With the massive take-up of high value smartphones comes the inevitable surge in theft of these valued possessions. A report from the U.S. Federal Communications Commission (FCC) claims that mobile phone theft is a “growing epidemic,” with more than 40 percent of robberies in New York alone involving smartphones and other wireless devices. Forget handing over your wallet, it’s your smartphone they’re after!

The comparative ease with which stolen devices, even those locked by operators, can be reutilized in home and overseas markets makes them a prized target for thieves looking for quick cash. There are suggestions that in some markets, organized crime syndicates may be behind this new growth market.

One sure way of making device theft less attractive is for operators to recognize them being used on their networks and either use location data to help owners recover them or use technology they have to disable them completely, rendering them worthless. For this to be really effective, it calls for cooperation from all mobile operators in a country and even between international entities in recognized delivery target markets where stolen handsets tend to end up.

It seems the message is sinking in because U.S. operators, including Verizon Wireless, Sprint Nextel, T-Mobile and AT&T, covering 90 percent of U.S. subscribers, have agreed to disable phones that are reported stolen. If all goes to plan, they will begin blocking stolen devices within six months. They also plan to go beyond deactivating SIM cards and will deactivate the device itself, using the phone’s unique identification number or IMEI.

One would have to assume that there lies a massive potential market for handset insurance of some type, but with an estimated 25 percent of all phones in the U.S., around 60 million, getting lost, broken or damaged each year, would the business even be viable. Well, apparently it is, and one company you have probably never heard of dominates the market worldwide. Its name is Asurion, and it claims to service over 95 million customers but it only sells through strategic partnerships with the world’s top wireless and cable brands.

Its website also states that if a phone is lost or stolen, its owner is able to:

  • Sound an alarm to find it, even if it’s on silent or vibrate
  • Locate the phone online with GPS and turn-by-turn directions
  • Remotely lock a phone
  • Remotely erase contacts.

It appears that the mobile operators are not merely sales channels but that a close working relationship with them allows Asurion to offer mobile security services, such as those mentioned, to protect handset data, maintain customer privacy, and help locate a phone when it is lost. Presumably, the greatest risk for insurers is potential fraud through false claims, so any move by operators to jointly monitor the use of lost, stolen or damaged phones across all networks will go a long a way in reducing these crimes.

In an era of burgeoning smartphone sales and growing security concerns, this may well be another revenue stream for operators previously overlooked. It is also a good example of how a well-oiled ecosystem can work, with each party doing what it does best and, when combined, becomes a very appealing and mutually beneficial relationship. How many other products and services do you know of that work for all parties quite as effectively as this?

First published at TM Forum as The Insider, 13 April 2012