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Glitches' Brew: Software Stings AT&T Wireless

Muffed customer handoffs are giving rise to finger-pointing at AT&T Wireless (AWE).

Nearly two weeks after wireless number portability rules took effect, AT&T Wireless stands out for its poor performance. Portability, which enables customers to keep their phone numbers while switching service providers, has been a challenge for nearly all of the wireless phone companies. But AT&T's problems have been worse, and they have been compounded by its use of a different customer-tracking system than all the other major carriers, say analysts.

The problems heated up this week, when a letter written by NeuStar, the closely held software vendor hired by AT&T Wireless to act as the clearinghouse for its customer switching requests, blamed a rival TSI Telecommunications for the glitches. TSI says the problem is Neustar's.

Meanwhile, the brewing controversy has pressured shares in Evolving Systems (EVOL - Get Report), an order administrator being used by NeuStar and AT&T Wireless. Evolving shares dropped 81 cents, or 5%, to $14.84 Friday, capping a 21% decline for the week. Investors evidently fear there may be some fallout in coming weeks from AT&T's shortfalls.

"Our software is working with no significant problems at any of our customers' accounts," Evolving chief George Hallenbeck said Friday.

Compounding AT&T Wireless' apparent NeuStar compatibility issue is the fact that every other major wireless carrier uses TSI, says CIBC World Markets analyst Gregor Dannacher. "If it's truly a software fix, they could just pay people to solve it," says Dannacher, who has a buy rating on AT&T Wireless. "But if it's an architectural difference, then that may cause bigger problems."
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