As VSE NET clearly states on its website, the telecoms market is in a ‘state of flux’. New technology is changing the way network operators like VSE NET provides services to its customers. The move to software-based IP networks is lowering the costs and adding to the possibilities network operators have when it comes to proving telecom services. However, it’s also creating new opportunities for fraudsters and hackers.
This case study looks at how VSE NET, working with Telsis, has identified and addressed the telephony fraud problem in its network.
About VSE NET
VSE NET GmbH is a regional telecommunications provider based in the Saarland region of south-west Germany. VSE NET is part of the German-Luxembourg group Artelis which is owned by energy-providers VSE AG and Enovos International S.A.
VSE NET’s services range from supplying data, Internet and voice network services, through leasing highly secure computer centre space, to planning, building and operating the entire telecommunication network. VSE NET sells predominantly to business customers including hospitals, public administration, universities, call-centres,banks and insurers. In addition, other fixed network and mobile telephone network carriers resell their services.
VSE NET’s Managing Director, Michael Leidinger, has been leading the company since its establishment in 1998. He’s overseen the company’s growth and developed its network to the point where it now supports more than one billion voice minutes every year.
For Michael Leidinger, innovation is a fundamental requirement for VSE NET to maintain and grow its position in the German telecoms market. As he says:
“Traditional telecoms services are becoming cheaper and margins are being squeezed. Innovation is very important to grow the business in the future. We want our customers to know VSE NET for innovation and for providing the new services they need to help run their businesses. In recent years we’ve invested heavily in cloud services, virtualisation, security and machine-to-machine (M2M) for example. These help to keep us at the forefront of our market.”
Working with technology suppliers is key to VSE NET delivering on its innovation promise. For more than six years, VSE NET and Telsis have partnered to bring innovative and high value services to customers.
At the outset Telsis helped with number portability and least cost routing services to reduce costs within the business. Now VSE NET has adopted the Telsis Ocean Services Platform (OSP) to deliver advanced network intelligence-based services.
Michael Leidinger describes OSP as:
“The brain in our network – Telsis provides the intelligence that allows us to deliver innovative services for our customers.”
The Telsis ‘brain’ is now being put to use to address the issue of telephony fraud within the VSE NET network.
VSE NET’s parent company has long established internal rules for data and fraud protection and VSE NET has always been at the vanguard of identifying and addressing these issues.
Two years ago, VSE NET spotted that a business customer had their PBX (private branch exchange or private telephone network) hacked. At the same time, there was also a widespread hack of more than a million CPE (customer-premises equipment) devices across Germany when hackers realised that a standard password could be used to login to these devices (as customers rarely changed the default password on the equipment).
These events led to a sharp rise in fraud attacks on the network with hackers taking over these devices and instructing them to make fraudulent calls. There was a realisation that the problem was significant and needed to be dealt with. As Michael Leidinger observed:
“For VSE NET directly, we estimated the impact of fraud was costing the business between €100k-€200k.”
Initially, VSE NET looked to its billing system to try and identify fraud patterns. However, it only provided information one hour after calls were completed. The Call Detail Records (CDRs) created were examined to look for fraudulent
patterns such as a large number of calls per hour to an international premium rate number originating from one source after hours (indicating a likely PBX hack).
Whilst examining CDRs in this way did identify fraudulent patterns, fraud could only be identified after it had occurred. As Michael Leidinger states:
“Using CDRs was helpful to identify fraud patterns. However, we needed a solution that would be proactive and not simply reactive.”
VSE NET developed this initial work and engaged Telsis as the OSP was handling call routing directly both in the older TDM and more modern IP telephony networks. The goal was to develop an algorithm that would identify these fraudulent
patterns in real-time giving rise to the possibility of tearing-down fraudulent calls in progress. Now the fraud detection could be proactive, not simply reactive.
Telsis Voice SafeGuard became the fraud protection solution for VSE NET. When implementing Voice SafeGuard, VSE NET was able to compare the before and after performance for a period of two months. VSE NET was registering on average, three to four attacks each month. Michael Leidinger explained the impact of Voice SafeGuard:
“Comparing the before and after data, we observed the incidence of fraud reduced by a factor of 100:1. A typical fraud attack previously cost us an average of €1000 and we were now able to reduce this to to only €13.”
VSE NET regards the central routing component of the network as the ideal place for anti-fraud to be operating. Telsis OSP with Voice SafeGuard has been running in VSE NET’s network since October 2015. As Michael Leidinger says:
“Voice SafeGuard is proving stable and reliable in our network. It is reducing losses for ourselves and our customers.”
The Voice SafeGuard solution also allowed VSE NET to demonstrate innovation in the market and helped to improved its reputation as a secure supplier of telephony services to business customers. The solution dovetails with its new service offerings around cloud and virtualisation. As Michael Leidinger explains:
“VSE NET regards Voice SafeGuard as a useful tool to help reinforce our security credentials with business customers for our new generation of services.”
Fraud reduced factor
Since VSE NET has been using Voice SafeGuard
Within the next five years, VSE NET expects to have phased out the older TDM telephony network and transitioned entirely to a modern IP-based network. VSE NET intends to drive its first-mover advantage, positioning itself as the most secure provider of telephony and data services as part of its marketing efforts. Michael Leidinger is optimistic for the future:
“Voice SafeGuard has helped reinforce our position as the safest and most secure network. In the future, security will become even more important for businesses and we are well positioned to win new security sensitive business customers across Germany and Luxembourg.”
For Voice SafeGuard itself, VSE NET continue to help drive the solution forward. Extending the solution to address new types and approaches fraudsters are using to perpetrate fraud within
the network and to identify and address wider forms of network fraud.
VSE NET continues to look to the market for new services and solutions that continue to help drive innovation in the network for the future. Telsis is a trusted partner of VSE NET with new services and ideas that provide the intelligence in the network.
To phase out older TDM telephony network and transition to a modern IP-based network.
The brain in our network - Telsis provides the intelligence that allows us to deliver innovative services for our customers.Michael Leidinger
Managing Director, VSE NET