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), 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."