are really a business issue for the mobile operators which they can best deal with by cutting their interconnect rates to more realistic levels.

"There is potentially a business deal in this - the mobile operators need to make a deal, or call the other network and offer them a better rate," he said.

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