It is that time of the year again. Subex Azure and Analysys have issued their 2007 attitudes survey. The word attitude is important, because although the survey asked people to tell them numbers, as far as we can tell most of them are just opinions, not hard fact. But they get quoted as if they are derived from solid, irrefutable data. Which if you think about it, would make no sense. If you had solid data about this level of leaks, then you would be more effective at fixing the leaks! Despite the reservations that people like me have about the survey, Subex Azure, who have continued the survey that was started by Azure, know they are on to a good thing. The survey is regularly quoted all over the place, earning them plenty of kudos and helping to reinforce the strength of their brand in revenue assurance circles.
Here are the highlights that they picked out. The bits in italics are me interpreting the data (in my own inimitably sarcastic style).
The survey findings are based on responses from 96 operators from around the world.
Subex Azure boasts over 150 “installations” in over 60 countries, so a fair few of the operators must be Subex Azure customers.
Average revenue leakage has increased dramatically from 12.1% to 13.6% of turnover.
Oh dear! Does this mean leakage is going up for Subex Azure’s customers too? But surely if you buy their products then leakage should go down?
If 13.6% of turnover is the mean average, then that means for every telco with 0% leakage, there is another losing over a quarter of all revenues. But hang on… no CEO ever got sacked because of revenue leakage. Does this mean shareholders do not share the same attitudes as people working in revenue assurance?
Operators’ beliefs about what is an ‘acceptable’ amount of revenue loss has risen to 1.8% from 1.1% last year.
That explains 0.7% of the rise in leakage then. Some telco revenue assurance departments just decided to make their own targets easier. Perhaps shareholders should sack the CEOs that let revenue assurance departments decide what is and what is not acceptable.
The increases in revenue leakage are predominantly due to external fraud, internal fraud and fraud by other operators.
Operator-to-operator fraud – nice to see someone admitting it takes place. But presumably none of the operators that responded to the survey volunteered figures on how much they made by committing fraud. For the purposes of the survey, should the money operators make from defrauding others be netted off against the money they lose from being the victim of fraud?
Average fraud losses have grown to 4.5% this year from 2.9% of turnover last year.
Very interesting. So these telcos can confidently measure how much money they allow somebody else to steal from them. If they are so good at measuring the theft, which means they can detect it when it has happened, then why are they not better at preventing theft from happening again?
Subex Azure makes a lot of money from selling fraud detection systems. Perhaps some Subex Azure customers do not know how to set up the fraud detection systems they purchased…
In this year’s survey, we specifically asked about the impact of convergence. We found that increased network convergence means that more revenue assurance managers have responsibilities for both fixed and mobile networks
Increased network convergence? This does not sound like anything to do with convergence to me. It sounds like more revenue assurance managers are finding they cannot continue to put off the big chunks of work they previously never had time for.
One final trend is that the mid-size operators (between 100k – 1m subscribers) tend to lose the most revenue. Smaller operators tend to have simple products and processes which result in lower losses, whilst large operators have the resources to approach the problems systematically.
There is some sloppy language here, and my guess is it leads to sloppy maths. When they say that mid-size operators lose the “most” revenue, they probably mean they have the highest proportionate losses i.e. stated as a % of revenues. This is different to saying that they have the highest absolute losses i.e. stated in numbers of dollars. Chances are that the headline “average” leakage for the industry is also misleading. You cannot take an “average” of different %’s of revenue leaked. 5% of a big telco’s revenues may be a lot more money than 15% of a mid-size telco’s revenues. So you cannot say the “average” loss of the two companies is 10% of the total revenues. But that error is made over and over again – taking the industry average % leakage quoted by this survey, multiplying it by the total industry revenues, and claiming the answer is the total absolute leakage in dollars. That is bad maths. If large operators leak lower proportions of revenue, then the mean average leakage across the whole telco industry may well be a lot less than the attention-grabbing headline stated here. Instead of just employing Analysys to ask people’s opinions, they should also employ someone to do some proper stats.
By the way, it says on the survey webpage that if I discuss the numbers, I have to give credit by stating these exact words: “Source: Subex Azure Operator Attitudes to Revenue Management Survey 2007.” Now that I have, I assume there is little danger of a law suit. So in case you missed it before, it is the Subex Azure survey I am making fun of ;) I hope that is clear to everyone!