AT&T, CSG Settle Dispute

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AT&T Broadband and major information-management vendor CSG Systems Inc. have settled their contract dispute, with the MSO agreeing to withdraw its demand for arbitration without prejudice.

CSG, which lost 40 percent of its stock value on Sept. 28 when the dispute became news, recovered most of its losses when the settlement was announced last Wednesday.

Shares of CSG closed at $46.63, up from $27.94 last Tuesday but a bit below the Sept. 27 closing price of $49.50.

In September, the companies appeared to reach an impasse over billing and other services for the former MediaOne Group Inc. systems, now a part of AT&T Broadband.

The MediaOne systems had a separate billing contract. In 1999, it signed an agreement with Convergys Corp., under which it agreed to convert its entire base of 5.1 million subscribers to Convergys.

But AT&T Broadband's predecessor, Tele-Communications Inc., had tied its information-management needs to CSG in 1997. That's when the billing firm agreed to purchase TCI's "SummitTrak" customer tracking and billing software, which was still in development.

That contract commits AT&T to CSG products through 2012, said Liz Bauer, the biller's vice president of investor relations.

When the vendor and operator failed to reach a service agreement this summer, AT&T went public with the dispute on Sept. 27, filing for arbitration. While that was pending, the parties continued to negotiate.

In last week's agreement, jointly announced by the companies, AT&T agreed to use "best efforts" to convert 90 percent of MediaOne's 5.1 million subscribers to CSG management systems by Dec. 31, 2001. The remaining 10 percent are due to be converted by June 30, 2002.

AT&T Broadband spokeswoman Sarah Duisik said the dates weren't linked to any contractual milestones, but are "mutually convenient."

AT&T declined comment on its contract with Convergys. Analysts said AT&T could face millions in penalties if it fails to fulfill MediaOne's contractual commitment.

Convergys officials did not return calls by press time.

The new CSG-AT & T agreement appears to leave room for Convergys, however. CSG will provide billing and management systems for video and high-speed-data businesses, but not telephony.

AT & T's Duisik said that exclusion does not represent a lack of confidence in CSG's telephony product. "We can't discuss the behavior of vendors," she said.

Instead, AT&T will seek bids from a number of vendors for residential wireline telephony billing services, presumably including Convergys. That company was originally a part of Cincinnati Bell and derives a substantial part of its revenue from billing for wireless and wired telephony.

CSG will not be included in the telephony bid process, Duisik said.

AT&T also agreed to purchase expanded software licenses for its use in call centers and for work-force management.

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