How AI-driven company Oculeus helps telecom service providers better combat fraud

The telecommunications industry isn’t just a critical aspect of business operations, but also an essential part of everyday living. Phones, laptops and other telecom devices serve as essential bridges that connect the world. However, the telecom industry is also exposed to several ongoing threats and vulnerabilities, as malicious actors continue to advance with more sophistication and even innovation. The Truecaller Insights 2021 U.S. Spam and Scam Report estimates a staggering $29.8 billion was lost to phone scams in the United States in 2020 alone. 

Steven Wilson, head of Europol’s European Cybercrime Center (EC3), said in a report that financially motivated cybercriminals will always find ways to exploit new and existing business processes and technologies. While the realities are frightening, experts note in a research paper that emerging technologies like blockchain and artificial intelligence (AI) are powerful tools in the fight against telecom fraud.

Oculeus, a Germany-based company that provides operation support systems (OSS) and business support systems (BSS), hopes to lead the charge in this fight with its portfolio of software-based solutions for telecommunications service providers. 

The company claims its solutions use AI and other substantial technologies to help its service provider and network operator customers better manage and protect their business and network operations with high levels of accuracy and automation.

 In an exclusive interview with VentureBeat, Arnd Baranowski, founder and CEO at Oculeus, detailed a broader sense of how Oculeus is helping its service provider customers with its AI-powered telecom fraud prevention technology.

The ongoing problem in the telecom industry

An ongoing problem in the industry is simply that telecom fraud is a lucrative business that is relatively easy to execute. Baranowski told VentureBeat that cybercriminals know how to exploit the inherent security vulnerabilities of IP-based telephone systems, without organizations ever knowing their communications networks have been compromised.

“An enterprise often only discovers thousands of dollars of calls have been made on its telephone systems without its knowledge when it receives the bill at the end of the month and still has to pay the bill to its telco service provider,” he explained.

A report by the Communications Fraud Control Association (CFCA) estimates telecom fraud is causing $3.6 billion in financial damage to businesses yearly.  From financial losses, to reputational damage and more, the impact of telecom fraud can be devastating. The most common form of telecom fraud, according to Baranowski, is an attack commonly known as “PBX hacking” or “toll fraud,” which involves cybercriminals injecting expensive telecommunications traffic into the private branch exchange (PBX) and communications networks of an enterprise.

Attackers only need to compromise the security credentials of a PBX system to execute this attack — a feat which Baranowski said isn’t a challenge for an experienced cybercriminal.

“Over the years, telcos have developed a poor reputation for their efforts to combat fraud. Many are known for using slow-moving processes and legacy technologies that are far behind the innovative technologies and attack methods used by threat actors,” he said. “Our telecom fraud protection solutions provide telcos and their enterprise customers with real-time insight into their communications traffic and an automated framework to prevent false charges on their telephony networks.”

Modernizing the fight against telecom fraud with AI

Oculeus’ telecom fraud protection solution uses AI to analyze the regular communications traffic and patterns of a telecommunications service provider and its business customers.

“Our solution continually monitors telephony systems and communications networks for exceptions to a baseline of expected activity,” said Baranowski. “With our AI-driven capabilities, we can identify, investigate and block suspicious traffic within milliseconds well before any significant financial damage is caused.” 

Cybercriminals typically use the latest technologies to execute financially damaging telecom fraud attacks, said Baranowski, who also noted that telcos and their slow-moving telecom fraud prevention practices are often two or three steps behind the advanced, fast-moving methods used by perpetrators of telecom fraud.

“Our innovative AI-enabled telecom fraud prevention solution is helping telcos modernize their fight against telecom fraud and significantly close the gaps against the activities of fraudsters,” said Baranowski.

While there are several methods, different approaches and solutions to preventing telecom fraud — such as traffic analysis-based, scenario/rules-based and device-based solutions — Baranowski said Oculeus’ competitive differentiator is that it incorporates all of these approaches in a single platform.

“We utilize an intelligent combination of AI and anomaly detection to analyze communications traffic patterns — and any suspicious traffic that is confirmed to be fraudulent is blocked instantly,” he said.

Baranowski said Oculeus trains its AI models to enable its algorithms to define specific results that quickly distinguish between legitimate and fraudulent traffic. 

While Baranowski said that automation is essential in modern cybersecurity endeavors, he cautioned that it’s essential for organizations to always have control over what they automate. He said organizations must use automation on top of systems that can be controlled, understood, maintained, monitored and managed.

Market opportunity created by digital transformation

For many years, Oculeus’ main product has been a telecommunications wholesale management system, which was originally developed for voice services and also supports SMS services today. 

According to Baranowski, these solutions help telcos to keep their voice and messaging business lines not only relevant, but also profitable. The company has near-term strategic plans to extend this solution to include support for retail voice and mobile virtual network operator (MVNO) services.

With the pandemic fast-tracking digital transformation, Baranowski said more business and commerce is being conducted online than ever before. He noted that this has significantly widened the attack surface for cybercrime, especially telecom fraud. 

This has created a major market opportunity for Oculeus to provide telcos the tools and framework they need to effectively combat fraud and better protect the communications networks of their customers.

The company will also expand the use of AI, especially for its telecom fraud protection solution, in order to adapt to new threats and provide more anti-fraud countermeasures with faster response rates.

Oculeus was founded in 2004 and has been fully self-financed since its inception. The company currently claims to have upwards of 120 telecommunications service provider customers around the world. Oculeus’ customers include Swisscom and Telekom Austria, among others. The company’s current headcount is 26 and it’s looking to gradually increase that number this year.