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Glitches' Brew: Software Stings AT&T Wireless

Number portability problems continue to plague the No. 3 cell-phone service provider.

Muffed customer handoffs are giving rise to finger-pointing at

AT&T Wireless



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


, 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

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, 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."

The latest problems come at a difficult time for AT&T Wireless. The No. 3 cell-phone service is widely seen as one of the biggest losers as the industry plays a game of number-portability musical chairs. The rap on the Redmond, Wash., company is that many customers are unhappy with the company's network quality. AT&T Wireless was also one of the strongest opponents of number portability and one of the last carriers to jump on board once the shift became inevitable. AT&T Wireless shares were off a nickel Friday at $7.24.

Though AT&T Wireless says it has been fully compliant with the new rules, observers say it's easy to get the impression that there's been some foot-dragging as the company gets forced into a process that stands to rob it of customers. Curiously, that perception has been reinforced by reports from people involved in the process who say the greatest difficulty has been had by customers trying to leave AT&T.

An AT&T Wireless representative declined to comment on the relative switching success of inbound and outbound customers. He added that any suggestion that the company is trying to keep customers against their will is "absolutely, utterly false."

This is the second high-profile software glitch for AT&T Wireless in as many months. The company is still trying to resolve problems with



software used to activate new customers on its global systems for mobile, or GSM, network. A month ago, AT&T Wireless lost the ability to move customers to its GSM service after it

installed a Siebel upgrade.

An AT&T spokesman said the the company is "almost there" in its effort to fully restore the system.