How big of a problem is mobile supply chain device theft?
Mobile supply chain device theft is a global issue and one that is costing operators billions of pounds every year.
However, the emergence of new technologies, designed to disincentivise organised criminals and amoral warehouse workers from stealing smartphones, presents the ideal solution to the problem.
Why is stealing smartphones so lucrative?
From the moment a batch of new smartphones leaves the factory, there is a very real risk of them being stolen.
In 2018, a group of Brazilian thieves disguised as workers made off with a shipment of Samsung Galaxy smartphones worth $1 million from Rio de Janeiro’s international airport. This is anything but an isolated issue.
Indeed, BSI Supply Chain Services and Solutions assesses that companies lose more than an estimated $76 million in the UK alone to cargo theft, highlighting the severity of the issue.
The cost of mobile supply chain device theft
The huge surge in smartphone use over the past decade has created new opportunities for supply chain theft, representing a significant threat to operators.
The ongoing issue of organised crime related to mobile device trafficking continues to cost the telecoms industry billions each year. The GSMA estimates that, in the U.S. alone, more than four million devices are trafficked annually, costing mobile operators in excess of $900 million.
In certain parts of the world, however, regulations have been introduced to stem the flow of trafficked devices.
For example, IMEI blacklists have helped to identify stolen smartphones that have made their way onto the black market and ensure that carriers will not provide any service to these devices.
In some cases, IMEIs or ESNs that are positive matches on any list could even be reported to the authorities and the traffickers located and arrested.
For example, in 2017, police in Mumbai arrested a 27-year-old-man accused of selling stolen smartphones by tracking the IMEI numbers of the devices in question. The investigation led police to a mobile theft gang operating in the western suburbs of the city. The culprit had been purchasing phones from the gang with the view to reprogramming their IMEI numbers and replacing them with those of old, non-blacklisted devices.
Regulations such as IMEI blacklists do indeed help to stem the flow of trafficked smartphones in nations where they are active. However, stolen devices still run rife on the streets in countries where no real enforcement exists.
Therefore, if a device on an IMEI blacklist ends up in a country that does not adhere to the regulations, police are powerless to do anything to track its movement. As such, IMEI blacklists are limited in their effectiveness and can only go so far in taking the fight back to traffickers.
What are the impacts?
As it stands, the main impact of supply chain device theft for mobile operators is on their bottom line, with experts calculating that the industry loses approximately $17 billion annually as a result.
Examining the full scale of the issue, it becomes clear that theft at various stages in the supply chain has a significant effect on operators. The GSMA estimates that over five billion people worldwide have access to mobile services and that more than four million devices are trafficked yearly. The expense of bulk prepaid trafficking amounts to a significant £900 million, equating to a loss of $225 per trafficked device.
With the issue of supply chain device theft such a prevalent and costly one, it is clear that a global solution is required to prevent stolen devices from ever being used. This would remove the incentive for theft altogether and ensure that smartphones generate revenue for operators.
As a result of this, the pain points operators are currently experiencing around revenue losses and the impact on their bottom line can be mitigated significantly. Furthermore, greater focus can be given to entering and exploring new markets.
How Trustonic can help
At Trustonic, we have created such a solution for mobile operators who are committed to protecting their investment. By utilising our cloud-based Telecoms Platform, operators can move to fully lock down smartphones that have been stolen, thus rendering them unusable and removing their resale value as a result.
Crucially, the Platform can also be used to manage and control devices in countries where IMEI blacklisting is not enforced, ensuring that criminal organisations are not able to exploit these gaps in the defence.
With the technology that Trustonic has developed, devices can now be managed throughout their entire lifecycle – from the moment they leave the factory floor, right through to the point that they are recycled.
As phones can be registered as missing or stolen with ease, operators can begin to deter gangs from stealing devices while in transit. This provides them with greater peace of mind that their investments are unlikely to be targeted.
As it stands, not nearly enough investment in security technology is taking place, and the only people benefitting from this are criminals. Operators need to work collaboratively with industry peers, associations, and regulators to remove the incentives and opportunities for stealing smartphones. In doing so, they begin to make supply chain device theft a thing of the past.