Tag: pseudonymous customer reference

Introduction: The Authentication Arms Race

Authentication: Ubiquitous, but increasingly complex

Authentication is the process of verifying a claim by (or for) an entity to an attribute, identity or unique identifier: it confirms that ‘you are what you claim to be’. The entity might be a human or machine, for example, and a peer in a transaction or the source of some data. This verification is achieved by presenting credential(s) (or ‘authentication information’) that corroborate the claim(s) of the entity.

Clearly, authentication is not a new issue: for thousands of years, societies have learned to cooperate and establish trust in non-digital environments. When an individual presents a credit card (the ‘credential’) for payment in a shop and, in some cases, enters a secret PIN code or signs a receipt (another credential), they are attempting to authenticate their claim that the bank account associated with the card is theirs to use (the ‘attribute’). When a letter is received with a difficult-to-replicate wax seal, this is an attempt to authenticate the origin of the letter. When two members of a secretive group meet for the first time, knowledge of a secret handshake can mutually authenticate their membership of the group.

Nor is it a new issue for STL Partners, either: we began our coverage of authentication, and the broader identity and personal data markets, in 2008 and have regularly provided market-leading research (e.g. Customer Data 2.0: Telcos Must Vie for a slice of the $Multi-Billion ‘PIE’; Personal Data: how to make it a viable, customer-centred industry) and advisory services since then.

What is new, however, is the growing digitisation of our everyday lives. This has driven new contexts for authentication (e.g. logging in to email accounts), new and sometimes more sophisticated methods of authentication (e.g. SMS one-time passwords, public key encryption), and created entire industries (e.g. Digital Certification). An example which covers all three of these areas is SSL (Secure Sockets Layer), the technology which establishes secure ‘HTTPS’ connections between servers and browsers using a sophisticated mechanism called ‘public key cryptography’, which we return to later.

Figure 1: Mutual SSL Authentication Handshake Message Flow

Source: CodeProject

As we discussed in the recent Executive Briefing ‘Authentication Mechanisms: The Digital Arms Race’, another consequence has been the entrance to the ecosystem of companies not traditionally associated with this space, especially Facebook and Google. Among their many activities in this space is the provision of ‘federated’ authentication and identity services to third-party websites, which essentially allows their users to login and register using their existing social network credentials. Although usage metrics for these services are not publicly available, anecdotal evidence suggests they are both widely and frequently used. There are clear benefits to each party from using one of these services, such as users needing to remember fewer passwords; online service providers being able to outsource their credential management systems; and Facebook/Google/Twitter collecting more behavioural data for advertising; but, as we will see, there are also clear drawbacks, notably around reach and privacy.

Such user (consumer, citizen or employee) authentication services to remote, digital environments for third-parties (enterprises or governments) are the focus of this report.

Figure 2: The Internet players are providing authentication services to third-parties

Source: Adweek

Some MNOs are already active in authentication services

Authentication is not a new activity area for mobile operators, either. Most fundamentally, one of the two core purposes of the SIM cards that MNOs issue and manage is precisely that (as well as storage):

1. Identity: The SIM contains, among others, a unique reference number (the international mobile subscriber identity, or ‘IMSI’) that identifies the SIM and the relevant subscription. The MNO recognises the reference number and ensures costs and usage are allocated against it correctly.
2. Authentication: To provide assurance that the identity claim is valid, the MNO uses a security mechanism to grant access to the network. This is done by issuing a ‘challenge’ which only a particular SIM card can answer correctly using a unique 128-bit ‘Ki’ key associated with its identity. The specific mechanism is known as ‘symmetric key cryptography’.

Beyond authentication for their own use, MNOs have also been developing commercial propositions around user authentication services. In some cases, their role has been strictly limited to enabling the authentication process, such as the UK MNOs’ support of ValidSoft’s fraud prevention service for financial services. In other cases, MNOs have been providing complete mobile authentication services themselves. Some of these have achieved impressive traction and results (e.g. Swisscom’s Mobile ID, KDDI’s au ID), whilst others have struggled, and there are important lessons here.