• Sunday, July 14, 2024
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SIM boxing: Scam on Buhari’s daughter unmasks dark industry

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Like every doting parent, Muhammadu Buhari, former President of Nigeria, was looking forward to the call with his daughter on a certain day. But he got more than he bargained for and set off alarms that unmasked an industry he never knew existed and has been causing a drain on the revenue of telecom operators.

The call that came was from his daughter who was away schooling at a London university, but the number Buhari was seeing was a Nigerian number the daughter had used before but had abandoned.

How was it possible that his daughter who was in London could be using a Nigerian mobile network line to call her father? After he confirmed from her that she was indeed in London and was using her London phone line to make the call, the then President knew something was fishy. He called his security detail to look into the matter. That order led to a telecom industry-wide investigation that came face-to-face with the dark world of SIM boxing.

What was particularly telling about the situation, according to people knowledgeable about the incident, which happened sometime during Buhari’s first tenure, was that all the information on the old number had not been erased before it was used again by the perpetrator. And given that the act involved an operator made it an even bigger problem. The investigation led to the Nigerian Communications Commission (NCC) scrambling for solutions to address the problem from 2018 to 2021.

SIM boxing, also known as SIM bank or call masking, is a device used as part of a Voice Over Internet Protocol (VoIP) gateway installation that contains several SIM cards, which are linked to the gateway but housed and stored separately from it.

Usually, when someone decides to make a call to another person in a different country, their phone company routes the call to one of the local phone companies and then sends the call to the receiver using their network.

But SIM boxing works when a person or group of people set up a device that can take up several SIM cards (SIM box) and use it to complete international calls it receives from the internet as VoIP and serve them to the in-country mobile network subscribers as local traffic. It allows fraudsters to effectively bypass the interconnect toll charging points to exploit the difference between the high interconnect rates and the low retail price for on-network calls, thus avoiding payment of the official call termination fee of an operator.

The global losses from SIM box fraud and the broader interconnect bypass fraud are estimated at $28.3 billion, with SIM box fraud alone accounts for $4.27 billion, according to the Communications Fraud Control Association. Also, the Revenue and Assurance Group estimates that SIM box could cost communications service providers up to $6.86 billion annually.

In 2018, the NCC put the estimated revenue loss from SIM boxing at N3 billion. Umar Garba Danbatta, executive vice chairman of the NCC who made the disclosure, said the SIM boxing began trending in September 2016 when the commission reviewed and implemented the termination rate for international inbound traffic from N3.90 per minute to N24.40 per minute.

The NCC said it would leverage the Device Management System (DMS) project to tackle SIM boxing. DMS revolutionises the approach to device configuration, campaign management, reporting, and device intelligence. There was also a public-private partnership (PPP) set up in November 2020 as a division under the Special Duties Department of the NCC. The role of the PPP was to oversee the implementation of the NCC’s revenue assurance solutions (RAS) as well as the DMS project.

Danbatta noted that while the RAS is intended to address the revenue leakages accruable to the government, through the NCC, the DMS is intended to address the issue of type approval of telecom equipment and devices to ensure originality and standardisation because of the implication of substandard devices to health and quality of service.

“The DMS is also instituted to tackle the problem of SIM boxing and call masking,” he said.

The projects notwithstanding, SIM boxing continues to constitute a menace in the telecom industry.

According to telecom operators who prefer not to be mentioned, SIM boxing costs the telecom industry about 30 percent of their revenue. The extent of revenue loss to SIM boxing is still largely unknown to many operators.

Why it is particularly dangerous is that it is responsible for traffic disruption on networks, causing indirect financial damage. For example, an operator like MTN or Airtel, which expects a lot of money when subscribers use their platforms for international calls, is heavily shortchanged by smaller operators masking calls to prevent being charged the international rates. The SIM boxer undercuts the prices charged by local operators.

Read also: Payment channel fraud losses drop to near 3-year low

Experts note that the fraud is often perpetuated by insiders, especially for the SIM boxes. At the same time, repeaters tend to be equipment suppliers, who in the event of installing the equipment deliberately divert the effort of the network providers to their accounts. This is partly why SIM boxing is considered a threat to national security because the fraud is able to escape legal intercept by national security agencies, which track criminal activities.

The big operators are also the most affected, given that they own the biggest infrastructure and deploy significant investments in building their interconnection business. An expert who prefers anonymity to speak freely alleges that most of the bad actors are also smaller telecom operators trying to avoid paying the cost of international call rates. BusinessDay made efforts to get some of the smaller telcos to speak but none agreed to respond.