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ENHANCED SERVICES STALLED AS FIRMS CONTEND WITH Y2K

NEW YORK-Cautious optimism in the absence of completely verifiable proof is the prognosis for
Year 2000 compliance by the wireless industry, according to consultants interviewed by RCR.

“How fraught
with danger is the unknown? It is irresponsible to say ‘head for the hills and take the gold doubloons with you.’ But I
think there will be serious interruptions of service on a regional basis, probably due to call volume, and recovery will
be expensive,” said Robert Thurmond, senior research consultant at Quality Communications Inc., Louisville,
Ky.

“There will be some serious issues for business users of intelligent networks, and carriers will have to
write off a lot of illogical billing stuff.”

QCI is an independent telecommunications consulting firm whose
clients are Fortune 500 multinational corporations. It specializes in analyzing system interoperability
issues.

Telecommunications carriers have in-house a depth of staff computer expertise unmatched by other kinds of
companies, said Peter Grambs, a principal of Booz-Allen & Hamilton Inc., New York. However, the concentrated
deployment of these human resources to millennium bug remediation efforts this year means “the proliferation of
enhanced services will be delayed until the Y2K issues are resolved,” he said.

There are myriad, if not
virtually infinite, ways in which the sophisticated web of our telecommunications system can be hamstrung by the Y2K
bug, which is the failure of computer software to recognize properly dates that begin in the year
2000.

“Cellular always come up when people look at a back-up for landline,” said Ken Czajka,
president of T3G Inc., Richardson, Texas.

T3G provides Y2K compliance assistance, both for companies that
develop technology for wireless carriers and for users of wireless systems.

“One of the fallacies is that some
consultants have recommended wireless services as an alternative to wireline, but wireline originates and terminates
wireless calls,” QCI’s Thurmond said.

Citing a report published in late December by Triaxsys Research
L.L.C., Missoula, Mont., Czajka said publicly traded domestic telecommunications carriers disclosed to the Securities
and Exchange Commission they had budgeted $3 billion collectively to fix the Y2K problem. By the end of the third
quarter of 1998, only $1 billion had been spent.

“I really think not enough management attention has been
given to Y2K. If there had been more focus, more than $1 billion would already have been spent,” Czajka
said.

“Anytime you fiddle with a stable environment, there will be problems, and we are throwing our
telecommunications network into a blender. But if we can mobilize, Y2K will be a big bump in the road, not a show
stopper.”

Thurmond termed “really telling” references that Federal Communications
Commissioner Michael Powell has made to GTE Corp. testimony before the FCC. To test all equipment and operating
systems would be to test combinations that number 10-to-the-29th power.

“If you could test one per second,
you would be testing for all of time that already has existed and still only be one-tenth of the way through,”
Thurmond said.

Czajka said it is estimated that between 40 billion and 50 billion microprocessor chips were sold to
all industries during the last decade, and between 1 percent and 3 percent of these will fail due to the millennium
bug.

“That’s a lot of ‘oops’,” he said.

Interoperability

“You can make some logical,
theoretical predictions. All carriers, including wireless carriers, have at least announced testing plans for
interoperability,” QCI’s Thurmond said.

“However, no one will know for sure unless every wireless
system is taken out of service at the same time to test, and I don’t know of any carrier that wants to take down a live
system. You get into the law of unintended consequences when you try to fix Y2K piecemeal.”

Lucent
Technologies Inc. runs a laboratory that simulates system-to-system network traffic between switches made by
different manufacturers, he said. The SEC has chartered two voluntary industry associations-the Alliance for
Telecommunications Industry Solutions and the Network Reliability and Interoperability Council-to develop
specifications for interoperability testing and plans for inter-carrier problem resolution.

“These groups have
not talked publicly about results. They say ‘we’ve tested and there are results’,” Thurmond said.

“There
is interesting dialogue but little detail because there’s not much they can say without live testing.”

Overseas
partners

“The real issue is outside the United States,” said Douglas Engfer, president of the Windward
Group, Los Gatos, Calif.

“I am not seeing equal diligence in Europe and Asia, but quite often the
infrastructure is newer.”

Windward’s Y2K compliance oversight is done in the context of consulting with
technology providers on product development and with high-technology end users on building solutions into enterprise-
level legacy systems. In wireless, its work has involved infrared and radio-wave systems.

However, at least one
Asian carrier, Hongkong Telecom, has certified its network is year-2000 compliant. Hongkong Telecom, in which
United Kingdom-based Cable & Wireless plc. is a major stakeholder, also is working with the International
Telecommunication Union’s Year 2000 Task Force.

In the United Kingdom, at least 20 carriers are exchanging Y2K
compliance information as members of the Telecoms Operators Forum, in which the federal Office of
Telecommunications also plays a major role.

However, the ITU cautioned that “the toughest challenge faced
by its Task Force is helping developing countries get up to speed with the rest of the world in making their equipment
and network operation systems compliant.”

QCI’s Thurmond offered a slightly different perspective on the
potential overseas telecommunications problem with the millennium bug.

“Our mindset is that because our
telecommunications system is so sophisticated and we’ve had a running start, we may be ahead of the rest of the world.
But we probably have the most complex system, with more carriers and more hand-offs … and we rely heavily on
it,” he said.

“The Y2K factor works in favor of less complex systems, especially in less-developed
countries where one monopoly controls wireless and wireline. Their systems may be at risk, but what’s the impact
because, even in some European countries, they are less reliable (anyway), so people are less dependent on
them.”

Billing

“Y2K won’t affect delivery of services, but there will be some wackiness with respect
to billing,” said Windward’s Engfer.

However, QCI’s Thurmond countered that those who reduce the Y2K
issue to a billing problem ignore the fact that “if you’re a telco provider, billing is everything.”

Grambs
of Booz-Allen Hamilton specializes in consulting on billing and other operational support system issues. He calls
himself “a pragmatic optimist” when it comes to Y2K billing accuracy.

“Everyone talks about this
as if all will be peaceable until Dec. 31, 1999, but for billing systems, the first hit was Jan. 1, 1999 and there is a
gradual rise toward Jan. 1, 2000,” he said.

“That allows a gradual testing of the Y2K problem. Also, as
opposed to other industries, telcos have a very formalized testing approach on the OSS side. (Consequently) they are
better positioned t
o run scenarios, troubleshoot systems and verify that the fix has been done.”

Start-up
carriers may have an advantage over incumbents because their systems are newer, but that isn’t necessarily so, a fact
that should bring “shame on the developers,” he added. Grambs recommended
carriers trust but also verify
by in-house testing the Y2K compliance certification of their third-party suppliers.

Billing and other applications
run on binary files comprised of ones and twos that are translated from a source code, typically Common Business-
Oriented Language, or COBOL, said Leland Freeman, vice president of marketing for The Source Recovery Co.
L.L.C., Framingham, Mass. Smaller companies’ systems may have 100 million lines of source code, while
multinationals have billions of lines of it.

“In the Y2K problem, programs must be inspected at the COBOL
level,” he said.

In programming, a chain is as strong as its weakest link, so each line of source code matters.
For a variety of reasons, bits and pieces of the source code typically are missing. Realizing they are gone, identifying
which ones they are and correcting them for Y2K compliance can take internal programmers months and even years,
Freeman said.

He said Source Recovery, whose clients include Fortune 500 financial services, telecommunications
and manufacturing companies, possesses the only extant process by which to rewrite source code from scratch. It can
do so within days.

A good omen for telecom carriers, however, is they “wrote a lot of the source code
themselves and have the most COBOL legacy software in the world,” Grambs said.

“The issue is that
their software developers will have to defer other work-service enhancements, system upgrades-to work on the Y2K
problem.”

Carrier networks

Although the actual testing of network elements, like cell sites, is not date
sensitive, the logging and retrieval of data related to system problems, remediation efforts and results depends on time-
coded information.

Thurmond of QCI offered this unhappy scenario. A carrier is notified by its system of a
problem at a specific location. A technician is dispatched and fixes the problem. In order to shut off the alarm
notification that signaled the problem, the technician must input that information into the computer system.

The
alarm went into an area of volatile computer memory, which is designed to hold information only until the network
problem is resolved by the technician.

“If the technician finds he can’t get access because the password date
has expired, the (site) eventually could signal the entire system, and the volatile memory in the switches will begin to
fail because of overload,” Thurmond said.

Another issue is that of “common mode failure,” which
is a lot more complicated to fix than that of the failure of an individual component within a single piece of equipment,
whether it is a handset or a network element, said Czajka of T3G.

“With Y2K common mode failure, say
vendor ‘X’ has a Y2K problem with its cell phones. There will be thousands of cell phones out there with that problem,
not just one,” he said.

“At cell sites, say 20 vendors each supplied 10,000 pieces of equipment to the
market. If just one has a common mode failure, all the cell sites will fail.”

Big vs. small

“One
interesting fallout on the enterprise side is that the large companies are doing real well and the mid-tier companies have
recognized the issue and are moving on it,” said Engfer of the Windward Group.

“The smaller firms
can’t afford the change-over, although some of the newer ones are lucky to have installed Y2K-compliant
systems.”

That assessment was affirmed by Scott Conrad, director of the test and measurement Y2K program
for the Hewlett-Packard Microwave Communications Group, Santa Rosa, Calif.

Hewlett-Packard already has tested
all 18,000 model numbers for its equipment sold since January 1995, and it is working to remediate the 7 percent or
less that needed some Y2K remediation intervention, he said.

“We have already tested the equipment of most
of our major suppliers and are trying to audit other critical suppliers, to convince them we want to work with them, not
sue them,” he said.

“Among the larger companies, we’ve seen quite a bit of action. But we are having a
harder time getting a response from small and medium-size companies.”

Consequently, both Windward and
Hewlett-Packard have embarked on a low-tech, high-touch endeavor called “face time” in the vernacular of
corporate America. They are dispatching personnel to these companies, using this situation as a means to renew
relationships while solving a common problem.

“A lot of people wait for the lawyer-based, written letter, but
we have been real successful in using this as a good opportunity for vendors and customers to renew their
relationships,” Engfer said.

“If you think of Y2K as a natural disaster, then people will band together
and pull together.”

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