NEW YANKEE GROUP REPORT ANALYZES HOW CHANGING ECONOMIC CONDITIONS HAVE IMPACTED THE MARKET FOR INTERCONNECTION SOFTWARE SOLUTIONS.

The interconnection software market, a byproduct of a government mandate for competition in the local service market, has clearly felt the impact of the numerous bankruptcies and mergers/acquisitions of the CLEC market over the last 18 months. The consequences of a shrinking customer base and greater financial constraints from the more established service providers (ILECs, RBOCs, IXCs) have already prompted some vendors to exit this market. While the Yankee Group expects more vendor consolidation, overall, the research firm expects the market for interconnection solutions to remain stable--with modest growth projected. The Yankee Group currently estimates that CSPs will spend roughly $450 million in 2002 on interconnection software and services, which are still comprised predominantly of software, created by the large CSPs' internal IT staffs.

"The software vendors that have survived and will gain market share in this difficult economic climate (i.e., Accenture, NightFire, and Telcordia) are those that have not veered beyond their core competency, yet have managed to expand their particular value proposition to CSPs," says Sharon Ballard, an analyst with the Telecom Software Strategy's practice at the Yankee Group. The new Yankee Group Report titled, "Interconnection Software Solutions: Darwinian Dynamics Prompting Vendor Market Evolution," discusses the trends in CSP adoption of interconnection solutions, how this technology has evolved, and the near-term and future opportunities for interconnection software.