UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549
                                   FORM 10-K

(X) ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
                             EXCHANGE ACT OF 1934

                   For the fiscal year ended December 31, 1999

                                     OR

( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
                                 ACT OF 1934

                        Commission File Number 333-4128

                        BOSTON COMMUNICATIONS GROUP, INC.
             (Exact Name of Registrant as Specified in its Charter)

MASSACHUSETTS                                                04-3026859
(State or Other Jurisdiction                                (I.R.S. Employer
 of Incorporation or Organization)                           Identification No.)

100 Sylvan Road, Suite 100, Woburn, Massachusetts            01801
(Address of Principal Executive Office)                     (Zip Code)

Registrant's telephone number, including area code:         (617)692-7000

           Securities registered pursuant to Section 12(b) of the Act:
                                       None

           Securities registered pursuant to Section 12(g) of the Act:
                       Common Stock, par value $.01 per share

    Indicate by check mark whether registrant (1) has filed all reports required
to be filed by Section 13 or 15(d)of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.

     YES  (X)                                  NO

    Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K.  [ ]
    The approximate aggregate value of the voting stock held by non-affiliates
of the registrant, computed by reference to the closing sales price of such
stock quoted on the Nasdaq National Market on February 29, 2000 was $84,458,903.
The number of shares outstanding of the Registrant's common stock, $.01 par
value per share, as of February 29, 2000 was 16,628,154.

                    DOCUMENTS INCORPORATED BY REFERENCE

The following document is incorporated by reference in the following part of
this Form 10-K: information required by Part III (Items  10, 11, 12 and 13) of
this Annual Report on Form 10-K is incorporated from the Proxy statement
relating to the 2000 Annual Meeting of Stockholders of the Company.

<PAGE>

Item 1.  BUSINESS

                               Background

General

Boston Communications Group, Inc. (BCGI) is the leading provider of prepaid
services to wireless carriers in North America currently serving the
top five wireless carriers based on number of subscribers in the US.  Taken
together with the Company's innovative roaming services and teleservices, this
suite of offerings has made BCGI a leading provider of enhanced services to the
wireless telecommunications industry. The Company's Prepaid Wireless Services
Division provides U.S and Canadian carriers with prepaid wireless services
through its C2C Prepaid Services network.  This network enables carrier's
subscribers to use their wireless phone as if they were a traditional post-pay
subscriber, thereby expanding carriers' service offerings to new and existing
subscribers without the added billing costs and collection risk.  The Systems
Division markets a voice processing platform with enhanced features for
providing prepaid wireless, voice messaging, calling card and toll limitation
services to domestic and international wireless and wireline carriers.  The
Systems Division also manufactures prepaid system components that are used to
support the Company's C2C network.  The Company's Teleservices Division
provides customer support teleservices to wireless carriers that allows them
to outsource all or a portion of their customer service activities, and are
designed to help wireless carriers retain subscribers, reduce costs and manage
growth.  The Company's ROAMERplus Division provides carriers with the ability
to cost-effectively generate revenues from subscribers who are not covered
under traditional roaming agreements by arranging payment for roaming calls
and paying carriers for the airtime used.  Each of the divisions complement
each other by providing the Company with a strong suite of products and
services to meet the needs of wireless carriers.  The Company's customers
include eight of the ten largest domestic wireless carriers by subscriber,
five of whom use three or more of the Company's products.

The Company is currently exploring opportunities to utilize its extensive
prepaid network and real-time rating engine for mobile and other electronic
commerce applications.  Because of the scale of its network and access to the
largest wireless carriers in North America, the Company anticipates that it can
provide wireless internet and other companies the ability to bill users for
products and services on a real-time prepaid basis.  The Company's expertise in
processing micro payment transactions could be sold to service and content
providers to allow them to bill for small dollar internet transactions.  The
Company also believes that the market for prepaid internet billing will be very
attractive to the youth market.  The Company intends to leverage the financial
investment in its existing technological infrastructure to facilitate mobile
commerce solutions for wireless carriers, other telecommunications companies
and online merchants.

Wireless telephone service has been one of the fastest growing areas of the
telecommunications industry over the last thirteen years.  Currently, prepaid
wireless is the fastest growing market segment of wireless industry.  According
to the Yankee Group, the number of Prepaid Wireless users in the U.S. will grow
from 4.9 million at the end of 1999 to 34 million by the end of 2003.  The
Yankee Group also estimates that over 64% of total net subscriber additions and
more than 22% of all wireless subscribers will be prepaid in 2003.  Estimates
from the Yankee Group indicate that Prepaid Wireless in North America was a $1.5
billion industry in 1999.

The Company was organized as a Massachusetts corporation in 1988 and introduced
its ROAMERplus roaming service in 1991.  The Company introduced teleservices in
1993 and its prepaid wireless service in 1996.  Also in 1996, the Company
acquired Voice Systems Technology Inc, which is now the Systems Division.  The
Company's principal office is located at 100 Sylvan Road, Suite 100, Woburn,
Massachusetts 01801 and its telephone number is (617) 692-7000.

<PAGE>

                       Description of Business

Prepaid Wireless Services Division

The Company introduced its C2C network-based prepaid wireless service offering
in early 1996 and as of December 31, 1999 was offering the service in over 150
U.S. Metropolitan Service Areas (MSA's) which cover more than 80% of the U.S.
population and all major markets in Canada as of December 31, 1999.
The Company has become the leading prepaid wireless service provider for
wireless carriers in the United States and Canada and has grown its subscriber
base more than 113% from 890,000 at December 31, 1998 to 1.9 million at December
31, 1999.  The Yankee Group estimates that the Company holds about 40% of the
U.S. Prepaid Wireless market at the end of 1999.  The average monthly minutes of
use per subscriber was approximately 45 minutes during the fourth quarter of
1999.  The Company added 411,000 new net subscribers to its C2C platform during
that time.

The Company is uniquely positioned to continue as the market leader and benefit
from the anticipated explosive growth in prepaid wireless use.  Since the
introduction of the Company's prepaid wireless service, BCGI has invested over
$60 million to create the only national network of prepaid service voice nodes,
which provide local points of presence for wireless carriers to tie into the
BCGI network.  A key advantage over other prepaid wireless service providers is
BCGI's ability to utilize the 63 voice nodes to process prepaid wireless
roaming calls locally, without having to route these calls back to a central
location via an 800 number.  BCGI has the ability to identify where in North
America a prepaid wireless user is when they make or receive a call, so the
network can determine the "least cost route" for that roaming call, thus giving
the carrier the most cost-effective call handling, and giving the end user as
seamless a roaming experience as possible.  BCGI's platform is a real time
rating engine that debits the user's account as the calls are made, as compared
to other platforms that are typically not real-time and therefore are more
exposed to fraud and revenue leakage.  The C2C network provides economies of
scale by combining many carrier's subscribers onto one comprehensive network
and database.  In addition, the Company's extensive experience in prepaid has
allowed the Company to offer not only rich and robust features and
functionality but also to provide knowledgeable guidance to carriers to
facilitate profitable prepaid programs.

The C2C network permits a wireless carrier to automatically switch a prepaid
subscriber's call to the C2C network where information regarding the status of
that subscriber's prepaid account is maintained.  A subscriber establishes an
account with the wireless carrier by prepaying a specific dollar amount that is
credited toward future service.  Subsequently, each call that is initiated or
received by the subscriber is routed to the C2C network and rated in real time
based on the telephone number called, carrier usage charges, taxes and
applicable surcharges.  The subscriber is able to replenish the account by
purchasing additional prepaid service from the carrier by credit card through
C2C's automated replenishment feature or by purchasing additional prepaid
service at any of the carrier's affiliated retail outlets.  The C2C network
can complete a call and debit the account automatically without requiring the
subscriber to enter a debit card number or other information.  As a result, a
prepaid subscriber receives service similar to a subscriber using traditional
post-pay billing arrangements, including the ability to make outgoing and
receive incoming calls, as well as roam into other markets.  Prepaid roaming
can be done automatically through the C2C platform, via the Company's C2C
service agreements, C2C call screening feature and through the Company's
ROAMERplus service.  In addition, the Company is currently developing an
enhanced roaming solution that will allow our prepaid subscribers to make or
receive calls anywhere in the United States and Canada.

The C2C network consists of a central computer database complex linked by a high
speed, fully redundant wide area frame relay network to geographically
distributed proprietary call processing subsystems, called voice nodes.  Each
voice node site is capable of serving more than one carrier and consists of a
computer controlled telecommunications switch and an interactive voice response
unit that provides high quality personalized voice prompts.  These voice nodes
are linked to the carriers' mobile switching centers via dedicated telephone
facilities.  The distributed node architecture is designed to be modular and
scaleable, while remaining efficient and cost-effective.  The C2C network also
utilizes the SS7 signaling protocol from carrier's mobile switching centers for
faster and more reliable call set-up as well as to facilitate enhanced digital
services including Caller ID and voice mail.  The centralized database enables
prepaid users to make calls while roaming in other service areas where the C2C
network is in place.

The Company provides international dialing capabilities to permit prepaid
subscribers to make calls from within the United States and Canada to countries
around the world.  The Passport feature allows subscribers to use prepaid
services from any prepaid or traditional postpaid mobile phone on a per-call
basis.  Additional features include outbound roaming, automated replenishment
options and credit card address verification.

<PAGE>

BCGI continues to expand the features of its prepaid wireless services to offer
additional functionality to its carriers and their prepaid subscribers.  During
1999, the Company added its Converged Prepaid feature that allows subscribers
to make prepaid calls from a wireless or landline phone.  The Company also
added a call-screening feature to provide seamless outbound roaming.  Other
features were added to provide a more user-friendly experience to the prepaid
subscriber.  The Company works closely with the carriers on an ongoing basis
to develop additional features and functionality to expand the capabilities
and value of prepaid wireless services.

The Company created its Distribution Technology Partner program in 1999 to
offer expanded prepaid distribution to its C2C carrier customers.  This
program enables subscribers to replenish their prepaid service at many more
retail locations beyond the carrier's retail outlets.  Western Union, Radio
Shack, Datascape, UPP and PreNet all signed up for the program, providing
over 75,000 potential  points of distribution to BCGI customers.  The Company
is aggressively pursuing additional partners and arrangements for distribution
including online activation and replenishment opportunities.

The Company signed an agreement with AG Communication Systems (AGCS, a wholly
owned subsidiary of Lucent Technologies) to jointly develop a Wireless
Intelligent Network (WIN) based solution for prepaid wireless service, including
prepaid roaming.  This WIN system will take advantage of the call processing
efficiency and enhanced feature capabilities of WIN, Phase II standards,  while
building on BCGI's existing strengths in all areas of prepaid service delivery
and back office operation.  While WIN call processing will be the standard used
by many prepaid providers, BCGI customers will benefit greatly by continuing
to receive industry leading services in the areas of rating, reporting,
distribution support, customer care and replenishment.  This will enable BCGI
to provide a state-of-the-art, full-featured platform to new customers while
allowing a smooth migration for current customers, including roaming capability
between WIN and non-WIN systems.  Carriers will also have the opportunity to
upgrade to WIN in certain markets and remain on the current C2C platform in
other markets.  The WIN service logic that BCGI and AGCS are developing is
intended to operate on many Service Control Point (SCP) platforms, providing
carriers the flexibility to run WIN service logic on their own SCP platform if
they choose.

Carriers compensate BCGI for network usage by contracting at a per minute rate
for prepaid subscriber usage based on the connection time between the carrier's
mobile switching center and the C2C network voice node.  As minutes of usage
increase and carriers achieve higher volume tiers, the per minute rates paid
by the carriers decrease yielding lower average rates per minute of usage.
The terms of the Company's existing contracts to provide prepaid wireless
services through the C2C network are generally one or two years.

The Company currently provides C2C to several U.S. carriers, including Airtouch,
Southwestern Bell Mobile Systems (SBC), Bell Atlantic Mobile, Bell South
Cellular Corp., AT&T Wireless (AWS), Bay Area Cellular, Aliant Cellular, Dobson
Cellular Systems, Inc., and Cincinnati Bell Wireless in addition to more than 20
wireless resellers.  The Company also provides prepaid wireless services in
Canada to Rogers AT&T Wireless.  As of February 29, 2000 the Company was
supporting over two million prepaid subscribers on behalf of carriers who have
deployed a BCGI C2C prepaid system in the United States and Canada.


Teleservices Division

The Company began providing teleservices in 1993 in response to the industry's
need for 24-hour, 365 day customer service.  The Company's teleservices
program allows a wireless carrier's subscriber to obtain information on rate
plans, phone operations and service center locations, as well as instructions on
roaming features and promotions.  Subscribers also may make billing inquiries,
initiate address and rate plan changes, and obtain other customer assistance.
Most carriers using BCGI's teleservices use these services for special projects,
off-hours and overflow subscriber support.  The Company currently provides
teleservices to thirty-one wireless customers.  Certain wireless carriers that
have contracted for the Company's prepaid wireless services have also engaged
the Company to provide teleservices for their prepaid subscribers.

The Company provides its teleservices from four telecommunications call centers
located in the United States and Canada.  The Company's largest
telecommunications call center is located in Deland, Florida and employs over
400 personnel as of December 31, 1999.  In collaboration with the University of
Massachusetts - Lowell, the Company operates a service center in Lowell,
Massachusetts.  This service center is located on the campus of the university
and provides students the opportunity to learn about call center operations
while earning money and scholarships to pay for their education.  More than 50%
of the current teleservices representatives at this service center are student
employees of the university.  The Company also provides services in a call
center in New Brunswick, Canada and Lakeland, Florida.  The Company contracts
with ICT Group, Inc. who owns and manages the operational functions of the New
Brunswick and Lakeland call centers, in accordance with company specifications.
BCGI is responsible for call routing, initial training and ongoing quality
assurance and mentoring to ensure compliance with the Company's standards.

<PAGE>

Each of the Company's facilities is designed to provide highly efficient, rapid
customer response through the deployment of state-of-the-art switching
technologies with client/server architecture and open, automatic call delivery
platforms.  Each customer service representative utilizes database interfaces
customized for each carrier, to facilitate subscriber inquiry response,
technical problem resolution, program/feature clarification, on-line follow-up
and performance reporting.  These customized interfaces can be programmed to
give the Company complete access to a particular carrier's subscriber databases.
Administration of call center floor personnel is facilitated by the use of
forecasting, scheduling and monitoring systems that allow floor supervisors to
observe numerous aspects of the call center's performance in a graphical format,
including information on call duration, compliance with contract standards and
operator performance.

BCGI has identified additional specific teleservices needs in the wireless
industry and has developed services to meet those needs.  These services allow
the carriers to better manage the demands of hiring, training, managing and
retaining a large number of customer service representatives for specialized
service projects that often place significant increased demands on the capacity
of customer service centers.  For example, BCGI provides teleservices support to
carriers who have prepaid subscribers on the C2C network using BCGI's
proprietary CCST software.  BCGI's wireless-trained representatives are
available to effectively answer subscriber questions that are not handled by
C2C's automated customer service application.  BCGI also provides special
support services to carriers including dealer support, phone number and NPA-NXX
area code changes and third party verification services.  In 1999, the Company
made its CCST software available for license to carriers who wish to perform
customer care on their own, creating another competitive advantage of the C2C
platform.

The Company offers extensive in-house classroom and on-the-job training programs
for its teleservices personnel, including instruction on a full breadth of
customer service skills, call handling techniques and service quality.  In
addition, carrier-specific training allows the teleservices staff to
disseminate information on a particular carrier's services, as well as to update
and edit information in the carrier's databases.

Roaming Services Division

BCGI's ROAMERplus roaming service enables wireless carriers to cost-effectively
generate revenues from subscribers roaming in a carrier's service area who are
not covered under traditional roaming agreements.  These unregistered roamers
attempting to place calls in the serving carrier's territory are automatically
switched to BCGI, which arranges payment for the calls, completes the calls and
pays the serving carrier based on the length of the call.  When an unregistered
roamer places a call in the carrier's service area, the carrier's mobile
switching center forwards the call, at the Company's expense, to the Company's
proprietary digital call processing system.  The roamer may complete the call by
charging the call to a telephone calling card, a commercial credit card, a
prepaid account or as a collect call.  All incoming traffic is initially handled
by an automated call processing system, which prompts the caller for billing and
calling information.  The Company's specially trained service representatives
handle all calls that require additional operator assistance.  The Company's
roaming service is being used by approximately 87 wireless carriers that
collectively hold licenses for over 1,000 markets in the United States, Canada
and Mexico.  BCGI services 8 of the 10 largest wireless carriers, by number of
subscribers, in the United States.

In order to implement the Company's ROAMERplus service, a carrier need only make
a minor software change in its switches.  BCGI pays for transport of the calls
to its facilities and for completion of the calls.  Under its agreements with
carriers, which typically have a term of one year, BCGI pays the serving carrier
for the airtime that the roamer uses and charges the roamer for the call.  The
charge for the call appears directly on a telephone or credit card bill, with
BCGI (typically, under the trade name "Wireless Roaming") as the vendor.
ROAMERplus eliminates collection and fraud risk for the carrier because BCGI
takes responsibility for collection from the customer.  The Company manages this
collection and fraud risk by utilizing its own proprietary and external fraud
control systems as well as validating the caller's credit before completing the
call.  Over the past few years there has been a decrease in the suspension of
inter-carrier roaming agreements due to improved fraud controls implemented by
the carriers.  This change, coupled with some reduction of unregistered
roaming due to prepaid wireless growth (caused by former unregistered roamers
becoming prepaid wireless users) and the increase in one-rate registered roaming
plans offered by some national carriers has caused a decline in roaming service
revenues.

Since the Company expects the unregistered roaming business segment to continue
to decline, the Company has focused its efforts on cost management and finding
new sources of revenue for this platform.  In order to maintain margins and
realize contributing profits from ROAMERplus, the Company has improved its call
routing and streamlined operations to reduce telecommunications rates as well as
bad debt and labor costs.

<PAGE>

Systems Division

The Systems Division delivers prepaid wireless solutions to carriers which, when
coupled with the Prepaid Wireless Services Division's carrier customers, makes
BCGI the leading provider of prepaid wireless services to carriers in North
America.  The Systems Division sells systems that enable prepaid wireless
calling on a turnkey basis primarily to international customers.  In 1999, the
Systems Division introduced its latest product, BCGI Prepaid Connection, a new
architecture for delivering prepaid service that gives wireless carriers in
small- and medium-sized U.S. markets many of the benefits of BCGI's national C2C
prepaid wireless network at a lower cost.  Prepaid Connection carriers can offer
subscribers automatic inbound and outbound roaming virtually anywhere in North
America and competitive pricing on a per-minute-of-use basis.  In return, these
carriers will be able to increase their revenues when other BCGI prepaid callers
roam into their service area.  The callers who can roam into their service area
include subscribers of the largest wireless carriers which BCGI serves today.
BCGI's server complex in Tulsa, Oklahoma manages the call rating, customer
account information, Web-based customer care server and the connection to the
national roaming server complex.  The Division also markets and sells systems
for voice messaging, toll limitation and other enhanced service applications to
Original Equipment Manufacturers (OEM's) and wireless and wireline carriers
throughout North America.

Prepaid systems have been sold to several customers whose efforts are focused on
international prepaid wireless, including Cable & Wireless, Bell South Wireless
International and Cellstar, Ltd.  In 1999, the Company entered into an agreement
with Centigram Communications under which BCGI's prepaid system solution is
offered through Centigram's worldwide distribution channels.  These customers
have operations throughout the world and have enabled the Company to make
prepaid system sales in Mexico, Brazil, Venezuela and several other South
American countries.  The Company expects to continue to market and sell its
systems through these and other channels to expand prepaid wireless services
beyond North and South America.

Engineering, Research and Development

BCGI believes that its future success will depend in large part on its ability
to enhance existing services and develop new services in response to changing
market, customer and technological requirements of the wireless telephone
industry.  An important factor in the future success of the Company's prepaid
wireless service will be the Company's ability to provide, at competitive
prices, more functionality and features than those typically available in other
competitive offerings.  The Company has developed proprietary software to enable
its call processing platform to handle custom signaling interfaces to various
types of wireless switches, specialized call rating requirements of prepaid
wireless services, and interfaces to wireless administration and management
information systems.  The Company is developing a number of enhanced services
that it intends to make available to prepaid and traditional subscribers through
the C2C network.  In addition, BCGI's agreement with AGCS to jointly develop the
WIN system is expected to improve call processing efficiency and provide BCGI
the ability to enhance the features available to carriers.  These enhanced
services are intended to be designed to enable carriers to market prepaid more
effectively, to generate additional sources of revenue from subscribers, to
provide carriers with more extensive internal reporting capabilities and help to
reduce carriers' telecommunications costs.

The Company spent approximately $5.4 million, $5.5 million and $6.0 million on
engineering, research and development in 1997, 1998, and 1999, respectively.
The Company expects to continue to devote significant resources to its
engineering, research and development activities in future years.

<PAGE>

Sales, Marketing and Distribution

The Company's sales strategy is to establish and maintain long-term
relationships with its customers.  The Company utilizes a consultative sales
process to understand and define customer needs and determine how those needs
can be addressed by the Company's services.  BCGI seeks to build upon its
existing customer relationships by integrating and cross-selling its different
service offerings.  The Company's sales cycle varies for different services and
can be up to 12 months for the Company's Teleservices, Prepaid Wireless Services
and Systems Divisions.

The Company's sales force consists of business development representatives who
generally have significant experience in the wireless industry, either as former
employees of wireless carriers or in selling products and services to wireless
carriers.  The Company typically assigns each sales representative to a single
group of wireless telephone carriers in order to support the development and
maintenance of long-term strategic customer relationships.  These
representatives are supported by product specific account and service managers
who also typically have experience in the wireless industry and manage the
accounts on a daily basis after the completion of the initial sale.  Most
business development representatives are strategically located in the carriers
major geographic regions, however, the Company's marketing and product
management activities are supported from its Woburn, Massachusetts facility and
from its Tulsa, Oklahoma Systems Division location.

The Company's direct sales strategy is complemented by a marketing program that
includes participation in industry trade shows, advertising and public
relations.  Because the Company's customers are a group of large-scale wireless
carriers, the Company seeks to gain wide exposure through carefully selected
events and activities specific to the wireless telephone industry.

Product and account management groups have been established for the Prepaid
Wireless Services, Teleservices and Systems Divisions.  Each group focuses on
supporting carriers' operational issues, understanding the prepaid market and
providing carriers with valuable information regarding prepaid marketing and
subscriber trends, distribution techniques and marketing success factors.  The
Company works closely with the carriers and the industry to disseminate and
integrate this information into their prepaid programs to help generate and
retain prepaid subscribers.  In addition, the product and account management
groups focus on identification of new features and functionality that drive
incremental prepaid business by working closely with all BCGI customers.

Distribution of prepaid wireless is an integral piece of the service because it
provides consumers with numerous channels to purchase or replenish prepaid
service.  The Company continues to improve distribution options for prepaid
cards on behalf of wireless carriers through its Distribution Technology
Program, under which the Company seeks arrangements with national distributors,
retailers, resellers and alternative channels to increase market penetration and
exposure.  Currently Western Union, Radio Shack, Datascape, UPP and PreNet are
all part of BCGI's Distribution Technology Program, providing over 75,000
potential points of distribution to BCGI customers.  The Company is aggressively
pursuing additional partners and arrangements for distribution including online
activation and replenishment opportunities.  The Company has focused much effort
on its marketing program in 1999 and 2000 to expand awareness of its prepaid
product offering, specifically to provide more assistance to its carrier
customers in strategically marketing and promoting prepaid services through
their sales and distribution channels.

Customers

The Company provides its services to wireless carriers and resellers of varying
size, expertise and capabilities.  The Company currently provides one or more
of its services to approximately 87 wireless carriers in the United States,
Canada and Mexico, including 8 of the 10 largest wireless carriers in the United
States.  Historically, a significant portion of the Company's revenues in any
particular period has been attributed to a limited number of customers.  Net
revenues attributable to the Company's ten largest customers accounted for
approximately 75%, 79% and 86% of the Company's total revenues in 1997, 1998,
and 1999, respectively.  AT&T Wireless, Ameritech Cellular Services, Bell
Atlantic Mobile, Southwestern Bell Mobile Systems, Bell South Cellular and
Airtouch Communications accounted for approximately 5%, 15%, 11%, 10%, 13% and
13%, respectively, of total revenues in 1998 and for 10%, 9%, 17%, 11%, 11% and
15%, respectively, of total revenues in 1999.

<PAGE>

Competition

The market for services to wireless carriers is highly competitive and subject
to rapid change.  A number of companies currently offer one or more of the
services provided by the Company.  In addition, many wireless carriers are
providing or can provide, in-house, the services that the Company offers.
Trends in the wireless telephone industry, including greater consolidation and
technological or other developments that make it simpler or more cost-effective
for wireless carriers to provide certain services themselves, could affect
demand for the Company's services and could make it more difficult for the
Company to offer a cost-effective alternative to a wireless carrier's in-house
capabilities.  In addition, the Company anticipates continued growth in the
wireless carrier services industry, and consequently, the entrance of new
competitors in the future.  BCGI's principal competitor in the unregistered
roaming market is National Telemanagement Corporation and in its C2C prepaid
network market, Intervoice Brite, Inc., National Telemanagement Corporation,
GTE Telecommunications Services, Inc., Lucent Technologies, Inc. and Ericcson.
In the teleservices market, BCGI competes with a variety of companies that have
inbound and outbound service centers.  The Systems Division's principal
competitors in the turnkey prepaid and voice processing systems markets include
Corsair Communications Inc., Comverse Technology, Inc. and Intervoice Brite,
Inc.

The Company believes that the principal competitive factors in the wireless
carrier services industry include the ability to identify and respond to
customer needs, quality and breadth of service offerings, the size and scale of
its C2C platform, nationwide roaming, price and technical expertise.  The
Company's ability to compete also depends in part on a number of competitive
factors outside its control, including the ability to hire and retain employees,
the development by others of products and services that are competitive with the
Company's products and services, the price at which others offer comparable
products and services and the extent of its competitors' responsiveness to
customer needs.  There can be no assurance that the Company will be able to
continue to compete successfully with its existing competitors or with new
competitors.


Government Regulation

The Federal Communications Commission ("FCC"), under the terms of the
Communications Act of 1934, as amended, including the Telecommunications Act of
1996, regulates interstate communications and use of radio spectrum, including
entry, exit, rates and terms of operation.  BCGI presently neither operates any
facilities utilizing radio spectrum nor has any facilities-based services
involving interstate communications.  Consequently, it is not required to and
does not hold any licenses or other authorizations issued by the FCC for
interstate operations.  Two subsidiaries of the Company, Cellular Express, Inc.
and BCGI Communications Corp. have been granted licenses by the FCC to provide
international telecommunications services.  BCGI Communications Corp. has also
filed applications to provide intrastate telecommunication services in all 50
states, and if approved, will be subject to state regulatory requirements.

The wireless carriers that constitute the Company's customers are regulated at
both the federal and state levels.  Such regulation may decrease the growth of
the wireless telephone industry, affect the development of the PCS market,
limit the number of potential customers for the Company's services or impede the
Company's ability to offer competitive services to the wireless market or
otherwise have a material adverse effect on the Company's business and results
of operations.  At the same time, the Telecommunications Act of 1996, a
deregulatory measure, may cause changes in the industry, including entrance of
new competitors and industry consolidation, which could in turn affect the
Company's cost of doing business or otherwise have a material effect on the
Company's business, financial condition and results of operations.


Employees

As of December 31, 1999, the Company had a total of 936 full-time and part-time
employees.  Of these employees, 619 serve in teleservices and roaming call
center and related functions, 182 serve in technical operations and software
development, 49 serve in sales, marketing, product and account management and 86
serve in administration and management.  In addition, 107 students of the
University of Massachusetts - Lowell serve as representatives for the
Teleservices Division.  None of the Company's employees are represented by a
labor union.  The Company believes that its employee relations are good.

<PAGE>

Backlog

As of December 31, 1999, there was $28,000 in backlog of firm orders of the
Systems Division.  The Company includes in backlog only those orders for which
it has received completed purchase orders and for which delivery has been
specified within 12 months.  Most orders are subject to cancellation by the
customer.  Because of the possibility of customer changes in delivery schedules,
cancellation of orders and potential delays in product shipments, the Company's
backlog as of any particular date may not be representative of actual sales for
any succeeding period.


Item 2.  PROPERTIES

The Company leases space or facilities at five of its six principal locations:
Woburn and Lowell, Massachusetts, Deland and Lakeland, Florida and Riverview,
New Brunswick, Canada.  In March 1999, the Company purchased the property at its
Tulsa, Oklahoma location which was previously under lease.  The Woburn location
serves as the operations center for ROAMERplus and has separate facilities that
house the Company's network operations center as well as the Company's executive
headquarters, training facility, engineering, sales, human resources and finance
personnel.  The Deland, Lakeland and Riverview facilites serve as call centers
for teleservices.  The Deland facility is leased and run by the Company.  The
Lakeland and Riverview facilities are leased and managed by a third party.  The
Tulsa facility is used for the manufacturing and assembly of systems and houses
other Systems Division support functions such as engineering, product
management, sales support and finance.  The Company has 32 other leased
facilities throughout the United States that are used to house the Company's
voice nodes and certain equipment for the C2C network.

The following is a listing of the Company's significant leased facilities:

                    Square
       Location    Footage      Expiration Date
       ------------------------------------------------
       Woburn, MA   81,834      February 2001-June 2004
       Deland, FL   30,000      May 2003
       Lowell, MA    9,000      February 2002


Item 3.  LEGAL PROCEEDINGS

In December 1999, the Company was named as a defendant in a suit filed in United
States District Court for the Northern District of Iowa by a former supplier
(the "Supplier") of materials to a subsidiary of the Company.  A purchase
contract for an unspecified number of components was signed in 1997 and the
Supplier became the sole supplier for a certain system component in 1997 and
early 1998.  The suit alleges that the Company breached the confidentiality
clause of the contract, misappropriated the Suppliers' trade secrets and
interfered with actual and prospective contracts with other customers.  The
Supplier has requested injunctive relief and seeks actual and punitive damages
for lost profits and damage to the supplier's reputation in excess of $1
million.  The Company believes that the claim is without merit.

In December 1999, the Company was named as a defendant in a suit filed in United
States District Court for the District of New Jersey by another supplier
("Supplier II") of materials to a subsidiary of the Company.  A purchase
contract was signed for up to 1,000 units of a certain system component with a
stipulation giving the Company most favored nation pricing.  In February 1999,
the Company stopped shipments from Supplier II.  Supplier II then invoiced the
Company for $437,000 to compensate for components not shipped.  Subsequently,
the Company discovered that Supplier II had not extended most favored nation
pricing over the entire contract period.  The Company maintains that Supplier II
has been paid in full.  The suit against the Company alleges breach of contract,
lost profits of $350,000 and fraudulent and unfair conduct.  The Company
believes that it has meritorious defenses and counterclaims to this action.

On November 20, 1997, AWS sent a letter to the Company stating that it believed
that it was entitled to indemnification from the Company in respect to a certain
claim presently pending in a case brought by Ronald A. Katz Technology
Licensing, L.P. and MCI Telecommunications Corporation against AT&T Corp. in the
United States District Court for the Eastern District of Pennsylvania.  The
amount in question is undetermined.  The Company believes that the claim is
without merit.  No legal action has been brought against the Company.

<PAGE>

Item 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

No matters were submitted to a vote of security holders of the Company, through
solicitation of proxies or otherwise, during the last quarter of the year ended
December 31, 1999.


EXECUTIVE OFFICERS OF THE REGISTRANT

The executive officers of the Company and their ages and positions are as
follows:

   Name               Age           Position
   ----               ---           --------
   E.Y. Snowden        45           President & Chief Executive
                                    Officer, Director
   Frederick E. von    47           Vice President, Corporate
   Mering                           Development, Director
   Karen A. Walker     35           Treasurer, Vice President,
                                    Financial Administration and
                                    Chief Financial Officer



     Mr. Snowden has served as a Director of the Company and as its President
and Chief Executive Officer since February 1998.  Prior to joining the Company,
Mr. Snowden served as President and Chief Operating Officer of American Personal
Communications, L.P. d/b/a Sprint Spectrum, a telecommunications company, from
February 1994 to December 1997.  From June 1990 until February 1994, Mr. Snowden
was an Area Vice President at Pacific Bell, Inc., a telecommunications company.
Mr. Snowden was the Chief Executive Officer at Universal Optical Company, Inc.
from March 1986 to March 1988.  Mr. Snowden received his B.S. from Stanford
University and his M.B.A. from Harvard Graduate School of Business
Administration.

     Mr. von Mering has served as a Director of the Company since 1989 and as
the Company's Vice President of Corporate Development since April 1999.  From
1989 until April 1999 Mr. von Mering was the Company's Vice President, Finance
and Administration.  Prior to joining the Company, Mr. von Mering served as
Regional Vice President and General Manager for the paging division of
Metromedia, Inc., a communications company, from 1980 to 1986.  From 1975 to
1979, Mr. von Mering was employed at Coopers & Lybrand LLP.  Mr. von Mering
earned his B.A. in accounting from Boston College and his M.B.A. from Babson
College.

     Ms. Walker has served as Treasurer, Vice President Financial Administration
and Chief Financial Officer of the Company since April 1999 and as Vice
President of Financial Administration from August 1998 until April 1999.  She
served as the Company's Corporate Controller from December 1993 until August
1998.  Prior to her employment at BCGI, Ms. Walker spent more than six years at
Ernst & Young LLP, where she earned her CPA and was a manager in their
Entrepreneurial Services Group.  Ms. Walker earned a B.S. in Accounting from
Boston College.

<PAGE>

                              PART II


Item 5.  MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED
     SHAREHOLDER MATTERS

Market Information for Common Stock

    Boston Communications Group, Inc.'s Common Stock is traded on the Nasdaq
National Market, under the symbol BCGI.  The following table reflects the range
of high and low selling prices of the Company's common stock for the periods
indicated.

                                           1998            1999
                                       High     Low     High     Low
   First Quarter                   $11 11/16  $6 1/8  $13  1/4  $8 1/16
   Second Quarter                   11  1/4    6 1/2   14 11/16  7 3/8
   Third Quarter                     9  1/8    3 7/8   17  1/4   4 9/16
   Fourth Quarter                   13         6 3/4    7  7/16  3 1/2


Holders

At February 29, 2000, there were approximately 5,000 holders of Common Stock.


Dividends

The Company has never paid a cash dividend on its Common Stock.  The Company
currently intends to retain all of its earnings to finance future growth and,
accordingly, does not anticipate paying any cash dividends in the foreseeable
future.


Item 6.  SELECTED FINANCIAL DATA

The following tables should be read in conjunction with the Consolidated
Financial Statements of the Company and the notes thereto and with "Management's
Discussion and Analysis of Financial Condition and Results of Operations"
appearing elsewhere in this report.

                                               Year ended December 31,

                                     1995      1996     1997     1998     1999

Consolidated Statements of Operations (in thousands, except per share data)
Data:

Total revenues(1)                  $34,220   $50,651  $68,099  $86,482 $105,051
Operating income (loss)              2,129       610   (2,389)  (3,149)  (1,287)
Income (loss) from continuing
 operations(2)                       3,008      599   (1,116)  (1,800)   (786)
Loss from discontinued operations     (165)      --       --       --      --
Net income (loss)                    2,843      599   (1,116)  (1,800)   (786)
Net income (loss) available to common
 shareholders                        1,893      148   (1,116)  (1,800)   (786)
Basic net income (loss) per common
 share:                               0.57     0.02    (0.08)   (0.11)  (0.05)
Diluted net income (loss) per common
 share:                               0.22     0.01    (0.08)   (0.11)  (0.05)
Consolidated Balance Sheet Data:
Cash and short-term investments        253   21,421   33,704   25,609  30,236
Working capital                      2,082   26,433   38,210   37,397  34,880
Property and equipment, net          4,884   12,906   38,087   38,055  44,995
Total assets                        13,614   51,959   93,385   91,760 102,081
Redeemable preferred stock          15,896       --       --       --      --
Shareholders' equity (deficit)     $(8,698) $42,893  $80,104  $78,658 $79,369
Dividends per common share              --       --       --       --      --


(1) In February 1996, the Company acquired VST for Common Stock and cash with
    an aggregate value of approximately $2.5 million.
(2) In 1995, the Company reversed the deferred tax asset valuation allowance,
    resulting in a tax benefit of $1.8 million.  In addition, in 1995, the
    Company realized benefits from a net operating loss carryforward of
    $840,000.

<PAGE>

Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
        OF OPERATIONS


Consolidated Results of Operations

The Company's total revenues increased 21% from $86.5 million in 1998 to $105.1
million in 1999.  The growth was primarily attributable to a 98% increase in the
Company's principal business, Prepaid Wireless Services, and to a 57% increase
in Teleservices revenues, primarily arising from increased customer service for
carriers' C2C customers.  A 21% decline in Roaming Service revenues and 63%
decline in Systems revenues offset the growth in Prepaid Wireless Services and
Teleservices.  In 1998, total revenues increased 27% compared to 1997 primarily
due to increases in Prepaid Wireless Services and Teleservices revenues.

The Company incurred operating losses for the years ended December 31, 1999,
1998, and 1997 totaling $1.3 million, $3.1 million, and $2.4 million
respectively.  Excluding the effect of the one-time charge for the
reorganization of the Systems Division, the Company generated operating income
of $537,000 in 1999.  The significant increase in Prepaid revenues principally
contributed to the improvement in operating income.  Excluding the effects of
the loss on impairment of long-lived assets, the operating losses for the years
ended December 31, 1998 and 1997 were $2.5 million and $1.8 million,
respectively.  The increased loss in 1998 reflects the increased depreciation,
telecommunication and personnel costs associated with the deployment and
operation of the C2C network.  The specifics of each division's revenues and net
operating income (loss) are discussed in greater detail below.

The Company's reportable operating segments consist of Prepaid Wireless
Services, Teleservices, Roaming Services and Systems Divisions.  The accounting
policies of the operating segments are the same as those described in the
summary of significant accounting policies in Note 2 of the Company's
Consolidated Financial Statements, except that the financial results for the
Company's operating segments have been prepared using a management approach.
This approach is consistent with the basis and manner in which the Company's
management internally analyzes financial information for the purposes of
assisting in making internal operating decisions.  The Company evaluates
performance based on stand-alone divisions operating income (loss) before
interest and taxes and allocates corporate level operating expenses to the
operating divisions.  Segment disclosure information is included in Note 5 of
the Company's Consolidated Financial Statements.

The Company's chief operating decision-maker is its President and Chief
Executive Officer.  The Company's Divisions, or operating segments, are managed
separately because each represents a strategic business unit that offers
different products and serves unique markets within the wireless industry.
However, the divisions do complement each other in order to provide the Company
with a strong suite of products and services to meet the needs of wireless
carriers.  The Company's customers include eight of the ten largest domestic
wireless carriers by subscriber, five of whom use three or more of the Company's
products.

<PAGE>

Divisional Data
(in thousands except for percentages)

                       Prepaid
                      Wireless                 Roaming
                      Services  Teleservices  Services  Systems     Total
--------------------------------------------------------------------------
1999
Revenues               $36,920    $40,870      $22,249   $5,012  $105,051
Gross margin            23,040      7,291        4,019     (246)   34,104
Gross margin percentage    62%        18%          18%      (5%)      32%
Operating income(loss)   3,467        316        1,116   (6,186)  (1,287)
Percentage of revenues      9%         1%           5%    (123%)     (1%)

1998
Revenues               $18,624    $26,001      $28,235  $13,622  $86,482
Gross margin             8,659      5,918        6,364    5,174   26,115
Gross margin percentage    46%        23%          23%      38%      30%
Operating income(loss)  (7,236)       393        2,962      732   (3,149)
Percentage of revenues    (39%)        2%          10%       5%      (4%)

1997
Revenues                $7,539    $17,009      $32,461  $11,090  $68,099
Gross margin             1,260      4,815        6,754    4,889   17,718
Gross margin percentage    17%        28%          21%      44%      26%
Operating income(loss)  (7,976)       562        4,547      478   (2,389)
Percentage of revenues   (106%)        3%          14%       4%      (4%)


Prepaid Wireless Services Division

Prepaid Wireless Services Division revenues increased from $7.5 million in 1997
to $18.6 million in 1998 and increased 98% to $36.9 million in 1999.  The
increase in 1999 was the result of existing carrier customers adding new markets
and new subscribers as well as increased minutes of use.  At the end of 1999
there were approximately 1.9 million paid subscribers on the C2C network, as
compared to 890,000 subscribers at the end of 1998, an increase of over 113%.
The subscribers increased more than 200% in 1998 from 290,000 at the end of
1997.  The increase in 1998 was the result of new carrier contracts secured in
1998, as well as existing carrier customers adding new markets to the C2C
network.

Gross margins for the Prepaid Wireless Services Division improved from 17% of
prepaid wireless service revenues in 1997 to 46% of revenues in 1998 and to 62%
of revenues in 1999.  The improvement in both years resulted from the
significant increase in prepaid wireless services revenues in 1998 and 1999 that
leveraged the predominantly fixed cost infrastructure.  This increase in gross
margins was partially offset by increased personnel and related costs incurred
to support the growth of the C2C network.

Operating income (loss) for the Prepaid Wireless Services Division decreased 10%
from an $8.0 million operating loss in 1997 to a $7.2 million operating loss in
1998, compared to operating income of $3.5 million in 1999. Although
depreciation and other operating costs increased in 1999 to support the expanded
system, the increases in revenues and gross margin in 1999 more than offset
these costs, which are more fixed than variable, resulting in an operating
profit.  The operating losses incurred in 1997 and 1998 were due to costs
associated with developing and launching the C2C network, including costs for
personnel, network development and telecommunications equipment and software to
launch and subsequently expand the C2C system.

<PAGE>

Teleservices Division

Teleservices Division revenues increased 53% from $17.0 million in 1997 to
$26.0 million in 1998 and increased 57% to $40.9 million in 1999.  The increases
in Teleservices revenues were primarily due to new and additional services
provided to existing customers and the addition of new carrier customers in 1997
and 1998.  A significant component of these increases was the increase in
Teleservices revenues from billing inquiry services provided to the Prepaid
Division's carriers.  Teleservices revenues from those services increased 331%
from $1.9 million in 1997 to $8.2 million in 1998 and increased 110% to $17.2
million in 1999.  The Company does not expect that these trends will continue
for several reasons: First, during the fourth quarter of 1999, one of the
Company's carrier customers made the decision to transfer a portion of its
customer care to an in-house facility with existing capacity.  Second, in order
to maintain its competitive advantage for its prepaid system, the Company has
decided to offer its carrier customers the option to license the prepaid
customer service software (CCST), which will potentially have a negative impact
on Teleservices Division revenues in 2000, while providing additional licensing
and maintenance revenue to prepaid wireless services.  The Company's C2C prepaid
platform is attractive to carrier customers because billing inquiry can either
be outsourced to BCGI or provided in-house by the carrier.

Gross margins for the Teleservices Division decreased from 28% of teleservices
revenues in 1997 to 23% of revenues in 1998, and declined to 18% of revenues in
1999.  The decreases in gross margins in 1999 and 1998 were primarily due to
incremental costs in connection with opening one additional call center in 1999
and three centers in 1998, including training, travel and other start up costs.
Another reason for the gross margin decline was the leasing of call center
facilities, equipment and personnel from third parties that began in August
1998, that resulted in these costs being classified entirely in cost of services
in 1998 and 1999.  Prior to 1998, these costs were classified in depreciation or
general and administrative expenses.  In October 1999, the Company cancelled the
management services contract and acquired the underlying leases for the Deland
call center facility to achieve additional cost savings.  This buyout is
expected to have a positive effect on 2000 gross margins given that a portion of
the related expenses will again be classified as depreciation or general and
administrative expenses.  In addition, the closing of the Woburn, Massachusetts
call center is expected to reduce labor costs in 2000.

Operating income for the Teleservices Division decreased from $562,000 in 1997
to $393,000 in 1998 and $316,000 in 1999.  Operating income for the Teleservices
Division represented 3% of Teleservices revenues in 1997, 2% in 1998 and 1% in
1999.  The decrease in 1999 operating income was due to costs associated with
the closing of the Woburn call center, including severance and asset writeoffs.
The decrease in 1998 was primarily due to the Company's significant investment
in call center technology designed to enhance service offerings as well as
improve operational efficiency.

Roaming Services Division

Roaming services revenues decreased 13% from $32.5 million in 1997 to $28.2
million in 1998 and decreased 21% to $22.2 million in 1999.  The decrease in
roaming services revenues was primarily attributable to fewer suspensions of
inter-carrier automatic roaming agreements and some reduction of unregistered
roaming use because of the growth of prepaid wireless services.  In addition, a
consumer's decision to use the Company's premium priced roaming service has been
adversely affected by an increase in one-rate registered roaming plans offered
by some national carriers.  The Company anticipates that these trends will
continue and, therefore, roaming services revenues will continue to decrease
over time.

Gross margins for the Roaming Services Division increased from 21% of roaming
services revenues in 1997 to 23% in 1998 and declined to 18% in 1999.  The gross
margin declined in 1999 due to lower revenues and therefore lower absorption of
fixed costs, higher revenue sharing rates paid to the Company's carrier
customers and  with increased roaming calls attempted that were not completed
resulting in higher telecommunications costs.  The improvement in 1998 resulted
primarily from enhancement and expansion of automated features of the service
that reduced labor costs.

Operating income for the Roaming Services Division decreased from $4.5 million
in 1997 to $3.0 million in 1998 and decreased 62% to $1.1 million in 1999.  The
decreases were primarily a result of lower absorption of fixed costs as roaming
services revenues declined.  The decrease was partially offset by reduced labor
costs and other cost reduction measures.  The Company anticipates that operating
income for the Roaming Services Division will continue to decline due to the
anticipated decrease in roaming services revenues.

<PAGE>

Systems Division

Systems revenues increased 23% from $11.1 million in 1997 to $13.6 million in
1998 and decreased 63% to $5.0 million in 1999.  The decrease in 1999 was due to
a significant decline in orders for the Division's international prepaid
systems.  The increase in 1998 was due to system sales to new and existing
customers in South America, including a sale to one customer for approximately
$7.0 million.

Gross margins for the Systems Division decreased from 44% of systems revenues in
1997 to 38% in 1998 and decreased to 31% of systems revenues in 1999 (excluding
the effects of the one-time charge).  The decrease in 1999 was primarily due to
the reduced sales levels for 1999 that absorbed fewer fixed costs.  In addition,
the gross margin was further reduced by the one-time charge of $1.8 million
recorded in the third quarter of 1999 for the reorganization of the Systems
Division.  The charge principally relates to expenses associated with inventory
write-downs to bring the level of inventory in line with the future sales
strategy, as well as severance costs.  The Company believes that the
reorganization will help position the Division to expand its presence in the
international market, while ensuring that corporate exposure to the under-
performance of the Division is minimized.  However, should the reorganization
not be successful, the Systems Division may incur additional operating losses,
asset impairment charges or other write-offs that could materially and adversely
affect the Company's business, operating results and financial condition.  The
decrease in 1998 was primarily a result of increased competition in the market
for prepaid systems that resulted in reduced prices for the systems, as well as
higher costs associated with installing systems abroad.  The trend of selling
more prepaid systems in proportion to total systems sales also continued and,
therefore, was an additional factor in the decrease in gross margin.

Operating income for the Systems Division increased 53% from $478,000 in 1997 to
$732,000 in 1998 and decreased to a $6.2 million operating loss in 1999.
Operating income for the Systems Division represented 4% of systems revenues in
1997, 5% of systems revenues in 1998 and the operating loss represented (123%)
of systems revenues in 1999.  The decrease in 1999 was primarily a result of the
one-time charge along with the low sales volume that caused lower gross margins
and less absorption of fixed operating, depreciation, and amortization costs.
Operating income remained consistent as a percentage of systems revenues in 1998
and 1997, notwithstanding the decrease in gross margin, because sales and
marketing expenses of the Systems Division were reduced with the consolidation
of one of the division's satellite sales offices into its Tulsa headquarters.

The Company currently prices and sells all of its systems to international
customers in U.S. dollars.  In addition, many Systems Division customers are
multinational corporations that are publicly traded in the U.S.  All payments
are received in U.S. dollars which helps to protect the Company from the need to
hedge against foreign currency risk.


Operating Data
($ in thousands)
                                  1999              1998               1997
                                      %of               %of                %of
                             Total  Revenue    Total  Revenue    Total   Revenue
--------------------------------------------------------------------------------
Total revenues            $105,051    100%   $86,482   100%    $68,099    100%
Engineering, research and
 development                 6,045      6%     5,523     6%      5,433      8%
Sales and marketing          6,507      6%     5,590     6%      5,089      7%
General and administrative   7,269      7%     6,208     7%      3,470      5%
Depreciation and
 amortization               15,570     15%    11,245    13%      5,546      8%
Impairment of long-lived
 assets                          0      0%       698     1%        569      1%

<PAGE>

Engineering, research and development expenses

Engineering, research and development expenses primarily include the salaries
and benefits for software development and engineering personnel associated with
the development, implementation and maintenance of existing and new services.
Engineering, research and development expenses remained consistent at 6% for the
years ended December 31, 1998 and 1999, respectively, but increased from $5.5
million to $6.0 million due to additional personnel hired to develop new
features and functionality for the Company's C2C network.

Engineering, research and development expenses decreased as a percentage of
total revenues from 8% to 6% for the years ended December 31, 1997 and 1998.
This decrease primarily resulted from engineers devoting less time to developing
and building out the C2C network infrastructure than they had in the prior year
and, to a lesser extent, to the changes associated with organizing the Company
into its four operating divisions.  As a result of the divisional structure,
certain senior management personnel changed their functional responsibilities
from engineering to general management and oversight of the divisions.  The
Company intends to continue to increase its engineering, research and
development expenditures to support future development and enhancements of its
prepaid and other wireless services and systems.  In addition, the Company
intends to invest additional resources to expand the capabilities of its current
network to be positioned to take advantage of new wireless opportunities.


Sales and marketing expenses

Sales and marketing expenses include direct sales and product management
salaries, commissions, travel and entertainment expenses, in addition to the
cost of trade shows, advertising and other promotional expenses.  Sales and
marketing expenses remained consistent at 6% for the years ended December 31,
1998 and 1999, respectively, but increased in absolute dollars from $5.6 million
in 1998 to $6.5 million in 1999.  The increase in absolute dollars for 1999
primarily related to new marketing and business development efforts for the
Company.

As a percentage of total revenues, sales and marketing expenses decreased from
7% in 1997 to 6% in 1998.  This decrease resulted primarily from revenues
absorbing fixed sales and marketing costs that did not increase as rapidly as
revenue growth.  In addition, the decrease resulted from the consolidation of
the Systems Division satellite sales offices to the Tulsa headquarters in 1997
and, to a lesser extent, to the changes associated with organizing the Company
into its four operating divisions.  As a result of the divisional structure,
certain senior management personnel changed their functional responsibilities
from sales and marketing to general management and oversight of the divisions.


General and administrative expenses

General and administrative expenses include salaries and benefits of employees
and other expenses that provide administrative support to the Company.  Total
general and administrative expenses were consistent as a percentage of total
revenues for 1998 and 1999 at 7%, respectively, but increased in absolute
dollars from $6.2 million in 1998 to $7.3 million in 1999, due to increased
personnel and other related costs to support the Company's growth.

General and administrative expenses increased as a percentage of total revenues
from 5% in 1997 to 7% in 1998.  The increase resulted principally from the
addition of staff to support the Company's growth and changes associated with
organizing the Company into its four operating divisions.  As a result of the
divisional structure, certain senior management personnel changed their
functional responsibilities from marketing and engineering to general management
and oversight of the divisions.

<PAGE>

Depreciation and amortization expense

Depreciation and amortization expense includes depreciation of
telecommunications systems, furniture and equipment and leasehold improvements.
The Company provides for depreciation using the straight-line method over the
estimated useful lives of the assets, which range from three to twenty years.
Goodwill related to acquisitions is amortized over eight years.  Depreciation
and amortization expense increased from 13% to 15% of total revenues for 1998
and 1999, respectively, primarily due to the depreciation of additional
technical equipment and software to support the rapid expansion and enhancement
of the Company's prepaid wireless network.  This increase was partially offset
by a decrease in depreciation as a percentage of Teleservices revenues since
most of the Division's growth was facilitated through outsourced call center
facilities.  In 1999, the Company primarily supported the growth in Teleservices
by leasing call center facilities, equipment and personnel from third parties
and classified amounts entirely in cost of services.

Depreciation and amortization expense increased more than 100% in 1998 compared
to 1997.  The increase in 1998 was due primarily to the depreciation of
additional technical equipment and software to support the rapid expansion and
enhancement of the Company's prepaid wireless network.  Depreciation and
amortization expense are expected to increase in 2000 due to increased capital
expenditures for telecommunications systems, primarily related to new features
and functionality and the continued expansion of the C2C network.  In addition,
the Deland call center equipment leases assumed in October 1999 are expected to
increase depreciation since these expenses will no longer be classified as cost
of services but instead will be classified as depreciation expense.


Impairment of long-lived assets

The Company recognized a pre-tax charge of $569,000 and $698,000 in the years
ended December 31, 1997 and 1998, respectively, for a write-down of assets that
are no longer being used to support the Company's operations.


Interest income

Interest income increased from $1.1 million in the year ended December 31, 1997
to $1.3 million in 1998 and decreased to $896,000 in 1999.  Interest income was
earned from investments of the proceeds of the Company's public offerings and
was offset slightly by interest expense from the Company's capital leases.


Provision (benefit) for income taxes

The income tax provision of $395,000 recorded for the year ended December 31,
1999 principally represents the Company's assessment of the additional valuation
allowance necessary on the Company's net operating losses.  The income tax
benefit of $188,000 for the year ended December 31, 1997 yielded a 14% income
tax benefit.  The lack of an income tax benefit in 1998 and the income tax
benefit of $188,000 recorded in 1997, resulted primarily from the non-
deductibility of goodwill from the Company's acquisitions.  In addition, the
Company did not provide any additional benefit for net operating losses
generated in 1998.  The Company's effective income tax rate may be greater than
40% in future years due to the continued impact of non-deductible goodwill.

The Company has recorded a net deferred tax asset for net operating loss
carryforwards and other temporary differences based on management's assessment
that it is more likely than not that future results of operations will be
sufficient to realize this asset.

<PAGE>

Selected Quarterly Operating Results

The following table sets forth certain unaudited quarterly results of
operations of the Company for the eight quarters in the two year period ended
December 31, 1999, including such amounts expressed as a percentage of revenues.
This quarterly information is unaudited, has been prepared on the same basis as
the audited Consolidated Financial Statements and, in the opinion of the
Company's management, reflects all necessary adjustments, consisting only of
normal recurring adjustments, necessary for a fair presentation of the
information for the periods presented.  The quarterly operating results are not
necessarily indicative of future results of operations when read in conjunction
with the audited Consolidated Financial Statements and Notes thereto included
elsewhere in this Annual Report on Form 10-K.

                                                     Three months ended
                                           -------------------------------------
                                           March 31, June 30, Sept. 30, Dec. 31,
                                             1999      1999     1999      1999
--------------------------------------------------------------------------------
Revenues:
      Prepaid wireless services              $7,872    $9,731   $9,115   $10,202
      Teleservices                            9,843    10,707   10,088    10,232
      Roaming services                        5,435     5,733    5,956     5,125
      System sales                            1,014     1,250      955     1,793
--------------------------------------------------------------------------------
           Total revenues                    24,164    27,421   26,114    27,352
Expenses:
      Cost of service revenues               15,471    17,067   17,651    15,500
      Cost of system revenues                   735       863      728     1,108
      Cost of system revenues-one-time charge    --        --    1,824        --
      Engineering, research and development   1,263     1,551    1,632     1,599
      Sales and marketing                     1,606     1,664    1,498     1,739
      General and administration              1,640     1,794    1,985     1,850
      Depreciation and amortization           3,372     3,544    3,921     4,733
      Impairment of long-lived assets            --        --       --        --
--------------------------------------------------------------------------------
            Total expenses                   24,087    26,483   29,239    26,529
--------------------------------------------------------------------------------
Operating income(loss)                           77       938   (3,125)      823
Interest income                                 274       247      227       148
--------------------------------------------------------------------------------
Income (loss) before income taxes               351     1,185   (2,898)      971
Provision (benefit) for income taxes            161       523     (684)      395
--------------------------------------------------------------------------------
Net income (loss)                               190       662   (2,214)      576
--------------------------------------------------------------------------------
Basic and diluted earnings per share          $0.01     $0.04   $(0.13)    $0.03
--------------------------------------------------------------------------------


                                                     Three months ended
                                           -------------------------------------
                                           March 31, June 30, Sept. 30, Dec. 31,
                                             1998      1998     1998      1998
--------------------------------------------------------------------------------
Revenues:
      Prepaid wireless services              $2,934    $4,043   $5,010    $6,637
      Teleservices                            4,589     6,226    7,514     7,672
      Roaming services                        7,796     7,059    7,097     6,283
      System sales                            5,064     3,932    1,547     3,079
--------------------------------------------------------------------------------
           Total revenues                    20,383    21,260   21,168    23,671
Expenses:
      Cost of service revenues               12,041    12,899   13,684    13,295
      Cost of system revenues                 2,673     2,180    1,363     2,232
      Cost of system revenues-one-time charge    --        --       --        --
      Engineering, research and development   1,403     1,176    1,426     1,518
      Sales and marketing                     1,333     1,308    1,387     1,562
      General and administration              1,414     1,469    1,572     1,753
      Depreciation and amortization           2,452     2,695    2,908     3,190
      Impairment of long-lived assets            --       698       --        --
--------------------------------------------------------------------------------
            Total expenses                   21,316    22,425   22,340    23,550
--------------------------------------------------------------------------------
Operating income(loss)                         (933)   (1,165)  (1,172)      121
Interest income                                 386       326      331       306
--------------------------------------------------------------------------------
Income (loss) before income taxes              (547)     (839)    (841)      427
Provision (benefit) for income taxes           (208)       --      208        --
--------------------------------------------------------------------------------
Net income (loss)                              (339)     (839)  (1,049)      427
--------------------------------------------------------------------------------
Basic and diluted earnings per share         $(0.02)   $(0.05)  $(0.06)    $0.03
--------------------------------------------------------------------------------

<PAGE>

                                           As a Percentage of Total Revenues
                                          -------------------------------------
                                          March 31, June 30, Sept. 30, Dec. 31,
                                            1999      1999     1999      1999
-------------------------------------------------------------------------------
Revenues:
   Prepaid wireless services                 33%       35%      35%       37%
   Teleservices                              41        39       38        37
   Roaming services                          22        21       23        19
   System sales                               4         5        4         7
------------------------------------------------------------------------------
        Total revenues                      100       100      100       100
Expenses:
   Cost of service revenues                  64        62       67        57
   Cost of system revenues                    3         3        3         4
   Cost of system revenues-one-time charge   --        --        7        --
   Engineering, research and development      5         6        6         6
   Sales and marketing                        7         6        6         6
   General and administration                 7         7        8         7
   Depreciation and amortization             14        13       15        17
   Impairment of long-lived assets           --        --       --        --
------------------------------------------------------------------------------
        Total expenses                      100        97      112        97
Operating income(loss)                        0         3      (12)        3
Interest income                               1         1        1         0
------------------------------------------------------------------------------
Income (loss) before income taxes             1         4      (11)        3
Provision (benefit) for income taxes         --         2       (3)        1
------------------------------------------------------------------------------
Net income (loss)                             1%        2%      (8)%       2%
------------------------------------------------------------------------------

                                           As a Percentage of Total Revenues
                                          -------------------------------------
                                          March 31, June 30, Sept. 30, Dec. 31,
                                            1998      1998     1998      1998
-------------------------------------------------------------------------------
Revenues:
   Prepaid wireless services                 14%       19%      24%       28%
   Teleservices                              23        29       36        32
   Roaming services                          38        33       33        27
   System sales                              25        19        7        13
------------------------------------------------------------------------------
        Total revenues                      100       100      100       100
Expenses:
   Cost of service revenues                  59        61       64        56
   Cost of system revenues                   13        10        6         9
   Cost of system revenues-one-time charge   --        --       --        --
   Engineering, research and development      7         6        7         6
   Sales and marketing                        7         6        7         7
   General and administration                 7         7        7         7
   Depreciation and amortization             12        13       14        14
   Impairment of long-lived assets           --         3       --        --
-------------------------------------------------------------------------------
        Total expenses                      105       106      105        99
Operating income(loss)                       (5)       (6)      (5)        1
Interest income                               2         2        1         1
-------------------------------------------------------------------------------
Income (loss) before income taxes            (3)       (4)      (4)        2
Provision (benefit) for income taxes         (1)       --        1        --
-------------------------------------------------------------------------------
Net income (loss)                            (2)%      (4)%     (5)%       2%
-------------------------------------------------------------------------------

The Company has experienced fluctuations in its quarterly operating results and
anticipates that such fluctuations will continue and could intensify.  The
Company's quarterly operating results may vary significantly depending on a
number of factors, including the timing of the introduction or acceptance of new
services offered by the Company or its competitors, seasonality, changes in the
mix of services provided by the Company, changes in regulations affecting the
wireless industry, changes in the Company's operating expenses, personnel
changes, and general economic conditions.  In particular, Prepaid Wireless
Services revenues are affected by seasonal trends as the fourth quarter
typically generates the highest number of net additions as compared to the other
three quarters.  The timing of carrier contract renewals can also impact Prepaid
Wireless Service revenues.  Teleservices revenues may be influenced by the
requirements of one of more of the Company's significant Teleservices customers,
including engagement of the Company to implement or assist in implementing
special projects of limited duration.  The Company's Roaming Services revenues
are affected by the frequency and volume of use of the Company's services, which
may be influenced by seasonal trends, as well as changes in demand during
particular periods due to a higher or lower incidence of temporary suspension of
inter-carrier roaming agreements in certain markets.  The timing of orders and
the number of large prepaid systems shipped during a particular quarter may
fluctuate based upon the needs of systems customers and can have a significant
impact on the level of Systems Division revenues.

Because a significant portion of the Company's operating expenses are committed
in advance, the Company may be unable to adjust spending in a timely manner to
compensate for any unexpected revenue shortfall.  Accordingly, unexpected
revenue shortfalls could cause significant variations in operating results from
quarter to quarter and could have a material adverse effect on the Company's
results of operations.  As a result, the Company believes that period-to-period
comparisons of its results of operations are not necessarily meaningful and
should not be relied upon as an indication of likely future performance.

<PAGE>

Liquidity and Capital Resources

Cash, cash equivalents and short-term investments increased from $25.6 million
in 1998 to $30.2 million in 1999.  The increase was due to improved cash
collections and cash management along with the use of capital leases to finance
certain equipment purchases.  Net cash provided by operations of $20.9 million
in 1999 was primarily generated from $15.6 million in depreciation and
amortization expense, which resulted from the significant investment in
telecommunications systems and equipment in 1999 and increased accounts payable
and accrued expenses of $4.9 million which primarily related to accrued call
center management fees and cellular airtime.

The Company's investing activities utilized $18.1 million of net cash in 1999.
The Company expended $16.1 million in 1999, including almost $11.1 million for
telecommunications systems equipment and software for expansion of the Company's
C2C network.  The Company also purchased $2.0 million in net short-term
investments.  The Company anticipates that over the next 12 months it will
continue to make significant capital investments for additional equipment and
enhanced feature capabilities to strengthen Prepaid Wireless Services.  The
Company's financing activities utilized $238,000 in 1999, mainly due to payments
of capital lease obligations, partially offset by proceeds from the exercise of
stock options.

The Company believes that its short-term investments and the funds anticipated
to be generated from operations would be sufficient to finance the Company's
operations for at least the next 12 months.


Impact of Year 2000

Many computer systems and software products installed in the industry were coded
to accept only two digit entries in the date code field.  In order to
distinguish 21st century dates from 20th century dates, the date code field must
be modified to distinguish between 21st and 20th century dates.  As a result,
many companies upgraded or replaced their software and computer systems in order
to comply with these Year 2000 requirements.  The use of software and computer
systems that are not Year 2000 compliant could result in a system failures or
miscalculations resulting in disruptions of operations, including among other
things a temporary in ability to process transactions, send invoices or engage
in normal business activities.

In prior years, the Company discussed the nature and progress of its plans to
become Year 2000 ready.  In late 1999, the Company completed its remediation and
testing of systems.  As a result of those planning and implementation efforts,
the Company experienced no significant disruptions in mission critical
information technology and non-information technology systems and believes those
systems successfully responded to the Year 2000 date change.  In total, the
Company expensed approximately $883,000 in connection with remediating its
systems.  The Company is not aware of any material problems resulting from Year
2000 issues, either with its products, its internal systems, or the products and
services of third parties.  The Company will continue to monitor its mission
critical computer applications and those of its suppliers and vendors throughout
the year 2000 to ensure that any latent Year 2000 matters that may arise are
addressed promptly.

<PAGE>

Certain Factors That May Affect Future Results

This Annual Report contains forward-looking statements that involve risks and
uncertainties, including without limitation, statements regarding Teleservices
revenue and gross margin, trend of decreased suspensions of inter-carrier
automatic roaming agreements, prepaid cannibalization of unregistered roaming
and carrier marketing of one-rate registered roaming plans to reduce roaming
service revenues, Roaming Division profitability declining due to decreasing
revenue, increased expenditures for engineering, research and development,
greater costs of depreciation and amortization and an effective income tax rate
greater than 40%.  The Company's actual results may differ significantly from
the results discussed in the forward-looking statements.  A number of important
factors exist that could affect the Company's future operating results,
including, without limitation, technological changes in the Company's industry,
the ability of the Company to continue to successfully support its C2C network,
the ability of the Company's carrier customers to successfully continue to
market and sell C2C prepaid wireless services, the Company's ability to retain
existing customers and attract new customers, increased competition and general
economic factors.

Historically, a significant portion of the Company's revenues in any particular
period have been attributable to a limited number of customers.  This
concentration of customers can cause the Company's revenues and earnings to
fluctuate from quarter to quarter, based on the volume of call traffic generated
through these customers, the services being performed for the teleservices
programs and the level of system sales.  A significant decrease in business from
any of the Company's major customers, including a decrease in business due to
factors outside of the Company's control, would have a material adverse effect
on the Company's business, financial condition and results of operations.

The Company has recently developed a distributed architecture that will enable
carriers to use our proprietary software to deliver prepaid billing inquiry
in-house.  However, any revenues generated from this application will reduce the
need for the Teleservices Division to provide customer care services and
therefore may reduce teleservices revenues in future quarters.

A number of the Company's Prepaid, Teleservices and Systems Division contracts
have been extended beyond their expiration dates or will expire in 2000 and
beyond.  There can be no assurances that the Company will be successful in
renewing any of these contracts.  If these contracts are not renewed the
Company's business, financial condition and results of operations could be
materially adversely affected.  Also, when and if the contracts are renewed,
many of the carrier customers have reached higher tiers of subscription levels
and therefore contractual rates per minute will be lower than in previous years.
If subscriber levels begin to drop off, revenue could be adversely affected due
to these lower rates.

The Company has experienced fluctuations in its quarterly operating results and
anticipates that such fluctuations will continue and could intensify.  The
Company experienced an operating loss in 1997 and the first three quarters of
1998, primarily due to expenses associated with the development and expansion of
its C2C network.  During the quarter ended September 30, 1999, an operating loss
was also incurred due to the Systems Division one-time charge, system outages in
Prepaid and a software problem in Teleservices.  In addition, the Company's
Systems Division has experienced operating losses during each of the last six
quarters due to fewer sales of international prepaid systems.  The Company's
quarterly operating results may vary significantly depending on a number of
factors including, the timing of the introduction or acceptance of new services
offered by the Company or its competitors, changes in the mix of services
provided by the Company, variations in the level of system sales, changes in
regulations affecting the wireless industry, changes in the Company's operating
expenses, the ability to identify, hire and retain qualified personnel and
general economic conditions.  Due to all of the foregoing factors, it is
possible that in some future quarter the Company's results of operations will be
below prior results or the expectations of public market analysts and investors.
In such event, the price of the Company's Common Stock would likely be
materially and adversely affected.

The Company has recently taken steps in an attempt to improve the results of the
Systems Division, which has generated losses during each of the last six
quarters.  A reorganization plan was implemented in September 1999 in an effort
realign the division and improve operating results.  However, should these
reorganization efforts not be successful, the Systems Division may incur
additional operating losses, asset impairment charges or other write-offs that
could materially and adversely affect the Company's overall business, operating
results and financial condition.

<PAGE>

The Company historically has provided its services almost exclusively to
wireless carriers.  Although the wireless telecommunications market has
experienced significant growth in recent years, there can be no assurance that
such growth will continue at similar rates, or at all, or that wireless carriers
will continue to use the Company's services.  The Company expects that demand
for its roaming services will continue to decline as fewer inter-carrier roaming
agreements are suspended, prepaid cannibalization of unregistered roaming use
increases and carriers offer more one-rate roaming plans.  In addition, prepaid
wireless services are relatively new services in new markets, and if these
markets do not grow as expected or if the carriers in these markets do not use
the Company's services, the Company's business, financial condition and results
of operations would be materially and adversely affected.

The Company's future success depends, in large part, on the continued use of its
existing services and systems, the acceptance of new services in the wireless
industry and the Company's ability to develop new services and systems or adapt
existing services or systems to keep pace with changes in the wireless telephone
industry.  Further, a rapid shift away from the use of wireless in favor of
other services, could affect demand for the Company's service offerings and
could require the Company to develop modified or alternative service offerings
to address the particular needs of the providers of such new services.  There
can be no assurance that the Company will be successful in developing or
marketing its existing or future service offerings or systems in a timely
manner, or at all.

The Company is currently devoting significant resources toward the support and
enhancement of its prepaid wireless services and systems to maintain system
reliability and expand the C2C network.  Several of the Company's carrier
customer contracts contain penalty clauses that provide for reductions in
revenue for certain network outages.  There can be no assurance that the Company
will successfully support and enhance the C2C network effectively to avoid
system outages and any associated loss in revenue, that the market for the
Company's prepaid service will continue to develop, or that the Company's C2C
network will successfully support current and future growth.  Furthermore, the
Company has expended significant amounts of capital to support the C2C
agreements it has secured with its carrier customers.  Because C2C revenues are
principally generated by prepaid subscriber minutes of use, the Company's C2C
revenues can be impacted by the carrier's ability to successfully market and
sell prepaid services.  Revenues from the Company's C2C network are dependent on
the ability to retain subscribers on the network and there can be no assurance
that the Company's churn rate (percentage of total subscribers that terminate
service on the network) will not increase, which may result in reductions in
related revenues.  Teleservices revenues associated with billing inquiry support
for C2C carrier customers are becoming a more significant portion of
teleservices revenues and therefore these revenues are dependent upon the size
and growth of the C2C subscriber base.  In addition, the Company has enabled
carrier customers to license software that enables C2C customers to perform
their billing inquiry in-house if they choose.  This may reduce the Company's
Teleservices revenues significantly and reduce profits accordingly.

The Company has experienced outages on the C2C network which have resulted in
performance penalties and unbilled revenue.  Despite efforts to avoid outages,
there can be no assurance that future outages will not occur.  Such outages can
result in additional penalties and lost revenue for the Company.  In addition,
outages could damage the Company's reputation.  The occurrence of one or more
outages could have a material adverse effect on the Company's business,
operating results and financial condition.

The Company has expanded its operations rapidly, creating significant demands on
the Company's administrative, operational, development and financial personnel
and other resources.  In addition, the growth of the Company's Teleservices
Division is dependent on recruiting, training and retaining employees to perform
customer services responsibilities.  Teleservices has also recently outsourced a
small portion of its call center operations to a third party vendor who is
responsible for certain operational functions, including hiring, training and
retaining employees.  There can be no assurance that the vendor will continue to
be able to meet the Company's existing and future needs effectively.
Additional expansion by the Company may further strain the Company's management,
financial and other resources.  There can be no assurance that the Company's
systems, procedures, controls and existing space will be adequate to support
expansion of the Company's operations.  If the Company's management is unable to
manage growth effectively, the quality of the Company's services, its ability to
retain key personnel and its business, financial condition and results of
operations could be materially and adversely affected.

The Company's operations are supported by many hardware components and software
applications from third party vendors.  There can be no assurances that these
hardware components and software applications will function in accordance with
specifications agreed upon by the Company and its vendors.  If the hardware and
software do not function as specified, the Company's business, financial
condition and results of operations could be materially and adversely affected.

<PAGE>

The Company currently prices and sells all of its systems to international
customers in U.S. dollars.  In addition, many Systems Division customers are
multinational corporations that are publicly traded in the U.S.  All payments
are received in U.S. dollars which helps to protect the Company from the need to
hedge against foreign currency risk.  While these provisions serve to protect
the Company from accounts receivable losses, there can be no assurances that
systems sales to foreign countries will not result in losses due to devaluation
of foreign currencies or other international business conditions outside of the
Company's control.

The market for services to wireless carriers is highly competitive and subject
to rapid change.  A number of companies currently offer one or more of the
services offered by the Company.  In addition, many wireless carriers are
providing or can provide, in-house, the services that the Company offers.  In
addition, the Company anticipates continued growth and competition in the
wireless carrier services industry and consequently, the entrance of new
competitors in the future.  An increase in competition could result in price
reductions and loss of market share and could have a material adverse effect on
the Company's business, financial condition or results of operations.

The Company is exploring opportunities to utilize its prepaid network and real-
time rating engine for mobile and electronic commerce applications.  There can
be no assurances that there will be a market for the Company's network in the
mobile and electronic commerce arena.  In addition, this market could be so
highly competitive that the Company will not be able to enter it.

The Company's success and ability to compete is dependent in part upon its
proprietary technology.  If unauthorized copying or misuse of the Company's
technology were to occur to any substantial degree, the Company's business,
financial condition and results of operations could be materially adversely
affected.  In addition, some of the software used to support the Company's
services is licensed by the Company from single vendors, which are small
corporations.  There can be no assurance that these suppliers will continue to
license this software to the Company or, if any supplier terminates its
agreement with the Company, that the Company will be able to develop or
otherwise procure software from another supplier on a timely basis and at
commercially acceptable prices.

The Company's operations are dependent on its ability to maintain its computer,
switching and other telecommunications equipment and systems in effective
working order and to protect its systems against damage from fire, natural
disaster, power loss, telecommunications failure or similar events.  Any damage,
failure or delay that causes interruptions in the Company's operations could
have a material adverse effect on the Company's business, financial condition
and results of operations.

The Company has recorded a net deferred tax asset for net operating loss carry
forwards and other temporary differences based on management's assessment that
it is more likely than not that future results of operations will be sufficient
to realize this  asset.  However, there can be no assurances that future results
of operations will be sufficient to fully realize this asset.

<PAGE>

Item 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK

The Company currently prices and sells all of its systems to international
customers in U.S. dollars.  In addition, many Systems Division customers are
multinational corporations that are publicly traded in the U.S.  All payments
are received in U.S. dollars which helps to protect the Company from the need to
hedge against foreign currency risk.  While these provisions serve to protect
the Company from accounts receivable losses, there can be no assurances that
systems sales to foreign countries will not result in losses due to devaluation
of foreign currencies or other international business conditions outside of the
Company's control.

The Company does not believe that there is any material market risk exposure
with respect to derivative or other financial instruments that would require
disclosure under this item.


Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

The following Consolidated Financial Statements and supplementary data are
included as part of this Annual Report on Form 10-K:


Consolidated Balance Sheets
 at December 31, 1999 and 1998..............................................25
Consolidated Statements of Operations
 for the years ended December 31, 1999, 1998 and 1997.......................26
Consolidated Statements of Shareholders' Equity
 for the years ended December 31, 1999, 1998 and 1997.......................27
Consolidated Statements of Cash Flows
 for the years ended December 31, 1999, 1998 and 1997.......................28
Notes to Consolidated Financial Statements..................................29
Report of Ernst & Young LLP, Independent Auditors...........................39

<PAGE>

                            Consolidated Balance Sheets
                (In thousands, except share and per share amounts)


                                                                 December 31,
                                                            --------------------
                                                              1999        1998
--------------------------------------------------------------------------------
ASSETS
Current assets:
        Cash and cash equivalents                           $21,145     $18,523
        Short-term investments                                9,091       7,086
          Accounts receivable, net of allowance
               for billing adjustments and doubtful
               accounts of $2,025 in 1999 and $1,508
               in 1998                                       18,546      18,432
          Inventory                                           2,007       3,525
          Deferred income taxes                               1,169       1,564
          Prepaid expenses                                    1,758         823
--------------------------------------------------------------------------------
           Total current assets                              53,716      49,953
Property and equipment:
        Telecommunications systems & software                63,692      47,801
        Furniture and fixtures                                3,477       2,264
        Leasehold improvements                                2,803       2,127
        Systems in development                                5,560       4,305
--------------------------------------------------------------------------------
                                                             75,532      56,497
        Less allowance for depreciation and amortization     30,537      18,442
--------------------------------------------------------------------------------
                                                             44,995      38,055
Goodwill, net                                                 2,854       3,460
Other assets                                                    516         292
--------------------------------------------------------------------------------
           Total assets                                    $102,081     $91,760
--------------------------------------------------------------------------------

LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
       Accounts payable                                        $941        $884
       Accrued expenses                                      15,012      10,124
       Income taxes payable                                     505         496
       Current maturities of capital lease obligations        2,378       1,052
--------------------------------------------------------------------------------
            Total current liabilities                        18,836      12,556
Capital lease obligations, net of current maturities          3,876         546
Commitments and contingencies
Shareholders' equity:
         Preferred Stock,  $.01 par value, 2,000,000 shares
             authorized, none issued and outstanding             --          --
         Common Stock, voting, par value $.01 per share,
             35,000,000 shares authorized; 16,699,874 shares
             in 1999 and 16,436,028 shares in 1998 issued       167         164
         Additional paid-in capital                          93,177      91,683
         Treasury Stock (101,420 shares), at cost              (673)       (673)
         Accumulated deficit                                (13,302)    (12,516)

--------------------------------------------------------------------------------
            Total shareholders' equity                       79,369      78,658
--------------------------------------------------------------------------------
            Total liabilities and shareholders' equity     $102,081     $91,760
--------------------------------------------------------------------------------

See accompanying notes.

<PAGE>

                    Consolidated Statements of Operations
             (In thousands, except share and per share amounts)


                                                     Year Ended December 31,
                                                  ------------------------------
                                                    1999       1998       1997
--------------------------------------------------------------------------------
REVENUES:
     Prepaid wireless services                    $36,920    $18,624     $7,539
     Teleservices                                  40,870     26,001     17,009
     Roaming services                              22,249     28,235     32,461
     System sales                                   5,012     13,622     11,090
--------------------------------------------------------------------------------
                                                  105,051     86,482     68,099
EXPENSES:
     Cost of services revenues                     65,689     51,919     44,180
     Cost of system revenues                        3,434      8,448      6,201
     Cost of system revenues - one-time charge      1,824         --         --
     Engineering,  research and development         6,045      5,523      5,433
     Sales and marketing                            6,507      5,590      5,089
     General and administrative                     7,269      6,208      3,470
     Depreciation and amortization                 15,570     11,245      5,546
     Impairment of long-lived assets                   --        698        569
--------------------------------------------------------------------------------
                                                  106,338     89,631     70,488
--------------------------------------------------------------------------------
Operating loss                                     (1,287)    (3,149)    (2,389)
Interest income                                       896      1,349      1,085
--------------------------------------------------------------------------------
Loss before income taxes                             (391)    (1,800)    (1,304)
Provision (benefit) for income taxes                  395         --       (188)
--------------------------------------------------------------------------------
Net loss                                            $(786)   $(1,800)   $(1,116)
--------------------------------------------------------------------------------
Basic and diluted net loss per share               $(0.05)    $(0.11)    $(0.08)
--------------------------------------------------------------------------------
Shares used in computing basic and diluted net
     loss per share                                16,529     16,274     14,007
--------------------------------------------------------------------------------



See accompanying notes.

<PAGE>

                Consolidated Statements of Shareholders' Equity
                     (In thousands, except share amounts)




                                Treasury Stock      Common Stock     Additional
                                ---------------------------------      Paid In
                                Shares Dollars     Shares Dollars      Capital
-------------------------------------------------------------------------------
Balance at December 31, 1996    46,420  $(372) 12,725,749    $127      $52,738
 Issuance of Common Stock           --     --   3,000,000      30       35,769
 Exercise of Stock Options          --     --     538,630       6        2,482
 Issuance of Common Stock Under
  Employee Stock Purchase Plan      --     --       9,568      --           40
    Net loss                        --     --          --      --           --
-------------------------------------------------------------------------------
Balance at
 December 31, 1997              46,420   (372) 16,273,947     163       91,029
-------------------------------------------------------------------------------
 Exercise of Stock Options          --     --     143,488       1          572
 Issuance  of Common Stock Under
  Employee Stock Purchase Plan      --     --      18,593      --           82
 Treasury Stock Purchase        55,000   (301)         --      --           --
 Net loss                           --     --          --      --           --
-------------------------------------------------------------------------------
Balance at
 December 31,1998              101,420   (673) 16,436,028    $164       91,683
-------------------------------------------------------------------------------
 Exercise of Stock Options          --     --     208,980       2        1,209
 Issuance of Common Stock Under
  Employee Stock Purchase Plan      --     --      54,866       1          285
 Net loss                           --     --          --      --           --
-------------------------------------------------------------------------------
Balance at
 December 31,1999              101,420  $(673) 16,699,874    $167      $93,177
-------------------------------------------------------------------------------

                                              Total
                              Accumulated  Shareholders'
                                Deficit       Equity
--------------------------------------------------------
Balance at December 31, 1996   $(9,600)      $42,893
 Issuance of Common Stock           --        35,799
 Exercise of Stock Options          --         2,488
 Issuance of Common Stock Under
  Employee Stock Purchase Plan      --            40
    Net loss                    (1,116)       (1,116)
--------------------------------------------------------
Balance at
 December 31, 1997             (10,716)       80,104
--------------------------------------------------------
 Exercise of Stock Options          --           573
 Issuance  of Common Stock Under
  Employee Stock Purchase Plan      --            82
 Treasury Stock Purchase            --          (301)
 Net loss                       (1,800)       (1,800)
--------------------------------------------------------
Balance at
 December 31,1998              (12,516)       78,658
--------------------------------------------------------
 Exercise of Stock Options          --         1,211
 Issuance of Common Stock Under
  Employee Stock Purchase Plan      --           286
 Net loss                         (786)         (786)
--------------------------------------------------------
Balance at
 December 31,1999             $(13,302)      $79,369
--------------------------------------------------------

See accompanying notes

<PAGE>

               Consolidated Statements of Cash Flows
                           (In thousands)


                                                     Year Ended December 31,
                                                   -----------------------------
                                                     1999       1998       1997
--------------------------------------------------------------------------------
OPERATING ACTIVITIES
 Net loss                                           $(786)   $(1,800)   $(1,116)
 Adjustments to reconcile net loss to net cash
 provided by operating activities:
   Depreciation and amortization                   15,570     11,245      5,546
   Deferred income taxes                              395         --       (230)
   Impairment of long-lived assets                     --        698        569
   One-time charge                                  1,824         --         --
   Changes in operating assets and liabilities,
   excluding effects of business acquisitions:
        Accounts receivable                          (114)    (5,987)    (1,385)
        Inventory                                      41     (1,975)      (361)
        Prepaid expenses and other assets          (1,159)        65       (151)
        Accounts payable and accrued expenses       4,598        918      1,514
        Income taxes payable                            9         30        (24)
--------------------------------------------------------------------------------
Net cash provided by operating activities        20,378      3,194      4,362

INVESTING ACTIVITIES
Acquisition of businesses, net of cash acquired        --         --     (1,398)
Purchase of short-term investments                (18,777)   (14,095)   (12,976)
Sale of short-term investments                     16,772     17,112     23,371
Purchase of property and equipment                (15,513)   (10,516)   (28,552)
--------------------------------------------------------------------------------
Net cash used in investing activities             (17,518)    (7,499)   (19,555)

FINANCING ACTIVITIES
Proceeds from exercise of stock options             1,211        573      2,488
Proceeds from issuance of stock                       286         82     35,839
Purchase of treasury stock                             --       (301)        --
Repayment of  capital lease obligations            (1,735)    (1,127)      (456)
--------------------------------------------------------------------------------
Net cash provided by (used in) financing activities  (238)      (773)    37,871
--------------------------------------------------------------------------------
Increase (decrease) in cash and cash equivalents    2,622     (5,078)    22,678
Cash and cash equivalents at beginning of year     18,523     23,601        923
--------------------------------------------------------------------------------
Cash and cash equivalents at end of year          $21,145    $18,523    $23,601
--------------------------------------------------------------------------------
Supplemental disclosure of non-cash transactions:
--------------------------------------------------------------------------------
Capital lease obligations                          $6,391         --     $3,200
--------------------------------------------------------------------------------

See accompanying notes.

<PAGE>

                 Notes to Consolidated Financial Statements



1. BASIS OF PRESENTATION

The Company

Boston Communications Group, Inc. (the Company) develops, markets and provides
specialized prepaid wireless services, teleservices, and  roaming services to
the wireless telephone industry.  The Company also manufactures prepaid and
voice systems equipment.

2. SIGNIFICANT ACCOUNTING POLICIES

Revenue Recognition

The Company earns revenues by processing prepaid wireless calls, by providing
teleservices customer care support and processing wireless calls for
unregistered wireless subscribers who have roamed outside of their service area.
Revenue is recognized when the service is provided and is recorded net of
estimated billing adjustments.  The Company recognizes revenue from the sale of
systems at the time the systems are shipped.

Principles of Consolidation

The financial statements include 100% of the accounts and operations of the
Company and all of its majority-owned subsidiaries.  All intercompany accounts
and transactions have been eliminated.

Cash and Cash Equivalents

The Company considers all highly liquid investments with a maturity of three
months or less at the date of purchase to be cash equivalents.

Short-term Investments

The Company accounts for its marketable securities under the Statement of
Financial Accounting Standards No. 115, "Accounting for Certain Instruments in
Debt and Equity Securities."  The Company has classified all of its securities
as available-for-sale, and are thus reported at fair market value.

Investments that mature between three and twelve months are considered short-
term investments.  The Company's short-term investments are invested in
corporate notes.

Estimates

The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities, the disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.

Concentrations of Credit Risk

The Company's prepaid wireless services allows carriers, throughout the United
States and Canada, to access the Company's prepaid C2C platform, enabling the
carriers to offer prepaid wireless calling to their subscribers.  Accounts are
not activated until payment is received by the carrier.  Teleservices are
provided to wireless carriers located throughout the United States and Canada.
The Company's roaming customers are individuals who place wireless calls from
service areas, which are not covered by traditional roaming agreements.  These
calls are forwarded by wireless carriers to the Company for processing.  Each
transactionis small in size and the Company minimizes credit risk by validating
appropriate billing information.  The Company sells its voice systems in North
America and its prepaid systems in North and South America.

The Company has roaming, teleservice and prepaid wireless service agreements
with, and sells its systems to numerous carriers.  During the years ended
December 31, 1999, 1998, and 1997, the Company's top 10 customers accounted for
86%, 79% and 75% of the Company's total revenues, respectively.  The following
table summarizes sales in excess of 10% of total revenues only, as a percentage
of total revenues, to major customers:


                                                    December 31,
                                           ----------------------------
                                           1999        1998        1997
-----------------------------------------------------------------------
Bell Atlantic Mobile (P,T,R)                17%         11%         12%
AirTouch (P,T,R)                            15          13          --
BellSouth Cellular Corp. (P,T,R,S)          11          13          --
Southwestern Bell Mobile Systems (P,T,R)    11          --          11
AT&T (P,T,R)                                10          --          --
Ameritech Cellular (T,R)                    --          15          12
-----------------------------------------------------------------------

Revenue from these customers was generated from the following divisions:
     P - Prepaid wireless services
     T - Teleservices
     R - Roaming services
     S - Systems

Inventory

Inventory, which consists of computer hardware and electronic components, is
recorded at the lower of cost (first-in, first-out method) or market.  Inventory
is categorized as follows (in thousands):

                             December 31,
                      -----------------------
                        1999             1998
---------------------------------------------
 Raw materials        $1,356           $2,690
 Work in process         651              835
---------------------------------------------
                      $2,007           $3,525
---------------------------------------------

Property and Equipment

Property and equipment are recorded at cost and depreciated on a straight-line
basis over the estimated useful lives of the assets, which range from 3 to 20
years.  Systems in development represent the cost of purchased hardware and
software to be used in switching equipment not yet placed into service and will
be depreciated between 3 and 5 years.

Impairment of Long Lived Assets

In accordance with Financial Accounting Standards Board Statement No. 121,
"Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to
be Disposed Of," the Company reviews its long-lived assets for impairment
whenever events or changes in circumstances indicate that the carrying amount of
an asset may not be recoverable.  If it is determined that the carrying amount
of an asset cannot be fully recovered, an impairment loss is recognized.  During
1998 and 1997, the Company recorded impairment losses of $698,000 and $569,000,
respectively, for the writedown of equipment which could no longer be used in
its business to its fair market value.  These assets were sold during 1998 at
their impaired carrying value of $265,000.

<PAGE>

Goodwill

Goodwill represents the excess of cost of acquired businesses over the fair
market value of all net assets acquired.  Goodwill is being amortized on a
straight-line basis over an eight-year period.  Accumulated amortization totaled
approximately $2.0 million and $1.4 million as of December 31, 1999 and 1998,
respectively.

Engineering, Research and Development

Costs associated with engineering, research and development are expensed as
incurred.

Stock-Based Compensation

The Company has elected to follow Accounting Principles Board Opinion No. 25,
"Accounting for Stock Issued to Employees" (APB 25) in accounting for its stock-
based compensation plans, rather than the alternative fair value accounting
method provided for under Financial Accounting Standards Board Statement (SFAS)
No. 123, "Accounting for Stock-Based Compensation," as this alternative requires
the use of option valuation models that were not developed for use in valuing
employee stock options.  Under APB 25, since the exercise price of options
granted under these plans equals the market price of the underlying stock on the
date of grant, no compensation expense is required.

Accounting Pronouncement

In June 1998, the Financial Accounting Standards Board issued SFAS No. 133,
"Accounting for Derivative Instruments and Hedging Activities," which
establishes standards for the recognition, measurement, and reporting of
derivatives and hedging activities and is effective, as amended, for all
quarters in fiscal years beginning after December 31, 2001.  The Company
anticipates that the adoption of this new accounting standard will not have a
material impact on the Company's consolidated financial statements.

Basic and Diluted Net Loss Per Share

Basic and diluted net loss per share represents net loss divided by weighted
average shares outstanding.  Diluted and basic net loss per share are the same
because the Company generated net losses in 1999, 1998 and 1997.


3. ONE-TIME CHARGE

In September 1999, the Company recorded a one-time charge of $1.8 million as a
result of the reorganization of the Systems Division.  The charge primarily
relates to inventory write-downs associated with the reorganization.
 .


4. ACCRUED EXPENSES

Accrued expenses consist of the following:

                                           December 31,
                                       ------------------
   (In thousands)                        1999        1998
---------------------------------------------------------
 Billing adjustments                   $1,171      $1,177
 Cellular airtime                       1,898       1,178
 Payroll                                2,333       2,052
 Telecommunication costs                1,122       1,596
 Deferred revenue                       1,383         700
 Call center management fees            1,830         259
 Other                                  5,275       3,162
---------------------------------------------------------
                                      $15,012     $10,124
---------------------------------------------------------

<PAGE>

5. SEGMENT REPORTING

The Company adopted SFAS No. 131, "Disclosures about Segments of an Enterprise
and Related Information" in 1998.  SFAS No. 131 established standards for
reporting information about operating segments in annual financial statements
and requires selected information about operating segments in interim financial
reports issued to stockholders.  It also established standards for related
disclosures about products and services, and geographic areas.  Operating
segments are defined as components of an enterprise about which separate
financial information is available that is evaluated regularly by the chief
operating decision maker, or decision making group, in deciding how to allocate
resources and in assessing performance.  The Company's chief operating decision-
maker is the President and Chief Executive Officer.  The operating segments are
managed separately because each operating segment represents a strategic
business unit that offers different products and serves different niches in the
wireless industry.

The Company's reportable operating segments consist of the Prepaid Wireless
Services, Teleservices, Roaming Services and Systems Divisions.  The Company's
Prepaid Wireless Services Division offers prepaid wireless service that allows
carriers to access the Company's prepaid C2C platform, enabling the carriers to
offer prepaid wireless calling to their subscribers.  The Company's Teleservices
Division provides customer support teleservices to wireless carrier's customers,
which allows carriers to outsource all or a portion of their customer service
activities.  The Company's Roaming Services Division provides carriers with
ROAMERplus call processing services which provides carriers the ability to
generate revenues from subscribers who are not covered under traditional roaming
agreements by arranging payment for roaming calls.  The Company's Systems
Division manufactures and markets voice processing platforms to wireless and
wireline carriers throughout North and South America with enhanced features
including prepaid wireless, voice messaging and toll limitation services.  The
Systems Division also sells prepaid systems to international carriers and
manufactures the voice nodes used to support the Company's C2C network.  The
other segment assets include cash equivalents and short-term investments and
other assets not allocated to the reportable operating segments.

The accounting policies of the operating segments are the same as those
described in the summary of significant accounting policies except that the
financial results for the Company's operating segments have been prepared using
a management approach.  This is consistent with the basis and manner in which
the Company's management internally analyzes financial information for the
purposes of assisting in making internal operating decisions.  The Company
evaluates performance based on stand-alone operating segment income(loss) before
interest and taxes and allocates corporate level operating expenses to the
operating segments.  All revenues are generated from external customers and
there are no intersegment revenues.  Revenues are attributed to geographic areas
based on the location of the customers to whom the services were provided or the
location where the systems were shipped.  Capital expenditures include equipment
purchased directly from vendors or acquired through a capital lease.  The
summary of operating segment information is as follows at December 31, (in
thousands):

                                Prepaid
                               Wireless                     Roaming
                               Services    Teleservices    Services    Systems
 -----------------------------------------------------------------------------
 1999
 Net revenues                   $36,920      $40,870        $22,249     $5,012
 Depreciation and amortization    9,745        3,287            945      1,593
  Operating income(loss)          3,467          316          1,116     (6,186)
  Assets                         37,620       15,662          4,083      8,566
 Capital expenditures            11,116        1,260            233      1,624
 ------------------------------------------------------------------------------
 1998
 ------------------------------------------------------------------------------
 Net revenues                   $18,624      $26,001        $28,235    $13,622
 Depreciation and amortization    6,782        2,473            808      1,182
 Operating income(loss)          (7,236)         393          2,962        732
 Assets                          31,501       10,493          5,518     12,855
 Capital expenditures             6,603        1,311            199      1,184
 ------------------------------------------------------------------------------
 1997
 ------------------------------------------------------------------------------
 Net revenues                     7,539       17,009         32,461     11,090
 Depreciation and amortization    2,359        1,745            600        842
 Operating income(loss)          (7,976)         562          4,547        478
 Assets                          29,314        8,126          7,110      9,701
 Capital expenditures            24,742        4,154            798      1,006



                                  Other     Total
 -------------------------------------------------
 1999
 Net revenues                     $--    $105,051
 Depreciation and amortization     --      15,570
  Operating income(loss)           --      (1,287)
  Assets                       36,150     102,081
 Capital expenditures           1,843      16,076
 -------------------------------------------------
 1998
 -------------------------------------------------
 Net revenues                     $--     $86,482
 Depreciation and amortization     --      11,245
 Operating income(loss)            --      (3,140)
 Assets                        31,393      91,760
 Capital expenditures           1,219      10,516
 -------------------------------------------------
 1997
 -------------------------------------------------
 Net revenues                      --      68,099
 Depreciation and amortization     --       5,546
 Operating income(loss)            --      (2,389)
 Assets                        39,134      93,385
 Capital expenditures           1,034      31,734


<PAGE>

Information concerning principal geographic areas is as follows (in thousands):

                                    Year ended December 31,
                                 ----------------------------
Net Revenues                        1999       1998      1997
-------------------------------------------------------------
 North America
-------------------------------------------------------------
 United States                    $93,332   $78,044   $59,760
 Canada                             8,494     2,334       427
 Other                              1,908     1,231     4,869
-------------------------------------------------------------
  Total North America             103,734    81,609    65,056
-------------------------------------------------------------
  South America                     1,317     4,873     3,043
-------------------------------------------------------------
  Total                          $105,051   $86,482   $68,099
-------------------------------------------------------------


6. INCOME TAXES

Deferred income taxes reflect the net tax effects of temporary differences
between the carrying amounts of assets and liabilities for financial reporting
purposes and the amounts used for income tax purposes.  Significant components
of the Company's deferred tax assets and liabilities are as follows:

                                                              December 31,
                                                            ----------------
 (In thousands)                                              1999      1998
-----------------------------------------------------------------------------
Deferred tax assets:
   Net operating loss carryforwards                         $3,503    $2,577
   Allowance for doubtful accounts
    and billing adjustments                                    719       521
   Inventory valuation adjustments                             815       245
   Minimum tax credit carryforwards                            101       111
   Accrued expenses and other                                  692       977
   Asset impairment                                             --       478
-----------------------------------------------------------------------------
                                                             5,830     4,909
   Valuation allowance                                      (1,063)     (853)
-----------------------------------------------------------------------------
Total deferred tax assets                                    4,767     4,056
Deferred tax liabilities:
    Tax over book depreciation and amortization expense     (3,598)   (2,492)
-----------------------------------------------------------------------------
Total deferred tax liabilities                              (3,598)   (2,492)
-----------------------------------------------------------------------------
Net deferred tax assets                                     $1,169    $1,564
-----------------------------------------------------------------------------


The provision (benefit) for income taxes consists of the following (in
thousands):

                                                    Year Ended December 31,
                                               --------------------------------
 (In thousands)                                 1999         1998          1997
-------------------------------------------------------------------------------
 Current:
   Federal                                       $--          $--           $--
   State                                          30           --            42
-------------------------------------------------------------------------------
                                                  30           --            42
 Deferred:
   Federal                                       314           --          (209)
   State                                          51           --           (21)
--------------------------------------------------------------------------------
                                                 365           --          (230)
--------------------------------------------------------------------------------
 Income tax provision (benefit)                 $395          $--         $(188)
--------------------------------------------------------------------------------

At December 31, 1999, the Company has approximately $9.1 million of net
operating loss carryforwards for federal income tax return purposes available
for use in future years that expire beginning in 2006.  The valuation allowance
increased from $853,000 at December 31, 1998 to $1.1 million at December 31,
1999 due to net operating losses for which no benefit was recognized in 1999
and an additional reserve recorded against the Company's net deferred tax
assets.

A reconciliation of the income tax provision (benefit) at the statutory rate to
the income tax provision (benefit) as reported is as follows:

                                                           Year Ended
                                                          December 31,
                                                     1999     1998     1997
---------------------------------------------------------------------------
Federal benefit at statutory rate                  $(133)   $(612)   $(443)
State income benefit, net of federal                 (16)     (71)     (52)
Permanent differences                                334      288      307
Valuation allowances                                 210      395       --
---------------------------------------------------------------------------
                                                    $395       --    $(188)
---------------------------------------------------------------------------

 Income taxes paid were $41,000 in 1999, $61,000 in 1998, and $83,000 in 1997.


7. CAPITAL STOCK

Preferred Stock

The Board of Directors are authorized, subject to certain limitations prescribed
by law, without further shareholder approval, to issue from time to time up to
an aggregate of 2,000,000 shares of Preferred Stock in one or more series and to
fix or alter the designations, preferences, rights and any qualifications,
limitations or restrictions of the shares of each such series thereof, including
the dividend rights, dividend rates, conversion rights, voting rights, terms of
redemption (including sinking fund provisions), redemption price or prices,
liquidation preferences and the number of shares constituting any series or
designations of such series.  The issuance of Preferred Stock may have the
effect of delaying, deferring or preventing a change of control of the Company.
The Company has no present plans to issue any shares of Preferred Stock.

Stock Option Plans

The Company's 1996 and 1998 Stock Option Plans (the Plans) were adopted by the
Board of Directors and approved by the stockholders of the Company in 1996 and
1998, respectively.  The Plans provide for the grant of stock options to
employees, officers and directors, consultants and advisors to, the Company and
its subsidiaries.  Under the Plans, the Company may grant options that are
intended to qualify as incentive stock options within the meaning of Section 422
of the Internal Revenue Code of 1986, as amended (the "Code") ("incentive stock
options"), or options not intended to qualify as incentive stock options ("non-
statutory options").  Incentive stock options may only be granted to employees
of the Company.  A total of 1,264,792 and 600,000 shares of Common Stock may be
issued upon the exercise of options granted under the 1996 and 1998 Stock Option
Plans, respectively.  The maximum number of shares with respect to which options
may be granted to any employee under the 1996 and 1998 Stock Option Plans shall
not exceed 200,000 and 60,000 shares of Common Stock, respectively, during any
calendar year.  All options granted have 10 year terms and generally vest and
become exercisable over one to five years.

In 1998, the Company granted 400,000 non-qualified options to purchase shares of
common stock at an exercise price of $7.06.  In 1999, the Company granted
175,000, 25,000, and 10,000 non-qualified options to purchase shares of common
stock at $8.63, $13.13, and $8.44 respectively.  The exercise prices of all non-
qualified options were equal to the fair market value as determined by the
Company on the date of grant.

Pro forma information regarding net income and earnings per share is required by
Statement 123, and has been determined as if the Company had accounted for its
employee stock options under the fair value method of that statement.  The fair
value for these options was estimated at the date of grant using a Black-Scholes
option pricing model with the following weighted average assumptions for 1999,
1998, and 1997: risk-free interest rates of 5.5%, 5.4%, and 6.4%, respectively,
no dividend yield, the volatility factor of the expected market price of the
Company's common stock of 0.5 and a weighted-average expected life of the option
of 3 to 5 years.

The Black-Scholes option valuation model was developed for use in estimating the
fair value of traded options which have no vesting restrictions and are fully
transferable.  In addition, option valuation models require the input of highly
subjective assumptions including the expected stock price volatility.  Because
the Company's employee stock options have characteristics significantly
different from those of traded options, and because changes in the subjective
input assumptions can materially affect the fair value estimate, in management's
opinion, the existing models do not necessarily provide a reliable single
measure of the fair value of its employee stock options.

For purposes of pro forma disclosures, the estimated fair value of the options
is amortized to expense over the options' vesting period.  The Company's pro
forma information follows (in thousands, except for per share information):

                                               December 31,
                                     ------------------------------
                                       1999       1998       1997
-------------------------------------------------------------------
Pro forma net loss                   $(2,569)   $(4,034)   $(2,859)
-------------------------------------------------------------------
Pro forma basic and diluted net
loss per share                       $ (0.16)   $ (0.25)   $ (0.20)
--------------------------------------------------------------------

Stock option information is as follows:

                                           1999                1998
---------------------------------------------------------------------------
                                              Weighted            Weighted
                                               Average             Average
                                              Exercise            Exercise
                                    Options      Price   Options     Price
---------------------------------------------------------------------------
Outstanding-begining of year       1,935,976     $6.90  1,417,654    $6.74
Granted                              684,000      7.98    966,500     7.33
Exercised                           (208,580)     5.80   (143,888)    4.00
Canceled                            (306,850)     7.48   (304,290)    9.00
---------------------------------------------------------------------------
Outstanding - end of year          2,104,546     $7.27  1,935,976    $6.90
---------------------------------------------------------------------------

                                          1997
-------------------------------------------------------
                                              Weighted
                                               Average
                                              Exercise
                                    Options      Price
-------------------------------------------------------
Outstanding-begining of year       1,666,359    $8.86
Granted                            1,124,342     5.87
Exercised                           (538,630)    4.62
Canceled                            (834,417)   11.18
-------------------------------------------------------
Outstanding - end of year          1,417,654    $6.74
-------------------------------------------------------

The following table summarizes the stock options outstanding and
exercisable as of December 31, 1999:

      Options        Options        Exercise
    Exercisable    Outstanding        Price
----------------------------------------------
      236,266        606,950       $3.69-4.88
      314,104        649,604        5.00-7.06
       77,300        563,100        7.37-8.62
      152,142        284,892       8.66-14.00
---------------------------------------------
      779,812      2,104,546            $7.27
---------------------------------------------

There were 322,599 options available for grant at December 31, 1999.  There were
628,437 options exercisable at December 31, 1998 at a weighted-average exercise
price of $6.91.  The weighted-average fair value of options granted during 1999
and 1998 was $3.98 and $3.24, respectively.  The weighted-average contractual
life of options outstanding at December 31, 1999 and 1998 was 8.0 and 8.6 years,
respectively.

Employee Stock Purchase Plan

The Company's 1996 Employee Stock Purchase Plan (the  "Purchase Plan") was
adopted by the Board of Directors and approved by the shareholders of the
Company in April 1996.  The Purchase Plan authorizes the issuance of up to a
total of 225,000 shares of Common Stock to participating employees.  In May
1999, the Plan was amended by the Board of Directors to shorten the initial
eligibility period and increase the discount to the employees.

<PAGE>

All full-time employees of the Company who have been employed by the Company for
a minimum of three months, including directors of the Company who are employees,
are eligible to participate in the Purchase Plan.  On the first day of a
designated payroll deduction period (the  "Offering Period"), the Company will
grant to each eligible employee who has elected to participate in the Purchase
Plan an option to purchase shares of Common Stock as follows: the employee may
authorize an amount (up to a maximum of 10% of such employee's regular pay) to
be deducted by the Company from such pay during the Offering Period.  On the
last day of the Offering Period, the employee is deemed to have exercised the
option, at the option exercise price, to the extent of accumulated payroll
deductions.  Under the terms of the Purchase Plan, the option price is an amount
equal to 85% of the fair market value per share of the Common Stock on either
the first day or the last day of the Offering Period, whichever is lower.  In no
event may an employee purchase in any one Offering Period a number of shares
which has an aggregate market value (determined on the last day of the offering
Period) in excess of $25,000.  The Compensation Committee may, in its
discretion, choose an Offering Period of 12 months or less for each of the
Offerings and choose a different Offering Period for each Offering.


8. COMMITMENTS

Leases

The Company entered into capital leases for $3.6 million and $3.2 million in
1999 and 1997, respectively.  The accumulated amortization of the assets under
capital leases was $2.4 million and $886,000 at December 31, 1999 and 1998,
respectively.  In addition, in 1999 the Company cancelled a management contract
and acquired the underlying leases, resulting in capital lease additions of
approximately $2.7 million.  In addition, the Company has $1.2 million in
payments outstanding to be paid through September 30, 2000 to prepay the
remaining 48 months on the facility lease.  The Company also has non-cancelable
operating lease commitments for office space, call center facilities, equipment
and personnel.  Rent and call center facility and equipment expense approximated
$11.9 million in 1999, $2.2 million in 1998, and $1.2 million in 1997.  Future
minimum payments under non-cancelable capital leases and operating leases are
as follows (in thousands):

<TABLE>

                                       Capital     Operating
Year ending December 31,                Leases       Leases
------------------------------------------------------------
<S>                                    <C>          <C>
2000                                   $2,766       $3,868
2001                                    2,105        1,347
2002                                    1,562        1,115
2003                                      534        1,016
2004                                       --          276
------------------------------------------------------------
Total minimum lease payments            6,967       $7,622
Amounts representing interest             713       ------
---------------------------------------------
Present value of net minimum payments   6,254
Less: current portion                   2,378
---------------------------------------------
                                       $3,876
---------------------------------------------

</TABLE>

Significant Contracts

The Company has an agreement with a vendor to jointly develop two products for
the Company.  The Company will pay this vendor $1.7 million for the development
effort and the exclusive license to use the first product and $8.0 million for
the development effort and exclusive license to use the second product during
the next two years.

<PAGE>

Report of Ernst & Young LLP, Independent Auditors



Board of Directors and Shareholders
Boston Communications Group, Inc.

We have audited the accompanying consolidated balance sheets of Boston
Communications Group, Inc. and subsidiaries as of December 31, 1999 and 1998 and
the related consolidated statements of operations, shareholders' equity, and
cash flows for each of the three years in the period ended December 31, 1999.
Our audits also included the financial statements schedule listed in the Index
at Item 14(a).  These financial statements and schedule are the responsibility
of the Company's management.   Our responsibility is to express an opinion on
these financial statements and schedule based on our audits.

We conducted our audits in accordance with auditing standards generally accepted
in the United States. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements are free
of material misstatement.  An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements.  An
audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation.  We believe that our audits provide a reasonable basis
for our opinion.

In our opinion, the financial statements referred to above present fairly, in
all material respects, the consolidated financial position of Boston
Communications Group, Inc. and subsidiaries at December 31, 1999 and 1998, and
the consolidated results of their operations and their cash flows for each of
the three years in the period ended December 31, 1999, in conformity with
accounting principles generally accepted in the United States.  Also, in our
opinion, the related financial statement schedule, when considered in relation
to the basic financial statements taken as a whole, presents fairly in all
material respects the information set forth therein.




                                                      /s/ Ernst & Young LLP



Boston, Massachusetts
January 28, 2000

<PAGE>

Item 9.    CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
           FINANCIAL DISCLOSURE

     None.



                             PART III

Item 10.  DIRECTORS AND EXECUTIVE OFFICERS OF THE COMPANY

   The sections entitled "Election of Directors" and Reports Under Section 16(a)
of the Exchange Act appearing in the Company's proxy statement for the annual
meeting of stockholders to be held on May 25, 2000 set forth certain information
with respect to the directors of the Company and reports filed by certain
persons under Section 16(a) of the Exchange Act and are incorporated herein by
reference.  Certain information with respect to persons who are or may be deemed
to be executive officers of the Company is set forth under the caption
"Executive Officers of the Company" in Part I of this report.


Item 11.  EXECUTIVE COMPENSATION

   The sections entitled "Executive Compensation", "Employment Agreements with
Named Executive Officers" and "Report of the Compensation Committee" appearing
in the Company's proxy statement for the annual meeting of stockholders to be
held on May 25, 2000 set forth certain information with respect to the
compensation of management of the Company and are incorporated herein by
reference.


Item  12.   SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

   The section entitled "Security Ownership of Certain Beneficial Owners and
Management" appearing in the Company's proxy statement for the annual meeting of
stockholders to be held on May 25, 2000, sets forth certain information with
respect to the ownership of the Company's Common Stock and is incorporated
herein by reference.


Item 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

   The sections entitled "Executive Compensation", "Employment Agreements with
Named Executive Officers," and "Certain Transactions" appearing in the Company's
proxy statement for the annual meeting of stockholders to be held on May 25,
2000, set forth certain information with respect to certain business
relationships and transactions between the Company and its directors and
officers and are incorporated herein by reference.

<PAGE>

                              PART IV

Item 14.  EXHIBITS, FINANCIAL STATEMENT SCHEDULES & REPORTS ON FORM 8-K

(a)(1) Financial Statements

The following consolidated financial statements of Boston Communications Group,
Inc. are included as Item 8:

Consolidated Balance Sheets at December 31, 1999 and 1998...................25
Consolidated Statements of Operations
 - Years ended December 31, 1999, 1998 and 1997.............................26
Consolidated Statements of Shareholders' Equity
 - Years ended December 31, 1999, 1998 and 1997.............................27
Consolidated Statements of Cash Flows
 - Years ended December 31, 1999, 1998 and 1997.............................28
Notes to Consolidated Financial Statements..................................29

   (2) Financial Statement Schedules

       Index to Consolidated Financial Statement Schedules

For the years ended December 31, 1999, 1998 and 1997:
  Schedule II - Valuation and Qualifying Accounts

All other Schedules have been omitted because the required information is shown
in the consolidated financial statements or notes thereto or they are not
applicable.

   (3) The Exhibits listed in the Exhibit Index immediately preceding the
Exhibits are filed as part of this Annual Report on Form 10-K.

(b) Reports on Form 8-K

None

<PAGE>

                                         SIGNATURES


     Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized on the 27th day of
March 2000.


                               BOSTON COMMUNICATIONS GROUP, INC.


                               By: /s/  E.Y. Snowden
                                   ------------------
                                        E.Y. Snowden
                                        President and Chief
                                        Executive Officer


Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the registrant and
in the capacities and on the dates indicated.

            Signature                   Title                     Date
            ---------                   -----                     ----

        /s/   E.Y. Snowden              President, Chief          March 27, 2000
       -------------------              Executive Officer
              E.Y. Snowden              and Director

       /s/   Karen A. Walker            Vice President,           March 27, 2000
       ---------------------            Finance and
             Karen A. Walker            Administration,
                                        Director (Principal
                                        Financial and
                                        Accounting Officer)

       /s/   Paul J. Tobin              Chairman of the           March 27, 2000
       -------------------              Board of Directors
             Paul J. Tobin


<PAGE>

           Signature                   Title                     Date
           ---------                   -----                     ----


       /s/   Brian E. Boyle            Vice Chairman of the      March 27, 2000
       --------------------            Board of Directors
             Brian E. Boyle

       /s/   Craig L. Burr             Director                  March 27, 2000
       -------------------
             Craig L. Burr


       /s/   Paul R. Gudonis           Director                  March 27, 2000
       ---------------------
             Paul R. Gudonis


       /s/   Gerald Segel              Director                  March 27, 2000
       ------------------
             Gerald Segel


       /s/   Mark J. Kington           Director                  March 27, 2000
       ---------------------
             Mark J. Kington




<PAGE>



                                         EXHIBIT INDEX

Exhibit
  No.              Description
-------            -----------

3.1       Restated Articles of Organization of the Company, as amended. 1

3.3       Amended and Restated By-Laws of the Company. 1

10.2      +1996 Stock Option Plan. 1

10.3      +1996 Employee Stock Purchase Plan. 1

10.3.1    +Amendment Number 1, dated August 30, 1996, to 1996 Employee Stock
          Purchase Plan 2

10.15     Commercial Lease dated January 24, 1996 between the Company and
          Cummings Properties Management, Inc. 1

10.15.1   Commercial Lease dated February 26, 1996 between the Company and
          Cummings Property Management, Inc. (Amendment No. 1). 2

10.15.2   Amendment No. 2, dated August 8, 1996, to the commercial lease between
          the Company and Cummings Property Management, Inc. 2

10.15.3   Amendment No. 3, dated February 5, 1997, to the commercial lease
          between the Company and Cummings Property Management, Inc. 2

10.27     Software License and Services Agreement dated October 30, 1996 between
          the Company and Oracle Corporation. 2

10.28     Software License and Services Agreement dated September 24, 1996
          between the Company and Oracle Corporation. 2

10.33     Commercial Lease dated April 1, 1997 between the Company and Cummings
          Properties Management, Inc 3

10.34     Master Equipment Lease Agreement between Boston Communications Group,
          Inc. and Fleet Capital Corp. dated August 20, 1997 4

10.41     Agreement dated February 9, 1998 between the Company and the
          University of Massachusetts at Lowell. 5

10.42     Employment Letter Agreement dated February 10, 1998 between the
          Company and E.Y. Snowden. 5

10.45     +1998 Stock Incentive Plan

10.47^    Agreement between the Company and AG Communication Systems dated Nov.
          16, 1998.  6

10.49     Amendment No. 4, dated December 4, 1998, to the commercial lease
          between the Company and Cummings Property Management, Inc.  6

10.50     Master Equipment Lease between Boston Communications Group and Fleet
          Capital Corp. dated May 17, 1999.   7

<PAGE>

10.51^    Letter of Agreement between Centigram Communications Corporation and
          Boston Communications Group dated August 12, 1999.  8

10.52^    Amendment #1 to the Agreement between A.G. Communications Systems
          Corporation and Boston Communications Group dated August 26,1999.  8

10.53     Lease between Cummings Properties and Boston Communications Group
          dated June 3, 1999.  8

10.54^    Riverview, New Brunswick, Canada Management Services Agreement between
          ICT Group, Inc. and Boston Communications Group, Inc. dated August 4,
          1999.  8

10.55^    Lakeland, FL Management Services Agreement between ICT Group, Inc. and
          Boston Communications Group, Inc. dated August 4, 1999.  8

10.56     Termination of Services Agreement and related Assignment and
          Assumption Agreements between ICT Group, Inc. and Boston
          Communications Group, Inc., dated September 30, 1999.

10.57     +Amendment No. 3 to the Boston Communications Group, Inc. 1996
          Employee Stock Purchase Plan dated August 12, 1999.

11        Statement RE: Computation of Per Share Earnings

21        Subsidiaries of the Registrant.

23        Consent of Ernst & Young LLP, Independent Auditors.

27        Financial Data Schedules.



1 Incorporated by reference to the Company's Registration Statement on Form S-1
  filed June 17, 1996 (File No. 333-4128)
2 Incorporated by reference to the Company's Form 10-K for the year ended
  December 31, 1996.
3 Incorporated by reference to the Company's Form 10-Q for the quarter ended
  June 30, 1997.
4 Incorporated by reference to the Company's Form 10-Q for the quarter ended
  September 30, 1997.
5 Incorporated by reference to the Company's Form 10-Q for the quarter ended
  March 31, 1998.
6 Incorporated by reference to the Company's Form 10-K for the year ended
  December 31, 1998.
7 Incorporated by reference to the Company's Form 10-Q for the quarter ended
 June 30, 1999.
8 Incorporated by reference to the Company's Form 10-Q for the quarter ended
 September 30, 1999.

+ Management contract or compensatory plan or arrangement filed as an exhibit
  pursuant to Item 14(c) of this Report.
^ Confidential treatment granted as to certain positions, which positions have
  been deleted and filed separately with the Securities and Exchange Commission.

<PAGE>
<TABLE>

                            SCHEDULE II

        BOSTON COMMUNICATIONS GROUP, INC. AND SUBSIDIARIES

                 VALUATION AND QUALIFYING ACCOUNTS

                           (In thousands)


              COL. A                      COL. B                   COL. C
------------------------------------   ------------    -------------------------
                                                             ADDITIONS
                                                   -----------------------------

                                                                    CHARGED TO
                                      BALANCE AT     CHARGED TO       OTHER
                                     BEGINNING OF    COSTS AND       ACCOUNTS
DESCRIPTION                             PERIOD       EXPENSES       DESCRIBE (1)
                                    -----------    --------------  -------------
<S>                                 <C>            <C>             <C>
Year ended December 31, 1999:
 Reserves and allowances deducted
  from asset accounts:
  Allowance for billing adjustments
    and uncollectible accounts           $1,508           $ --         $1,688


Year ended December 31, 1998:
 Reserves and allowances deducted
  from asset accounts:
  Allowance for billing adjustments
    and uncollectible accounts           $1,304           $ --         $1,557

Year ended December 31, 1997:
 Reserves and allowances deducted
  from asset accounts:
  Allowance for billing adjustments
    and uncollectible accounts           $1,242           $ --           $636


              COL. A                     COL. D           COL. E
------------------------------------   ----------    -------------

                                       DEDUCTIONS        BALANCE AT
DESCRIPTION                            DESCRIBE (2)    END OF PERIOD
                                       -----------    --------------
<S>                                    <C>            <C>
Year ended December 31, 1999:
 Reserves and allowances deducted
  from asset accounts:
  Allowance for billing adjustments
    and uncollectible accounts            $1,171          $2,025


Year ended December 31, 1998:
 Reserves and allowances deducted
  from asset accounts:
  Allowance for billing adjustments
    and uncollectible accounts            $1,353          $1,508

Year ended December 31, 1997:
 Reserves and allowances deducted
  from asset accounts:
  Allowance for billing adjustments
    and uncollectible accounts              $574          $1,304


(1) Billing adjustments recorded as a reduction of revenue.
(2) Settlement of billing adjustments.

</TABLE>