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Dmitry Sumin: Fraud, Risks and Security in Telecoms Today

STIR/SHAKEN offers no protection from fraud schemes besides robocalls and caller ID spoofing.

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The author of this Expert Opinion is Dmitry Sumin, head of products at the AB Handshake Corporation

Telecommunications has always been an economic force on all sectors. It allows us to remain in contact and exchange information with each other from anywhere in the world, strengthening our existing bonds and creating new business opportunities.

The development of this industry is dictated by technological innovation and market changes. It offers steadily rising revenues for those who have adapted along with it.

In a similar fashion, fraud schemes also evolve, capitalizing on technological advancements.

For example, according to some researchers, subscriber/identity  theft was prevalent in 2008 and 2011, but disappeared from the top 5 threats in 2013, 2015, and 2017. Instead, from 2011 to 2017, Interconnect Bypass fraud and International Revenue Share Fraud took top spots.

By 2021, the Communications Fraud Control Association reported that caller ID Spoofing, Wangiri, SMS Phishing or Pharming, Subscription Fraud and PBX Hacking as primary threats. Robocalls, one of the most notorious fraud schemes of the day, occupied tenth place in 2021.

While in some countries ID theft was a top cyber telecom crime of 2011, it’s on the rise in other countries only now. The industry has always faced new, emerging threats.

No one would have thought this sector might face today’s level and variety of fraud. The complexity of the problem is multifold. It’s of a global scale and overwhelming volume. It poses reputational and financial risks for telcos. It threatens the wallets of unwitting end-users. And there is an ongoing social dilemma regarding how to stop it.

Telecom fraud is no easy problem to solve. It requires cooperation between multiple parties, including governments, tech companies, and service providers.

International fight against fraud

Of all the fraud tactics, they all share one goal – stealing profits. Their targets are telcos, enterprises and end-users and they use various methods to achieve their goal.

Today, there are organizations involved in fighting fraud, bringing the agenda to government officials – bodies specifically designed to fight telecom fraud. Of the countries leading this movement are the United States and the United Kingdom. Other geographical regions have followed some protocols initiated by these states, with modifications to the local rules.

The USA made a significant step by introducing a structural, mandatory approach to fighting fraud when they passed the TRACED Act in 2019. The Traced Act imposed rules for large carriers to adopt the STIR/SHAKEN framework by June 30, 2021, and for small to mid-size carriers to complete adoption by 2023.

STIR/SHAKEN is a broad protocol for attesting the source of incoming calls, helping identify robocalls.

The U.S. government decided to take action, as robocalls have become a top threat in recent years. The new framework certainly helps the industry create a better, more regulated, organized reaction to fraud. Unfortunately, it offers no protection from fraud schemes besides robocalls and caller ID spoofing.

Meanwhile, other countries and telcos located internationally have adopted this framework too.

Such unification certainly helps in the fight against telecom fraud and should be viewed as a key step towards entirely eliminating this problem.

This threat, however, requires a much more nuanced response. The market consists of many international and national telcos involved in transit, termination, and other service provision. With the rise of fraud, new telecom companies have emerged. These are companies with one mission – to eliminate telecom fraud. This niche is relatively new to the telecommunications industry and exists only for fraud prevention.

Carriers often develop their own in-house solutions to protect their traffic and subscribers. However, the technology developed by companies focused on fraud prevention offer a much-needed, game-changing approach.

And if the past is any indication of the future, then fraudsters will continue evolving.

When will the fight end?

For quicker results and greater progress in the fight against fraud, all parties in this sector must continue exchanging the latest industry insights, forming knowledge-sharing communities and offering joint solutions, when possible. Newly emerging technology and initiatives in this field are helping establish a new set of global standards in fraud prevention among telcos.

New companies focusing explicitly on fraud-prevention are more technologically advanced, and their solutions deserve close attention. These innovations stop fraud and related losses in real time. They also guarantee protection from future, unprecedented, fraud manifestations we’ve yet to face.

The industry has changed. Its architecture involves one more layer – an anti-fraud solution that can save brand reputations and revenue loss and stop crime on your networks.

Dmitry Sumin is Head of Products at the AB Handshake Corporation. A graduate of the Moscow State University, he has more than 15 years’ experience in international roaming, interconnect and fraud management. He has worked for both vendors and network operators in the MVNO and telecommunications market. This piece is exclusive to Broadband Breakfast.

Broadband Breakfast accepts commentary from informed observers of the broadband scene. Please send pieces to commentary@breakfast.media. The views reflected in Expert Opinion pieces do not necessarily reflect the views of Broadband Breakfast and Breakfast Media LLC.

Broadband Breakfast is a decade-old news organization based in Washington that is building a community of interest around broadband policy and internet technology, with a particular focus on better broadband infrastructure, the politics of privacy and the regulation of social media. Learn more about Broadband Breakfast.

Broadband's Impact

Lindsay Mark Lewis: As Inflation Spiked, Broadband is ‘The Dog That Didn’t Bark’

Why have internet prices remained constant while demand surges? It all boils down to investment.

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The author of this Expert Opinion is Lindsay Mark Lewis, executive director of the Progressive Policy Institute.

There are many lessons to be learned from last year’s midterms, but Democrats should not take the results as some broad endorsement of the economic status quo. Midterm voters identified inflation as the most important issue driving their votes. And while the latest Labor Department data shows the producer price index decreasing by 0.1% in February, prices remain 4.6% higher than a year ago, which means lawmakers still have work to do to bring inflation under control.

And as they search for ideas, they may want to examine the dog that didn’t bark – in particular, the one sector of the economy that has been an interesting counternarrative to the otherwise troubling inflation story.

Home internet service is one of the few major living costs that isn’t skyrocketing. In fact, the most popular broadband speed tier one year ago actually costs 15% less today, on average.

This success story – and the bipartisan policies behind it – offers important lessons.

Remarkably, broadband prices are declining even as demand surges. The pandemic made home internet service more essential than ever for education, job opportunities and health care – all driving internet traffic 25% to 50% above pre-pandemic levels.

So why have internet prices remained constant – even declined by some measures – while demand surges? In short, it all boils down to investment.

When the pandemic cratered economic activity in the spring of 2020, executives in many industries – from lumber to oil refineries to computer chips – made the snap decision to pull back on long-term investments in new factories and manufacturing capacity. When the economy roared back, those industries couldn’t meet demand, sending prices soaring.

In the broadband industry, conversely, providers responded by investing $86 billion into their network infrastructure in 2021 – the biggest one-year total in nearly 20 years. These investments are fueling faster speeds – fixed broadband speeds are up 35% nationwide in the past 12 months – while making sure networks have the capacity to handle growing traffic needs.

This teaches us three things.

First, we should observe a Hippocratic oath and “do no harm.” America’s broadband system has thrived under a decades long bipartisan consensus for light-touch, pro-investment policies. Nearly $2 trillion in private capital built the networks that now deliver American consumers higher speeds at lower per-megabit prices than consumers enjoy in Europe, despite having to cover greater distances and more difficult terrain.

This further tells us that it’s precisely the wrong time to abandon this successful model in favor of price controls and utility-style regulation, as some House and Senate progressives have proposed. Even Democratic policy experts acknowledge that approach would be toxic for private investment.

Second, policymakers need to recognize that broadband isn’t immune from the supply chain crunches plaguing so many other sectors of the economy. Broadband buildouts are already getting delayed by shortages in fiber cable, network hardware and skilled labor. And that’s before $42 billion in federal infrastructure funding goes out the door starting next year, which will only intensify demand for these scarce supplies.

That means rural buildout projects funded by federal dollars are likely to see inflationary pressures – and take longer to complete – than Congress expected when it passed the infrastructure bill in 2021. That will put pressure on state broadband offices to be even more diligent about waste, and to emphasize reliable supply chains with experienced network builders. Bidders will also need the flexibility to buy fiber from wherever they can manage to source it, even if that means relaxing the program’s strict “Buy American” rules. This requires a regulator ability to do smart tweaking of rules to expedite buildouts cost-effectively.

Third, we need to help more financially struggling households get connected. Thanks to President Joe Biden’s Affordable Connectivity Program – and an agreement with 20 broadband companies – 48 million households can now get home internet service for free.

But more than a year later, just over a third of eligible households have signed up. Investing in enrollment campaigns and digital literacy training programs is the fastest way we can crank up the dial on enrollment. Relatively small investments here could pay huge dividends in bringing millions more Americans into the digital economy.

Even with these remaining challenges, the overall contours of American broadband policy – encouraging investment, competition and affordability – are working well. And as the saying goes: “If it ain’t broke, don’t fix it.” In an inflation-roiled economy that defies easy answers, we should learn from – not mess with – this all-too-rare success story.

Lindsay Mark Lewis is executive director of the Progressive Policy Institute. Contact him at llewis@ppionline.org. This piece was originally published in the Richmond Times on March 24, 2023, and is reprinted with permission.

Broadband Breakfast accepts commentary from informed observers of the broadband scene. Please send pieces to commentary@breakfast.media. The views reflected in Expert Opinion pieces do not necessarily reflect the views of Broadband Breakfast and Breakfast Media LLC.

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Expert Opinion

David Strauss: How Will State Broadband Offices Score BEAD Applications?

Fiber, coax and fixed wireless network plans dependent on BEAD funding demand scrutiny.

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The author of this Expert Opinion is David Strauss, Principal and Co-Founder of Broadband Success Partners.

Given the vital ways in which access to broadband enables America, adequate Internet for all is a necessary and overdue undertaking.  To help close the digital divide, the Infrastructure Investment and Jobs Act includes $42.5 billion in Broadband Equity, Access and Deployment funding for the last mile. Add to this the estimated level of subgrantee matching funds and the total last mile figure rises to $64 billon, according to the BEAD Funding Allocation and Project Award Framework from ACA Connects and Cartesian.

The federal funds will be disbursed by the Department of Commerce’s National Telecommunications and Information Administration to the State Broadband Offices who will then award subgrants to service providers. On June 30, each state will find out their allocation amount. By 2024, the states will establish a competitive subgrantee process to start selecting applicants and distributing funds.

A critical element of the selection process is the methodology for scoring the technical merits of each subgrantee and their proposal. Specific assessment criteria to be used by each state are not yet set. However, the subgrantee’s network must be built to meet these key performance and technical requirements:

  • Speeds of at least 100 Megabits per second (Mbps) download and 20 Mbps upload
  • Latency low enough for “reasonably foreseeable, real-time interactive applications”
  • No more than 48 hours of outage a year
  • Regular conduit access points for fiber projects
  • Begin providing service within four years of subgrant date

What level of scrutiny will each state apply in evaluating the technical merits of the applicants and their plans?

Based on our conversations with a number of state broadband leaders, the answers could be as varied as the number of states. For example, some states intend to rigorously judge each applicant’s technical capability, network design and project readiness. In contrast, another state believes that a deep upfront assessment is not needed because the service provider will not receive funds until certain operational milestones are met. Upon completion, an audit of the network’s performance could be implemented.

We, at Broadband Success Partners, are a bit biased about the level of technical scrutiny we think the states should apply. Having assessed over 50 operating and planned networks for private sector clients, we appreciate the importance of a thorough technical assessment. Our network analyses, management interviews and physical inspections have yielded a valuable number of dos and don’ts. By category, below are some of the critical issues we’ve identified.

Network Planning & Design

  • Inadequate architecture, lacking needed redundancy
  • Insufficient network as-built diagrams and documentation
  • Limited available fiber with many segments lacking spares

Network Construction

  • Unprotected, single leased circuit connecting cities to network backbone
  • Limited daisy-chained bandwidth paths on backhaul network
  • Lack of aerial slack storage, increasing repair time and complexity

Network Management & Performance

  • Significant optical ground wire plant, increasing potential maintenance cost
  • Internet circuit nearing capacity
  • Insufficient IPv4 address inventory for planned growth

Equipment

  • Obsolete passive optical network equipment
  • Risky use of indoor optical network terminals in outdoor enclosures
  • Sloppy, untraceable wiring

Technical Service / Network Operations Center

  • Technical staff too lean
  • High labor rate for fiber placement
  • Insufficient NOC functionality

While the problems we uncover do not always raise to the level of a red flag, it happens often enough to justify this exercise. Our clients who invest their own capital in these networks certainly think so. The same should hold true for networks funded with taxpayer money. Fiber, coax and fixed wireless network plans dependent on BEAD funding demand serious scrutiny.

David Strauss is a Principal and Co-founder of Broadband Success Partners, the leading broadband consulting firm focused exclusively on network evaluation and technical due diligence. This piece is exclusive to Broadband Breakfast.

Broadband Breakfast accepts commentary from informed observers of the broadband scene. Please send pieces to commentary@breakfast.media. The views reflected in Expert Opinion pieces do not necessarily reflect the views of Broadband Breakfast and Breakfast Media LLC.

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Expert Opinion

Raul Katz: Can Investments in Robust Broadband Help States Limit the Downside of Recession?

If managed effectively, the BEAD program could play a key role in allowing our economy to weather the storms ahead.

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The author of this Expert Opinion is Raul Katz, President at Telecom Advisory Services LLC.

The United States economy is still undergoing persistent inflation rates, high interest rates, and stock market volatility. According to a Wall Street Journal survey conducted in January, economists put the probability of a recession at 61 percent.

Simultaneously, we are also on the eve of the largest federal broadband funding distribution in American history. All 50 U.S. states have begun formulating plans to help connect their communities through the $42.5 billion Broadband Equity, Access and Deployment Program, and its funds are expected to be distributed within months. That, coupled with the Affordable Connectivity Program  and other initiatives designed to subsidize broadband access, will play a critical role in connecting every American to the internet. This once-in-a-generation investment in building more robust and resilient broadband networks can help states weather the coming economic storm. To learn how, we simply need to look back to March 2020.

When the COVID-19 pandemic initially cratered the economy, states that had a higher rate of fixed broadband penetration were more insulated from its disruptive effects. Simply put, better-connected states had more resilient economies according to a study I authored for Network:On. In a separate study, by using an economic growth model that accounts for the role fixed broadband plays in mitigating the societal losses resulting from the pandemic, I also found that more connected societies exhibit higher economic resiliency during a pandemic-induced disruption.

In the study conducted for Network:On, we documented that U.S. states with higher broadband adoption rates were able to counteract a larger portion of the economic losses caused by the pandemic than states with lower broadband adoption rates. The states most adversely affected by the pandemic, such as Arkansas and Mississippi, were those exhibiting lower broadband penetration rates. Conversely, states with higher broadband penetration, such as Delaware and New Jersey, were able to mitigate a large portion of losses, as connectivity levels allowed for important parts of the economy to continue functioning during lockdowns.

Nationally, if the entire U.S. had penetration figures equal to those of the more connected states during the pandemic, the GDP would have contracted only one percent— a much softer recession than the actual 2.2 percent. These findings show that investments in closing the digital divide and ensuring everyone can access a high-speed Internet connection are critical to building economic resilience.

Today, wide penetration rate disparities exist between states — such as Delaware’s rate of 91.4 percent compared to Arkansas’ rate of 39.7 percent. Because of this, public authorities should focus on creating policy frameworks that allow operators to spur infrastructure deployments and find the optimal technological mixes to deliver the highest performance to users.

Broadband access matters. It doesn’t exist in a vacuum and is crucial to an area’s economic health. As state broadband offices around the country prepare to deploy BEAD funding, they must remember that broadband access and adoption are imperative to building economic resiliency.

Beyond my own study, a review of the research examining the economic impact of digital technologies over the past two decades confirms that telecommunications and broadband positively impact economic growth, employment, and productivity. This reinforces how consequential these government investments in broadband infrastructure and adoption are to protecting America’s economic health.

The BEAD program still has its challenges, but if managed effectively, it could play a key role in allowing our economy to weather the storms ahead.

Dr. Raul Katz is the president at Telecom Advisory Services LLC and author of the study: The Role of Robust Broadband Infrastructure in Building Economic Resiliency During the COVID-19 Pandemic. This piece is exclusive to Broadband Breakfast.

Broadband Breakfast accepts commentary from informed observers of the broadband scene. Please send pieces to commentary@breakfast.media. The views reflected in Expert Opinion pieces do not necessarily reflect the views of Broadband Breakfast and Breakfast Media LLC.

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