Editorial : ISS ROI Revisited

The only thing a telco CEO and a privacy advocate have in common is that they both cringe when you say the words “lawful intercept and Internet surveillance.” CEOs cringe because they see all the money going to support government mandates with no ROI, and the privacy advocates cringe because they don’t trust or like the USA-Patriot Act, Attorney General John Ashcroft, President Bush, and so on. Although the telco executives may not like it, in order to comply with the law they will need to install systems and software to capture data that might be required by law enforcement. This is where ISS comes in.

First and foremost, ISS is about a telecommunications service provider’s infrastructure requirements, which are no different than OSS/BSS requirements. The “I” in ISS stands for intelligence, which plays two roles. On the one hand, it’s about gathering information on illegal activities (terrorism, fraud, money laundering, etc.), and on the other hand it provides the data that improves the bottom line (revenue assurance, business intelligence, and so on). In short, ISSs are those software elements or units that interface with or are part of billing, ordering, provisioning and authentication systems as well as with outside parties such as law enforcement agencies.

The Good and Bad News

The good news is ISS as a market is starting to get attention. Last month’s ISS World conference attracted 221 people, over half of whom were service providers and law enforcement personnel. The other half were vendors, many of which identify themselves as ISS vendors or as vendors with ISS products. However, the bad news coming out of the event was three-fold:

1) Show Me the ROI

With ever-shrinking resources, service providers are doing their best to support law enforcement agencies. Of course they have no choice since it’s the law, and you just don’t ignore court subpoenas. But the reality is today no service provider treats ISS as a revenue producer or OpEx reducer. No one at this point is going to their CEO and CFO with an ISS business case in hand.

2) Things Are Getting Worse

The good old days (pre-2003) of lawful intercept were challenging but manageable for FBI and DEA agents. Local voice traffic went through a circuit switch that had all the bells and whistles for the collection of call records and supporting wiretaps. Wireless data, such as SMS messages, was transmitted through message switches. Regarding 2G wireless and cable telephony, all traffic went through the same type of circuit switches used by ILECs and CLECs.

So, what’s different today? Consider the flood of new services created by new IP technologies.

1. VoIP over DSL/Cable Modems: Companies like Vonage and others have rolled out voice over IP. All a user needs is a broadband connection, an analog phone, Vonage software and a DSL or cable modem with an RJ-11 jack. Originating and terminating calls go through the customer’s ISP to a non-local (out-of-state or even country) gateway to the PSTN. Some VoIP providers even allow you to have multiple phone numbers with different area codes, and numbers can be added and deleted in seconds. It’s a law enforcement nightmare when it comes to call record gathering and/or wiretapping.

2. Flat Rate Calling: Consumers love the flat-rate, unlimited calling plans introduced by the RBOCs and CLECs in 2003. The service providers also love flat-rate plans because they don’t have to save billing records. Law enforcement can’t get access to call records if none were saved, which is a big problem.

3. Wi-Fi Hot Spots: From a law enforcement perspective, good old pay phones presented manageable challenges. For example, you can’t use a pay phone as your business phone (by law a pay phone can’t receive calls) as drug dealers did in the past. But voice over a Wi-Fi equipped laptop used at a hot spot is a different kettle of fish. There are no call records, and it is almost impossible to tap without new surveillance tools.

4. Skype Phoning: Skype is a new company that was started by several programmers who wrote the software for Kazaa. If you can share music peer-to peer, than why not voice. The problem from a surveillance perspective is Skype phoning is not voice over IP; it’s voice over HTTP. VoIP is a challenge, but you can look at IP packets and detect voice. But, finding voice in the application layer (HTTP) is a real challenge.

5. SIP Phones: Session Initiated Protocol (SIP) phones are the basis for today’s monetizing of VoIP in the enterprise space. Here’s the challenge for law enforcement: A SIP phone is actually a computer. You can send messages to it, and it can turn around and send messages out. So what’s the intercept challenge? Anyone can anonymously hide behind that phone. It can be hacked via the Internet or someone can just plant a SIP phone on someone else’s LAN. Calls come in and out on other people’s phone numbers.

If you think that is bad for law enforcement, it gets worse. How about money laundering via SIP? A SIP phone lets you do one-to-many messaging, as well as gives the appearance of many-to-one by using the feature of changing the originating IP address. Take for example the scene in the movie “Runaway Jury,” where Gene Hackman transfers $15 million via cell phone to John Cusack’s offshore account, and within seconds Cusack’s character gets an acknowledgement via his Blackberry. If an al-Qaeda operative tried to do this using a cell phone, he would be stopped in his tracks by law enforcement. But if that $15 million transfer could be broken down into 1 million individual cash transactions at $15 each with 1 million different or rotating IP addresses, it would go undetected. You could do this with a SIP phone.

3) Here Come the Feds Again

IP technology is allowing terrorists, drug dealers and Wall Street insiders to keep many steps ahead of law enforcement. Given this state of affairs, the Feds are bound to step in with new legislation or changes to existing regulation. Here are some past examples of telecom-driven legislative changes:

ECPA (1986): The Electronics Communication Privacy Act expanded wiretap laws to include email, fax and other telecommunications services beyond switched voice.

CALEA (1994): The Communications Assistance to Law Enforcement Act came into effect because of cell phone usage by suspicious characters and, to a degree, a shift from analog multi-frequency trunk signaling that is easily intercepted to SS7 packet-based signaling, which is not.

USA-Patriot Act (2001): With so many ways to communicate, such as cell phones, Blackberries, etc., and the fact that anyone can change their number at any time, law enforcement faced a problem of constantly needing fresh subpoenas during investigations. The Patriot Act allows a person, rather than a communications device, to be targeted.

ISS and ROI

Bottom line: Telecommunications service providers should expect action from the U.S. government that will force changes in telecommunications infrastructure to better support law enforcement.

With that, here is where ISS is headed, and here is where you find the ROI.

In the circuit-switched world, billing systems were the center of gravity of the other support systems. This will not likely be the case in the IP world. In the IP world, ISS will dominate, and here is why.

1. Best-effort IP service will not be metered; it will be billed as flat rate with no usage records.

2. All metered IP services will be a function of QoS delivered. QoS sessions will be provisioned, validated and rated by an ISS component.

3. Fraud systems will not be triggered by an IP address but by a pattern of misuse or criminal activity such as money laundering detected by ISS components.

4. Security and infrastructure protection will not be IP address driven but from a pattern of network behavior (e.g. spreading worms and viruses) detected by an ISS component.

5. Marketing strategy will be driven by ISS that gives a true picture of the customer(s) not just a measure of one service. Decision support systems will be a subset of ISS, not billing.

You may agree and say ISS will have an elevated role in the future of the IP world, but what about today where circuit switching infrastructure generates the revenue for most Tier 1 wireless and wireline players? Here’s how circuit switching support systems will evolve and why ISS will be the new center of gravity. Again, it has to do with packet-based networks. In this case, it’s SS7, not IP packets.

The New Role of SS7

In the next era of circuit-switched services, SS7 will play a different network infrastructure role. Here are some examples:

1. Under flat-rate voice plans, billing records are discarded by billing systems. The most effective way of archiving call records are as SS7 records. And they are 100 percent accurate in terms of knowing who made the call, when it was made, and what occurred (conference call, call transfers, etc.). Service providers will be mandated to archive such information by the U.S. government. So why not bite the bullet and invest in ISS to gather and correlate such information? Another law enforcement plus, SS7 is a global standard whereas billing records aren’t.

2. Wiretapping by law enforcement is unbelievably inefficient and costly. Setting up a wiretapping capability on a circuit switch can cost up to $1 million for the first tap. If you had an SS7 function in your ISS, you could see the target’s incoming or outgoing telephone number and redirect the target’s traffic through a central law enforcement collection switch to the termination point. SS7 signal processing would be no different than with local number portability.

3. Fraud control is more efficient when SS7 packets are monitored and correlated by an ISS as opposed to examination of call records. The ISS scenario would be in real time; call record examination is after the fact (e.g. after the revenue is lost).

ISS with an SS7 network interfacing could improve marketing decisions and improve revenue assurance programs. At the same time, it meets upcoming law enforcement mandates.

So where is the ROI in ISS? It’s a fact that ISS can improve every aspect of a service provider’s network regarding revenue assurance and reduced operational expenses. In turn, this would give a provider a competitive edge while meeting past and future surveillance mandates. The best part is the same ISS infrastructure can be used for the new IP service world and next era of circuit-switched services.

If you want to keep up on where the ISS industry is headed, mark May 5-7, 2004 on your calendar for ISS World 2004, which will run in conjunction with Billing & OSS World 2004 at the Washington, D.C. Convention Center. For a program update, go to www.telestrategies.com.